8/3/2019 Form 20-F

20-F 1 d707024d20f.htm FORM 20-F

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934
For the transition period from to

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Date of event requiring this shell company report

Commission file number 001-15216

HDFC BANK LIMITED

(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant’s name into English)

India
(Jurisdiction of incorporation or organization)

HDFC Bank House, Senapati Bapat Marg, Lower Parel, Mumbai 400013, India
(Address of principal executive offices)

Name: Santosh Haldankar, Vice President (Legal) and Company Secretary

Telephone: 91-22-6652-1099
Email: [email protected]
Address: 4th floor, HDFC Bank House, Senapati Bapat Marg, Lower Parel, Mumbai 400 013, India.
(Name, telephone, e-mail and/or facsimile number and address of company contact person)

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8/3/2019 Form 20-F
Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered
American Depositary Shares, each representing HDB The New York Stock Exchange
three Equity Shares, Par value Rs. 2.0 per share

Securities registered or to be registered pursuant to Section 12(g) of the Act: Not Applicable

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: Not Applicable

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the
annual report:

Equity Shares, as of March 31, 2019 2,723,306,610

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934. Yes ☐ No ☒

Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.
See definition of “large accelerated filer”, “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a)
of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting
Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒ International Financial Reporting Standards as issued Other ☐

by the International Accounting Standards Board ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow: Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☒

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8/3/2019 Form 20-F

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TABLE OF CONTENTS

EXCHANGE RATES AND CERTAIN DEFINED TERMS 1

FORWARD-LOOKING STATEMENTS 2
BUSINESS 3
RISK FACTORS 30
CERTAIN INFORMATION ABOUT OUR AMERICAN DEPOSITARY SHARES AND EQUITY SHARES 56
DESCRIPTION OF EQUITY SHARES 57
DESCRIPTION OF AMERICAN DEPOSITARY SHARES 62
DIVIDEND POLICY 72
SELECTED FINANCIAL AND OTHER DATA 73
SELECTED STATISTICAL INFORMATION 76
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 94
MANAGEMENT 119
PRINCIPAL SHAREHOLDERS 141
RELATED PARTY TRANSACTIONS 142
TAXATION 145
SUPERVISION AND REGULATION 152
EXCHANGE CONTROLS 185
RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES 187
ADDITIONAL INFORMATION 191
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING 192
EXHIBIT INDEX
SIGNATURES

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CROSS REFERENCE SHEET

Form 20-F

Item Caption Location

Part I
Item 1 Identity of Directors, Senior Management and Advisors Not Applicable
Item 2 Offer Statistics and Expected Timetable Not Applicable
Item 3 Key Information Exchange Rates and Certain Defined Terms 1
Risk Factors 30
Selected Financial and Other Data 73
Item 4 Information on the Company Business 3
Selected Statistical Information 76
Management’s Discussion and Analysis of Financial Condition
and Results of Operations 94
Principal Shareholders 141
Related Party Transactions 142
Supervision and Regulation 152
Item 5 Operating and Financial Review and Prospects Management’s Discussion and Analysis of Financial Condition
and Results of Operations 94
Item 6 Directors, Senior Management and Employees Business—Employees 29
Management 119
Principal Shareholders 141
Item 7 Major Shareholders and Related Party Transactions Principal Shareholders 141
Management—Loans to Members of our Senior Management 131
Related Party Transactions 142
Item 8 Financial Information Report of Independent Registered Public Accounting Firms F-2
Consolidated Financial Statements and the Notes thereto F-11
Business—Legal Proceedings 29
Item 9 The Offer and Listing Certain Information About Our American Depositary Share and
Equity Shares 56
Restrictions on Foreign Ownership of Indian Securities 187
Item 10 Additional Information Management 119
Description of Equity Shares 57
Dividend Policy 72
Taxation 145
Supervision and Regulation 152
Exchange Controls 185

ii

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Item Caption Location

Restrictions on Foreign Ownership of Indian Securities 187
Additional Information 191
Item 11 Quantitative and Qualitative Disclosures About Market Risk Business—Risk Management 21
Selected Statistical Information 76
Item 12 Description of Securities Other than Equity Securities Not Applicable
Item 12D ADSs fee disclosure Description of American Depositary Shares—Fees and Charges
for Holders of American Depositary Shares 65
Part II
Item 13 Defaults, Dividend Arrearages and Delinquencies Not Applicable
Item 14 Material Modifications to the Rights of Security Holders and Use of Not Applicable
Proceeds
Item 15 Controls and Procedures Management—Controls and Procedures 132
Management’s Report on Internal Control Over Financial
Reporting 192
Report of Independent Registered Public Accounting Firm—
Internal Controls Over Financial Reporting 193
Item 16A Audit Committee Financial Expert Management—Audit Committee Financial Expert 133
Item 16B Code of Ethics Management—Code of Ethics 133
Item 16C Principal Accountant Fees and Services Management—Principal Accountant Fees and Services 134
Item 16D Exemption from the Listing Standards for Audit Committees Not Applicable
Item 16E Purchases of Equity Securities by the Issuer and Affiliated Not Applicable
Purchasers
Item 16F Changes in or disagreements with accountants Not Applicable
Item 16G Significant Differences in Corporate Governance Practices Management—Compliance with NYSE Listing Standards on
Corporate Governance 134

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EXCHANGE RATES AND CERTAIN DEFINED TERMS

In this document, all references to “we”, “us”, “our”, “HDFC Bank” or “the Bank” shall mean HDFC Bank Limited or where the context requires
also to its subsidiaries whose financials are consolidated for accounting purposes. References to the “U.S.” or “United States” are to the United States of
America, its territories and its possessions. References to “India” are to the Republic of India. References to the “Companies Act” in the document mean the
Companies Act, 1956 or the Companies Act, 2013 (to the extent notified as of the date of this report) and all rules and regulations issued thereunder.
References to “$” or “US$” or “dollars” or “United States dollars” are to the legal currency of the United States and references to “Rs.”, ”INR”, “rupees” or
“Indian rupees” are to the legal currency of India.

Our financial statements are presented in Indian rupees and in some cases translated into United States dollars. The financial statements and all other
financial data included in this report, except as otherwise noted, are prepared in accordance with United States generally accepted accounting principles, or
U.S. GAAP. U.S. GAAP differs in certain material respects from accounting principles generally accepted in India, the requirements of India’s Banking
Regulation Act and related regulations issued by the Reserve Bank of India (“RBI”) (collectively, “Indian GAAP”), which form the basis of our statutory
general purpose financial statements in India. Principal differences applicable to our business include: determination of the allowance for credit losses,
classification and valuation of investments, accounting for deferred income taxes, stock-based compensation, loan origination fees, derivative financial
instruments, business combinations and the presentation format and disclosures of the financial statements and related notes. References to a particular
“fiscal” are to our fiscal year ended March 31 of such year.

Fluctuations in the exchange rate between the Indian rupee and the United States dollar will affect the United States dollar equivalent of the Indian
rupee price of the equity shares on the Indian stock exchanges and, as a result, will affect the market price of our American Depositary Shares (“ADSs”) in
the United States. These fluctuations will also affect the conversion into United States dollars by the depositary of any cash dividends paid in Indian rupees
on the equity shares represented by ADSs.

Investor expectations that reforms implemented by the Government of India (the “Government”) will lead to an improvement in the long-term growth
outlook helped to improve the rupee’s performance, reducing the depreciation trend to 3.85 percent in fiscal 2015. During fiscal 2016, the rupee depreciated
by 6.32 percent primarily reflecting global risk aversion and a strong United States dollar. However, in line with other emerging markets, which experienced
currency appreciation in fiscal 2017, the Indian rupee also appreciated by 2.1 percent against the United States dollar. This was mainly attributed to
repricing of the Indian assets by international investors (driven by domestic economic and political stability) alongside the disappointment relating to the
United States reform agenda. In fiscal 2018, the rupee ranged between a high of Rs. 65.71 per US$ 1.00 and a low of Rs. 63.38 per US$ 1.00. Pressure
developed in the last two quarters of fiscal 2018 as oil prices rose and trade war risks escalated globally. In fiscal 2019, while the rupee depreciated overall
by 6.3 percent against the United States dollar, it ranged between a high of Rs 74.4 per US$ 1.00 and a low of Rs 64.85 per US$ 1.00. Rising oil prices and
consequently marginal deterioration of India’s current account deficit (“CAD”), slowdown in global trade volumes and a general risk aversion towards
emerging market currencies (because of tariffs and trade war risks) have all affected the rupee negatively in the past fiscal year.

Although we have translated selected Indian rupee amounts in this document into United States dollars for convenience, this does not mean that the
Indian rupee amounts referred to could have been, or could be, converted to United States dollars at any particular rate, the rates stated above, or at all.
Unless otherwise stated, all translations from Indian rupees to United States dollars are based on the noon buying rate in the City of New York for cable
transfers in Indian rupees at US$ 1.00 = Rs. 69.16 on March 29, 2019. The Federal Reserve Bank of New York certifies this rate for customs purposes on
each date the rate is given. The noon buying rate on July 19, 2019 was Rs. 68.82 per US$ 1.00.

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FORWARD-LOOKING STATEMENTS

We have included statements in this report which contain words or phrases such as “will”, “aim”, “will likely result”, “believe”, “expect”, “will
continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “project”, “should”, “will pursue” and similar
expressions or variations of these expressions, that are “forward-looking statements”. Actual results may differ materially from those suggested by the
forward-looking statements due to certain risks or uncertainties associated with our expectations with respect to, but not limited to, our ability to implement
our strategy successfully, the market acceptance of and demand for various banking services, future levels of our non-performing/impaired assets, our
growth and expansion, the adequacy of our provision/allowance for credit and investment losses, technological changes, volatility in investment income,
our ability to market new products, cash flow projections, the outcome of any legal, tax or regulatory proceedings in India and in other jurisdictions we are
or become a party to, the future impact of new accounting standards, our ability to pay dividends, the impact of changes in banking regulations and other
regulatory changes on us in India and other jurisdictions, our ability to roll over our short-term funding sources and our exposure to market and operational
risks. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what may actually occur in the future.
As a result, actual future gains, losses or impact on net income could materially differ from those that have been estimated.

In addition, other factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this
document include, but are not limited to: general economic and political conditions, instability or uncertainty in India and the other countries which have an
impact on our business activities or investments caused by any factor, including terrorist attacks in India, the United States or elsewhere, anti-terrorist or
other attacks by the United States, a United States-led coalition or any other country, tensions between India and Pakistan related to the Kashmir region or
between India and China, military armament or social unrest in any part of India; the monetary and interest rate policies of the Government of India, natural
calamities, inflation, deflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices or other rates or prices; the performance of
the financial markets in India and globally, changes in Indian and foreign laws and regulations, including tax, accounting and banking regulations, changes
in competition and the pricing environment in India, and regional or general changes in asset valuations. For further discussion on the factors that could
cause actual results to differ, see “Risk Factors”.

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BUSINESS

Overview
We are a new generation private sector bank in India. Our goal is to be the preferred provider of financial services to our customers in India across
metro, urban, semi-urban and rural markets. Our strategy is to provide a comprehensive range of financial products and services to our customers through
multiple distribution channels, with what we believe are high-quality services, advanced technology platforms and superior execution.

We have three principal business activities: retail banking, wholesale banking and treasury operations. Our retail banking products include deposit
products, loans, credit cards, debit cards, third-party mutual funds and insurance products, investment advice, bill payment services, loans to small and
medium enterprises and other services. On the wholesale banking front, we offer customers a range of financing products, such as documentary credits and
bank guarantees, foreign exchange and derivative products, investment banking services and corporate deposit products. We offer a range of deposit and
transaction banking services, such as cash management, custodial and clearing bank services and correspondent banking. Our treasury operations manage
our balance sheet, and include customer-driven services such as advisory services related to foreign exchange and derivative transactions for corporate and
institutional customers, supplemented by proprietary trading, including Indian Government securities. Further, our non-banking finance company (“NBFC”)
subsidiary HDB Financial Services Limited (“HDBFSL”) offers a wide range of loans and asset finance products including mortgage loans, commercial
vehicle loans, consumer loans and gold loans, as well as a range of business process outsourcing solutions. We provide our customers brokerage accounts
through our subsidiary HDFC Securities Limited (“HSL”), which we believe is one of the leading stock brokerage companies in India and offers a suite of
products and services across various asset classes such as equity, gold and debt, among others.

Our financial conditions and results of operation are affected by the general economic conditions in India. The Indian economy is one of the largest
economies in the world with a gross domestic product (“GDP”) at current market prices of an estimated Rs. 170.95 trillion for fiscal 2018 and an estimated
Rs. 190.1 trillion for fiscal 2019. In recent years, India has become an attractive destination for foreign direct investment (“FDI”), owing to its well-
developed private corporate sector, large consumer market potential, large pool of well-educated and English-speaking workers and well-established legal
systems. Overall, India attracted FDI (including reinvested earnings) of approximately US$ 64.4 billion in fiscal 2019, US$ 60.9 billion in fiscal 2018 and
US$ 60.2 billion in fiscal 2017. India attracted an average of US$ 48.7 billion during FDI from fiscal 2011 through fiscal 2019 compared to an average of
US$ 17.2 billion from fiscal 2001 through fiscal 2010. One measure of India’s progress has been the upward trend in ease of doing business rankings, a
measure published annually by the World Bank. In 2018, India improved 23 places to the 77th spot and was ranked as one of the top ten improvers
year-on-year.

The Indian economy faced multiple challenges during fiscal 2019, including volatile oil prices, elevated trade tensions, certain regional geo-political
uncertainties, interest rates tightening in certain developed countries, notably the United States, and the consistent slowdown in domestic consumption
growth, which is expected to continue into fiscal 2020. Despite the challenging international and domestic environment, India experienced real GDP growth
of 6.8 percent in fiscal 2019. This growth is, in part, due to various policy reform measures over the past years (such as the goods and service tax 2017, the
insolvency and bankruptcy code 2016 and the bank recapitalization plan 2017) which have contributed to improving India’s macro-economic stability
considerably.

On a comparative basis, real GDP growth levelled off to 6.8 percent in fiscal 2019 from 7.2 percent in fiscal 2018. This year-on-year decline was
primarily driven by reduced growth in the agricultural sector, which grew at 2.9 percent in fiscal 2019 compared to 5.0 percent in fiscal 2018. On a
quarterly basis, India’s real GDP growth in fiscal 2019 showed a steady decline from 8.0 percent in the first quarter, to 7.0 percent in the second quarter, to
6.6 percent in the third quarter and to 5.8 percent in the fourth quarter. Real GDP growth is expected to be approximately 7.0 percent in fiscal 2020.

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The Indian Union Budget for fiscal 2020 has tried to strike a balance between fiscal consolidation and supporting growth. The budget focuses on the
Government’s goal of developing India into a US $5 trillion economy over the next five years. The fiscal deficit is budgeted at 3.3 percent in fiscal 2020
compared to 3.4 percent in fiscal 2019. The budget strategy involves infrastructure, digital economy and the MSME (Micro, Small & Medium Enterprises)
sector.

Investment (as measured by the “gross fixed capital formation” component of GDP) remained on track except for the last quarter of fiscal 2019. For
the last six quarters, investment growth has averaged 10.75 percent, compared to an average of 7.7 percent for private consumption. Construction activity
also increased, growing at an average of 8.4 percent in the second half of fiscal 2019 compared to 7.2 percent growth during the same period of fiscal 2018.
We believe that the Government’s focus on low-cost housing and other key infrastructure projects awarded through the roads and highway ministry appears
to be having a favorable impact on the construction sector and we believe the positive momentum is likely to continue.

The decline in headline inflation which occurred in fiscal 2018 continued in fiscal 2019, with the consumer price index (“CPI”) falling to 1.97 percent
in January 2019, mainly as a result of lower inflation in food products. On a half-year basis, headline inflation decreased from 4.3 percent in the first half of
fiscal 2019 to 2.53 percent in the second half of fiscal 2019. More recently, as a result of a lower base of last year and a minor increase in inflation in food
products, headline inflation increased to 2.86 percent in March 2019. Headline inflation has increased to an average of 3.1% during the first quarter of fiscal
2020. Although headline inflation for fiscal 2020 is estimated to increase to an average of 3.7 percent, it is likely to remain well within the RBI’s target
range of 4 percent +/-2 percent.

Overall, we expect Indian real GDP growth to marginally increase to 7.0 percent in fiscal 2020 compared to 6.8 percent in fiscal 2019, assuming a
normal monsoon season, continued recovery in private investment, and gradual traction in private consumption with support from Government-led
spending. This expectation is in line with IMF forecasts for Indian GDP growth of 7.3 percent and 7.5 percent for 2019 and 2020 respectively. Globally, the
IMF projects 2019 GDP growth at 3.3 percent and 3.6 percent in 2020.

We have grown rapidly since commencing operations in January 1995. As of March 31, 2019, we had 5,103 banking outlets, 13,160 ATMs in 2,748
cities and towns and 49.2 million customers. On account of the expansion in our geographical reach and the resultant increase in market penetration, our
assets have grown from Rs. 11,367.3 billion as of March 31, 2018 to Rs. 13,280.1 billion as of March 31, 2019. Our net income has increased from Rs.
178.5 billion for fiscal 2018 to Rs. 220.1 billion for fiscal 2019. Our loans and deposits as of March 31, 2019 were at Rs. 8,963.2 billion and Rs.
9,225.0 billion respectively. Across business cycles, we believe we have maintained a strong balance sheet and a low cost of funds. As of March 31, 2019,
gross non-performing customer assets as a percentage of gross customer assets was 1.50 percent, while net non-performing customer assets constituted
0.59 percent of net customer assets. In addition, our net customer assets represented 100.1 percent of our deposits and our deposits represented 69.5 percent
of our total liabilities and shareholders’ equity. The average non-interest bearing current accounts and low-interest bearing savings accounts represented
39.9 percent of total deposits as of March 31, 2019. These low-cost deposits and the cash float associated with our transactional services led to an average
cost of funds (including equity) of 4.5 percent for fiscal 2019. During fiscal 2019 we raised equity share capital of Rs. 235.9 billion (net of share issue
expenses) through preferential allotment, an American depositary shares’ (“ADS”) issue and a qualified institutional placement. See “Financial conditions
—Liabilities and Shareholders’ Equity”. We had a return on equity (net income as a percentage of average total shareholders’ equity) of and 16.5 percent
for fiscal 2018 and 15.5 percent for fiscal 2019, and at March 31, 2019 had a total capital adequacy ratio (calculated pursuant to RBI guidelines) of
17.11 percent. Our Common Equity Tier I (“CET-I”) ratio was 14.93 percent as at March 31, 2019.

In addition, we are constantly working to develop new technology and improve the digital aspects of our business. For example, we have recently
invested in a digital banking platform, Backbase, to give a single unified omni-channel experience to our customers for mobility banking, online banking,
the public website and payments. We have implemented mobile data based networking options in semi-urban and rural areas where telecom infrastructure
and data connectivity are weak, [to improve our customers’ access to services]. Our other recent technological developments include mobile banking
applications, person-to-person smartphone payment solutions, secure payment systems and a virtual relationship manager for high-net-worth customers.

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About Our Bank

HDFC Bank was incorporated in August 1994 and commenced operations as a scheduled commercial bank in January 1995. In 2000, we merged with
Times Bank Limited and, in 2008, we acquired Centurion Bank of Punjab Limited (“CBoP”). We are part of the HDFC Group of companies established by
our principal shareholder, Housing Development Finance Corporation Limited (“HDFC Limited”), a listed public limited company established under the
laws of India. HDFC Limited is primarily engaged in financial services, including mortgages, property-related lending and deposit services. The
subsidiaries and associated companies of HDFC Limited are also largely engaged in a range of financial services, including asset management, life
insurance and general insurance. HDFC Limited and its subsidiaries (together, “HDFC Group”) owned 21.38 percent of our outstanding equity shares as of
March 31, 2019 and our Chairperson and Managing Director are nominated by HDFC Limited and appointed with the approval of our shareholders and the
RBI. See also “Principal Shareholders”. We have no agreements with HDFC Limited or any of its group companies that restrict us from competing with
them or that restrict HDFC Limited or any of its group companies from competing with our business. We currently distribute products of HDFC Limited
and its group companies, such as home loans of HDFC Limited, life and general insurance products of HDFC Life Insurance Company Limited and HDFC
ERGO General Insurance Company Limited, respectively, and mutual funds of HDFC Asset Management Company Limited.

We have two subsidiaries: HDBFSL and HSL. HDBFSL is a non-deposit taking NBFC engaged primarily in the business of retail asset financing
while HSL is primarily in the business of providing brokerage and other investment services. Effective April 1, 2018 the financial results of our subsidiary
companies have been prepared in accordance with notified Indian Accounting Standards (April 1, 2017 being the transition date). HDBFSL’s total assets
and shareholders’ equity as of March 31, 2019 were Rs. 565.4 billion and Rs. 71.8 billion, respectively. HDBFSL’s net income was Rs. 11.5 billion for
fiscal 2019. As of March 31, 2019, HDBFSL had 1,350 banking outlets across 981 cities in India. HSL’s total assets and shareholders’ equity as of
March 31, 2019 were Rs. 20.4 billion and Rs. 11.9 billion, respectively. HSL’s net income was Rs. 3.3 billion for fiscal 2019. On December 1, 2016, Atlas
Documentary Facilitators Company Private Ltd. which provided back office transaction processing services to us, and its subsidiary HBL Global Private
Ltd. which provided direct sales support for certain products of the Bank, amalgamated with HDBFSL.

Our principal corporate and registered office is located at HDFC Bank House, Senapati Bapat Marg, Lower Parel, Mumbai 400 013, India. Our
telephone number is 91-22-6652-1000. Our agent in the United States for the 2001, 2005, 2007, 2015 and 2018 ADS offerings is Depositary Management
Corporation, 570 Lexington Avenue, New York, NY 10022.

Our Competitive Strengths

We attribute our growth and continuing success to the following competitive strengths:

We have a strong brand and extensive reach through a large distribution network
At HDFC Bank, we are focused on understanding our customers’ financial needs and providing them with relevant banking solutions. We are driven
by our core values - customer focus, operational excellence, product leadership, sustainability and people. This has helped us grow and achieve our status as
one of the largest private sector banks in India, while delivering value to our customers, stakeholders, employees and our community. HDFC Bank is one of
the most trusted and preferred bank brands in India. We have been acknowledged as “India’s Most Valuable Brand” by BrandZ for the fifth consecutive
year. We have capitalized on our strong brand by establishing an extensive branch network throughout India serving a broad range of customers in urban,
semi-urban and rural regions. As of March 31, 2019, we had 5,103 banking outlets and 13,160 ATMs in 2,748 cities and towns and over 49 million
customers, and of our total banking outlets, 53.0 percent were in the semi-urban and rural areas. Our banking outlets’ network is further complemented by
our digital platforms, including online and mobile banking solutions, to provide our customers with a lifestyle banking experience, which is categorized into
eight categories: Pay, Save, Invest, Borrow, Shop, Trade, Insure and Advice. Our focus is on delivering highly personalized experiences, since most of our
customers interact with us at least once a day, across various channels.

We provide a wide range of products and high quality service to our clients in order to meet their banking needs
Whether in retail banking, wholesale banking or treasury operations, we consider ourselves a “one-stop shop” for our customers’ banking needs. We
consider our high-quality service offerings to be a vital component of our business and believe in pursuing excellence in execution through multiple internal
initiatives focused on continuous improvement. This pursuit of high-quality service and operational execution directly supports our ability to offer a wide
range of banking products.

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Our retail banking products include deposit products, retail loans (such as vehicle and personal loans), and other products and services, such as
private banking, depositary accounts, brokerage services, foreign exchange services, distribution of third-party products (such as insurance and mutual
funds), bill payments and sale of gold and silver bullion. In addition, we are the largest credit card issuer in India with 12.5 million cards outstanding as of
March 31, 2019. On the wholesale banking side, we offer customers working capital loans, term loans, bill collections, letters of credit, guarantees, foreign
exchange and derivative products and investment banking services. We also offer a range of deposit and transaction banking services such as cash
management, custodial and clearing bank services and correspondent banking. We believe our large scale and low cost of funding enable us to pursue high-
quality wholesale financing opportunities competitively and at an advantage compared to our peers. We collect taxes for the Government and are bankers to
companies in respect of issuances of equity shares and bonds to the public. Our NBFC subsidiary HDBFSL offers loan and asset finance products including
tractor loans, consumer loans and gold loans, as well as business process outsourcing solutions such as forms processing, documents verification, contact
center management and other front and back-office services.

We are able to provide this wide range of products across our physical and digital network, meaning we can provide our targeted rural customers with
banking products and services similar to those provided to our urban customers, which we believe gives us a competitive advantage. Our wide range of
products and focus on superior service and execution also create multiple cross-selling opportunities for us and, we believe, promote customer retention.

We have achieved robust and consistent financial performance while maintaining a healthy asset quality during our growth
On account of our superior operational execution, broad range of products, expansion in our geographical reach and the resulting increase in market
penetration through our extensive branch network, our assets have grown from Rs. 11,367.3 billion as of March 31, 2018 to Rs. 13,280.1 billion as of
March 31, 2019. Our net interest margin was 4.7 percent in fiscal 2018 and 4.5 percent in fiscal 2019. Our current and savings account deposits as a
percentage of our total deposits were 42.4 percent as of March 31, 2019, and we believe this strong current and savings account profile has enabled us to tap
into a low-cost funding base. In addition to the significant growth in our assets and net revenue, we remain focused on maintaining a healthy asset quality.
We continue to have low levels of non-performing customer assets as compared to the average levels in the Indian banking industry. Our gross
non-performing customer assets as a percentage of total customer assets was 1.50 percent as of March 31, 2019 and our net non-performing customer assets
was 0.59 percent of net customer assets as of March 31, 2019. Our net income has increased from Rs. 178.5 billion for fiscal 2018 to Rs. 220.1 billion for
fiscal 2019. Net income as a percentage of average total shareholders’ equity was 16.5 percent in fiscal 2018 and 15.5 percent in fiscal 2019 and net income
as a percentage of average total assets was unchanged at 1.9 percent in fiscal 2018 and fiscal 2019. We believe the combination of strong net income
growth, robust deposit-taking, a low cost of funds and prudent risk management has enabled us to generate attractive returns on capital.

We have an advanced technology platform

We continue to make substantial investments in our advanced technology platform and systems and expand our electronically linked branch network.
We have implemented mobile data based networking options in semi-urban and rural areas where telecom infrastructure and data connectivity are weak.
These networks have enabled us to improve our core banking services in such areas and provide a link between our banking outlets and data centers.

Our aim has always been to improve customer experience through digital innovation as an “Experiential Leader” and we are constantly working to
develop new technology and improve the digital aspects of our business. We have recently invested in a digital banking platform, Backbase, to give a single
unified omni-channel experience to our customers for mobile banking, online banking, the public website and payments. The first phase of our mobile
banking app has been rolled out to consumers, while our forward outlook and initiatives taken in artificial intelligence-led conversational banking have
helped us introduce information, assistance and commerce chatbots. Furthermore, with the pilot launch of “IRA” (Intelligent Robotic Assistant), an
interactive humanoid placed in a branch to help in servicing, we set a benchmark for what we believe to be a best in class digital experience for customers.
Other recent major technological developments include LITE App (a bilingual mobile banking application that does not require an internet connection);
Missed Call Recharge to top-up prepaid mobile phone minutes; a person-to-person smartphone payment solution called PayZapp with SmartBuy, a payment
system to improve our e-commerce processing capabilities; and the creation of a virtual relationship manager for high net worth customers. We have also
rolled out product innovations like pre-approved personal loans for salaried accounts granted in as little as 10 seconds and “Digital Loan Against Securities
(LAS) in under three minutes in three easy steps”.

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We have a dedicated digital innovation team to research and experiment with technology, which hosts a Digital Innovation Summit annually to attract
new talent and business opportunities from the financial technology space. In addition, we have developed robust data analytic capabilities that allow us to
cross-sell our products to customers through both traditional relationship management and interactive, on-demand methods depending on how customers
choose to interact with us. We believe that our direct banking platforms are stable and robust, enabling new ways to connect with our customers to cross-sell
various products and improve customer retention.

We believe the increased availability of internet access and broadband connectivity across India requires a comprehensive digital strategy to
proactively develop new methods of connecting with customers. We are in the process of putting in place advance models of these methods that we term
“BBC” (Biometrics – Blockchain) in a “BBC Initiative”, together with conversational banking which is already in place (for example, our service Missed
Call Commerce and Conversational Banking (“MCCB”)). We believe the BBC Initiative, which is most relevant for our connected customers, can help
protect customer identity and establish authenticity (Biometrics) and promote secure and efficient interactions between customers and us (Blockchain), with
an improved customer experience coming through artificial intelligence initiatives (Conversational Banking). For our customers with intermittent, limited or
even no connectivity, or customers with evolving digital needs or preferences, we have introduced the MCCB service model and HDFC Bank LITE
Banking (multilingual). We are continuously striving to improve our customers’ banking experience, offering them a range of products tailored to their
financial needs and making it easier for them to access and transact with their banking accounts with us.

In recent years we have been honored for our commitment to technology, including the Cisco-CNBC TV 18 Digitizing India Award for Innovations in
the Financial Industry and Digital Banking, the IBA Banking Technology Runner-up Award for Best Bank IT Risk and Cyber Security Initiatives in
February 2019, the Best Bank Banking Technology Excellence Award from IDRBT Banking Technology and the Businessworld Digital Leadership Award
2017 for Best Analytics Implementation. We believe our “Experiential Leadership” strategy and culture of innovation and development will be a crucial
strength in remaining competitive in the years to come.

We have an experienced management team

Many of the members of our management have had a long tenure with us, which gives us a deep bench of experienced managers. They have
substantial experience in banking or other industries and share our common vision of excellence in execution. Having a management team with such
breadth and depth of experience is well suited to leverage the competitive strengths we have already developed across our large, diverse and growing branch
network as well as allowing our management team to focus on creating new opportunities for our business. See also “Management”.

Our Business Strategy

Our business strategy emphasizes the following elements:

Increase our market share of India’s expanding banking and financial services industry
In addition to benefiting from the overall growth in India’s economy and financial services industry, we believe we can increase our market share by
continuing to focus on our competitive strengths, including our strong HDFC Bank brand, our diverse product offering and our extensive banking outlet and
ATM networks, to increase our market penetration. We believe we can expand our market share by focusing on developing our digital offerings to target
mass markets across India. We believe digital offerings will position us well to capitalize on growth in India’s banking and financial services sector, arising
from India’s emerging middle class and growing number of bankable households. We believe we can also capture an increased market share by expanding
our branch footprint, particularly by focusing on rural and semi-urban areas. As of March 31, 2019, we had 5,103 banking outlets and 13,160 ATMs in
2,748 cities and towns. We believe these areas represent a significant opportunity for our continued growth as we expand banking services to those areas
which have traditionally been underserved and which, by entering such markets, will enable us to establish new customer bases. We also believe that
delivering banking services which are integrated with our existing business and product groups helps us to provide viable opportunities to the sections of the
rural and semi-urban customer base that is consistent with our targeted customer profile throughout India.

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Continue our investments in technology to support our digital strategy

We believe the increased availability of internet access and broadband connectivity across India requires a comprehensive digital strategy to
proactively develop new methods of reaching our customers. As a result, we are continuously investing in technology as a means of improving our
customers’ banking experience, offering them a range of products tailored to their financial needs and making it easier for them to interact with their
banking accounts with us. We believe our culture of innovation and development to be crucial to remaining competitive. As part of our dedication to
digitization and technological development, we have appointed a digital innovation team to research, develop and experiment with new technologies. In
February 2017, we hosted our first Digital Innovation Summit to tap into emerging technological trends and innovations in the FinTech space and have
since held two more summits which have led to the development of new ideas in this emerging space.

While we currently provide a range of options for customers to access their accounts, including internet banking, telephone banking, artificial
intelligence driven chat bots and banking applications on mobile devices, we believe additional investments in our technology infrastructure to further
develop our digital strategy will allow us to cross-sell a wider range of products on our digital platform in response to our customers’ needs and thereby
expand our relationship with our customers across a range of customer segments. We believe a comprehensive digital strategy will provide benefits in
developing long-term customer relationships by allowing customers to interact with us and access their accounts wherever and whenever they desire.

Cross-sell our broad financial product portfolio across our customer base
We are able to offer our complete suite of financial products across our branch network, including in our rural locations. By matching our broad
customer base with our ability to offer our complete suite of products to both rural and urban customers across the retail banking, wholesale banking and
treasury product lines, we believe that we can continue to generate organic growth by cross-selling different products by proactively offering our customers
complementary products as their relationships with us develop and their financial needs grow and evolve.

Maintain strong asset quality through disciplined credit risk management

We have maintained high quality loan and investment portfolios through careful targeting of our customer base, and by putting in place what we
believe are comprehensive risk assessment processes and diligent risk monitoring and remediation procedures. Our gross non-performing customer assets as
a percentage of gross customer assets was 1.50 percent as of March 31, 2019 and our net non-performing customer assets as a percentage of net customer
assets was 0.59 percent as of March 31, 2019. We believe we can maintain strong asset quality appropriate to the loan portfolio composition while
achieving growth.

Maintain a low cost of funds

We believe we can maintain a relatively low-cost funding base as compared to our competitors, by leveraging our strengths and expanding our base of
retail savings and current deposits and increasing the free float generated by transaction services, such as cash management and stock exchange clearing.
Our non-interest bearing current and low-interest bearing savings account deposits were 42.4 percent of our total deposits as of March 31, 2019. Our
average cost of funds (including equity) was 4.4 percent for fiscal 2018 and 4.5 percent for fiscal 2019.

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Our Principal Business Activities

Our principal business activities consist of retail banking, wholesale banking and treasury operations. The following table sets forth our net revenues
attributable to each area for the last three fiscals:

Year ended March 31,

2017 2018 2019
(in millions, except percentages)
Retail banking Rs.351,345.6 82.8% Rs.414,894.0 81.6% Rs.473,748.2 US$6,850.0 79.6%
Wholesale banking 63,367.2 14.9% 77,623.6 15.3% 111,803.5 1,616.5 18.8%
Treasury operations 9,457.5 2.3% 15,842.2 3.1% 9,796.8 141.7 1.6%
Net revenue Rs.424,170.3 100.0% Rs.508,359.8 100.0% Rs.595,348.5 US$8,608.2 100.0%

Retail Banking
Overview
We consider ourselves a one-stop shop for the financial needs of our customers. We provide a comprehensive range of financial products including
deposit products, loans, credit cards, debit cards, third-party mutual funds and insurance products, bill payment services and other services. Our retail
banking loan products include loans to small and medium enterprises for commercial vehicles, construction equipment and other business purposes. We
group these loans as part of our retail banking business considering, among other things, the customer profile, the nature of the product, the differing risks
and returns, our organization structure and our internal business reporting mechanism. Such grouping ensures optimum utilization and deployment of
specialized resources in our retail banking business. We also have specific products designed for lower income individuals through our Sustainable
Livelihood Initiative. Through this initiative, we reach out to the un-banked and under-banked segments of the Indian population in rural areas. We actively
market our services through our banking outlets and alternate sales channels, as well as through our relationships with automobile dealers and corporate
clients. We follow a multi-channel strategy to reach out to our customers bringing to them choice, convenience and what we believe to be a superior
experience. Innovation has been the springboard of growth in this segment and so has a strong focus on analytics and customer relationship management,
which we believe has helped us to understand our customers better and offer tailor-made solutions. We further believe that these factors lead to better
customer engagement.

As of March 31, 2019, we had 5,103 banking outlets and 13,160 ATMs in 2,748 cities and towns. We also provide telephone, internet and mobile
banking to our customers. We plan to continue to expand our banking outlet and ATM network as well as our other distribution channels, subject to
regulatory guidelines/approvals.

Retail Loans and Other Asset Products

We offer a wide range of retail loans, including loans for the purchase of automobiles, personal loans, retail business banking loans, loans for the
purchase of commercial vehicles and construction equipment finance, two-wheeler/three-wheeler loans, credit cards and loans against securities. Our retail
loans, of which 30.1 percent were unsecured, made up 68.5 percent of our gross loans as of March 31, 2019. Apart from our banking outlets, we use our
ATMs and the internet to promote our loan products and we employ additional sales methods depending on the type of products. We perform our own credit
analysis of the borrowers and the value of the collateral if the loan is secured. See “—Risk Management—Credit Risk—Retail Credit Risk”. We also buy
mortgage and other asset-backed securities and invest in retail loan portfolios through assignments. In addition to taking collateral, in most cases, we obtain
debit instructions/post-dated checks covering repayments at the time a retail loan is made. It is a criminal offense in India to issue a bad check. Our
unsecured personal loans, which are not supported by any collateral, are a greater credit risk for us than our secured loan portfolio. We may be unable to
collect in part or at all on an unsecured personal loan in the event of non-payment by the borrower. Accordingly, personal loans are granted at a higher
contracted interest rate since they carry a higher credit risk as compared to secured loans. Also see “Risk Factors—Our unsecured loan portfolio is not
supported by any collateral that could help ensure repayment of the loan, and in the event of non-payment by a borrower of one of these loans, we may be
unable to collect the unpaid balance”.

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The following table shows the gross book value and share of our retail credit products:

At March 31, 2019 Value % of Total Value

(in millions)
Retail Assets:
Auto loans Rs. 951,744.2 US$13,761.5 15.2%
Personal loans / Credit cards 1,538,107.4 22,239.8 24.5%
Retail business banking 1,478,317.8 21,375.3 23.6%
Commercial vehicle and construction equipment finance 746,288.0 10,790.7 11.9%
Housing loans 513,771.6 7,428.7 8.2%
Other retail loans 1,009,674.6 14,599.1 16.0%
Total retail loans 6,237,903.6 90,195.1 99.4%
Mortgage-backed securities 56.9 0.8 — %
Asset-backed securities 38,869.9 562.0 0.6%
Total retail assets Rs.6,276,830.4 US$90,757.9 100.0%

Note: The figures above exclude securitized-out receivables. Mortgaged-backed securities and asset-backed securities are reflected at fair values.

Auto Loans
We offer loans at fixed interest rates for financing of new and used automobile purchases. In addition to our general marketing efforts for retail loans,
we market our offerings at various customer touch points such as authorized dealers, direct sales agents, our banking outlets and the phone banking channel,
and from our digital touch points. We believe that we are the leader in the auto loan segment, having established our presence over almost two decades.

Personal Loans and Credit Cards

We offer unsecured personal loans at fixed rates to specific customer segments, including salaried individuals and self-employed professionals. In
addition, we offer unsecured personal loans to small businesses and individual businessmen.

We offer credit cards from VISA, MasterCard and Diners platforms, including gold, silver, corporate, business, platinum, titanium, signature, world,
black, infinite, credit cards under the classification of corporate cards, business cards, co-brand cards, premium retail cards and super premium retail cards.
We had approximately 10.7 million and 12.5 million cards outstanding (i.e., total credit cards in circulation) as of March 31, 2018 and March 31, 2019,
respectively.

We launched Easy EMI (equated monthly installments) on our credit and debit cards through which customers can make payments for items
purchased using their cards in installments. We offer Easy EMI through credit cards, debit cards and consumer loans at authorized stores across India. Easy
EMI on debit cards is offered without blocking any funds in the account. It is available on a simple swipe of the debit card at any of authorized stores. Easy
EMI on debit cards is also available on major e-commerce sites. Online and in-store purchases can be instantly converted into Easy EMI on credit cards.
Consumer loans are available at no extra cost, instantly across multiple product categories from consumer durables to electronics to furniture to lifecare
treatments at designated stores.

Our efforts in the payments business are continuously focused on meeting customers’ specific requirements in the most accessible and relevant
manner, while simplifying transactions.

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Retail Business Banking

We address the borrowing needs of the community of small businessmen primarily located within servicing range of our banking outlets by offering
facilities such as credit lines, term loans for expansion or addition of facilities and discounting of receivables. We classify these business banking loans as a
retail product. Such lending is typically secured with current assets as well as immovable property and fixed assets in some cases. We also offer letters of
credit, guarantees and other basic trade finance products, foreign exchange and cash management services to such businesses.

Commercial Vehicles and Construction Equipment Finance

We provide secured financing for commercial vehicles and construction equipment along with working capital, trade advances, bank guarantees, and
transaction banking services, among others; both traditional and digital, to entities engaged in the infrastructure and transportation businesses. In addition to
funding domestic assets, we also extend financing for imported assets for which we open foreign letters of credit and offer treasury services, such as
forward exchange covers. We coordinate and collaborate with original equipment manufacturers including their authorized dealers to jointly promote our
financing options to their clients. We have a strong market presence in the commercial vehicle and construction equipment financing business.

Housing Loans
We provide home loans through an arrangement with our principal shareholder HDFC Limited. Under this arrangement, we source loans for HDFC
Limited through our banking outlets. HDFC Limited approves and disburses the loans, which are kept on their books, and we receive a sourcing fee for
these loans. We have a right, but not an obligation, to purchase up to 70 percent of the fully disbursed home loans sourced under this arrangement through
either the issue of mortgage-backed pass through certificates (“PTCs”) or a direct assignment of the loans. The balance is retained by HDFC Limited.

Other Retail Loans

Two-Wheeler Loans
We offer loans for financing the purchase of mopeds, scooters and motorcycles. We market this product in ways similar to our marketing of
automobile loans.

Loans Against Securities

We offer loans against equity shares, mutual fund units, bonds and other securities that are on our approved list. We limit our loans against equity
shares to Rs. 2.0 million per retail customer in line with regulatory guidelines and limit the amount of our total exposure secured by particular securities. We
lend only against shares in book-entry (dematerialized) form, which ensures that we obtain perfected and first-priority security interests. The minimum
margin for lending against shares is prescribed by the RBI.

Loan Assignments
We purchase loan portfolios, generally in India, from other banks, financial institutions and financial companies, which are similar to asset-backed
securities, except that such loans are not represented by PTCs. Some of these loans also qualify toward our directed lending obligations.

Kisan Gold Card (Agri Loans)

Under the Kisan Gold Card, funds are extended to farmers in accordance with the RBI’s Kisan Credit Card scheme in order to assist the farmers in
financing certain farming expenses, such as the production of crops, post-harvest requirements, repair and maintenance and the domestic consumption
needs of the farmers. In addition, we assist farmers in investment towards land development, minor irrigation, and the purchase of farm equipment. We also
extend credit facilities for development of allied agriculture sectors such as dairy, poultry, and fishery.

We offer both cash credit and term loan facilities under this product. The amount of cash credit funding is based on the farmer’s cropping pattern, the
amount of land underutilization, and scale of finance, while for term loans it is based on the unit cost of assets.

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We aim to cater to any other financial needs of rural customers through appropriate banking products.

Loans Against Gold Jewelry

We offer loans against gold jewelry to customers, including women and farmers. Such loans are typically offered with monthly interest payments and
a bullet maturity. These loans also have margin requirements in the event of a decrease in the value of the gold collateral due to fluctuations in market prices
of gold. Loans against gold jewelry are also extended to existing auto loan, personal loan customers in order to cater to their additional funding needs.

We also offer loans which primarily include loans/overdrafts against time deposits, health care equipment financing loans, tractor loans and loans to
self-help groups.

Retail Deposit Products

Retail deposits provide us with a low-cost, stable funding base and have been a key focus area for us since commencing operations. Retail deposits
represented approximately 77.4 percent of our total deposits as of March 31, 2019. The following chart shows the book value of our retail deposits by our
various deposit products:

At March 31, 2019

Value (in millions) % of total
Savings Rs.2,444,577.6 US$ 35,346.7 34.2%
Current 820,039.8 11,857.1 11.5%
Time 3,875,933.4 56,043.0 54.3%
Total Rs.7,140,550.8 US$103,246.8 100.0%

Our individual retail account holders have access to the benefits of a wide range of direct banking services, including debit and ATM cards, access to
internet, phone banking and mobile banking services, access to our growing branch and ATM network, access to our other distribution channels and
eligibility for utility bill payments and other services. Our retail deposit products include the following:
• Savings accounts, which are demand deposits, primarily for individuals and trusts.
• Current accounts, which are non-interest bearing checking accounts designed primarily for business customers. Customers have a choice of
regular and premium product offerings with different minimum average quarterly account balance requirements.
• Time deposits, which pay a fixed return over a predetermined time period.

We also offer special value-added accounts, which offer our customers added value and convenience. These include a time deposit account that
allows for automatic transfers from a time deposit account to a savings account, as well as a time deposit account with an automatic overdraft facility.

Other Retail Services and Products

Debit Cards
We had approximately 24.3 million and 26.9 million debit cards outstanding as of March 31, 2018 and March 31, 2019, respectively. The cards can be
used at ATMs and point-of-sales terminals in India and in other countries across the world.

Individual Depositary Accounts

We provide depositary accounts to individual retail customers for holding debt and equity instruments. Securities traded on the Indian exchanges are
generally not held through a broker’s account or in a street name. Instead, an individual has his or her own account with a depositary participant. Depositary
participants, including us, provide services through the major depositaries established by the two major stock exchanges. Depositary participants record
ownership details and effectuate transfers in book-entry form on behalf of the buyers and sellers of securities. We provide a complete package of services,
including account opening, registration of transfers and other transactions and information reporting.

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Mutual Fund Sales

We offer units of most large and reputable mutual fund houses in India to our retail customers. While until October 2018 we earned front-end
commissions for new sales, we continue to earn trail fees in subsequent years. We distribute mutual fund products primarily through our banking outlets and
our private banking relationship managers.

Insurance
We have arrangements with HDFC Life Insurance Company Limited, HDFC ERGO General Insurance Company Limited and Aditya Birla Health
Insurance Company Limited to distribute their life insurance, general insurance and health insurance products, respectively, to our customers, and have
recently entered into two new similar distribution arrangements in each of these segments. We earn commissions on new premiums collected as well as trail
income in subsequent years in certain cases while the policy is still in force. Our commission income for fiscal 2019 included fees of Rs. 14,733.7 million in
respect of life insurance business, of which Rs. 5,548.2 million was for displaying publicity materials at the Bank’s banking outlets/ATMs, Rs.
2,054.6 million of fees in respect of general insurance business and Rs. 172.2 million of fees in respect of stand-alone health insurance business.

Investment Advice
We offer our customers a broad range of investment recommendations, across mutual funds, shares. We provide our high net worth customers with a
personal relationship manager who provides them services based on their individual investment needs.

Bill Payment Services

We offer our customers bill payment services for leading utility companies, including electricity, telephone and internet service providers. Customers
can also review and access their bill details through our direct banking channels. We believe this is a valuable convenience that we offer our customers. We
offer these services to customers through multiple distribution channels—ATMs, telephone banking, internet banking and mobile banking.

Corporate Salary Accounts

We offer Corporate Salary Accounts, which allow employers to make salary payments to a group of employees with a single transfer. We then
transfer the funds into the employees’ individual accounts and offer them preferred services, such as lower minimum balance requirements. As of March 31,
2019, these accounts constituted 29.3 percent of our savings deposits by value.

Non-Resident Indian Services

Non-resident Indians are an important target market segment for us given their relative affluence and strong ties with family members in India. Our
non-resident deposits amounted to Rs. 817.9 billion as of March 31, 2018 and Rs 1,023.3 billion as of March 31, 2019.

Retail Foreign Exchange

We purchase foreign currency from and sell foreign currency to retail customers in the form of cash, traveler’s checks, demand drafts, foreign
exchange cards and other remittances. We also carry out foreign currency check collections.

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Customers and Marketing

We identify and target distinct market customer segments for our retail services. We market our products through our banking outlets, online through
our website, through telemarketing and through our dedicated sales team for niche market segments. We also use third-party agents and direct sales
associates to market certain products and to identify prospective customers.

Additionally, we obtain new customers through joint marketing efforts with our wholesale banking department, such as our Corporate Salary Account
package and we cross-sell several retail products to our customers. We also market our auto loan and two-wheeler loan products through joint efforts with
relevant manufacturers and distributors.

We have programs that target other particular segments of the retail market. For example, our private and preferred banking programs provide
customized financial planning to high net worth individuals. Private banking customers receive a personal investment advisor who serves as their single-
point contact and compiles personalized portfolio tracking products, including mutual fund and equity tracking statements. Our private banking program
also offers equity investment advisory products. While not as service-intensive as our private banking program, preferred banking offers similar services to
a slightly broader target segment. Top revenue-generating customers of our preferred banking program are channeled into our private banking program. As
of March 31, 2019, 34 percent of our retail deposit customers contributed 74 percent of our retail deposits.

We also have a strong commitment to financial inclusion programs to extend banking services to underserved populations. Our Sustainable
Livelihood Initiative targets lower income individuals to finance their economic activity, and also provide skill training, credit counseling and market
linkages for better price discovery. Through this initiative we reach out to the un-banked and under-banked segments of the Indian population.

Wholesale Banking
Overview
We provide our corporate and institutional clients a wide array of commercial banking products and transactional services.

Our principal commercial banking products include a range of financing products, documentary credits (primarily letters of credit) and bank
guarantees, foreign exchange and derivative products, investment banking services and corporate deposit products. Our financing products include loans,
overdrafts, bill discounting and credit substitutes, such as commercial paper, debentures, preference shares and other funded products. Our foreign exchange
and derivatives products assist corporations in managing their currency and interest rate exposures.

For our commercial banking products, our customers include companies that are part of private sector business houses, public sector enterprises and
multinational corporations, as well as small and mid-sized businesses. Our customers also include suppliers and distributors of corporations to whom we
provide credit facilities and with whom we thereby establish relationships as part of a supply chain initiative for both our commercial banking products and
transactional services. We aim to provide our corporate customers with high-quality customized service. We have relationship managers who focus on
particular clients and who work with teams that specialize in providing specific products and services, such as cash management and treasury advisory
services.

Loans to small and medium enterprises, which are generally in the nature of loans for commercial vehicles, construction equipment and business
purposes, are included as part of our retail banking business. We group these loans as part of our retail banking business considering, among other things,
the customer profile, the nature of the product, the differing risks and returns, our organization structure and our internal business reporting mechanism.
Such grouping ensures optimum utilization and deployment of specialized resources in our retail banking business.

Our principal transactional services include cash management services, capital markets transactional services and correspondent banking services. We
provide physical and electronic payment and collection mechanisms to a range of corporations, financial institutions and Government entities. Our capital
markets transactional services include custodial services for mutual funds and clearing bank services for the major Indian stock exchanges and commodity
exchanges. In addition, we provide correspondent banking services, including cash management services and funds transfers, to foreign banks and
co-operative banks.

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Commercial Banking Products

Commercial Loan Products and Credit Substitutes
Our principal financing products are working capital facilities and term loans. Working capital facilities primarily consist of cash credit facilities and
bill discounting. Cash credit facilities are revolving credits provided to our customers that are secured by working capital such as inventory and accounts
receivable. Bill discounting consists of short-term loans which are secured by bills of exchange that have been accepted by our customers or drawn on
another bank. In many cases, we provide a package of working capital financing that may consist of loans and a cash credit facility as well as documentary
credits or bank guarantees. Term loans consist of short-term loans and medium-term loans which are typically loans of up to five years in duration. Over
90 percent of our loans are denominated in rupees with the balance being denominated in various foreign currencies, principally the US dollar.

We also purchase credit substitutes, which are typically comprised of commercial paper and debentures issued by the same customers with whom we
have a lending relationship in our wholesale banking business. Investment decisions for credit substitute securities are subject to the same credit approval
processes as loans, and we bear the same customer risk as we do for loans extended to these customers. Additionally, the yield and maturity terms are
generally directly negotiated by us with the issuer.

The following table sets forth the asset allocation of our commercial loans and financing products by asset type. For accounting purposes, we classify
commercial paper and debentures as credit substitutes (which in turn are classified as investments).

As of March 31,
2017 2018 2019 2019
(in millions)
Gross commercial loans Rs.1,939,948.4 Rs.2,162,814.4 Rs.2,873,561.0 US$41,549.6
Credit substitutes:
Commercial paper Rs. 248,269.7 Rs. 34,248.6 Rs. 25,734.3 US$ 372.2
Non-convertible debentures 171,270.9 289,782.9 247,152.5 3,573.6
Total credit substitutes Rs. 419,540.6 Rs. 324,031.5 Rs. 272,886.8 US$ 3,945.8
Gross commercial loans plus credit substitutes Rs.2,359,489.0 Rs.2,486,845.9 Rs.3,146,447.8 US$45,495.4

While we generally lend on a cash-flow basis, we also require collateral from a large number of our borrowers. As of March 31, 2019, approximately
67.0 percent of the aggregate principal amount of our gross wholesale loans was secured by collateral (Rs. 949.3 billion in aggregate principal amount of
loans were unsecured). However, collateral securing each individual loan may not be adequate in relation to the value of the loan. All borrowers must meet
our internal credit assessment procedures, regardless of whether the loan is secured. See “ —Risk Management—Credit Risk—Wholesale Credit Risk”.

We price our loans based on a combination of our own cost of funds, market rates, tenor of the loan, our rating of the customer and the overall
revenues from the customer. An individual loan is priced on a fixed or floating rate and the pricing is based on a margin that depends on, among other
factors, the credit assessment of the borrower. We are required to follow the marginal cost of funds based on lending rate system while pricing our loans.
For a detailed discussion of these requirements, see “Supervision and Regulation—Regulations Relating to Making Loans”.

The RBI requires banks to lend to specific sectors of the economy. For a detailed discussion of these requirements, see “Supervision and Regulation
—Directed Lending”.

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Bill Collection, Documentary Credits and Bank Guarantees

We provide bill collection, documentary credit facilities and bank guarantees for our corporate customers. Documentary credits and bank guarantees
are typically provided on a revolving basis. The following table sets forth, for the periods indicated, the value of transactions processed with respect to our
bill collection, documentary credits and bank guarantees:

As of March 31,
2017 2018 2019 2019
(in millions)
Bill collection Rs.4,003,047.4 Rs.4,345,163.8 Rs.5,197,456.2 US$ 75,151.2
Documentary credits 1,172,946.1 1,262,413.0 1,787,206.9 25,841.6
Bank guarantees 226,961.8 289,821.8 313,578.3 4,534.1
Total Rs.5,402,955.3 Rs.5,897,398.6 Rs.7,298,241.4 US$105,526.9

Bill collection: We provide bill collection services for our corporate clients in which we collect bills on behalf of a corporate client from the bank of
our client’s customer. We do not advance funds to our client until receipt of payment.

Documentary credits: We issue documentary credit facilities on behalf of our customers for trade financing, sourcing of raw materials and capital
equipment purchases.

Bank guarantees: We provide bank guarantees on behalf of our customers to guarantee their payment or performance obligations. A part of our
guarantee portfolio consists of margin guarantees to brokers issued in favor of stock exchanges.

Foreign Exchange and Derivatives

Our foreign exchange and derivative product offering to our customers covers a range of products, including foreign exchange and interest rate
transactions and hedging solutions, such as spot and forward foreign exchange contracts, forward rate agreements, currency swaps, currency options and
interest rate derivatives. These transactions enable our customers to transfer, modify or reduce their foreign exchange and interest rate risks. A specified
group of relationship managers from our treasury front office works on such product offerings in line with the customers’ risk and other requirements and
within the framework of the Suitability and Appropriateness policy of the Bank.

Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments
to exchange cash flows by way of interest in one currency against another currency and exchange of principal amounts at maturity based on predetermined
rates. Rupee interest rate swaps are commitments to exchange fixed and floating rate cash flows in rupees. A forward rate agreement gives the buyer the
ability to determine the underlying rate of interest for a specified period commencing on a specified future date (the settlement date) when the settlement
amount is determined being the difference between the contracted rate and the market rate on the settlement date. Currency options give the buyer the right,
but not an obligation, to buy or sell specified amounts of currency at agreed rates of exchange on or before a specified future date.

We enter into forward exchange contracts, currency options, forward rate agreements, currency swaps and rupee interest rate swaps in the inter-bank
market, broadly to support our customer requirements and to a limited extent, for our own account. The following table presents the aggregate notional
principal amounts of our outstanding foreign exchange and derivative contracts with our customers as of March 31, 2017, 2018 and 2019, together with the
fair values on each reporting date.

As of March 31,
2017 2018 2019 2019
Notional Fair Value Notional Fair Value Notional Fair Value Notional Fair Value
(In millions)
Interest rate swaps and forward
rate agreements Rs.704,131.9 Rs. (34.6) Rs.1,106,546.0 Rs. 1,847.5 Rs.1,073,100.9 Rs. 698.2 US$15,516.2 US$10.1
Forward exchange contracts,
currency swaps, currency
options Rs.738,919.5 Rs.(312.9) Rs. 864,449.8 Rs.(5,261.4) Rs. 884,608.8 Rs.2,416.0 US$12,790.8 US$34.9

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Investment Banking
Our Investment Banking Group offers services in the debt and equity capital markets. The group has arranged project financing for clients across
various sectors including telecom, toll roads, healthcare, energy, real estate and cement. The group advised on aggregate issuances of over Rs. 550 billion
worth of rupee denominated corporate bonds across public sector undertakings, financial institutions and our corporate clients during fiscal 2019, becoming
the third largest corporate bond arranger in the market for fiscal 2019. In the equity capital markets business, the group concluded initial public offerings of
an asset management company, a housing finance company and buyback of a steam turbine manufacturing company during fiscal 2019. In the advisory
business, we advise clients in the infrastructure, financial services, industrials and healthcare sectors.

Wholesale Deposit Products

As of March 31, 2019, we had wholesale deposits aggregating to Rs. 2,084.5 billion, which represented 22.6 percent of our total deposits. We offer
both non-interest bearing current accounts and time deposits. We are allowed to vary the interest rates on our wholesale deposits based on the size of the
deposit (for deposits greater than Rs. 20.0 million), provided the rates booked on a day are the same for all customers of that deposit size for that maturity.
See “Selected Statistical Information” for further information about our total deposits.

Transactional Services
Cash Management Services
We believe that the Indian market is one of the most promising Cash Management Services (“CMS”) markets. However, it is also marked by some
distinctive characteristics and challenges such as a vast geography, a large number of small business-intensive towns, a large unorganized sector in various
business supply chains, and infrastructural limitations for accessibility to many parts of the country. Over the years, such challenges have made it a daunting
task for CMS providers in the country to uncover the business potential and extend suitable services and product solutions to the business community.

We have been providing CMS to our customers from diverse industry segments. We believe that we have been consistently aligning our product and
services strategy to meet our customers’ needs. This, we believe, has helped us to keep ahead of competitors and retain a satisfied customer base that is
growing by the year.

We offer traditional and new age electronic banking products and experience an increasing demand for electronic banking services. While we believe
that we have been one of the leading banks in the traditional CMS market, we believe that we have also been able to forge a similar position in the new age
CMS market, i.e., electronic cash management, and we also believe that we have aligned our product offering with changing and dynamic customer needs.
As of the date hereof, over 80 percent of our transactions are done on the electronic platform.

Today we believe that we are a leading service provider of electronic banking products with a large share of business across customer segments. We
have, thus, been able to reduce our transaction costs while maintaining our fees and float levels.

Clearing Bank Services for Stock and Commodity Exchanges

We serve as a clearing bank for the equity cash and derivatives segment, currency derivatives, commodity derivatives and other segments for major
stock and commodity exchanges in India, including the National Stock Exchange of India Limited, the BSE Limited, Multi Commodity Exchange and
National Commodity and Derivatives Exchange Limited. As a clearing bank, we provide the exchanges or their clearing corporations with a means for
collecting payments due to them from their members or custodians and a means of making payments to these institutions. In addition to benefiting from the
cash float, which reduces our overall cost of funds, we also earn interest, and generate transaction fees, and commissions by offering various fund based and
non-fund based facilities and transactional services to the exchanges and their members.

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Custodial Services
We provide custody services to domestic and foreign investors that include domestic mutual funds, portfolio managers, insurance companies,
alternative investment funds and foreign portfolio investors (“FPIs”). These services include safekeeping of securities and collection of dividend and
interest payments on securities, fund accounting services and derivatives clearing services. We are registered as a designated depository participant with the
local securities regulator i.e., the Securities and Exchange Board of India, and are permitted to grant registration to FPIs.

Correspondent Banking Services

We act as a correspondent bank for co-operative banks, foreign banks and select private banks. We provide cash management services, funds transfer
services, such as letters of credit, foreign exchange transactions and foreign check collection. We earn revenue on a fee-for-service basis and benefit from
the cash float, which reduces our overall cost of funds.

We are well-positioned to offer this service to co-operative banks, foreign banks and select private banks in light of the structure of the Indian banking
industry and our position within it. Co-operative banks are generally restricted to a particular state and foreign banks/some private banks have limited
branch networks. The customers of these banks frequently need services in other areas of the country where their own banks cannot provide. Because of our
technology platforms, our geographical reach and the electronic connectivity of our branch network, we can provide these banks with the ability to provide
such services to their customers.

Tax Collections
We have been appointed by the Government of India to collect direct taxes. In fiscals 2018 and 2019 we collected Rs. 2,613 billion and
Rs. 3,156 billion, respectively, of direct taxes for the Government of India. We are also appointed to collect Goods and Services Tax (“GST”) and excise
duties in India. In fiscals 2018 and 2019 we collected Rs. 1,874 billion and Rs. 2,076 billion, respectively, of such indirect taxes for the Government of
India and relevant state Governments. We earn a fee from the Government of India for each tax collection and benefit from the cash float. We hope to
expand our range of transactional services by providing more services to Government entities.

Treasury
Overview
Our treasury group manages our balance sheet, including our maintenance of reserve requirements and the management of market and liquidity risk.
Our treasury group also provides advice and execution services to our corporate and institutional customers with respect to their foreign exchange and
derivatives transactions. In addition, our treasury group seeks to optimize profits from our proprietary trading, which is principally concentrated on Indian
Government securities.

Our client-based activities consist primarily of advising corporate and institutional customers and transacting spot and forward foreign exchange
contracts and derivatives. Our primary customers are multinational corporations, large and medium-sized domestic corporations, financial institutions,
banks and public sector undertakings. We also advise and enter into foreign exchange contracts with some small companies and NRIs.

The following describes our activities in the foreign exchange and derivatives markets, domestic money markets and debt securities desk and equities
market. See also “—Risk Management” for a discussion of our management of market risk.

Foreign Exchange and Derivatives

We enter into forward exchange contracts, currency options, forward rate agreements, currency swaps and rupee interest rate swaps with inter-bank
participants. To support our clients’ activities, we are an active participant in the Indian inter-bank foreign exchange market. We also trade, to a more
limited extent, for our own account. We also engage in proprietary trades of rupee-based interest rate swaps and use them as part of our asset liability
management. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are
commitments to exchange cash flows by way of interest in one currency against another currency and exchange of principal amounts at maturity based on
predetermined rates. Rupee interest rate swaps are commitments to exchange fixed and floating rate cash flows in rupees. A forward rate agreement gives
the buyer the ability to determine the underlying rate of interest for a specified period commencing on a specified future date (the settlement date) when the
settlement amount is determined being the difference between the contracted rate and the market rate on the settlement date. Currency options give the
buyer the right, but not an obligation, to buy or sell specified amounts of currency at agreed rates of exchange on or before a specified future date.

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The following table presents the aggregate notional principal amounts of our outstanding foreign exchange and derivative inter-bank contracts as of
March 31, 2017, 2018 and 2019 together with the fair values on each reporting date:

As of March 31,
2017 2018 2019 2019
Notional Fair Value Notional Fair Value Notional Fair Value Notional Fair Value
(In millions)
Interest rate swaps and forward rate
agreements Rs.1,687,375.9 Rs.411.3 Rs.1,980,227.2 Rs.(750.2) Rs.2,086,766.2 Rs.131.0 US$30,173.0 US$ 1.9
Forward exchange contracts, currency
swaps, currency options Rs.4,291,942.7 Rs.(5,907.2) Rs.3,876,140.5 Rs.(1,124.3) Rs.5,156,391.8 Rs.829.9 US$74,557.4 US$12.0

Domestic Money Market and Debt Securities Desk

Our principal activity in the domestic money market and debt securities market is to ensure that we comply with our reserve requirements including
Liquidity Coverage Ratio (“LCR”). These consist of a cash reserve ratio, which we meet by maintaining balances with the RBI, and a statutory liquidity
ratio, which we meet by purchasing Indian Government securities. See also “Supervision and Regulation—Legal Reserve Requirements”. Our local
currency desk primarily trades Indian Government securities for our own account. We also participate in the inter-bank call deposit market and engage in
limited trading of other debt instruments. The LCR requirement presently stands at 100%. The Bank meets the LCR requirement by maintaining an
adequate level of high quality liquid assets mainly government securities above its mandated statutory requirements. See also “Supervision and Regulation
—Regulations on Asset Liability Management”

Equities Market
We trade a limited amount of equities of Indian companies for our own account. As of March 31, 2019, we had an internal aggregate approved limit
of Rs. 300 million for market purchases and Rs. 100 million (defined as a sub-limit of the aggregate approved limit) for primary purchases of equity
investments for proprietary trading and Rs. 100 million (defined as a sub-limit of the aggregate approved limit) for investment in index funds or equity
mutual funds for proprietary trading. Our exposure as of March 31, 2019 was within these limits. We set limits on the amount invested in any individual
company as well as stop-loss limits.

Distribution Channels
We deliver our products and services through a variety of distribution channels, including banking outlets, direct sales agents, ATMs, telephone,
mobile and internet banking.

Banking Outlets
As of March 31, 2019, we had a total of 5,103 banking outlets covering 2,748 cities and towns, which includes 132 banking outlets that were manned
by our business correspondents. All of our banking outlets are electronically linked so that our customers can access their accounts from any banking outlet
regardless of where they have their accounts.

Almost all of our banking outlets focus exclusively on providing retail services and products, though a few also provide wholesale banking services.
The range of products and services available at each banking outlet depends in part on the size and location of the banking outlet. We offer various banking
services to our customers through our arrangements with correspondent banks and exchange houses in overseas locations.

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As part of its banking outlet licensing conditions, the RBI requires that at least 25 percent of all incremental banking outlets added during the year be
located in unbanked rural areas that do not have a brick and mortar structure of any scheduled commercial bank for customer-based banking transactions.
As per the guidelines of the RBI, a rural area is defined as a center with a population up to 9,999. As of March 31, 2019, 669 of our banking outlets are in
unbanked areas. With the objective of liberalizing and rationalizing the branch licensing process, the RBI granted general permission, effective from
October 2013, to banks like us to open banking outlets in Tier 1 to Tier 6 centers, subject to a requirement to report to the RBI and other prescribed
conditions. In May 2017, the RBI further liberalized the branch authorization policy. See “Supervision and Regulation—Regulations Relating to the
Opening of Banking Outlets”.

We have overseas banking outlets in Bahrain, Hong Kong and the Dubai International Finance Centre (“DIFC”). These banking outlets cater to the
needs of our overseas clients both corporate and individual. They offer banking, trade finance and wealth management (primarily for non-resident
individual customers). In addition, we have representative offices in Abu Dhabi, Dubai and Nairobi. We also have a presence in the International Financial
Service Centre Banking Unit at the Gujarat International Finance Tec-City (“GIFT City”) in Gandhinagar, Gujarat. This unit operates in a similar fashion to
our foreign banking outlets and customers are able to purchase products such as trade credits and foreign currency term loans, including external
commercial borrowings and derivatives to hedge loans. Our unit in GIFT City is regulated and supervised by the RBI.

Automated Teller Machines

As of March 31, 2019, we had 13,160 ATMs, of which 6,036 were located at our banking outlets or extension counters and 7,124 were located
off-site, including at large residential developments or on major roads in metropolitan areas.

Customers can use our ATMs for a variety of functions, including withdrawing cash, monitoring bank balances and paying utility bills. Customers
can access their accounts from any of the HDFC Bank ATMs or non-HDFC Bank ATMs. ATM cards issued by American Express or other banks in the
Rupay, Visa, MasterCard, Maestro, JCB, UPI, Cirrus, Citrus or Discover Financial Services networks can be used in our ATMs and we receive a fee for
each transaction. Our debit cards issued with respective networks (Rupay/VISA/MasterCard) can be used on ATMs of other banks for which we pay the
acquiring bank a fee.

Telephone Banking
We provide telephone banking services to our customers in 2,748 cities and towns as at March 31, 2019. Customers can access their accounts over the
phone through our 24-hour automated voice response system and can order check-books, conduct balance inquiries and order stop payments of checks. In
select cities, customers can also engage in financial transactions (such as opening deposits and undertaking bill payments). In certain cities, we also have
staff available during select hours to assist customers who want to speak directly to one of our telephone bankers.

Mobile Banking
Our mobile banking platform offers “anytime, anywhere” banking services to our customers through mobile devices, such as smartphones, tablets,
and even basic feature phones. Using our mobile banking platform, customers can perform financial and non-financial transactions such as balance
enquiries, requests for account statements, funds transfers, both within and outside the Bank, undertake bill payments, apply for a loan and manage
investments. We also offer our customers the ability to pay insurance premiums and manage their demat account. The mobile banking application is
available for Android and iOS.

Internet Banking
Our internet banking platform seeks to be a virtual manifestation of a physical branch. Our customers can perform over 200 transactions, across any
browser or device such as laptops, desktops, mobile phones and tablets. Customers can access their account information, track transactions, request check
books or request stop check payments. They can also perform financial transactions like transferring funds between accounts and to third parties who
maintain accounts with us or other banks, paying bills and requesting demand drafts. Customers can also book and manage term deposits, demat accounts,
cards, loans and insurance. The internet banking platform also facilitates the purchase and sale of mutual funds and, the application of credit cards.

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Risk Management
Risk is inherent in our business and sound risk management is critical to our success. The major types of risk we face are credit risk, market risk,
liquidity risk, interest rate risk and operational risk. We have developed and implemented comprehensive policies and procedures to identify, assess,
monitor and manage our risk.

Credit Risk
Credit risk is the possibility of loss due to the failure of any counterparty to abide by the terms and conditions of any financial contract with us. We
identify and manage this risk through (a) our target defined markets, (b) our credit approval process, (c) our post-disbursement monitoring and (d) our
remedial management procedures. We have a comprehensive centralized risk management function, independent of our operations and business units.

The asset quality of the Indian banking industry continued to be under severe pressure during fiscal 2017 and the majority of fiscal 2018 due to
macroeconomic factors as well as sector-specific issues. The banking industry on an overall basis saw a sharp increase in stress and non-performing assets.
We did not witness any significant deterioration in overall asset quality.

Retail Credit Risk

We offer a range of retail products, such as auto loans, personal loans, credit cards, business banking, two-wheeler loans, loans against securities and
commercial vehicle loans. Our retail credit policy and approval process are designed to accommodate the high volumes of relatively homogeneous, small-
value transactions in retail loans. There are product programs for each of these products, which define the target markets, credit philosophy and process,
detailed underwriting criteria for evaluating individual credits, exception reporting systems and individual loan exposure caps.

For individual customers to be eligible for a loan, minimum credit parameters, so defined, are to be met for each product. Any deviations need to be
approved at the designated levels. The product parameters have been selected based on the perceived risk characteristics specific to the product. The
quantitative parameters considered include income, residence stability and the nature of the employment/business, while the qualitative parameters include
accessibility and profile. Our credit policies and product programs are based on a statistical analysis of our own experience and industry data, in
combination with the judgement of our senior officers.

The retail credit risk team manages credit risk in retail assets and has the following constituents:
(a) Central Risk Unit: The central risk unit drives credit risk management centrally for retail assets. It is responsible for formulating policies and
evaluates proposals for the launch of new products and new geographies. The central risk unit also conducts periodic reviews that cover our portfolio
management information system, credit management information system and post-approval reviews. The product risk teams conduct detailed studies
on portfolio performance in each customer segment.
(b) Retail Underwriting: This unit is primarily responsible for approving individual credit exposures and ensuring portfolio composition and
quality. The unit ensures implementation of all policies and procedures, as applicable.
(c) Risk Intelligence and Control: This unit is responsible for the sampling of documents to ensure prospective borrowers with fraudulent intent
are prevented from availing themselves of loans. The unit initiates market reference checks to avoid a recurrence of fraud and financial losses.
(d) Retail Collections Unit: This unit is responsible for the remedial management of problem exposures in retail assets. The collections unit uses
specific strategies for various segments and products for remedial management.

We mine data on our borrower account behavior as well as static data regularly to monitor the portfolio performance of each product segment
regularly, and use these as inputs in revising our product programs, target market definitions and credit assessment criteria to meet our twin objectives of
combining volume growth and maintenance of asset quality.

Our vehicle loans, loan against gold and loan against securities are generally secured on the asset financed. Retail business banking loans are secured
with current assets as well as immovable property and fixed assets in some cases. However, collateral securing each individual loan may not be adequate in
relation to the value of the loan. If the customer fails to pay, we would, as applicable, liquidate collateral and/or set off accounts. In most cases, we obtain
direct debit instructions or post-dated checks from the customer. It is a criminal offense in India to issue a bad check.

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Wholesale Credit Risk

The wholesale credit risk team, within the Risk Management Group, is primarily responsible for implementing the credit risk strategy approved by
the Board, developing procedures and systems for managing credit risk, carrying out an independent assessment of credit risk, approving individual credit
exposures and ensuring portfolio composition and quality. In addition to the credit approval process, there is also an independent framework for the review
and approval of credit ratings.

For our wholesale banking products, we target leading private businesses and public sector enterprises in the country, subsidiaries of multinational
corporations and leaders in the small and medium enterprises (“SME”) segment. We also have product-specific offerings for entities engaged in the capital
markets and commodities businesses.

We consider the credit risk of our counterparties comprehensively. Accordingly, our credit policies and procedures apply not only to credit exposures
but also to credit substitutes and contingent exposures. Our Credit Policies & Procedure Manual and Credit Program (“Credit Policies”) are central in
controlling credit risk in various activities and products. These articulate our credit risk strategy and thereby the approach for credit origination, approval
and maintenance. The Credit Policies generally address such areas as target markets, portfolio mix, prudential exposure ceilings, concentration limits, price
and non-price terms, structure of limits, approval authorities, exception reporting system, prudential accounting and provisioning norms. Each credit is
evaluated by the business units against the credit standards prescribed in our Credit Policies. They are then subjected to a greater degree of risk analysis
based on product type and customer profile by credit risk specialists in the Risk Management Group.

We have in place a process of risk-grading each borrower according to its financial health and the performance of its business and each borrower is
graded on a model scale of 1 to 10, which is further mapped to a master scale of HDB 1 to HDB 10 (HDB 1 indicating the highest and HDB 10 the lowest
rating; we further classify HDB 1 to HDB 7 as “investment grade” ratings, while HDB 8 or lower are classified as “non-investment grade” ratings). We
have specific models applicable to each significant segment of wholesale credit (e.g., large corporate, SME-manufacturing, SME-services and NBFCs). For
a standalone borrower rating, the model encapsulates risks associated with the industry, business, management and financials into quantitative and
qualitative factors. The risk rating assigned to the borrower is a function of aggregated weighted scores after an assessment under each of the above four
risk categories.

Based on what we believe is an adequately comprehensive risk assessment, credit exposure limits are set on individual counterparties. These limits
take into account the overall potential exposure on the counterparty, be it on balance sheet or off balance sheet, across the banking book and the trading
book, including foreign exchange and derivatives exposures. These limits are reviewed in detail at annual or more frequent intervals.

We do not extend credit on the judgment of one officer alone. Our credit approval process is based on a three-tier approval system that combines
credit approval authorities and discretionary powers. The required three approvals are provided by credit approvers who derive their authority from their
credit skills and experience. The level for approval of a credit varies depending upon the grading of the borrower, the quantum of facilities required and
whether we have been dealing with the customer by providing credit facilities in the past. As such, initial approvals would typically require a higher level of
approval for a borrower with the same grading and for sanctioning the same facility.

To ensure adequate diversification of risk, concentration limits have been set up in terms of:

a) Borrower/business group: Exposure to a borrower/business group is subject to the general ceilings established by the RBI from time to time, or
specific approval by the RBI. The exposure-ceiling limit for a single borrower is 15 percent of a bank’s capital funds. This limit may be exceeded by an
additional 5 percent (i.e., up to 20 percent), provided the additional credit exposure is on account of lending to infrastructure projects. The exposure-ceiling
limit in the case of a borrower group is 40 percent of a bank’s capital funds. This limit may be exceeded by an additional 10 percent (i.e., up to 50 percent),
provided the additional credit exposure is on account of extensions of credit for infrastructure projects. In addition to the above exposure limit, a bank may,
in exceptional circumstances and with the approval of its board, consider increasing its exposure to a borrower up to an additional 5 percent of its capital
funds. The exposure (both lending and investment, including off balance sheet exposures) of the bank to a single NBFC, NBFC-Asset Financing Company
(“AFC”), NBFC-Infrastructure Finance Company (“IFC”), or NBFC (having gold loans to the extent of 50 percent or more of its total financial assets)
should not exceed 10 percent, 15 percent, 15 percent and 7.5 percent, respectively, of the bank’s capital funds as per its last audited balance sheet. The bank
may, however, assume exposure on a single NBFC, NBFC-AFC, NBFC-IFC, or NBFC (having gold loans to the extent of 50 percent or more of its total
financial assets) up to 15 percent, 20 percent, 20 percent and 12.5 percent respectively, of the bank’s capital funds as per its last audited balance sheet,
provided the exposure in excess of 10 percent, 15 percent, 15 percent and 7.5 percent (referred to above) is on account of funds on-lent by the NBFC,
NBFC-AFC, NBFC-IFC, or (having gold loans to the extent of 50 percent or more of its total financial assets) the infrastructure sector. In June 2019, the
RBI issued revised Large Exposure Framework, which aims to align the exposure norms for Indian Banks with the Basel Committee on Banking
Supervision (“BCBS”) standards. These guidelines have come into effect from April 1, 2019, except for certain provisions which will become effective
from April 1, 2020. See “Supervision and Regulation—Large Exposures Framework”.

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b) Industry: Exposure to any one industry cannot exceed 12 percent of aggregate exposures. For this purpose, advances and investments as well as
non-fund based exposures are aggregated. Retail advances are exempt from this exposure limit. Further, exposure to banks and state-sponsored financial
institutions is capped at a level of 25 percent.

c) Risk grading: In addition to the exposure ceilings described above, we have set quantitative ceilings on aggregate funded plus non-funded exposure
(excluding retail assets) specific to each risk rating category at the portfolio level.

While we primarily make our credit decisions on a cash-flow basis, we also obtain security for a significant portion of credit facilities extended by us
as a second potential remedy. This can take the form of a floating charge on the movable assets of the borrower or a (first or residual) charge on the fixed
assets and properties owned by the borrower. We may also require guarantees and letters of support from the flagship companies of the group in cases where
facilities are granted based on our comfort level or relationship with the parent company.

We have a process for regular monitoring of all accounts at several levels. These include periodic calls on the customer, plant visits, credit reviews
and monitoring of secondary data. These are designed to detect any early warning signals of deterioration in credit quality so that we can take timely
corrective action.

The RBI restricts us from lending to companies with which we have any directors in common. In addition, the RBI requires that we direct a portion of
our lending to certain specified sectors (“Priority Sector Lending” or “PSL”). See also “Supervision and Regulation—Directed Lending”.

Market Risk
Market risk refers to the potential loss on account of adverse changes in market variables or other risk factors which affect the value of financial
instruments that we hold. The financial instruments may include investment in money market instruments, debt securities (such as gilts, bonds and PTCs),
equities, foreign exchange products and derivative instruments (both linear and non-linear products).

The market variables which affect the valuation of these instruments typically include interest rates, credit spreads, equity prices, commodity prices,
exchange rates and implied volatilities. Any change in the relevant market risk variable has an adverse or favorable impact on the valuation depending on
the direction of the change and the type of position held (long or short). While the positions are taken with a view to earn from the upside potential, there is
always a possibility of downside risk. Thus, the Bank must constantly review the positions to ensure that the risk on account of such positions is within our
overall risk appetite. The Bank’s overall risk appetite for various risks is defined by the Internal Capital Adequacy Assessment Process (“ICAAP”) review
committee, by stipulating specific risk appetite for each category of risk. The risk appetite for trading risk is set through a pre-approved treasury limits
package as well as through specific trading limits and trigger levels for a few product programs. In addition, the Bank’s risk limits are guided by the
Interbank Counterparty Exposure limit while the Bank’s Asset Liability Management (“ALM”) limits prescribe the appetite for liquidity risk and interest
rate risk in the banking book (“IRRBB”). The process for monitoring and reviewing risk exposure is outlined in the various risk policies.

The market risk department formulates procedures for portfolio risk valuation, assesses market risk factors impacting the trading portfolio and
recommends various market risk controls relating to limits and trigger levels for the treasury (including investment banking portfolios for primary
undertaking and distribution) and non-treasury positions. The treasury mid-office is responsible for monitoring and reporting market risks arising from the
trading desks and also carries out rate scan of the deals. The market data cell in the mid-office maintains market data, performs market data scan to check
market data sanctity and verifies the rates submitted by the treasury front office for polling various benchmarks.

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Our Board of Directors (the “Board”) has delegated the responsibility for market risk management of the balance sheet on an ongoing basis to the
Asset Liability Committee (“ALCO”). This committee, which is chaired by the Managing Director and includes the heads of the business groups, generally
meets fortnightly. The ALCO reviews the product pricing for deposits and assets as well as the maturity profile and mix of our assets and liabilities. It
articulates the interest rate view and decides on future business strategy with respect to interest rates. It reviews and sets funding policy, also reviews
developments in the markets and the economy and their impact on the balance sheet and business along with review of the trading levels. Moreover, it
reviews the utilization of liquidity and interest rate risk limits set by the Board and decides on the inter-segment transfer pricing policy.

The financial control department is responsible for collecting data, preparing regulatory and analytical reports and monitoring whether the interest
rate and other policies and limits established by the ALCO are being observed. The Balance Sheet Management desk, which is part of the treasury group,
also assists in implementing our asset liability strategy and in providing information to the ALCO.

Policies and Procedures—Trading and Asset Liability Management Risks

The following sections briefly describe our policies and procedures with respect to trading risk (price risk) and ALM risk (interest rate risk in the
banking book and liquidity risk).

I. Trading Risk
Trading risk is the risk arising from price fluctuations due to market factors, such as changes in interest rates, equity prices, commodity prices,
exchange rates and the variations in their implied volatilities in respect of the trading portfolio held by the Bank. The trading portfolio includes holdings in
the held-for-trading and available-for-sale portfolios, as per RBI guidelines and consists of positions in bonds, securities, currencies, interest rate swaps and
options, cross-currency interest rate swaps and currency options.

The trading risk is managed by putting in place a sound process for price validation and by setting various limits or trigger levels, such as value at risk
limits, stop-loss trigger levels, price value per basis point (PV01) limits, option Greek limits, position limits, namely, intraday and net overnight forex open
position as well as gap limits (aggregate and individual gap limits). Additional controls such as order size and outstanding exposure limits are prescribed,
wherever applicable, based on case-by-case review. Moreover, measures such as investment limits and deal size thresholds are prescribed as part of the
investment policy for managing outstanding investment or trading positions.

The treasury limits are reviewed by the market risk department and presented to the Risk Policy and Monitoring Committee (“RPMC”) for its
recommendation to the Board for approval. The limits are reviewed annually or more frequently (depending on market conditions) or upon introduction of
new products.

The market risk policy sets the framework for market risk monitoring. The risk on account of semi-liquid or illiquid positions in trading is recognized
in the non-standard product policy as part of the market risk policy. The non-standard product policy stipulates requirements for case-specific evaluation of
risk exposure in respect of non-standard products (that is, products which are not part of the standard product list decided by treasury and the market risk
department). Additionally, limits have been assigned to restrict the aggregate exposure in non-standard positions. Further, the stress testing policy prescribes
the stress scenarios that are applied on the outstanding trading positions to recognize and analyze the impact of the stress conditions on the trading portfolio.
Stress tests are based on historical scenarios as well as on sensitivity factors, such as an assessment based on hypothetical/judgmental scenarios.

Validation of valuation models applied for validation of trading products are conducted by the treasury analytics team, which are then reviewed by the
market risk department and governed by the Board approved independent model validation policy. The Valuation Committee is apprised of the model
validation results in its quarterly meetings. Moreover, the market data of major interest rate curves, captured in the valuation systems, are compared against
an independent market data source on a month-end basis for accurate valuation in accordance with the independent model validation policy of the Bank.

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II. Asset Liability Management

The ALM risk management process consists of management of liquidity risk and IRRBB. Liquidity risk is the risk that the Bank may not be able to
fund increases in assets or meet obligations as they fall due without incurring unacceptable losses. IRRBB refers to the potential adverse financial impact on
the Bank’s banking book from changes in interest rates. The banking book is comprised of assets and liabilities that are incurred to create a steady income
flow or to fulfill statutory obligations. Such assets and liabilities are generally held to maturity. The Bank carries various assets, liabilities and off-balance
sheet items across markets, maturities and benchmarks, exposing it to risks from changing interest rates. The Bank’s objective is to maintain liquidity risk
and IRRBB within certain tolerance limits. The ALM limits are reviewed by the market risk department and presented to the RPMC for its recommendation
to the Board for approval. The limits are reviewed at least annually.

Structure and Organization

The ALM risk management process of the Bank operates in the following hierarchical manner:

Board of Directors
The Board has the overall responsibility for management of liquidity and interest rate risk. The Board decides the strategy, policies and procedures of
the Bank to manage liquidity and interest rate risk, including setting the Bank’s risk tolerance and limits.

Risk Policy and Monitoring Committee of the Board

The RPMC is a Board-level committee, which supports the Board by supervising the implementation of risk strategy. It guides the development of
policies, procedures and systems for managing risk. It ensures that these are adequate and appropriate to changing business conditions, the structure and
needs of the Bank and the risk appetite of the Bank. It ensures that frameworks are established for assessing and managing liquidity and interest rate risks
faced by the Bank. The RPMC meets at least once every quarter. The RPMC’s role includes, inter alia:
1 to review and recommend for Board approval the liquidity and interest rate risk policies or any other amendment thereto; and
2. to ratify excess utilization of Board-approved limits except where delegated to ALCO.

Asset Liability Committee (“ALCO”)

The ALCO is the decision-making unit responsible for ensuring adherence to the risk tolerance and limits set by the Board, as well as implementing
the Bank’s liquidity and interest rate risk management strategy in line with the Bank’s risk management objectives and risk tolerance. The ALCO is also
responsible for balance sheet planning from a risk-return perspective, including strategic management of interest rate and liquidity risks. The role of the
ALCO includes the following:
• product pricing for deposits and customer advances;
• deciding the desired maturity profile and mix of incremental assets and liabilities;
• articulating the Bank’s interest rate view and deciding on its future business strategy;
• reviewing and articulating funding strategy;
• ensuring adherence to the liquidity and interest rate risk limits set by the Board;
• determining the structure, responsibilities and controls for managing liquidity and interest rate risk;
• ensuring operational independence of risk management function;
• reviewing stress test results; and

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• deciding on the transfer pricing policy of the Bank.

ALM Support Group

The ALM support group is responsible for analyzing, monitoring, and reporting the relevant risk profiles to senior management and relevant
committees. The ALM support group comprises the balance sheet management desk (Treasury), market risk department, treasury mid-office and financial
control.

Risk Measurement Systems and Reporting

Liquidity Risk
Liquidity risk is measured using the flow approach and the stock approach. The flow approach involves comprehensive tracking of cash flow
mismatches, whereas the stock approach involves the measurement of critical ratios in respect of liquidity risk.

For measuring and managing net funding requirements, the use of a maturity ladder and calculation of cumulative surplus or deficit of funds at
selected maturity dates has been adopted as a standard tool. The time buckets for classification of assets and liabilities for the purposes of this statement is
as per the RBI’s prescribed guidelines.

Stock approach involves measurement of certain critical ratios in respect of liquidity risk. Based on the RBI guidelines, a set of liquidity ratios under
stock approach is monitored on a periodic basis.

In addition, the Bank is required to maintain Liquidity Coverage Ratio. The regulatory minimum requirement for the ratio is 100 percent starting from
January 1, 2019 (which was 90 percent between January 2018 to December 2018).

Analysis of liquidity risk also involves examining how funding requirements are likely to be affected under crisis scenarios. The Bank has a Board-
approved liquidity stress framework guided by regulatory instructions. The Bank has an extensive intraday liquidity risk management framework for
monitoring intraday positions during the day.

Interest Rate Risk in Banking Book

Interest rate risk is the risk where changes in market interest rates affect a bank’s financial position. Changes in interest rates impact a bank’s earnings
through changes in its net interest income (“NII”). Changes in interest rates also impact a bank’s market value of equity (“MVE”) or net worth through
changes in the economic value of its rate-sensitive assets, liabilities and off-balance sheet positions. The interest rate risk, when viewed from these two
perspectives, is known as “earnings perspective” and “economic value perspective”, respectively.

The Bank measures and controls IRRBB using both the earnings perspective (measured using the traditional gap analysis method) and the economic
value perspective (measured using the duration gap analysis method) as detailed below. These methods involve grouping of rate-sensitive assets (“RSA”)
and rate-sensitive liabilities (“RSL”), including off-balance sheet items, based on the maturity or repricing dates. The Bank shall classify an asset or liability
as rate sensitive or non-rate sensitive in line with the RBI guidelines, as amended, from time to time.

A significant portion of non-maturing deposits are grouped in the “over 1 year to 3 year” category. Non-rate sensitive liabilities and assets primarily
comprise capital, reserves and surplus, other liabilities, cash and balances with the RBI, current account balances with banks, fixed assets and other assets.

The banking book is represented by excluding from the total book the trading book (i.e., on and off-balance sheet items) and the commensurate
liabilities in the form of short-term borrowings and deposits.
• Earnings Perspective (impact on net interest income)

The traditional gap analysis (“TGA”) method measures the level of a bank’s exposure to interest rate risk in terms of sensitivity of its NII to interest
rate movements over a one-year horizon. It involves bucketing of all RSA, RSL and off-balance sheet items maturing or getting repriced in the next year
and computing changes of income under 200 basis points upward and downward parallel rate shocks over a year’s horizon.

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• Economic Value Perspective (impact on market value of equity)

While earnings perspective calculates the short-term impact of the rate changes, the Economic Value Perspective calculates the long-term impact on
the MVE of the Bank through changes in the economic value of its rate-sensitive assets, liabilities and off-balance sheet positions. Economic value
perspective is measured using the duration gap analysis method (“DGA”). DGA involves computing of the modified duration gap between RSA and RSL
and thereby the Duration of Equity (“DoE”). The DoE is a measure of sensitivity of MVE to changes in interest rates. Using the DoE, the Bank estimates
the change in MVE under 200 basis points upward and downward parallel rate shocks.

Operational Risk Management

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The way
operational risk is managed has the potential to positively or negatively impact the Bank’s customers, financial performance and reputation. The Bank has
put in place Board-approved governance and organizational structure with clearly defined roles and responsibilities to mitigate operational risk arising from
the Bank’s business and operations.

Organizational Structure for Managing Operational Risk

The RPMC reviews and recommends to the Board the overall operational risk management framework for the Bank. The Operational Risk
Management Committee, which is headed by the Chief Risk Officer and consists of senior management functionaries (including the Group Head—Audit,
Group Head—Operations and senior representatives from all the relevant business verticals), oversees the implementation of the operational risk
management framework approved by the Board. An independent operational risk management department is responsible for implementation of the
framework across the Bank. The operational risk management policy stipulates the roles and responsibilities of employees, business units, operations and
support functions in managing operational risk.

Risk Measurement and Monitoring

While the day-to-day operational risk management lies with business lines, operations and support functions, the operational risk management
department is responsible for designing tools and techniques for identification and monitoring of operational risk across the Bank consistent with the
framework approved by the Board. The unit also ensures operational risk exposures are captured and reported to the relevant levels of the management for
initiating suitable risk mitigations in order to contain operational risk exposures within acceptable levels. The internal audit department evaluates the
adequacy and effectiveness of the internal control systems and procedures, in the risk management functions as well as across the various business and
support units of the Bank.

The Bank applies a number of risk management techniques to effectively manage operational risks. These techniques include:
• A bottom-up risk assessment process, risk control self-assessment, to identify high-risk areas so that the Bank can initiate timely remedial
measures. This assessment is conducted annually to update senior management of the risk level across the Bank.
• The employment of key risk indicators to alert the Bank of impending problems in a timely manner. The key risk indicators allow monitoring
of the control environment as well as operational risk exposures and also trigger risk mitigation actions.
• Subjecting material operational risk losses to a detailed risk analysis in order to identify areas of risk exposure and gaps in controls based on
which appropriate risk mitigating actions are initiated.
• Conducting a scenario analysis annually to derive information on hypothetical severe loss situations. The Bank uses this information for risk
management purposes, as well as for analyzing the possible financial impact.

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• Periodic reporting of risk assessment and monitoring to senior management to ensure timely actions are initiated at all levels.

Capital Requirement
Currently, the Bank follows the basic indicator approach for computing operational risk capital. The Bank has devised an operational risk
measurement system compliant with an advanced measurement approach (“AMA”) for estimating operational risk capital for the standalone bank. The RBI
has granted “in-principle” approval to the Bank to migrate to AMA for calculating operational risk capital charge in parallel to the basic indicator approach
followed currently.

Competition
We face intense competition in all our principal lines of business. Our primary competitors are large public sector banks, other private sector banks,
foreign banks and in some product areas, NBFCs. In addition, new entrants into the financial services industry, including companies in the financial
technology sector, may further intensify competition in the business environments, especially in the digital business environment, in which we operate. In
February 2013, the RBI issued guidelines for the entry of new banks in the private sector, including eligibility criteria, capital requirements, shareholding
structure, business plan and corporate governance practices. Pursuant to these guidelines, in fiscal 2016 IDFC Bank and Bandhan Bank commenced
banking operations.

In November 2014, the RBI released guidelines for the licensing of payments banks and small finance banks in the private sector. Since
promulgation, such banks have been established and operational pursuant to these guidelines, which have increased competition in the markets in which we
operate.

In August 2016, the RBI released final guidelines for “on-tap” Licensing of Universal Banks in the Private Sector. The guidelines aim at moving from
the current “stop and go” licensing approach (wherein the RBI notifies the licensing window during which a private entity may apply for a banking license)
to a continuous or “on-tap” licensing regime. Among other things, the new guidelines specify conditions for the eligibility of promoters, corporate structure
and foreign shareholdings. One of the key features of the new guidelines is that, unlike the February 2013 guidelines (mentioned above), the new guidelines
make the “Non-Operative Financial Holding Company” structure non-mandatory in the case of promoters being individuals or standalone
promoting/converting entities which do not have other group entities. See “Supervision and Regulation—Entry of new banks in the private sector”.

Retail Banking
In retail banking, our principal competitors are large public sector banks, which have much larger deposit bases and branch networks than ours, other
new generation private sector banks, old generation private sector banks, foreign banks and NBFCs in the case of retail loan products. The retail deposit
share of foreign banks is small in comparison to the public sector banks. However, some foreign banks have a significant presence among NRIs and also
compete for non-branch-based products.

In mutual fund sales and other investment-related products, our principal competitors are brokers, foreign banks and other new private sector banks.

Wholesale Banking
Our principal competitors in wholesale banking are public and new private sector banks as well as foreign banks. The large public sector banks have
traditionally been market leaders in commercial lending. Foreign banks have focused primarily on serving the needs of multinational companies and Indian
corporations with cross-border financing requirements, including trade and transactional services and foreign exchange products and derivatives, while the
large public sector banks have extensive branch networks and large local currency funding capabilities.

Treasury
In our treasury advisory services for corporate clients, we compete principally with foreign banks in foreign exchange and derivatives, as well as
public sector banks and new generation private sector banks in the foreign exchange and money markets business.

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Employees
The number of our employees was 98,061 as of March 31, 2019. Most of our employees are located in India. We consider our relationship with our
employees to be positive. Further to our acquisition of CBoP in 2008, several employees of CBoP continue to be part of a labor union. These employees
represent less than 1 percent of our total employee strength.

Our compensation structure has fixed as well as variable pay components. Our variable pay plans are comprised of periodic performance linked pay
(PLP), annual performance linked bonus and employee stock option plans.

In addition to basic compensation, employees are eligible to participate in our provident fund and other employee benefit plans. The provident fund,
to which both we and our employees contribute, is a savings scheme required by Government regulation under which the fund is required to pay to
employees a minimum annual return, which is 8.65 percent at present. If such return is not generated internally by the fund, we are liable for the difference.
Our provident fund has generated sufficient funds internally to meet the annual return requirement since inception of the fund. We have also set up a
superannuation fund to which we contribute defined amounts. We also contribute specified amounts to a pension fund in respect of certain of our former-
CBoP employees. In addition, we contribute specified amounts to a gratuity fund set up pursuant to Indian statutory requirements.

We focus on training our employees on a continuous basis. We have training centers, where we conduct regular training programs for our employees.
Management and executive trainees generally undergo up to eight-week training modules covering most aspects of banking. We offer courses conducted by
both internal and external faculty. In addition to ongoing on-the-job training, we provide employees courses in specific areas or specialized operations on an
as-needed basis.

Properties
Our registered office and corporate headquarters is located at HDFC Bank House, Senapati Bapat Marg, Lower Parel, Mumbai 400 013, India. In
addition to the corporate office, we have administrative offices in most of the metros and some other major cities in India.

As of March 31, 2019, we had a network consisting of 5,103 banking outlets and 13,160 ATMs, including 7,124 at non-branch locations. These
facilities are located throughout India with the exception of three banking outlets which are located in Bahrain, Hong Kong and Dubai. We also have
representative offices in the United Arab Emirates and Kenya. We set up and commenced business in an International Financial Service Centre Banking
Unit at the Gujarat International Finance Tec-City in June 2017. This branch is treated as an overseas branch.

Intellectual Property
We utilize a number of different forms of intellectual property in our business including our HDFC Bank brand and the names of the various products
we provide to our customers. We believe that we currently own, have licensed or otherwise possess the rights to use all intellectual property and other
proprietary rights, including all trademarks, domain names, copyrights, patents and trade secrets used in our business.

Legal Proceedings
We are involved in a number of legal proceedings in the ordinary course of our business, including certain spurious or vexatious proceedings with
significant financial claims present on the face of the complaint but that we believe lack any merit based on the historical dismissals of similar claims.
Accordingly, we believe there are currently no legal proceedings, which, if adversely determined, might materially affect our financial condition or the
results of our operations.

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RISK FACTORS

You should carefully consider the following risk factors in evaluating us and our business.

Risks Relating to Our Business

A slowdown in economic growth in India would cause us to experience slower growth in our asset portfolio and deterioration in the quality of our
assets.
Our performance and the quality and growth of our assets are dependent on the health of the overall Indian economy, which is, in turn, linked to
global economic conditions. Economic growth in India is affected by inflation, interest rates, external trade, capital flows and, given India’s dependence on
imported oil for its energy needs, oil prices. The Indian economy in general and the agricultural sector in particular are also impacted by weather conditions,
including the level and timing of monsoon rainfall. Investments by the corporate sector in India are affected by Government policies and decisions,
including those relating to awards of licenses, access to land and natural resources and the protection of the environment. A slowdown in global growth and
volatility in global financial markets could contribute to a weakness in the Indian financial and economic environment.

The global economy is expected to slow down in 2019, with the IMF predicting global growth to decrease to 3.3 percent in 2019 from 3.6 percent in
2018, with growth in developed economies such as the United States slowing to 2.3 percent in 2019 from 2.9 percent in 2018. Growth in emerging markets
and developing economies is also expected to soften marginally to 4.4 percent in 2019 compared to 4.5 percent in 2018. The IMF expects China to see a
moderation in its growth rate (from 6.6 percent in 2018 to 6.3 percent in 2019) and were this slowdown to be sharp, it could also have some negative
implications for emerging markets, including India, through trade channels and impact on investors’ sentiment.

While we believe it is unlikely that, amid a slowdown in economic growth in the United States, the United States Federal Reserve will further
increase interest rates in 2019, and that interest rates may even be reduced again, there is no reliable indication regarding the timing of such a reduction.
This uncertainty could undermine financial stability in an emerging market economy like India, especially if coupled with the start of tightening monetary
policies elsewhere in advanced economies, for instance in the U.K. Such economic conditions in addition to current and expected political uncertainties in
the Eurozone, in particular, the negotiations between U.K. and EU policymakers following the U.K.’s vote to leave the European Union, could result in
heightened volatility and risk on sentiment which could adversely affect our business, including our ability to grow our asset portfolio, the quality of our
assets and our ability to implement our strategy. India also faces major challenges in sustaining its growth rate, including the need for substantial
infrastructure development and improved access to healthcare and education.

In fiscal 2015, the Government introduced a new methodology for estimating the gross domestic product (“GDP”) and also began publishing sector
data on a gross value added basis. According to the new methodology, India’s GDP grew by 7.4 percent in fiscal 2015, 8.0 percent in fiscal 2016,
8.2 percent in fiscal 2017, 7.2 percent in fiscal 2018 and 6.8 percent in fiscal 2019. In addition, the RBI entered into a monetary policy framework
agreement with the Government of India, affirming that the RBI would pursue a consumer inflation target of 4 percent with an upper tolerance level of
6 percent and lower limit of 2 percent for the five years ending March 31, 2021. Actual inflation readings so far have remained within the RBI’s target zone
—consumer price inflation declined to 3.4 percent in fiscal 2019 from 3.6 percent in fiscal 2018, 4.5 percent in fiscal 2017 and 4.9 percent in fiscal 2016.

However, a return to a tighter interest rate regime on account of inflation, other market factors such as higher oil prices or changes in the conduct of
monetary policy may put a constraint on economic growth in India. Any prolonged slowdown may adversely impact credit growth and the level of
non-performing and restructured loans. If the Indian economy deteriorates, our asset base may erode, which would result in a material decrease in our net
profits and total assets.

If we are unable to manage our rapid growth, our operations may suffer and our performance may decline.
We have grown rapidly over the last three fiscals. Our loan growth rate has been significantly higher than that of the Indian banking industry. Our
loans in the three-year period ended March 31, 2018 grew at a compounded annual growth rate of 23.2 percent. The compounded annual growth for the
Indian Banking Industry for the same period was approximately 5.8 percent. The growth in our business is partly attributable to the expansion of our branch
network. As at March 31, 2014, we had a branch network comprised of 3,403 banking outlets, which increased to 5,103 banking outlets as at March 31,
2019. Section 23 of the Banking Regulation Act, 1949 (the “Banking Regulation Act”) provides that banks must obtain the prior approval of the RBI to
open new banking outlets. Further, the RBI may cancel a license for violations of the conditions under which it was granted. The RBI issues instructions
and guidelines to banks on branch authorization from time to time. With the objective of liberalizing the branch licensing process, the RBI, effective
October 2013, granted general permission to banks, including us, to open banking outlets in Tier 1 to Tier 6 centers, subject to a requirement to report to the
RBI and certain other conditions. In May 2017, the RBI has further liberalized the branch authorization policy. See “Supervision and Regulation—
Regulations Relating to the Opening of Banking Outlets”. If we are unable to perform in a manner satisfactory to the RBI in any of these centers or comply
with the specified conditions, it may have an impact on the number of banking outlets we will be able to open, which would, in turn, have an impact on our
future growth.

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In addition, our rapid growth has placed, and if it continues, will place, significant demands on our operational, credit, financial and other internal risk
controls including:
• recruiting, training and retaining sufficient skilled personnel;
• upgrading, expanding and securing our technology platform;
• developing and improving our products and delivery channels;
• preserving our asset quality as our geographical presence increases and customer profile changes;
• complying with regulatory requirements such as the Know Your Customer (“KYC”) norms; and
• maintaining high levels of customer satisfaction.

If our internal risk controls are insufficient to sustain our rapid rate of growth, if we fail to properly manage our rapid growth, or if we fail to perform
adequately in any of the above areas, our operations would suffer and our business, results of operations and financial position would be materially
adversely affected.

Our business is particularly vulnerable to interest rate risk and volatility in interest rates could adversely affect our net interest margin, the value of our
fixed income portfolio, our treasury income and our financial performance.
Our results of operations depend to a great extent on our net interest revenue. During fiscal 2019, net interest revenue after allowances for credit
losses represented 73.1 percent of our net revenue. Changes in market interest rates affect the interest rates charged on our interest-earning assets differently
from the interest rates paid on our interest-bearing liabilities and also affect the value of our investments. An increase in interest rates could result in an
increase in interest expense relative to interest revenue if we are not able to increase the rates charged on our loans, which would lead to a reduction in our
net interest revenue and net interest margin. Further, an increase in interest rates could negatively affect demand for our loans and credit substitutes and we
may not be able to achieve our volume growth, which could adversely affect our net income. A decrease in interest rates could result in a decrease in
interest revenue relative to interest expense due to the repricing of our loans at a pace faster than the rates we pay on our interest-bearing liabilities. The
quantum of the changes in interest rates for our assets and liabilities may also be different.

The combination of global disinflationary pressures, better supply management of food items, including prudent food stock management, appropriate
monetary policy action and subdued global commodity prices have helped to keep domestic inflation in check in recent years, thereby causing consumer
price index inflation to decrease from levels of 8.25 percent in March 2014 to 5.25 percent in March 2015 to 4.83 percent in March 2016 to 3.89 percent in
March 2017. For March 2018, although inflation was higher it remained within the RBI’s target zone at 4.3 percent. In March 2019, headline inflation
decreased to 2.9 percent. The softening in inflation led the RBI to cut the policy repo rate by 75 basis points in fiscal 2016, by another 50 basis points in
fiscal 2017 and by 25 basis points in fiscal 2018. However, in fiscal 2019 the repo rate was raised by 25 basis points in light of the high oil prices and other
potential inflationary risks. In addition, in order to make the liquidity situation more comfortable, the RBI also conducted net open market operations
(“OMOs”) with purchases of Rs. 1.1 trillion in fiscal 2017 and sales of Rs. 0.9 trillion in fiscal 2018. In fiscal 2019, the RBI again conducted an OMO with
the purchase of Rs 3.0 trillion. In response to the declining policy rates, easing liquidity conditions, the benchmark bond yield eased during most of fiscals
2016, 2017 and 2018. However, yields in fiscal 2019 increased on concerns of risks to inflation and fiscal concerns at both the center and state level. The
RBI increased the policy repo rate to 6.25 percent in June 2018 and to 6.5 percent in August 2018. However, since February 2019, the RBI cut the repo rate
by 75 basis points to 5.75 percent, as of June 6, 2019.

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On a going-forward basis, there are certain trends that could change interest rates or lead to increase in interest rate volatility. If the fiscal deficit for
each state and for the center is much higher than the fiscal deficit target, or if crude oil prices remain relatively high, or if headline inflation rises rapidly, the
RBI could change its stance and raise rates in the current fiscal. A further narrowing of liquidity surplus (domestically or globally) could lead to further rise
in bond yields in fiscal 2020. These trends could be more intense than we expect, or interest rates and bond yields could change as a result of a number of
different factors which we cannot predict at this time. Any volatility in interest rates could thereby adversely affect our net interest margin, the value of our
fixed income portfolio, our treasury income and our financial performance.

On July 27, 2017, the U.K. Financial Conduct Authority announced that it will no longer compel or persuade banks to contribute to LIBOR rate
setting after 2021. It remains unclear whether LIBOR will continue to be viewed as an acceptable market benchmark rate, what rate or rates may develop as
accepted alternatives to LIBOR, or what the effect of any such changes may have on the markets for LIBOR-based financial instruments.

Uncertainty as to the nature of potential changes, alternative reference rates or other reforms may adversely affect market liquidity, the pricing of
LIBOR-based instruments and the availability and cost of associated hedging instruments and borrowings. Payments under contracts referencing new
reference rates may differ from those referencing LIBOR. The transition may change our risk profile and require changes to risk and pricing models,
valuation tools, product design and hedging strategies. Although we are unable to quantify the ultimate impact of the transition from LIBOR given the
uncertain nature of the potential changes, we continue to monitor the developments related to the future of LIBOR in line with any regulatory or quasi-
regulatory guidance. Moreover, the failure to manage any potential transition from LIBOR to a different reference rate, or rates, may adversely affect our
reputation, business and financial condition, and results of operations. See “Selected Statistical Information—Analysis of Changes in Interest Revenue and
Interest Expense” and “Selected Statistical Information—Yields, Spreads and Margins”.

If the level of non-performing loans in our portfolio increases, we will be required to increase our provisions, which would negatively impact our
income.
Our gross non-performing loans and non-performing credit substitutes represented 1.50 percent of our gross customer assets as of March 31, 2019.
Our non-performing loans and non-performing credit substitutes net of specific provisions represented 0.59 percent of our net customer assets portfolio as
of March 31, 2019. Our management of credit risk involves having appropriate credit policies, underwriting standards, approval processes, loan portfolio
monitoring, remedial management and the overall architecture for managing credit risk. In the case of our secured loan portfolio, the frequency of the
valuation of collateral may vary based on the nature of the loan and the type of collateral. A decline in the value of collateral or an inappropriate collateral
valuation increases the risk in the secured loan portfolio because of inadequate coverage of collateral. As of March 31, 2019, 69.0 percent of our loan book
was partially or fully secured by collateral. Our risk mitigation and risk monitoring techniques may not be accurate or appropriately implemented and we
may not be able to anticipate future economic and financial events, leading to an increase in our non-performing loans. See “Note 9—Loans” in our
consolidated financial statements.

Provisions are created by a charge to expense, and represent our estimate for loan losses and risks inherent in the credit portfolio. See “Selected
Statistical Information—Non-performing Loans”. The determination of an appropriate level of loan losses and provisions required inherently involves a
degree of subjectivity and requires that we make estimates of current credit risks and future trends, all of which may undergo material changes. Our
provisions may not be adequate to cover any further increase in the amount of non-performing loans or any further deterioration in our non-performing loan
portfolio. Further, as part of its supervision process, the RBI assesses our asset classification and provisioning requirements. In the event that additional
provisioning is required by the RBI, our net income, balance sheet and capital adequacy could be affected, which could have a material adverse impact on
our business, future financial performance, shareholders’ equity and the price of our equity shares. As part of an RBI supervisory process, the RBI has
identified certain modifications in respect of our asset classification for three of our accounts. One of these accounts has since been upgraded to “standard”
account classification. Any imposition in the future of even more stringent regulatory requirements or any directives by the RBI on the methodology of
classification of non-performing loans may result in a significant increase in our non-performing loans in the future. If we are not able to continue to reduce
our existing non-performing loans, or if there is a significant increase in the amount of new loans classified as non-performing loans as a result of a change
in the methodology of non-performing loans classification mandated by the RBI or otherwise, our asset quality may deteriorate, our provisioning for
probable losses may increase and our business, future financial performance and the trading price of our equity shares and ADSs could be adversely
affected. In addition, we are a relatively young bank operating in a growing economy and we have yet not experienced a significant and prolonged
downturn in the economy.

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A number of factors outside of our control affect our ability to control and reduce non-performing loans. These factors include developments in the
Indian economy, domestic or global turmoil, global competition, changes in interest rates and exchange rates and changes in regulations, including with
respect to regulations requiring us to lend to certain sectors identified by the RBI or the Government of India. For example, recently, certain state
governments have announced waiver of amounts due under agricultural loans provided by the banks. Demands for similar waivers have been raised by
farmers in other states as well. Also, in the past, the central and state governments have waived farm loans from time to time to provide some respite to the
debt-ridden agricultural sector. It is unclear when the governments will compensate the banks for the waivers so announced. Further, such frequent farm
waivers may create expectations of future waivers among the farmers and lead to a delay in or cessation of loan repayments, which may lead to a rise in our
non-performing loans. These factors, coupled with other factors such as volatility in commodity markets, declining business and consumer confidence and
decreases in business and consumer spending, could impact the operations of our customers and in turn impact their ability to fulfill their obligations under
the loans granted to them by us. In addition, the expansion of our business may cause our non-performing loans to increase and the overall quality of our
loan portfolio to deteriorate. If our non-performing loans increase, we will be required to increase our provisions, which would result in our net income
being less than it otherwise would have been and would adversely affect our financial condition.

We have high concentrations of exposures to certain customers and sectors and if any of these exposures were to become non-performing, the quality of
our portfolio could be adversely affected and our ability to meet capital requirements could be jeopardized.
We calculate customer and industry exposure (i.e., the loss we could incur due to the downfall of a customer or an industry) in accordance with the
policies established by the RBI, computed based on our Indian GAAP financial statements. In the case of customer exposures, we aggregate the higher of
the outstanding balances of, or limits on, funded and non-funded exposures. As of March 31, 2019, our largest single customer exposure was
Rs. 152.6 billion, representing 10.6 percent of our capital funds, and our ten largest customer exposures totaled Rs. 918.7 billion, representing 63.9 percent
of our capital funds, in each case, computed in accordance with RBI guidelines. None of our 10 largest customer exposures were classified as
non-performing as of March 31, 2019. However, if any of our 10 largest customer exposures were to become non-performing, our net income would decline
and, due to the magnitude of the exposures, our ability to meet capital requirements could be jeopardized. See “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” for a detailed discussion on customer exposures. The RBI has released guidelines on “Large Exposures
Framework” in December 2016 and April 2019, and has further revised these guidelines by its circular dated June 2019. The guidelines govern exposure of
banks to a single counterparty and a group of connected counterparties. Under this framework, the sum of all the exposure values of a bank to a single
counterparty must not be higher than 20 percent of the bank’s available eligible capital base at all times and the sum of all the exposure values of a bank to a
group of connected counterparties (as defined in the guidelines) must not be higher than 25 percent of the bank’s available eligible capital base at all times.
The eligible capital base for this purpose is the effective amount of Tier I capital fulfilling the criteria mentioned in the Basel III guidelines issued by RBI as
per the last audited balance sheet. Most of the guidelines under this framework have been implemented with effect from April 1, 2019 and the extant
exposure norms applicable for credit exposure to individual borrowers or to groups of companies under the same management control will no longer be
applicable from that date.

Further, in June 2019, the RBI issued the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019. These
directions replace the framework for resolution of stressed assets (including the framework for revitalizing distressed assets, joint lenders forum mechanism,
strategic debt restructuring, and the scheme of sustainable structuring of stressed assets). In accordance with the circular, lenders must recognize developing
stress in loan accounts, immediately on default. Lenders must put in place policies approved by their board of directors for the resolution of stressed assets,
including the timelines for such resolution and they are expected to initiate implementation of the resolution plan even before default occurs. If a default
occurs, however, lenders have a review period of 30 days within which their resolution strategy is to be decided. The directions provide the timelines within
which the banks are required to implement the resolution plan, depending on the aggregate exposure of the borrower to the lender. For large accounts with
the aggregate exposure of the lenders being Rs. 20 billion or more, the RBI has specified that the resolution plan must be implemented within 180 days
from the end of the review period. If there is a delayed implementation of the resolution plan, lenders are required to make an additional provision of
20 percent of the total amount outstanding in addition to the provisions already held and provisions required to be made as per asset classification status of
the borrower’s account, subject to a total provisioning of 100 percent of the total amount outstanding. Lenders are required to make appropriate disclosures
of resolution plans implemented in their financial statements under “Notes on Accounts”.

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As of March 31, 2019, our largest industry concentrations, based on RBI guidelines, were as follows: NBFC/financial intermediaries (4.6 percent),
retail trade (4.3 percent), banks and financial institutions (4.3 percent) and automobile and auto ancillary (3.6 percent). In addition, as of March 31, 2019,
23.4 percent of our exposures were consumer loans. Industry-specific difficulties in these or other sectors may increase our level of non-performing
customer assets. If we experience a downturn in an industry in which we have concentrated exposure, our net income will likely decline significantly and
our financial condition may be materially adversely affected. As of March 31, 2019, our non-performing loans and credit substitutes as a percentage of total
non-performing customer assets in accordance with U.S. GAAP were concentrated in the following industries: Agriculture production-food (13.5 percent),
wholesale trade-non industrial (11.3 percent), food and beverage (6.1 percent) and retail trade (5.5 percent). In addition, 16.0 percent of our non-performing
customer assets were consumer loans.

We are required to undertake directed lending under RBI guidelines. Consequently, we may experience a higher level of non-performing loans in our
directed lending portfolio, which could adversely impact the quality of our loan portfolio, our business and the price of our equity shares and ADSs.
Further, in the case of any shortfall in complying with these requirements, we may be required to invest in deposits of Indian development banks as
directed by the RBI. These deposits yield low returns, thereby impacting our profitability.
The RBI prescribes guidelines on PSL in India. Under these guidelines, banks in India are required to lend 40.0 percent of their adjusted net bank
credit (“ANBC”) or the credit equivalent amount of off-balance sheet exposures (“CEOBE”), whichever is higher, as defined by the RBI and computed in
accordance with Indian GAAP figures, to certain eligible sectors categorized as priority sectors. The RBI has issued revised priority sector lending norms
applicable from fiscal 2016 onwards. The priority sector requirements must be met as of March 31 of each year with reference to the higher of the ANBC
and the CEOBE as of the corresponding date of the preceding year. From fiscal 2017, PSL achievement is required to be evaluated at the end of the fiscal
based on the average of priority sector target/sub-target achievement as at the end of each quarter of that fiscal. See “Supervision and Regulation—Directed
Lending”. Under the guidelines, scheduled commercial banks having any shortfall in lending to the priority sector shall be allocated amounts for
contribution to the Rural Infrastructure Development Fund (“RIDF”) established with the National Bank for Agriculture and Rural Development
(“NABARD”) and other Funds with NABARD, National Housing Bank (“NHB”), Small Industries Development Bank of India (“SIDBI”) or Micro Units
Development and Refinance Agency Limited (“MUDRA”), as decided by the RBI from time to time. The interest rates on such deposits may be lower than
the interest rates which the Bank would have obtained by investing these funds at its discretion.

Further, the RBI has directed banks to maintain direct lending to non-corporate farmers at the banking system’s average level for the last three years,
which would be notified by the RBI at the beginning of each year. The target for fiscal 2019 was 11.78 percent. Failure to maintain these lending levels to
non-corporate farmers will attract penalties. The RBI has also directed banks to continue to pursue the target of 13.5 percent of ANBC towards lending to
borrowers who constituted the direct agriculture lending category under the earlier guidelines. If we fail to adhere to the RBI’s policies and directions, we
may be subject to penalties, which may adversely affect our results of operations. Furthermore, the RBI can make changes to the types of loans that qualify
under the PSL scheme. Changes that reduce the types of loans that can qualify toward meeting our PSL targets could increase shortfalls under the overall
target or under certain sub-targets.

Our total PSL achievement for fiscal 2018 stood at 41.2 percent and our achievement of direct lending to non-corporate farmers stood at 14.6 percent
for fiscal 2018 as against a requirement of 40 percent and 11.78 percent, respectively. In fiscal 2018 agricultural loans made to small and marginal farmers
were 7.3 percent of ANBC, against the requirement of 8.0 percent with a shortfall of Rs. 96.0 billion. Advances to sections termed “weaker” by the RBI
were 10.2 percent against the requirement of 10.0 percent. Our achievement stood at 14.7 percent compared to a target of 13.5 percent of ANBC towards
lending to borrowers, who constituted the direct agriculture lending category under the earlier guidelines. We met our priority sector lending requirements
in fiscal 2019.

We may experience a higher level of non-performing assets in our directed lending portfolio, particularly in loans to the agricultural sector, small
enterprises and weaker sections, where we are less able to control the portfolio quality and where economic difficulties are likely to affect our borrowers
more severely. Our gross non-performing assets in the directed lending sector as a percentage to gross loans were 0.6 percent as of March 31, 2019
(0.6 percent as of March 31, 2018). Further expansion of the PSL scheme could result in an increase of non-performing assets due to our limited ability to
control the portfolio quality under the directed lending requirements.

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In addition to the PSL requirements, the RBI has encouraged banks in India to have a financial inclusion plan for expanding banking services to rural
and unbanked centers and to customers who currently do not have access to banking services. The expansion into these markets involves significant
investments and recurring costs. The profitability of these operations depends on our ability to generate business volumes in these centers and from these
customers. Future changes by the RBI in the directed lending norms may result in our inability to meet the PSL requirements as well as require us to
increase our lending to relatively more risky segments and may result in an increase in non-performing loans.

We may be unable to foreclose on collateral in a timely fashion or at all when borrowers default on their obligations to us, or the value of collateral may
decrease, any of which may result in failure to recover the expected value of collateral security, increased losses and a decline in net income.
Although we typically lend on a cash-flow basis, many of our loans are secured by collateral, which consists of liens on inventory, receivables and
other current assets, and in some cases, charges on fixed assets, such as property, movable assets (such as vehicles) and financial assets (such as marketable
securities). As of March 31, 2019, 69.0 percent of our loans were partially or fully secured by collateral. We may not be able to realize the full value of the
collateral, due to, among other things, stock market volatility, changes in economic policies of the Indian government, obstacles and delays in legal
proceedings, borrowers and guarantors not being traceable, our records of borrowers’ and guarantors, addresses being ambiguous or outdated and defects in
the perfection of collateral and fraudulent transfers by borrowers. In the event that a specialized regulatory agency gains jurisdiction over the borrower,
creditor actions can be further delayed. In addition, the value of collateral may be less than we expect or may decline. For example, the global economic
slowdown and other domestic factors had led to a downturn in real estate prices in India, which negatively impacted the value of our collateral.

The RBI has introduced various mechanisms, from time to time, to enable the lenders to timely resolve and initiate recovery with regards to stressed
assets. In February 2018, RBI released a revised framework for resolution of stressed assets providing a simplified generic framework for resolution of
stressed assets to harmonize the process of resolving stressed assets with the insolvency resolution process provided under the Insolvency and Bankruptcy
Code, 2016 and the rules prescribed thereunder (the “Insolvency and Bankruptcy Code”). See “Supervision and Regulations – Resolution of Stressed
Assets”.

The Insolvency and Bankruptcy Code was introduced in December 1, 2016, with the aim to provide for the efficient and timely resolution of
insolvency of all persons, including companies, partnership firms, limited liability partnerships and individuals. For further details, see “Supervision and
Regulation—The Insolvency and Bankruptcy Code, 2016”. However, given the limited experience of this framework, there can be no assurance that we will
be able to successfully implement the above-mentioned mechanisms and recover the amounts due to us in full. The inability to foreclose on such loans due
or otherwise liquidate our collateral may result in failure to recover the expected value of such collateral security, which may, in turn, give rise to increased
losses and a decline in net income.

Our unsecured loan portfolio is not supported by any collateral that could help ensure repayment of the loan, and in the event of non-payment by a
borrower of one of these loans, we may be unable to collect the unpaid balance.
We offer unsecured personal loans and credit cards to the retail customer segment, including salaried individuals and self-employed professionals. In
addition, we offer unsecured loans to small businesses and individual businessmen. Unsecured loans are a greater credit risk for us than our secured loan
portfolio because they may not be supported by realizable collateral that could help ensure an adequate source of repayment for the loan. Although we
normally obtain direct debit instructions or postdated checks from our customers for our unsecured loan products, we may be unable to collect in part or at
all in the event of non-payment by a borrower. Further, any expansion in our unsecured loan portfolio could require us to increase our provision for credit
losses, which would decrease our earnings. Also see “Business—Retail Banking—Retail Loans and Other Asset Products”.

Our and our customers’ exposure to fluctuations in foreign currency exchange rates could adversely affect our operating results.
Foreign currency exchange rates depend on various factors and can be volatile and difficult to predict. We enter into derivative contracts with our
borrowers to manage their foreign currency exchange risk exposure. Volatility in these exchange rates may lead to losses in derivative transactions for our
borrowers. On maturity or on premature termination of the derivative contracts and under certain circumstances, we may have to bear these losses. The use
of derivative financial instruments may also generate obligations for us to make additional cash payments, which would negatively affect our liquidity. Any
losses suffered by our customers as a result of fluctuations in foreign currency exchange rates may have a materially adverse effect on our business,
financial position or results of operations.

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We may not adequately assess, monitor and manage risks inherent in our business, and any failure to manage risks could adversely affect our business,
financial position or results of operations.
We are exposed to a variety of risks, including liquidity risk, interest rate risk, credit risk, operational risk (including fraud) and legal risk (including
actions taken by our own employees). The effectiveness of our risk management is limited by the quality and timeliness of available data and other factors
outside of our control.

For example, our hedging strategies and other risk management techniques may not be fully effective in mitigating risks in all market environments
or against all types of risk, including risks that are unidentified or unanticipated. Some methods of managing risks are based upon observed historical
market behavior. As a result, these methods may not predict future risk exposures, which could be greater than the historical measures indicated. Other risk
management methods depend upon an evaluation of information regarding markets, customers or other matters. This information may not in all cases be
accurate, complete, up-to-date or properly evaluated. As part of our ordinary decision-making process, we rely on various models for risk and data analysis.
These models are based on historical data and supplemented with managerial input and comments. There are no assurances that these models and the data
they analyze are accurate or adequate to guide our strategic and operational decisions and protect us from risks. Any deficiencies or inaccuracies in the
models or the data might have a material adverse effect on our business, financial condition or results of operation.

Additionally, management of operational, legal or regulatory risk requires, among other things, policies and procedures to ensure certain prohibited
actions are not taken and to properly record and verify a number of transactions and events. Although we believe we have established such policies and
procedures, they may not be fully effective and we cannot guarantee that our employees will follow these policies and procedures in all circumstances.
Unexpected shortcomings in these policies and procedures or a failure to follow them may have a materially adverse effect on our business, financial
position or results of operations.

Our future success will depend, in part, on our ability to respond to new technological advances and emerging banking and finance industry standards
and practices on a cost-effective and timely basis. The development and implementation of such technology entails significant technical and business risks.
There can be no assurance that we will successfully implement new technologies or adapt its transaction-processing systems to customer requirements or
emerging market standards. Failure to properly monitor, assess and manage risks, could lead to losses which may have an adverse effect on our future
business, financial position or results of operations.

In order to support and grow our business, we must maintain a minimum capital adequacy ratio, and a lack of access to the capital markets may
prevent us from maintaining an adequate ratio.
As of March 31, 2019, the RBI requires a minimum capital adequacy ratio of 11.025 percent (including capital conservation buffer) of our total risk-
weighted assets. We adopted the Basel III capital regulations effective April 1, 2013. Our capital adequacy ratio, calculated in accordance with Indian
GAAP, was 17.11 percent as of March 31, 2019. Our CET-I ratio was 14.93 percent as of March 31, 2019. Our ability to support and grow our business
would be limited by a declining capital adequacy ratio. While we anticipate accessing the capital markets to offset declines in our capital adequacy ratio, we
may be unable to access the markets at the appropriate time or the terms of any such financing may be unattractive due to various reasons attributable to
changes in the general environment, including political, legal and economic conditions.

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The Basel Committee on Banking Supervision issued a comprehensive reform package entitled “Basel III: A global regulatory framework for more
resilient banks and banking systems” in December 2010. In May 2012, the RBI released guidelines on implementation of the Basel III capital regulations in
India and in July 2015, the RBI issued a master circular consolidating all relevant guidelines on Basel III. The key items covered under these guidelines
include: (i) improving the quality, consistency and transparency of the capital base; (ii) enhancing risk coverage; (iii) grading the enhancement of the total
capital requirement; (iv) introducing a capital conservation buffer and countercyclical buffer; and (v) supplementing the risk-based capital requirement with
a leverage ratio. One of the major changes in the Basel III capital regulations is that the Tier I capital will predominantly consist of common equity of the
banks, which includes common shares, reserves and stock surplus. Innovative instruments and perpetual non-cumulative preference shares will not be
considered a part of CET-I capital. Basel III also defines criteria for instruments to be included in Tier II capital to improve their loss absorbency. The
guidelines also set out criteria for loss absorption through the conversion or write-off of all non-common equity regulatory capital instruments at the point
of non-viability. The point of non-viability is defined as a trigger event upon the occurrence of which non-common equity Tier I and Tier II instruments
issued by banks in India may be required to be, at the option of the RBI, written off or converted into common equity. Additionally, the guidelines have set
out criteria for loss absorption through the conversion or write-off of Additional Tier I capital instruments at a pre-specified trigger level. The RBI by its
circular dated January 2019 has deferred the implementation of the last tranche of the capital conservation buffer from March 31, 2019 to March 31, 2020.
Consequently, for Additional Tier I instruments issued before March 31, 2020, i.e., before the full implementation of Basel III there would be two
pre-specified triggers. A lower pre-specified trigger at CET-I of 5.5 percent of risk weighted assets (“RWAs”) will apply and remain effective before
March 31, 2020; from this date the trigger will be raised at CET-I of 6.125 percent of RWAs for all such instruments. Additional Tier I instruments issued on
or after March 31, 2020 will have only one pre-specified trigger at CET-I of 6.125 percent of RWAs. The capital requirement, including the capital
conservation buffer, will be 11.5 percent once these guidelines are fully phased in. Domestic systemically important banks (“D-SIB”) are required to
maintain additional CET-I capital requirement ranging from 0.2 percent to 0.8 percent of risk weighted assets. We have been classified a D-SIB and we are
required to maintain additional CET-I of 0.2 percent with effect from April 1, 2019. See “Supervision and Regulation—Domestic Systemically Important
Banks”. Banks will also be required to have an additional capital requirement towards countercyclical capital buffer varying between 0 percent and
2.5 percent of the risk weighted assets as and when announced by the RBI. The transitional arrangements began from April 1, 2013 and was required to be
fully implemented as of March 31, 2019. However, the RBI by its circular dated January 2019 has deferred the implementation of the last tranche of the
capital conservation buffer from March 31, 2019 to March 31, 2020. Additionally, the Basel III LCR, which is a measure of the Bank’s high quality liquid
assets compared to its anticipated cash outflows over a 30-day stressed period, began applying in a phased manner that started with a minimum requirement
of 60 percent from January 1, 2015 and a minimum of 100 percent on January 1, 2019. The LCR requirement presently stands at 100%. These various
requirements including requirements to increase capital to meet increasing capital adequacy ratios could require us to forego certain business opportunities.
Further pursuant to a circular issued by the RBI dated June 2019, under Basel III, D-SIBs are required to maintain a minimum leverage ratio of 4 percent as
compared to 3.5 percent required to be maintained by other scheduled commercial banks, with effect from October 1, 2019. Since, we have been classified
as a D-SIB we will be required to comply with this requirement.

We believe that the demand for Basel III compliant debt instruments, such as Tier II capital eligible securities, may be limited in India. In the past, the
RBI has reviewed and made amendments in its guidelines on Basel III capital regulations with a view to facilitating the issuance of non-equity regulatory
capital instruments by banks under the Basel III framework. It is unclear what effect, if any, these amendments may have on the issuance of Basel III
compliant securities or if there will be sufficient demand for such securities. It is also possible that the RBI could further amend the eligibility criteria of
such instruments in the future if the objectives identified by the RBI are not met, which would create additional uncertainty regarding the market for Basel
III compliant securities in India.

If we are unable to meet the new and revised requirements, including both requirements applicable to banks generally and requirements imposed on
us as a D-SIB, our business, future financial performance and the price of our ADSs and equity shares could be adversely affected.

We rely on third parties, including service providers, overseas correspondent banks and other Indian banks, who may not perform their obligations
satisfactorily or in compliance with law.
Our business leads us to rely on different types of third parties, which exposes us to risks. For example, we enter into outsourcing arrangements with
third party vendors, in compliance with the RBI guidelines on outsourcing. These vendors provide services which include, among others, cash management
services, software services, client sourcing, debt recovery services and call center services. However, we cannot guarantee that there will be no disruptions
in the provision of such services or that these third parties will adhere to their contractual obligations. Additionally, we also rely on our overseas
correspondent banks to facilitate international transactions, and the Indian banking industry as a whole is interdependent in facilitating domestic
transactions. There is no assurance that our overseas correspondent banks or our domestic banking partners will not fail or face financial problems (such as
financial problems arising out of or in relation to frauds uncovered in early 2018 at one of India’s public sector banks). If there is a disruption in the third-
party services, or if the third-party service providers discontinue their service agreement with us, our business, financial condition and results of operations
will be adversely affected. In case of any dispute with any of the foregoing parties, we cannot assure you that the terms of our arrangements with such
parties will not be breached, which may result in costs such as litigation costs or the costs of entering into agreements with third parties in the same industry,
and such costs may materially and adversely affect our business, financial condition and results of operations. We may also suffer from reputational and
legal risks if one of these third parties acts unethically or unlawfully, and if any Bank in India, especially a private Bank, or any of our key overseas
correspondent banks were to fail, this could materially and adversely affect our business, financial condition, growth prospects or the price of our equity
shares.

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HDFC Limited holds a significant percentage of our share capital and can exercise influence over board decisions that could directly or indirectly favor
the interests of HDFC Limited over our interests.
HDFC Group owned 21.38 percent of our equity as of March 31, 2019. So long as HDFC Group holds at least a 20 percent equity stake in us, HDFC
Limited is entitled to nominate two directors, our Chairperson and Managing Director, to our Board of Directors. These two directors are not required to
retire by rotation and their appointments are subject to RBI approval. Shyamala Gopinath has been reappointed as part-time Non-Executive Chairperson for
three years with effect from January 2, 2018. Keki Mistry, the Vice Chairman and Chief Executive Officer of HDFC Limited is a member of our Board of
Directors. While we are professionally managed and overseen by an independent board of directors, HDFC Limited can exercise influence over our board
and over matters subject to a shareholder vote, which could result in decisions that favor HDFC Limited or result in us foregoing opportunities to the benefit
of HDFC Limited. Such decisions may restrict our growth or harm our financial condition.

In the past, there have been reports in the Indian media suggesting that we may merge with financial institutions, including HDFC Limited. We
consider business combination opportunities as they arise. At present, we are not actively considering a business combination with any financial institution.
Any significant business combination would involve compliance with regulatory requirements and shareholder and regulatory approvals.

Additionally, on July 15, 2014, the RBI issued guidelines in relation to the issuance of long-term bonds with a view to encouraging financing of
infrastructure and affordable housing. Regulatory incentives in the form of an exemption from the reserve requirements and a relaxation in PSL norms are
stipulated as being restricted to bonds that are used to incrementally finance long-term infrastructure projects and loans for affordable housing. Any
incremental infrastructure or affordable housing loans acquired from other financial institutions, such as those that could be involved in a business
combination with HDFC Limited, to be reckoned for regulatory incentives will require the prior approval of the RBI. We cannot predict the impact any
potential business combination would have on our business, financial condition, growth prospects or the prices of our equity shares.

We may face conflicts of interest relating to our promoter and principal shareholder, HDFC Limited, which could cause us to forego business
opportunities and consequently have an adverse effect on our financial performance.
HDFC Limited is primarily engaged in financial services, including home loans, property-related lending and deposit products. The subsidiaries and
associated companies of HDFC Limited are also largely engaged in a range of financial services, including asset management, life and other insurance and
mutual funds. Although we have no agreements with HDFC Limited or any other HDFC Group companies that restrict us from offering products and
services that are offered by them, our relationship with these companies may cause us not to offer products and services that are already offered by other
HDFC Group companies and may effectively prevent us from taking advantage of business opportunities. See Note 28 “Related Party Transactions” in our
consolidated financial statements for a summary of transactions we have engaged in with HDFC Limited during fiscal 2019. We currently distribute
products of HDFC Limited and its group companies. If we stop distributing these products or forego other opportunities because of our relationship with
HDFC Limited, it could have a material adverse effect on our financial performance.

HDFC Limited may prevent us from using the HDFC Bank brand if they reduce their shareholding in us to below 5 percent.
As part of a shareholder agreement executed when HDFC Bank was formed, HDFC Limited has the right to prevent us from using “HDFC” as part of
our name or brand if HDFC Limited reduces its shareholding in HDFC Bank to an amount below 5 percent of our outstanding share capital. If HDFC
Limited were to exercise this right, we would be required to change our name and brand, which could require us to expend significant resources to establish
new branding and name recognition in the market as well as undertake efforts to rebrand our banking outlets and our digital presence. This could have a
material adverse effect on our financial performance.

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RBI guidelines relating to ownership in private banks could discourage or prevent a change of control or other business combination involving us, such
as with HDFC Limited, which could restrict the growth of our business and operations.
RBI guidelines prescribe a policy framework for the ownership and governance of private sector banks. Under the Banking Regulation Act, a
shareholder presently cannot exercise voting rights in excess of 15 percent of the total voting rights, which ceiling on voting rights may be increased in a
phased manner up to 26 percent by the RBI. In May 2016, the RBI issued the Reserve Bank of India (Ownership in Private Sector Banks) Directions, 2016.
These guidelines prescribe requirements regarding shareholding and voting rights in relation to all private sector banks licensed by the RBI to operate in
India. The guidelines specify the following ownership limits for shareholders based on their categorization:
(i) In the case of individuals and non-financial entities (other than promoters/a promoter group), 10 percent of the paid up capital. However, in the case
of promoters being individuals and non-financial entities in existing banks, the permitted promoter/promoter group shareholding shall be as
prescribed under the February 2013 guidelines, i.e., 15 percent.
(ii) In the case of entities from the financial sector, other than regulated or diversified or listed, 15 percent of the paid-up capital.
(iii) In the case of “regulated, well diversified, listed entities from the financial sector” shareholding by supranational institutions, public sector
undertaking or governments, up to 40 percent of the paid-up capital is permitted for both promoters/a promoter group and non-promoters.

The RBI may permit increase of stake beyond the limits mentioned above on a case-to-case basis under circumstances, such as relinquishment by
existing promoters, rehabilitation, restructuring of problems, weak banks, entrenchment of existing promoters or in the interest of the bank or in the interest
of consolidation in the banking sector.

Such restrictions could discourage or prevent a change in control, merger, consolidation, takeover or other business combination involving us, which
might be beneficial to our shareholders. The RBI’s approval is required for the acquisition or transfer of a bank’s shares, which will increase the aggregate
holding (direct and indirect, beneficial or otherwise) of an individual or a group to the equivalent of 5 percent or more of its total paid-up capital. The RBI,
when considering whether to grant an approval, may take into account all matters that it considers relevant to the application, including ensuring that
shareholders whose aggregate holdings are above specified thresholds meet fitness and propriety tests, as prescribed by the RBI. The RBI has accorded its
approval for HDFC Limited to hold more than 10 percent of our stock. HDFC Limited’s substantial stake in us could discourage or prevent another entity
from exploring the possibility of a combination with us. These obstacles to potentially synergistic business combinations could negatively impact our share
price and have a material adverse effect on our ability to compete effectively with other large banks and consequently our ability to maintain and improve
our financial condition.

Additionally, under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the “SEBI
Listing Regulations”), all related party transactions will require approval from the audit committee. Further, all material related party transactions (based on
the threshold provided under the SEBI Listing Regulations) will require shareholders’ approval. Further, pursuant to the SEBI Listing Regulations a related
party shall not vote with regard to the approval of these transactions. For transactions with HDFC Limited shareholder approvals have been obtained for
fiscal 2019. However, if we are unable to obtain the necessary shareholder approvals for transactions with HDFC Limited in the future, we would be
required to forego certain opportunities, which could have a material adverse effect on our financial performance.

Foreign investment in our shares may be restricted due to regulations governing aggregate foreign investment in the Bank’s paid-up equity share
capital.
Aggregate foreign investment from all sources in a private sector bank is permitted up to 49 percent of the paid-up capital under the automatic route.
This limit can be increased to 74 percent of the paid-up capital with prior approval from the Government of India. Pursuant to a letter dated February 4,
2015, the Foreign Investment Promotion Board has approved foreign investment in the Bank up to 74 percent of its paid-up capital. The approval is subject
to examination by the RBI for compounding on the change of foreign shareholding since April 2010. If the Bank is subject to any penalties or an
unfavorable ruling by the RBI, this could have an adverse effect on the Bank’s results of operation and financial condition. The RBI had previously imposed
a restriction on the purchase of equity shares of the Bank by foreign investors, under its circular dated March 19, 2012. On February 16, 2017, the RBI
lifted such restriction since the foreign shareholding in the Bank was below the maximum prescribed percentage of 74 percent. Thereafter the RBI notified
by press release on February 17, 2017, and by separate letter to us dated February 28, 2017, that the foreign shareholding in all forms in the Bank crossed
the said limit of 74 percent again. This was due to secondary market purchases of the Bank’s equity shares during this period. Consequently, the RBI
re-imposed the restrictions on the purchase of the Bank’s equity shares by foreign investors. Further, SEBI also enquired regarding the measures that the
Bank has taken and will take in respect of breaches of the maximum prescribed percentage of foreign shareholding in the Bank, by its letter dated March 9,
2018. As of March 31, 2019, foreign investment in the Bank, including the shareholdings of HDFC Limited and its subsidiaries, constituted 71.99 percent,
respectively of the paid-up capital of the Bank. The restrictions on the purchases of the Bank’s equity shares could negatively, affect the price of the Bank’s
shares and could limit the ability of investors to trade the Bank’s shares in the market. These limitations and any consequent regulatory actions may also
negatively affect the Bank’s ability to raise additional capital to meet its capital adequacy requirements or to fund future growth through future issuances of
additional equity shares, which could have a material adverse effect on our business and financial results. See “Supervision and Regulation—Foreign
Ownership Restriction”.

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Our success depends in large part upon our management team and skilled personnel and our ability to attract and retain such persons.
We are highly dependent on our management team, including the efforts of our Chairperson, our Managing Director, our Executive Director and
members of our senior management. Our future performance is dependent on the continued service of these persons. We also face a continuing challenge to
recruit and retain a sufficient number of skilled personnel, particularly if we continue to grow. Competition for management and other skilled personnel in
our industry is intense, and we may not be able to attract and retain the personnel we need in the future. The loss of key personnel may restrict our ability to
grow and consequently have a material adverse impact on our results of operations and financial position.

We have previously been subject to penalties imposed by the RBI. Any regulatory investigations, fines, sanctions, and requirements relating to conduct
of business and financial crime could negatively affect our business and financial results, or cause serious reputational harm.
The RBI is empowered under the Banking Regulation Act to impose penalties on banks and their employees to enforce applicable regulatory
requirements. In fiscal 2014, the RBI imposed penalties on us and many other banks for certain irregularities and violations discovered by the RBI during
its scrutiny conducted in the first half of 2013, namely, non-observance of certain safeguards in respect of arrangement of “at par” payment of checks drawn
by cooperative banks, exceptions in the periodic review of risk profiling of account holders, non-adherence to KYC rules for walk-in customers
(non-customers), including for the sale of third party products, the sale of gold coins for cash in excess of Rs. 50,000 in certain cases and the
non-submission of proper information as required by the RBI. We paid a penalty of Rs. 45.0 million in June 2013. Further, in this regard, the Financial
Intelligence Unit (India) (the “FIU”), in January 2015, levied a fine on us of Rs. 2.6 million relating to our failure to detect and report attempted suspicious
transactions. We filed an appeal against the order before the appellate tribunal stating that there were only roving enquiries made by the reporters of the
media and there were no instances of any attempted suspicious transactions. Pursuant to the directions of the appellate tribunal, the Bank created a fixed
deposit of Rs. 2.6 million in favor of the FIU. In June 2017, the appellate tribunal dismissed the penalty levied by the FIU and observed that the prescribed
matter fell within the provisions of section 13(2)(a) of the Prevention of Money Laundering Act, 2002 (“PMLA”), 2002 (pursuant to which a warning was
required to be given to the Bank), and that the matter did not fall within section 13(2)(d) of the PMLA (pursuant to which monetary penalties can be
imposed on failure to comply with certain obligations under the PMLA) as mentioned by the FIU. The appellate tribunal further ordered that the fixed
deposit created by the Bank as per the interim order of the appellate tribunal be released. In a letter dated September 8, 2017, we requested FIU’s consent
for liquidation of the Rs. 2.6 million fixed deposit receipt given the resolution of the case. FIU has responded to us on October 25, 2017, advising that it has
challenged the appellate tribunal’s order to release the fixed deposit receipt. They advised that the appeal, including application for stay, is to be listed
before the Delhi High Court in due course and accordingly at this stage our request to liquidate the fixed deposit receipt is premature. Subsequently, we
received a summons on the notice for a hearing from the High Court of Delhi in connection with an appeal filed with them by FIU-IND challenging the
order of the Appellate Tribunal. On May 10, 2018, the High Court had granted eight weeks’ time to us to furnish our response. The matter was heard on
December 6, 2018. Meanwhile, the FDR in the name of FIU was renewed for a further period of one year. We filed (i) replies to the Appeal made by FIU
and (ii) an application for interim stay on July 11, 2018. The counsel for FIU-IND, however, sought additional time to file its rejoinder. The court accepted
this request and now the matter is listed for further proceedings on August 1, 2019. See “Supervision and Regulation – Penalties”.

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During fiscal 2014, the RBI investigated a corporate borrower’s loan and current accounts maintained with 12 Indian banks, including us. Based on
its assessment, the RBI, in its press release dated July 25, 2014, levied penalties totaling Rs. 15 million on the 12 Indian banks. The penalty levied on us
was Rs. 0.5 million on the grounds that we failed to exchange information about the conduct of the corporate borrower’s account with other banks at
intervals as prescribed in the RBI guidelines on “Lending under Consortium Arrangement/Multiple Banking Arrangements”. In October 2015, there were
media reports about irregularities in advance import remittances in various banks, further to which the RBI had conducted a scrutiny of the transactions
carried out by us. In April 2016, the RBI issued a show cause notice to us to which we submitted our detailed response. After considering our submissions,
the RBI imposed a penalty of Rs. 20.0 million on us in July 2016, which we paid, on account of pendency in receipt of bills of entry relating to advance
import remittances made and lapses in adhering to Know Your Customer (“KYC”) and Anti-Money Laundering (“AML”) guidelines in this respect. During
fiscal 2019 we received two separate fines for non-compliance with certain RBI directives. In its order dated February 4, 2019, the RBI imposed a monetary
penalty of Rs. 2.0 million on us for failing to comply with the RBI’s KYC and AML standards, as set out in their circulars dated November 29, 2004 and
May 22, 2008. In its order dated June 13, 2019, the RBI imposed a monetary penalty of Rs. 10 million on us for failing to comply with its KYC, AML and
fraud reporting standards, following an investigation into bills of entry submitted by certain importers. The penalties were imposed under Section 47A(1)(c)
and Section 46(4)(i) of the Banking Regulation Act, 1949. We have since implemented corrective action to strengthen our internal control mechanisms so as
to ensure that such incidents do not repeat themselves. See “Supervision and Regulation—Penalties”.

We cannot predict the initiation or outcome of any further investigations by other authorities or different investigations by the RBI. The penalties
imposed by the RBI have generated adverse publicity for our business. Such adverse publicity, or any future scrutiny, investigation, inspection or audit
which could result in fines, public reprimands, damage to our reputation, significant time and attention from our management, costs for investigations and
remediation of affected customers, may materially adversely affect our business and financial results.

Transactions with counterparties in countries designated as state sponsors of terrorism by the United States State Department, the Government of India
or other countries, or with persons targeted by United States, Indian, EU or other economic sanctions may cause potential customers and investors to
avoid doing business with us or investing in our securities, harm our reputation or result in regulatory action which could materially and adversely
affect our business.
We engage in business with customers and counterparties from diverse backgrounds. In light of United States, Indian, EU and other sanctions, it
cannot be ruled out that some of our customers or counterparties may become the subject of sanctions. Such sanctions may result in our inability to gain or
retain such customers or counterparties or receive payments from them. In addition, the association with such individuals or countries may damage our
reputation or result in significant fines. This could have a material adverse effect on our business, financial results and the prices of our securities.

These laws, regulations and sanctions or similar legislative or regulatory developments may further limit our business operations. If we were
determined to have engaged in activities targeted by certain United States, Indian, EU or other statutes, regulations or executive orders, we could lose our
ability to open or maintain correspondent or payable-through accounts with United States financial institutions, among other potential sanctions. In addition,
depending on sociopolitical developments, even though we take measures designed to ensure compliance with applicable laws and regulations, our
reputation may suffer due to our association with certain restricted targets. The above circumstances could have a material adverse effect on our business,
financial results and the prices of our securities.

Material changes in Indian banking regulations may adversely affect our business and our future financial performance.
We operate in a highly regulated environment in which the RBI extensively supervises and regulates all banks. Our business could be directly affected
by any changes in policies for banks in respect of directed lending, reserve requirements and other areas. For example, the RBI could change its methods of
enforcing directed lending standards so as to require more lending to certain sectors, which could require us to change certain aspects of our business. In
addition, we could be subject to other changes in laws and regulations, such as those affecting the extent to which we can engage in specific business, those
that reduce our income through a cap on either fees or interest rates chargeable to our customers, or those affecting foreign investment in the banking
industry, as well as changes in other government policies and enforcement decisions, income tax laws, foreign investment laws and accounting principles.
Laws and regulations governing the banking sector may change in the future and any changes may adversely affect our business, our future financial
performance and the price of our equity shares and ADSs.

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Our funding is primarily short- and medium-term and if depositors do not roll over deposited funds upon maturity our net income may decrease.
Most of our funding requirements are met through short-term and medium-term funding sources, primarily in the form of retail deposits. Short-term
deposits are those with a maturity not exceeding one year. Medium-term deposits are those with a maturity of greater than one year but not exceeding three
years. See “Selected Statistical Information—Funding”. However, a portion of our assets have long-term maturities, which sometimes causes funding
mismatches. As of March 31, 2019, 38.5 percent of our loans are expected to mature within the next one year and 43.4 percent of our loans are expected to
mature between the next one to three years. As of March 31, 2019, 36.8 percent of our deposits are expected to mature within the next year and 39.2 percent
of our deposits are expected to mature between the next one to three years. In our experience, a substantial portion of our customer deposits has been rolled
over upon maturity and has been, over time, a stable source of funding. However, if a substantial number of our depositors do not roll over deposited funds
upon maturity, our liquidity position will be adversely affected and we may be required to seek more expensive sources of funding to finance our
operations, which would result in a decline in our net income and have a material adverse effect on our financial condition. We may also face a
concentration of deposits by our larger depositors. Any sudden or large withdrawals by such large depositors may impact our liquidity position.

Any increase in interest rates would have an adverse effect on the value of our fixed income securities portfolio and could have a material adverse effect
on our net income.
Any increase in interest rates would have an adverse effect on the value of our fixed income securities portfolio and could have a material adverse
effect on our net revenue. Policy rates were successively increased from February 2010 to March 2012 during which period the bout of interest rate
tightening in India was faster than in many other economies. The RBI raised key policy rates from 5.25 percent (repo rate) in April 2010 to 8.5 percent in
October 2011. However, key policy rates were eased from 8.0 percent (repo rate) in April 2012 to 7.25 percent in May 2013. In July 2013, the RBI
increased the rate for borrowings under its marginal standing facility (which was introduced by the RBI in fiscal 2012) from 100 basis points to 300 basis
points above the repo rate. This rate was eased from 200 basis points above the repo rate in September 2013 to 100 basis points above repo rate in October
2013. In contrast, the policy rates were tightened from 7.5 percent (repo rate) in September 2013 to 8.0 percent in January 2014. The RBI reduced the policy
repo rate again to 7.75 percent in January 2015, further reducing it to 7.5 percent in March 2015, 7.25 percent in June 2015, 6.75 percent in September
2015, 6.5 percent in April 2016, 6.25 percent in October 2016, and 6.0 percent in August 2017, before increasing it to 6.25 percent in June 2018 and
6.5 percent in August 2018. Since then, the RBI has reduced the repo rate in February 2019, April 2019 and June 2019, in each instance by 25 basis points.
We are, however, more structurally exposed to interest rate risk than banks in many other countries because of certain mandated reserve requirements of the
RBI. See “Supervision and Regulation—Legal Reserve Requirements”. These requirements result in Indian banks, such as ourselves, maintaining (as per
RBI guidelines currently in force) a portion of our liabilities in bonds issued by the Government (19.0 percent as of June 2019, computed as per guidelines
issued by the RBI). We are also required to maintain 4 percent of our liabilities (computed as per guidelines issued by the RBI) by way of a balance with the
RBI. This, in turn, means that we could be adversely impacted by a rise in interest rates, especially if the rise were sudden or sharp. A rise in yields on fixed
income securities, including government securities, will likely adversely impact our profitability. The aforementioned requirements would also have a
negative impact on our net interest income and net interest margins since interest earned on our investments in government issued securities is generally
lower than that earned on our other interest earning assets.

Further competition and the development of advanced payment systems by our competitors would adversely impact our cash float and decrease fees we
receive in connection with cash management services.
The Indian market for cash management services (“CMS”) is marked by some distinctive characteristics and challenges such as a vast geography, a
large number of small business-intensive towns, a large unorganized sector in various business supply chains and infrastructural limitations for accessibility
to many parts of the country. Over the years, such challenges have made it a daunting task for CMS providers in the country to uncover the business
potential and extend suitable services and product solutions to the business community.

We have been able to retain and increase our share of business in cash management services through traditional product offerings as well as by
offering new age electronic banking services. With new entrants in the payment space such as new payment banks now being granted licenses to conduct
business and certain financial technology companies, the competition in the payments landscape is likely to increase. Any increased competition within the
payment space, any introduction of a more advanced payment system in India or an inability for us to sustain our technology investments, may have a
material adverse effect on our financial condition.

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We could experience a decline in our revenue generated from activities on the equity markets if there is a prolonged or significant downturn on the
Indian stock exchanges, and we may face difficulties in getting regulatory approvals necessary to conduct our business if we fail to meet regulatory
limits on capital market exposures.
We provide a variety of services and products to participants involved with the Indian stock exchanges. These include working capital funding and
margin guarantees to share brokers, personal loans secured by shares, initial public offering finance for retail customers, stock exchange clearing services,
collecting bankers to various public offerings and depositary accounts. If there is a prolonged or significant downturn on the Indian stock exchanges, our
revenue generated by offering these products and services may decrease, which would have a material adverse effect on our financial condition.

We are required to maintain our capital market exposures within the limits as prescribed by the RBI. Our capital market exposures are comprised
primarily of investments in equity shares, loans to share brokers and financial guarantees issued to stock exchanges on behalf of share brokers.

As per RBI norms, a bank’s capital market exposure is limited to 40 percent of its net worth under Indian GAAP as of March 31 of the previous year,
both on a consolidated and non-consolidated basis. Our capital market exposure as of March 31, 2019 was 16.6 percent of our net worth on a
non-consolidated basis and 17.8 percent on a consolidated basis, in each case, under Indian GAAP. See “Supervision and Regulation—Large Exposures
Framework”. If we fail to meet these regulatory limits in the future, we may face difficulties in obtaining other regulatory approvals necessary to conduct
our normal course of business, which would have a material adverse effect on our business and operations.

Any failure or material weakness of our internal control system could cause significant errors, which may have a materially adverse effect on our
reputation, business, financial position or results of operations.
We are responsible for establishing and maintaining adequate internal measures commensurate with our size and complexity of operations. Our
internal or concurrent audit functions are equipped to make an independent and objective evaluation of the adequacy and effectiveness of internal controls
on an ongoing basis to ensure that business units adhere to our policies, compliance requirements and internal circular guidelines. While we periodically test
and update, as necessary, our internal control systems, we are exposed to operational risks arising from the potential inadequacy or failure of internal
processes or systems, and our actions may not be sufficient to guarantee effective internal controls in all circumstances. Given our high volume of
transactions, it is possible that errors may repeat or compound before they are discovered and rectified. Our systems and internal control procedures that are
designed to monitor our operations and overall compliance may not identify every instance of non-compliance or every suspicious transaction. If internal
control weaknesses are identified, our actions may not be sufficient to fully correct such internal control weakness. We face operational risks in our various
businesses and there may be losses due to deal errors, settlement problems, pricing errors, inaccurate reporting, breaches of confidentiality, fraud and failure
of mission critical systems or infrastructure. Any error tampering or manipulation could result in losses that may be difficult to detect. As a result, we may
come under additional regulatory scrutiny or be the target of enforcement actions, or suffer monetary losses or adverse reputation effects which, in each
case, could be material, and could have a material adverse effect on our business, financial position or results of operation.

For example, pursuant to the media reports during fiscal 2018, certain unpublished price sensitive information (“UPSI”) relating to our financial
results for the quarter ended December 31, 2015 and June 30, 2017 was leaked in a private “group” on the WhatsApp mobile app ahead of the official
publication of such results. Following this leak, we received an order from SEBI on February 23, 2018 directing us to (i) strengthen our processes, systems,
and controls relating to information security to prevent future leaks, (ii) submit a report on (a) the systems and controls, how they have been strengthened,
and at what regular intervals they are monitored, and (b) the details of persons who are responsible for monitoring such systems, and (iii) conduct an
internal inquiry into the leakage of UPSI relating to our financial results and submit a report in relation thereto. In accordance with the SEBI order, we filed
both reports with SEBI on May 30, 2018. Any additional action by SEBI in connection with its investigation and our respective reports may subject us to
further scrutiny or enforcement actions and have a material adverse effect on our reputation, business, financial position or results of operation.

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Significant fraud, system failure or calamities would disrupt our revenue-generating activities in the short-term and could harm our reputation and
adversely impact our revenue-generating capabilities.
Our business is highly dependent on our ability to efficiently and reliably process a high volume of transactions across numerous locations and
delivery channels. We place heavy reliance on our technology infrastructure for processing this data and therefore ensuring the security of this system and
its availability is of paramount importance. Our systemic and operational controls may not be adequate to prevent any adverse impact from frauds, errors,
hacking and system failures. A significant system breakdown or system failure caused by intentional or unintentional acts would have an adverse impact on
our revenue-generating activities and lead to financial loss. Our reputation could be adversely affected by fraud committed by employees, customers or
outsiders, or by our perceived inability to properly manage fraud-related risks. Our inability or perceived inability to manage these risks could lead to
enhanced regulatory oversight and scrutiny. Fraud or system failures by other Indian banking institutions (such as frauds uncovered in early 2018 at one of
India’s public sector banks) could also adversely affect our reputation and revenue-generating activity by reflecting negatively on our industry more
generally, and in certain circumstances we could be required to absorb losses arising from intentional or unintentional acts by third-party institutions. We
have established a geographically remote disaster recovery site to support critical applications, and we believe that we would be able to restore data and
resume processing in the event of a significant system breakdown or failure. However, it is possible the disaster recovery site may also fail or it may take
considerable time to make the system fully operational and achieve complete business resumption using the alternate site. Therefore, in such a scenario
where the primary site is also completely unavailable, there may be significant disruption to our operations, which would materially adversely affect our
reputation and financial condition.

Our business and financial results could be impacted materially by adverse results in legal proceedings.
Legal proceedings, including lawsuits, investigations by regulatory authorities and other inspections or audits, could result in judgments, fines, public
reprimands, damage to our reputation, significant time and attention from our management, costs for investigations and remediation of affected customers,
or other adverse effects on our business and financial results. We establish reserves for legal claims when payments associated with claims become probable
and the costs can be reasonably estimated. We may still incur legal costs for a matter even if we have not established a reserve. In addition, the actual cost of
resolving a legal claim may be substantially higher than any amounts reserved for that matter. The ultimate resolution of any pending or future legal
proceeding, depending on the remedy sought and granted, could materially adversely affect our results of operations and financial condition. See “Business
—Legal Proceedings”.

We may breach third party intellectual property rights.

We may be subject to claims by third parties, both inside and outside India, if we breach their intellectual property rights by using slogans, names,
designs, software or other such rights, which are of a similar nature to the intellectual property these third parties may have registered. Any legal
proceedings which result in a finding that we have breached third parties’ intellectual property rights, or any settlements concerning such claims, may
require us to provide financial compensation to such third parties or make changes to our marketing strategies or to the brand names of our products, which
may have a materially adverse effect on our business prospects, reputation, results of operations and financial condition.

Negative publicity could damage our reputation and adversely impact our business and financial results.
Reputational risk, or the risk to our business, earnings and capital from negative publicity, is inherent in our business. The reputation of the financial
services industry in general has been closely monitored as a result of the financial crisis and other matters affecting the financial services industry. Negative
public opinion about the financial services industry generally or us specifically could adversely affect our ability to attract and retain customers, and may
expose us to litigation and regulatory action. Negative publicity can result from our actual or alleged conduct in any number of activities, including lending
practices, mortgage servicing and foreclosure practices, corporate governance, regulatory compliance, mergers and acquisitions and related disclosure,
sharing or inadequate protection of customer information, and actions taken by government regulators and community organizations in response to that
conduct. Although we take steps to minimize reputational risk in dealing with customers and other constituencies, we, as a large financial services
organization with a high industry profile, are inherently exposed to this risk.

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We face cyber threats, such as hacking, phishing and trojans, attempting to exploit our network to disrupt services to customers and/or theft or leaking
of sensitive internal Bank data or customer information. This may cause damage to our reputation and adversely impact our business and financial
results.
We offer internet banking services to our customers. Our internet banking channel includes multiple services such as electronic funds transfer, bill
payment services, usage of credit cards on-line, requesting account statements, and requesting check books. We are therefore exposed to various cyber
threats related to these services or to other sensitive Bank information, with such threats including: (a) phishing and trojans targeting our customers,
whereby fraudsters send unsolicited mails to our customers seeking account-sensitive information or infecting customer computers in an attempt to search
and export account-sensitive information; (b) hacking, whereby attackers seek to hack into our website with the primary intention of causing reputational
damage to us by disrupting services; (c) data theft whereby cyber criminals attempt to intrude into our network with the intention of stealing our data or
information or to extort money; and (d) leaking, whereby sensitive internal Bank data or customer information is inappropriately disclosed by parties
entitled to access it. Attempted cyber threats fluctuate in frequency but are generally increasing in frequency, and while certain of the foregoing events have
occurred in the past, we cannot guarantee they will not reoccur in the future. As the sophistication of cyber-incidents continues to evolve, we will likely be
required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber
incidents. In addition, cyber incidents may remain undetected for an extended period.

There is also the risk of our customers incorrectly blaming us and terminating their accounts with us for a cyber-incident which might have occurred
on their own system or with that of an unrelated third party. Any cyber security breach could also subject us to additional regulatory scrutiny and expose us
to civil litigation and related financial liability.

A failure, inadequacy or security breach in our information technology and telecommunication systems may adversely affect our business, results of
operation or financial condition.
Our ability to operate and remain competitive depends in part on our ability to maintain and upgrade our information technology systems and
infrastructure on a timely and cost-effective basis, including our ability to process a large number of transactions on a daily basis. Our operations also rely
on the secure processing, storage and transmission of confidential and other information in its computer systems and networks. Our financial, accounting or
other data processing systems and management information systems or our corporate website may fail to operate adequately or become disabled as a result
of events that may be beyond our control or may be vulnerable to unauthorized access, computer viruses or other attacks. See “—We face cyber threats, such
as hacking, phishing and trojans, attempting to exploit our network to disrupt services to customers and/or theft of sensitive internal Bank data or customer
information. This may cause damage to our reputation and adversely impact our business and financial results”. Further, the information available to and
received by our management through its existing systems may not be timely and sufficient to manage risks or to plan for and respond to changes in market
conditions and other developments in our operations. If any of these systems are disabled or if there are other shortcomings or failures in our internal
processes or systems, it may disrupt our business or impact our operational efficiencies, and render us liable to regulatory intervention or damage to its
reputation. The occurrence of any such events may adversely affect our business, results of operation and financial condition.

Our business is highly competitive, which makes it challenging for us to offer competitive prices to retain existing customers and solicit new business,
and our strategy depends on our ability to compete effectively.
We face strong competition in all areas of our business, and some of our competitors are larger than we are. We compete directly with large public
and private sector banks, some of which are larger than we are based on certain metrics such as customer assets and deposits, branch network and capital.
These banks are becoming more competitive as they improve their customer services and technology. In addition, we compete directly with foreign banks,
which include some of the largest multinational financial companies in the world. See “—We may face increased competition as a result of revised
guidelines that relax restrictions on foreign ownership and participation in the Indian banking industry, and the entry of new banks in the private sector
which could cause us to lose existing business or be unable to compete effectively for new business.”. In addition, new entrants into the financial services
industry, including companies in the financial technology sector, may further intensify competition in the business environments, especially in the digital
business environment, in which we operate, and as a result, we may be forced to adapt our business to compete more effectively. There can be no assurance
that we will be able to respond effectively to current or future competition or that the technological investments we make in response to such competition
will be successful. Due to competitive pressures, we may be unable to successfully execute our growth strategy and offer products and services (whether
current or new offerings) at reasonable returns and this may adversely impact our business. If we are unable to retain and attract new customers, our revenue
and net income will decline, which could materially adversely affect our financial condition. See “Business—Competition”.

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We may face increased competition as a result of revised guidelines that relax restrictions on foreign ownership and participation in the Indian banking
industry, and the entry of new banks in the private sector which could cause us to lose existing business or be unable to compete effectively for new
business.
The Government of India regulates foreign ownership in private sector banks. Foreign ownership up to 49 percent of the paid-up capital is permitted
in Indian private sector banks under the automatic route and this limit can be increased up to 74 percent with prior approval of the Government of India.
However, under the Banking Regulation Act, read together with the Reserve Bank of India (Ownership in Private Sector Banks) Directions, 2016, a
shareholder cannot exercise voting rights in excess of 15 percent of the total voting rights. The ceiling on voting rights may be increased in a phased manner
up to 26 percent by the RBI. The RBI has also from time to time issued various circulars and regulations regarding ownership of private banks and licensing
of new private sector banks in India. See “Supervision and Regulation—Entry of new banks in the private sector”. Reduced restrictions on foreign
ownership of Indian banks could increase the presence of foreign banks in India, increased competition in the industry in which we operate.

In February 2013, the RBI released guidelines for the licensing of new banks in the private sector. The RBI permitted private sector entities owned
and controlled by Indian residents and entities in the public sector in India to apply to the RBI for a license to operate a bank through a wholly owned
non-operative financial holding company (“NOFHC”) route, subject to compliance with certain specified criteria. Such a NOFHC was permitted to be the
holding company of a bank as well as any other financial services entity, with the objective that the holding company ring-fences the regulated financial
services entities in the group, including the bank, from other activities of the group. Pursuant to these guidelines, in fiscal 2016 IDFC Bank and Bandhan
Bank commenced banking operations.

In November 2014, the RBI released guidelines for the licensing of payments banks and small finance banks in the private sector. Since
promulgation, such banks have been established and operational pursuant to these guidelines, which have increased competition in the markets in which we
operate.

In August 2016, the RBI released final guidelines for “on-tap” Licensing of Universal Banks in the Private Sector. The guidelines aim at moving from
the current “stop and go” licensing approach (wherein the RBI notifies the licensing window during which a private entity may apply for a banking license)
to a continuous or “on-tap” licensing regime. Among other things, the new guidelines specify conditions for the eligibility of promoters, corporate structure
and foreign shareholdings. One of the key features of the new guidelines is that, unlike the February 2013 guidelines (mentioned above), the new guidelines
make the NOFHC structure non-mandatory in the case of promoters being individuals or standalone promoting/converting entities which do not have other
group entities.

In May 2016, the RBI issued the Reserve Bank of India (Ownership in Private Sector Banks) Directions, 2016. These guidelines prescribe
requirements regarding shareholding and voting rights in relation to all private sector banks licensed by the RBI to operate in India. See “Supervision and
Regulation—Entry of new banks in the private sector”.

Any growth in the presence of foreign banks or new banks in the private sector may increase the competition that we face and, as a result, have a
material adverse effect on our business and financial results.

If the goodwill recorded in connection with our acquisitions becomes impaired, we may be required to record impairment charges, which would
decrease our net income and total assets.
In accordance with U.S. GAAP, we have accounted for our acquisitions using the purchase method of accounting. We recorded the excess of the purchase
price over the fair value of the assets and liabilities of the acquired companies as goodwill. U.S. GAAP requires us to test goodwill for impairment at least
annually, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. Goodwill is tested by initially estimating fair
value of the reporting unit and then comparing it against the carrying amount including goodwill. If the carrying amount of a reporting unit exceeds its
estimated fair value, we are required to record an impairment loss. The amount of impairment and the remaining amount of goodwill, if any, is determined
by comparing the implied fair value of the reporting unit as of the test date against the carrying value of the assets and liabilities of that reporting unit as of
the same date. See Notes 2u and 2v, “Summary of significant accounting policies—Business combination” and “Summary of significant accounting policies
—Goodwill and other intangibles”, in our consolidated financial statements.

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Many of our banking outlets have been recently added to our branch network and are not operating with the same efficiency as compared to the rest of
our existing banking outlets, which adversely affects our profitability.
As at March 31, 2014, we had 3,403 banking outlets and as at March 31, 2019, we had 5,103 banking outlets, a significant increase in the number of
banking outlets. Some of the newly added banking outlets are currently operating at a lower efficiency level as compared with our established banking
outlets. While we believe that the newly added banking outlets will achieve the productivity benchmark set for our entire network over time, the success in
achieving our benchmark level of efficiency and productivity will depend on various internal and external factors, some of which are not under our control.
The sub-optimal performance of the newly added banking outlets, if continued over an extended period of time, would have a material adverse effect on our
profitability.

Deficiencies in accuracy and completeness of information about customers and counterparties may adversely impact us.
We rely on accuracy and completeness of information about customers and counterparties while carrying out transactions with them or on their
behalf. We may also rely on representations as to the accuracy and completeness of such information. For example, we may rely on reports of independent
auditors with respect to financial statements, and decide to extend credit based on the assumption that the customer’s audited financial statements conform
to generally accepted accounting principles and present fairly, in all material respects, the financial condition, results of operations and cash flows of the
customer. Our financial condition and results of operations could be negatively impacted by reliance on information that is inaccurate or materially
misleading. This may affect the quality of information available to us about the credit history of our borrowers, especially individuals and small businesses.
As a result, our ability to effectively manage our credit risk may be adversely affected.

We present our financial information differently in other markets or in certain reporting contexts.
In India, our equity shares are traded on the BSE Limited (the “BSE”) and National Stock Exchange of India Limited (the “NSE”). BSE and NSE
rules, in connection with other applicable Indian laws, require us to report our financial results in India in Indian GAAP. Because of the difference in
accounting principles and presentation, certain financial information available in our required filings in the United States may be presented differently than
in the financial information we provide under Indian GAAP.

Additionally, we make available information on our website and in our presentations in order to provide investors a view of our business through
metrics similar to what our management uses to measure our performance. Some of the information we make available from time to time may be in relation
to our unconsolidated or our consolidated results under Indian GAAP or under U.S. GAAP. Potential investors should read any notes or disclaimers to such
financial information when evaluating our performance to confirm how the information is being presented, since the information that may have been
prepared with a different presentation may not be directly comparable.

Scheduled commercial banks in India, including us, insurers/insurance companies and non-banking financial companies will be required to prepare
financial statements under Indian Accounting Standards, as per the implementation roadmap drawn up by the Ministry of Corporate Affairs. In addition, we
may adopt IFRS for the purposes of our filings pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”). If we do, we may be adversely
affected by this transition.

The Ministry of Corporate Affairs, in its press release dated January 18, 2016, had issued a roadmap for implementation of Indian Accounting
Standards (“IND-AS”) converged with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”)
with certain carve-outs for scheduled commercial banks, insurance companies and non-banking financial companies (the “Roadmap”). This Roadmap
required such institutions to prepare IND-AS-based financial statements for the accounting periods commencing on or after April 1, 2018 and to prepare
comparative financial information for accounting periods beginning April 1, 2017 and thereafter. The RBI, in its circular dated February 11, 2016, required
all scheduled commercial banks to comply with IND-AS for financial statements for the same periods stated above. The RBI did not permit banks to adopt
IND-AS earlier than the above timelines. The RBI circular also required the RBI to issue guidance and clarifications, as and when required, on the relevant
aspects of IND-AS implementation. Presently, certain legislative amendments recommended by the RBI are under consideration by the Government of
India. Accordingly, the RBI, in its circular dated March 22, 2019 deferred the implementation of IND-AS until further notice.

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In conjunction with the implementation of IND-AS for our local Indian results, we may adopt IFRS for the purposes of our filings pursuant to
Section 13 or 15(d) of, and our reports pursuant to Rule 13a-16 or 15d-16 under, the Exchange Act. Should we choose to do so, our first year of reporting in
accordance with IFRS would be same as the accounting period for IND-AS which is dependent on instructions to be issued by the RBI for the
implementation of IND-AS. For our first year of reporting in accordance with IFRS, we would be permitted to file two years, rather than three years, of
statements of income, changes in shareholders’ equity and cash flows prepared in accordance with IFRS.

The new accounting standards are expected to change, among other things, our methodologies for estimating allowances for probable loan losses and
classifying and valuing our investment portfolio, as well as our revenue recognition policy. It is possible that our financial condition, results of operations
and changes in shareholders’ equity may appear materially different under IND-AS or IFRS than under Indian GAAP or U.S. GAAP, respectively. Further,
during the transition to reporting under the new standards, we may encounter difficulties in the ongoing implementation of the new standards and
development of our management information systems. Given the increased competition for the small number of IFRS-experienced accounting personnel in
India, it may be difficult for us to employ the appropriate accounting personnel to assist us in preparing IND-AS or IFRS financial statements. Moreover,
there is no significant body of established practice from which we may draw when forming judgments regarding the application of the new accounting
standards. There can be no assurance that the Bank’s controls and procedures will be effective in these circumstances or that a material weakness in internal
control over financial reporting will not occur. Further, failure to successfully adopt IND-AS or IFRS could adversely affect the Bank’s business, financial
condition and results of operations.

Statistical, industry and financial data obtained from industry publications and other third-party sources may be incomplete or unreliable.
We have not independently verified certain data obtained from industry publications and other third-party sources referred to in this document and
therefore, while we believe them to be true, we cannot assure you that they are complete or reliable. Such data may also be produced on different bases from
those used in the industry publications we have referenced. Therefore, discussions of matters relating to India, its economy and the industries in which we
currently operate are subject to the caveat that the statistical and other data upon which such discussions are based may be incomplete or unreliable.

Risks Relating to India

Financial instability in other countries may cause increased volatility in the Indian financial market.
The Indian market and the Indian economy are influenced by the economic and market conditions in other countries, particularly the emerging market
countries in Asia. Financial turmoil in Asia, Russia and elsewhere in the world in recent years has affected the Indian economy. Although economic
conditions are different in each country, investors’ reactions to developments in one country can have adverse effects on the securities of companies in other
countries, including India. A loss of investor confidence in the financial systems of other markets may cause increased volatility in the Indian financial
market and, more generally, in the Indian economy. Any financial instability or disruptions could also have a negative impact on the Indian economy and
could harm the Bank’s business, its future financial performance and the prices of its equity shares and ADSs.

The global credit and equity markets have experienced substantial dislocations, liquidity disruptions and market corrections in recent years. In
particular, sub-prime mortgage loans in the United States have experienced increased rates of delinquency, foreclosure and loss. The recent history of
financial crises, which have affected both emerging and developed economies, has given rise to heightened liquidity and credit concerns and caused an
increase in volatility in the global credit and financial markets. Developments in the Eurozone have further exacerbated concerns relating to liquidity and
volatility in global capital markets.

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Developments in the Eurozone during the past couple of years have exacerbated concerns in the financial markets. Large budget deficits and rising
public debts have triggered sovereign debt crisis in multiple European countries that resulted in the bailout of certain economies and increased the risk of
government debt defaults, forcing governments to undertake aggressive budget cuts and austerity measures. On the back of this crises, the U.K. voted to
leave the European Union in 2016, prompting a plunge in the pound sterling and a credit rating downgrade. The outcome of the U.K. referendum created
fear of potential further exits from the European Economic and Monetary Union. While some of these apprehensions were alleviated by favorable outcomes
of subsequent Dutch and French elections, election results in Germany, Italy (where anti-EU parties gained support), the rise of separatists in Spain remain
and the recently concluded European Union elections show that these fears still persist. The election of a new prime minister in the U.K. may increase the
likelihood of the U.K.’s exit, on October 31, 2019, without an agreement to govern the future relationship between the U.K. and European Union, further
exacerbating concerns in the financial markets. In any case, the terms of the U.K.’s exit from the European Union remain in the process of being negotiated
and this uncertainty regarding the future of the relationship between the U.K. and the European Union could keep financial markets on edge. In addition, the
sovereign ratings of various European Union countries have been downgraded since 2012. Financial markets and the supply of credit could continue to be
negatively impacted by ongoing concerns surrounding the sovereign debts and fiscal deficits of European countries, the possibility of further downgrades
of, or defaults on, sovereign debt, concerns regarding a sharper slowdown in Eurozone than was earlier anticipated, as well as uncertainties regarding the
stability and overall standing of the European Monetary Union. These and other related events have had a significant impact on the global credit and
financial markets as a whole, including reduced liquidity, greater volatility, the widening of credit spreads and a lack of price transparency.

In response to such developments, legislators and financial regulators in the United States, Europe and other jurisdictions, including India, have
implemented several policy measures designed to add stability to the financial markets. However, the overall impact of these and other legislative and
regulatory efforts on the global financial markets is uncertain, and they may not have the intended stabilizing effects. In the event that the current adverse
conditions in the global credit markets continue or if there is any significant financial disruption, this could cause increased volatility in the Indian financial
market and have an adverse effect on our business, future financial performance and the trading price of our equity shares and ADSs.

Any adverse change in India’s credit rating, or the credit rating of any country in which our foreign banking outlets are located, by an international
rating agency could adversely affect our business and profitability.
The Bank is rated BBB- by Standard & Poor’s (“S&P”) and Baa2 by Moody’s, two international rating agencies. In the case of the international rating
agencies, the ratings of all Indian banks are capped at the sovereign rating (that is, BBB- by S&P and Baa2 by Moody’s). In India, the Bank is rated AAA
by CRISIL, CARE and India Ratings (the Indian arm of Fitch Ratings), which are the highest credit ratings assigned on the domestic scale.

There is a risk that the Bank’s ratings may be downgraded when the rating agencies revise their outlook on India’s sovereign rating or when there is a
significant deterioration in the Bank’s existing financial strength and business position. The Bank’s rating may also be revised when the rating agencies
undertake changes to their rating methodologies. For instance, in April 2015, Moody’s revised its Bank rating methodology and the assessment of
government support to banks, following which the ratings of several banks globally, including Indian banks, were revised. Following this methodology
change, the Bank’s rating was revised to Baa3 from Baa2 so as to cap it at the Indian sovereign rating.

In addition, the rating of our foreign banking outlets may be impacted by the sovereign rating of the country in which those banking outlets are
located, particularly if the sovereign rating is below India’s rating. Pursuant to applicable ratings criteria published by S&P, the rating of any bond issued in
a jurisdiction is capped by the host country rating. Accordingly, any revision to the sovereign rating of the countries in which our banking outlets are located
to below India’s rating could impact the rating of our foreign banking outlets and any securities issued from those banking outlets. For example, in fiscal
2016, declining oil prices caused the credit ratings of many oil exporting countries to be downgraded and we had outstanding bonds issued from a branch in
such a country which were negatively affected by such downgrade.

Going forward, the sovereign ratings outlook for India will remain dependent on the growth of the economy and the inflation environment, as well as
exercise of adequate fiscal restraint by the government. Any adverse change in India’s credit rating, or the credit rating of any country in which our foreign
banking outlets are located, by international rating agencies may adversely impact our business financial position and liquidity, limit our access to capital
markets, and increase our cost of borrowing.

If there is any change in tax laws or regulations, or their interpretation, such changes may significantly affect our financial statements for the current
and future years, which may have a material adverse effect on our financial position, business and results of operations.
Any change in Indian tax laws, including the upward revision to the currently applicable normal corporate tax rate of 30.0 percent along with
applicable surcharge and cess, could affect our tax burden. Other benefits such as exemption for income earned by way of dividend from investments in
other domestic companies and units of mutual funds, exemption for interest received in respect of tax-free bonds, if withdrawn in the future, may no longer
be available to us. Any adverse order passed by the appellate authorities/tribunals/courts would have an impact on our profitability.

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As of July 1, 2017, GST replaced most indirect taxes levied by the central government and state governments, providing a unified tax regime in
respect of goods and services for all of India.

There continue to be several challenges to the successful implementation of GST, making compliance with the tax difficult. These include variations
in the tax rate, legal challenges, complex return filings, certain reconciliation issues, input tax credit issues, and IT infrastructure issues. The GST law
continues to evolve and the authorities have been trying to address public concerns by issuing a series of notifications, clarifications, press releases and
FAQs to resolve a wide range of issues. We expect challenges to certain aspects of the GST law to continue until the remaining issues, particularly those
related to technical aspects of the law, are settled. Any such changes and the related uncertainties with respect to GST may have a material adverse effect on
our business, financial condition and results of operations.

The General Anti-Avoidance Rules (“GAAR”) have come into effect from April 1, 2017. The tax consequences of the GAAR provisions being
applied to an arrangement could result in denial of tax benefit amongst other consequences. In the absence of any precedents on the subject, the application
of these provisions is uncertain. If the GAAR provisions are made applicable to us, it may have an adverse tax impact on us.

The Finance Act 2018, has withdrawn exemption previously granted in respect of payment of long term capital gains tax and such tax became
payable by the investors from April 1, 2018. We cannot predict whether any tax laws or regulations impacting our products will be enacted, what the nature
and impact of the specific terms of any such laws or regulations will be or whether, if at all, any laws or regulations would have a material adverse effect on
our business, financial condition and results of operations.

Any volatility in the exchange rate may lead to a decline in India’s foreign exchange reserves and may affect liquidity and interest rates in the Indian
economy, which could adversely impact us.
Capital flows picked up substantially over the past couple of years, reflecting a reassessment of investor expectations about future domestic growth
prospects following the election of a pro-reform government in 2014. While the CAD remained a main area of concern over fiscal 2012 and fiscal 2013, it
shrunk sharply in fiscal 2014 to 1.7 percent of GDP, and fell further in fiscal 2017 to 0.7 percent of GDP. A sharp contraction in the oil imports bill on the
back of a near 50 percent decline in global crude prices was the main reason behind the improvement in the current account position. However, with the
subsequent rise in oil prices, CAD as percent of GDP stood higher at 1.8 percent in fiscal 2018. The current account position is expected to further
deteriorate in fiscal 2019 to register deficit at 2.5 percent of GDP.

During fiscal 2014, the rupee came under significant and sustained selling pressure driven by growing anxiety about domestic growth prospects and
global risk aversion. The rupee depreciated in fiscal 2014 by 10.1 percent compared to the United States dollar. Investor expectations that reforms
implemented by the Government will lead to an improvement in the long-term growth outlook helped to improve the rupee’s performance, reducing the
depreciation trend to 3.85 percent in fiscal 2015. During fiscal 2016, the rupee depreciated by 6.32 percent primarily reflecting global risk aversion and a
strong United States dollar. However, in line with other emerging markets, which experienced currency appreciation in fiscal 2017, the Indian rupee also
appreciated by 2.1 percent against the United States dollar. This was mainly attributed to repricing of the Indian assets by international investors (driven by
domestic economic and political stability) alongside the disappointment relating to the United States reform agenda. In fiscal 2018, the rupee ranged
between a high of Rs.65.71 per US$ 1.00 and a low of Rs.63.38 per US$ 1.00. Pressure developed in the last two quarters of fiscal 2018 as oil prices rose
and trade war risks escalated globally. In fiscal 2019, the rupee depreciated by 6.3 percent against the United States dollar. Rising oil prices and
consequently marginal deterioration of India’s CAD, slowdown in global trade volumes and a general risk aversion towards emerging market currencies
(because of tariffs and trade war risks) have all affected the rupee negatively in the past fiscal year. Going forward, the Indian rupee may be impacted by
factors such as: (a) monetary policy in the developed world, (b) the rise in protectionist voices across the world (c) uncertainty surrounding the United
Kingdom’s exit from the European Union, (d) the slower pace of global growth particularly in China, (e) the revival of the domestic economy and (f) rise in
oil prices.

Further, global risk aversion could mean a continuation of the rotation of global fund flows from emerging markets to developed markets over the
medium term. The Indian rupee may be among the more vulnerable emerging market currencies on the back of a deterioration in the CAD and looming
fiscal concerns in the current year. Nevertheless, it remains a possibility that the RBI will intervene in the foreign exchange markets to stamp out excess
volatility in the exchange rate in the event of potential shocks, such as rise in protectionist tendencies creating panic in EM economies or a break-down in
the negotiations between EU and U.K. policymakers. Any such intervention by the RBI may result in a decline in India’s foreign exchange reserves and,
subsequently, reduce the amount of liquidity in the domestic financial system, which would, in turn, cause domestic interest rates to rise.

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Further, any increased volatility in capital flows may also affect monetary policy decision-making. For instance, a period of net capital outflows
might force the RBI to keep monetary policy tighter than optimal to guard against currency depreciation.

Political instability or changes in the central and state governments in India could delay the liberalization of the Indian economy and adversely affect
economic conditions in India generally, which would impact our financial results and prospects.
Since 1991, successive Indian governments have pursued policies of economic liberalization, including significantly relaxing restrictions on the
private sector. Nevertheless, the roles of the Indian central and state governments in the Indian economy as producers, consumers and regulators remain
significant as independent factors in the Indian economy. The re-election of the NDA government led by Prime Minister Narendra Modi has provided the
Indian political leadership with a new mandate to continue its reform agenda.

These reforms could lead to changes in the rate of economic liberalization, and specific laws and policies affecting financial institutions, foreign
investments, currency exchange rates, and other matters affecting investment in India. During its previous tenure, the Government of India and the RBI
declared that Rs. 500 and Rs. 1,000 denominations of bank notes have ceased to be legal tender. Pursuant to this currency demonetization, these high
denomination notes have no value and cannot be used for transactions or exchange purposes. These notes were replaced with a new series of bank notes.
The process of demonetization and replacement of these high denomination notes reduced the liquidity in the Indian economy which has a significant
reliance on cash. These factors resulted in reduced purchasing power, and altered consumption patterns in general. While the comprehensive and long-term
impact of this currency demonetization remains to be seen, there has been a slowdown in the Indian economy, at least in the short term, given that
demonetization impacts a majority of the cash currency in circulation. Such a slowdown can adversely affect the Indian economy, in turn affecting the
operations of our business. Further, protests against privatizations and government corruption scandals, which have occurred in the past, could slow the pace
of liberalization and deregulation. Any change in India’s policy of economic liberalization and deregulation could adversely affect business and economic
conditions in India generally, and our business in particular.

Terrorist attacks, civil unrest and other acts of violence or war involving India and other countries would negatively affect the Indian market where our
shares trade and lead to a loss of confidence and impair travel, which could reduce our customers’ appetite for our products and services.
Terrorist attacks, such as those in Mumbai in November 2008 and in Pulwana in February 2019, and other acts of violence or war may negatively
affect the Indian markets on which our equity shares trade and also adversely affect the worldwide financial markets. These acts may also result in a loss of
business confidence, make travel and other services more difficult and, as a result, ultimately adversely affect our business. In addition, any deterioration in
relations between India and Pakistan or between India and China might result in investor concern about stability in the region, which could adversely affect
the price of our equity shares and ADSs.

India has also witnessed civil disturbances in recent years and future civil unrest as well as other adverse social, economic and political events in
India could have an adverse impact on us. Such incidents also create a greater perception that investment in Indian companies involves a higher degree of
risk, which could have an adverse impact on our business and the price of our equity shares and ADSs.

Natural calamities, climate change and health epidemics could adversely affect the Indian economy, or the economy of other countries where we
operate, our business and the price of our equity shares and ADSs.
India has experienced natural calamities such as earthquakes, floods and droughts in the past few years. The extent and severity of these natural
disasters determine their impact on the Indian economy. In particular, climatic and weather conditions, such as the level and timing of monsoon rainfall,
impact the agricultural sector, which constituted approximately 16 percent of India’s GDP in fiscal 2019 (in current prices terms). Prolonged spells of below
or above normal rainfall or other natural calamities, or global or regional climate change, could adversely affect the Indian economy and our business,
especially our rural portfolio. Similarly, global or regional climate change in India and other countries where we operate could result in change in weather
patterns and frequency of natural calamities like droughts, floods and cyclones, which could affect the economy of India, the countries where we operate
and our operations in those countries.

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Health epidemics could also disrupt our business. In fiscal 2010, there were outbreaks of swine flu, caused by the H1N1 virus, in certain regions of
the world, including India and several countries in which we operate. Any future outbreak of health epidemics may restrict the level of business activity in
affected areas, which may in turn adversely affect our business and the price of our equity shares and ADSs could be adversely affected.

Investors may have difficulty enforcing foreign judgments in India against the Bank or its management.
The Bank is a limited liability company incorporated under the laws of India. Substantially all of the Bank’s directors and executive officers and some
of the experts named herein are residents of India and a substantial portion of the assets of the Bank and such persons are located in India. As a result, it
may not be possible for investors to effect service of process on the Bank or such persons in jurisdictions outside of India, or to enforce against them
judgments obtained in courts outside of India predicated upon civil liabilities of the Bank or such directors and executive officers under laws other than
Indian Law.

In addition, India is not a party to any international treaty in relation to the recognition or enforcement of foreign judgments. Recognition and
enforcement of foreign judgments is provided for under section 13 and section 44A of the Indian Civil Procedure Code (the “Civil Procedure Code”).
Section 44A of the Civil Procedure Code provides that where a foreign judgment has been rendered by a superior court in any country or territory outside
India that the Government has, by notification, declared to be a reciprocating territory, that judgment may be enforced in India by proceedings in execution
as if it had been rendered by the relevant court in India. However, section 44A of the Civil Procedure Code is applicable only to monetary decrees not being
in the nature of any amounts payable in respect of taxes or other charges of a like nature or in respect of a fine or other penalty and is not applicable to
arbitration awards.

The United States has not been declared by the government to be a reciprocating territory for the purposes of section 44A of the Civil Procedure
Code. However, the United Kingdom has been declared by the government to be a reciprocating territory and the High Courts in England as the relevant
superior courts. A judgment of a court in a jurisdiction which is not a reciprocating territory, such as the United States, may be enforced only by a new suit
upon the judgment and not by proceedings in execution. Section 13 of the Civil Procedure Code provides that a foreign judgment shall be conclusive as to
any matter thereby directly adjudicated upon except: (i) where it has not been pronounced by a court of competent jurisdiction; (ii) where it has not been
given on the merits of the case; (iii) where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to
recognize the law of India in cases where such law is applicable; (iv) where the proceedings in which the judgment was obtained were opposed to natural
justice; (v) where it has been obtained by fraud; or (vi) where it sustains a claim founded on a breach of any law in force in India. The suit must be brought
in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a
court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court
would enforce a foreign judgment if it viewed the amount of damages awarded as excessive or inconsistent with Indian practice. A party seeking to enforce
a foreign judgment in India is required to obtain approval from the RBI to repatriate outside India any amount recovered pursuant to execution. Any
judgment in a foreign currency would be converted into Indian rupees on the date of the judgment and not on the date of the payment. The Bank cannot
predict whether a suit brought in an Indian court will be disposed of in a timely manner or be subject to considerable delays.

Risks Relating to the ADSs and Equity Shares

Historically, our ADSs have traded at a premium to the trading prices of our underlying equity shares, a situation which may not continue.
Historically, our ADSs have traded on the New York Stock Exchange (the “NYSE”) at a premium to the trading prices of our underlying equity
shares on the Indian stock exchanges. See “Certain Information About Our American Depositary Shares and Equity Shares” for the underlying data. We
believe that this price premium has resulted from the relatively small portion of our market capitalization previously represented by ADSs, restrictions
imposed by Indian law on the conversion of equity shares into ADSs, and an apparent preference for investors to trade dollar-denominated securities. Over
time, some of the restrictions on issuance of ADSs imposed by Indian law have been relaxed and we expect that other restrictions may be relaxed in the
future. It is possible that in the future our ADSs will not trade at any premium to our equity shares and could even trade at a discount to our equity shares.

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Investors in ADSs will not be able to vote.

Investors in ADSs will have no voting rights, unlike holders of equity shares. Under the deposit agreement, the depositary will abstain from voting
the equity shares represented by the ADSs. If you wish, you may withdraw the equity shares underlying the ADSs and seek to vote (subject to Indian
restrictions on foreign ownership) the equity shares you obtain upon withdrawal. However, this withdrawal process may be subject to delays and additional
costs and you may not be able to redeposit the equity shares. For a discussion of the legal restrictions triggered by a withdrawal of equity shares from the
depositary facility upon surrender of ADSs, see “Restrictions on Foreign Ownership of Indian Securities” and “Description of American Depositary Shares
—Voting Rights”.

Your ability to withdraw equity shares from the depositary facility is uncertain and may be subject to delays.
India’s restrictions on foreign ownership of Indian companies limit the number of equity shares that may be owned by foreign investors and generally
require government approval for foreign investments. Investors who withdraw equity shares from the ADSs depositary facility for the purpose of selling
such equity shares will be subject to Indian regulatory restrictions on foreign ownership upon withdrawal. The withdrawal process may be subject to delays.
For a discussion of the legal restrictions triggered by a withdrawal of equity shares from the depositary facility upon surrender of ADSs, see “Restrictions
on Foreign Ownership of Indian Securities”.

Restrictions on deposit of equity shares in the depositary facility could adversely affect the price of our ADSs.
Under current Indian regulations, an ADSs holder who surrenders ADSs and withdraws equity shares may deposit those equity shares again in the
depositary facility in exchange for ADSs. An investor who has purchased equity shares in the Indian market may also deposit those equity shares in the
ADSs program. However, the deposit of equity shares may be subject to securities law restrictions and the restriction that the cumulative aggregate number
of equity shares that can be deposited as of any time cannot exceed the cumulative aggregate number represented by ADSs converted into underlying equity
shares as of such time. These restrictions increase the risk that the market price of our ADSs will be below that of our equity shares.

There is a limited market for the ADSs.

Although our ADSs are listed and traded on the NYSE, any trading market for our ADSs may not be sustained, and there is no assurance that the
present price of our ADSs will correspond to the future price at which our ADSs will trade in the public market. Indian legal restrictions may also limit the
supply of ADSs. The only way to add to the supply of ADSs would be through an additional issuance. We cannot guarantee that a market for the ADSs will
continue.

Conditions in the Indian securities market may affect the price or liquidity of our equity shares and ADSs.
The Indian securities markets are smaller and more volatile than securities markets in more developed economies. The Indian stock exchanges have
in the past experienced substantial fluctuations in the prices of listed securities. Currently, prices of securities listed on Indian exchanges are displaying
signs of volatility linked among other factors to the uncertainty in the global markets and the rising inflationary and interest rate pressures domestically. The
governing bodies of the Indian stock exchanges have from time to time imposed restrictions on trading in certain securities, limitations on price movements
and margin requirements. Future fluctuations or trading restrictions could have a material adverse effect on the price of our equity shares and ADSs.

Settlement of trades of equity shares on Indian stock exchanges may be subject to delays.
The equity shares represented by our ADSs are listed on the NSE and BSE. Settlement on these stock exchanges may be subject to delays and an
investor in equity shares withdrawn from the depositary facility upon surrender of ADSs may not be able to settle trades on these stock exchanges in a
timely manner.

You may be subject to Indian taxes arising out of capital gains.

Generally, capital gains, whether short-term or long-term, arising on the sale of the underlying equity shares in India are subject to Indian capital
gains tax. Investors are advised to consult their own tax advisers and to carefully consider the potential tax consequences of an investment in ADSs. See
also “Taxation”.

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You may be unable to exercise preemptive rights available to other shareholders.

A company incorporated in India must offer its holders of equity shares preemptive rights to subscribe and pay for a proportionate number of shares
to maintain their existing ownership percentages prior to the issuance of any new equity shares, unless these rights have been waived by at least 75 percent
of the company’s shareholders present and voting at a shareholders’ general meeting. United States investors in our ADSs may be unable to exercise
preemptive rights for our equity shares underlying our ADSs unless a registration statement under the Securities Act of 1933 (the “Securities Act”) is
effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. Our decision to file a registration
statement will depend on the costs and potential liabilities associated with any registration statement as well as the perceived benefits of enabling United
States investors in our ADSs to exercise their preemptive rights and any other factors we consider appropriate at the time. We do not commit to filing a
registration statement under those circumstances. If we issue any securities in the future, these securities may be issued to the depositary, which may sell
these securities in the securities markets in India for the benefit of the investors in our ADSs. There can be no assurance as to the value, if any, the
depositary would receive upon the sale of these securities. To the extent that investors in our ADSs are unable to exercise preemptive rights, their
proportional interests in us would be reduced.

Financial difficulty and other problems in certain financial institutions in India could adversely affect our business and the price of our equity shares
and ADSs.
We are exposed to the risks of the Indian financial system by being a part of the system which may be affected by the financial difficulties faced by
certain Indian financial institutions because the commercial soundness of many financial institutions may be closely related as a result of credit, trading,
clearing or other relationships. Such “systemic risk”, may adversely affect financial intermediaries, such as clearing agencies, banks, securities firms and
exchanges with which we interact on a daily basis. Any such difficulties or instability of the Indian financial system in general could create an adverse
market perception about Indian financial institutions and banks and adversely affect our business. Our transactions with these financial institutions expose
us to various risks in the event of default by a counterparty, which can be exacerbated during periods of market illiquidity.

Because the equity shares underlying our ADSs are quoted in rupees in India, you may be subject to potential losses arising out of exchange rate risk
on the Indian rupee and risks associated with the conversion of rupee proceeds into foreign currency.
Fluctuations in the exchange rate between the United States dollar and the Indian rupee may affect the value of your investment in our ADSs.
Specifically, if the relative value of the Indian rupee to the United States dollar declines, each of the following values will also decline:
• the United States dollar equivalent of the Indian rupee trading price of our equity shares in India and, indirectly, the United States dollar
trading price of our ADSs in the United States;
• the United States dollar equivalent of the proceeds that you would receive upon the sale in India of any equity shares that you withdraw from
the depositary; and
• the United States dollar equivalent of cash dividends, if any, paid in Indian rupees on the equity shares represented by our ADSs.

There may be less information available on Indian securities markets than securities markets in developed countries.
There is a difference between the level of regulation and monitoring of the Indian securities markets and the activities of investors, brokers and other
participants and that of markets in the United States and other developed economies. The Securities and Exchange Board of India (“SEBI”) and the stock
exchanges are responsible for improving disclosure and other regulatory standards for the Indian securities markets. The SEBI has issued regulations and
guidelines on disclosure requirements, insider trading and other matters. There may, however, be less publicly available information about Indian companies
than is regularly made available by public companies in developed economies.

HDFC Limited’s significant holdings could have an effect on the trading price of our equity shares and ADSs.
HDFC Limited and its subsidiaries hold a significant portion of our equity, and are entitled to certain rights to appoint directors to our Board. While
we are professionally managed and overseen by an independent board of directors, HDFC Limited can exercise influence over our board and over matters
subject to a shareholder vote that could directly or indirectly favor the interests of HDFC Limited over our interests. See “ —HDFC Limited holds a
significant percentage of our share capital and can exercise influence over board decisions that could directly or indirectly favor the interests of HDFC
Limited over our interests” and “ —We may face conflicts of interest relating to our promoter and principal shareholder, HDFC Limited, which could cause
us to forego business opportunities and consequently have an adverse effect on our financial performance”. HDFC Limited’s concentration of ownership
may adversely affect the trading price of our equity shares to the extent investors perceive a disadvantage in owning stock of a company with a significant
shareholder.

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Investors may be subject to Indian taxes arising out of capital gains on the sale of equity shares.
Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian company are generally taxable in India. Until
March 31, 2018, any gain realized on the sale of listed equity shares on a stock exchange held for more than 12 months was not subject to capital gains tax
in India if STT was paid on the transaction. STT is levied on and collected by a domestic stock exchange on which the equity shares are sold. However,
with the enactment of the Finance Act, 2018, (“Finance Act”) the exemption previously granted in respect of payment of long-term capital gains tax has
been withdrawn and such taxes are now payable by the investors with effect from April 1, 2018. Further, any gain realized on the sale of listed equity shares
held for a period of 12 months or less will be subject to short-term capital gains tax in India. Capital gains arising from the sale of equity shares will be
exempt from taxation in India in cases where the exemption from taxation in India is provided under a treaty between India and the country of which the
seller is resident.

Indian tax treaties, for example with the United States and the United Kingdom, do not limit India’s ability to impose tax on capital gains. The treaties
provide that except as provided in case of taxation of shipping and air transport provisions, each contracting state may tax capital gains in accordance with
the provisions of the domestic law. As a result, residents of other countries may be liable for tax in India as well as in their own jurisdiction on a gain upon
the sale of equity shares. However, credit for the same may be available in accordance with the provisions of the respective treaty and in accordance with
the provisions under the domestic law, if applicable.

Future issuances or sales of equity shares and ADSs could significantly affect the trading price of our equity shares and ADSs.
The future issuance of shares by us or the disposal of shares by any of our major shareholders, or the perception that such issuance or sales may occur,
may significantly affect the trading price of our equity shares and ADSs. There can be no assurance that we will not issue further shares or that the major
shareholders will not dispose of, pledge or otherwise encumber their shares.

Foreign Account Tax Compliance Act withholding may affect payments on our equity shares and ADSs.
Sections 1471 through 1474 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”) (provisions commonly known as
“FATCA” or the Foreign Account Tax Compliance Act) impose (a) certain reporting and due diligence requirements on foreign financial institutions
(“FFIs”) and, (b) potentially require such FFIs to deduct a 30 percent withholding tax from (i) certain payments from sources within the United States, and
(ii) “foreign passthru payments” (which is not yet defined in current guidance) made to certain FFIs that do not comply with such reporting and due
diligence requirements or certain other payees that do not provide required information. We as well as relevant intermediaries such as custodians and
depositary participants are classified as FFIs for these purposes. The United States has entered into a number of intergovernmental agreements (“IGAs”)
with other jurisdictions which may modify the operation of this withholding. India has entered into a Model 1 IGA with the United States for giving effect
to FATCA, and Indian FFIs, including us, are generally required to comply with FATCA based on the terms of the IGA and relevant rules made pursuant
thereto.

Under current guidance it is not clear whether or to what extent payments on ADSs or equity shares will be considered “foreign passthru payments”
subject to FATCA withholding or the extent to which withholding on “foreign passthru payments” will be required under the applicable IGA. Investors
should consult their own tax advisers on how the FATCA rules may apply to payments they receive in respect of the ADSs or equity shares.

Should any withholding tax in respect of FATCA be deducted or withheld from any payments arising to any investor, neither we nor any other person
will pay additional amounts as a result of the deduction or withholding.

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CERTAIN INFORMATION ABOUT OUR AMERICAN DEPOSITARY SHARES AND EQUITY SHARES

Our ADSs, each representing three equity shares, par value Rs. 2.0 per equity share, are listed on the NYSE under the symbol “HDB”. Our equity
shares, including those underlying the ADSs, are listed on the National Stock Exchange of India Limited (NSE) under the symbol “HDFCBANK” and the
Bombay Stock Exchange Limited (BSE) under the code 500180. Our fiscal quarters end on June 30 of each year for the first quarter, September 30 for the
second quarter, December 31 for the third quarter and March 31 for the fourth quarter.

As of March 31, 2019, there were 618,595 holders of record of our equity shares, including the shares underlying ADSs and GDRs, of which 888 had
registered addresses in the United States and held an aggregate of 970,659 equity shares representing 0.14 percent of our shareholders. In our records, only
the depositary, JPMorgan Chase Bank, N.A., is the shareholder with respect to equity shares underlying the ADSs and GDRs.

Upon our acquisition of Centurion Bank of Punjab (“CBoP”) in 2008, CBoP had global depository receipts (GDRs) outstanding, representing the
right to receive shares in CBoP, which, upon the consummation of the acquisition, converted into our GDRs, representing the right to receive our shares. As
of March 31, 2019, there were 22,860,766 GDRs outstanding, representing 11,430,383 shares of the Bank (in aggregate 0.42 percent of our paid-up capital).
The Depository for GDRs is represented in India by JPMorgan Chase Bank N.A. Due to low trading and conversion volume in our GDRs, the Board of
Directors of the Bank at its meeting held on April 20, 2019 decided to terminate the GDR program. The requisite notice of termination was issued to the
custodian and the depository on May 15, 2019 and the GDRs which were listed on the Luxembourg Stock Exchange have since been delisted effective
July 15, 2019.

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DESCRIPTION OF EQUITY SHARES

The Company
We are registered under Corporate Identity Number L65920MH1994PLC080618 with the Registrar of Companies, Maharashtra State, India. Our
Memorandum of Association permits us to engage in a wide variety of activities, including all the activities in which we currently engage or intend to
engage, as well as other activities in which we currently have no intention of engaging.

Our authorized share capital is Rs.6,500,000,000 consisting of 3,250,000,000 equity shares of par value Rs.2 each. In line with the approval of the
Board of Directors on May 22, 2019 and our shareholders At our annual general meeting on July 12, we intend to effect a subdivision of our equity shares,
splitting each equity share into two new equity shares of par value Rs.1 each, resulting in an authorized share capital of Rs.6,500,000,000 consisting of
6,500,000,000 equity shares of par value Rs.1 each. For the said subdivision the Board of Directors, in their meeting held on July 20, 2019, fixed the record
date as September 20, 2019. The Board of Directors, at their meeting held on July 20, 2019, also declared a special interim dividend of Rs.5 per equity share
for fiscal 2020, and fixed the record date for the dividend as August 2, 2019.

Dividends
Under Indian law and subject to the Banking Regulation Act, a company pays dividends upon a recommendation by its board of directors and
approval by a majority of its shareholders at the annual general meeting of shareholders held within six months of the end of each fiscal year. The
shareholders have the right to decrease but not increase the dividend amount recommended by the Board of Directors. Dividends are generally declared as a
percentage of par value (on a per share basis) and distributed and paid to shareholders. The Companies Act provides that shares of a company of the same
class must receive equal dividend treatment.

These distributions and payments are required to be deposited into a separate bank account within 5 days of the declaration of such dividend and paid
to shareholders within 30 days of the annual general meeting where the resolution for declaration of dividends is approved.

The Companies Act states that any dividends that remain unpaid or unclaimed after that period are to be transferred to a special bank account. Any
dividend amount that remains unclaimed for seven years from the date of the transfer is to be transferred by us to a fund, called the Investor Education and
Protection Fund, created by the Government.

Our Articles of Association authorize our Board of Directors to declare interim dividends, the amount of which must be deposited in a separate bank
account within five days and paid to the shareholders within 30 days of the declaration.

Under the Companies Act, final dividends payable can be paid only in cash to the registered shareholder at a record date fixed prior to the relevant
annual general meeting, to his order or to the order of his banker.

Before paying any dividend on our shares, we are required under the Banking Regulation Act to write off all capitalized expenses (including
preliminary expenses, organization expenses, share-selling commission, brokerage, amounts of losses incurred and any other item of expenditure not
represented by tangible assets). We are permitted to declare dividends of up to 35.0 percent of net profit calculated under Indian GAAP without prior RBI
approval subject to compliance with certain prescribed requirements. Further, upon compliance with the prescribed requirements, we are also permitted to
declare interim dividends subject to the above-mentioned cap computed for the relevant accounting period.

Dividends may only be paid out of our profits for the relevant year arrived at after providing for depreciation or out of the profits of the company for
any previous financial years arrived at after providing for depreciation and in certain contingencies out of the free reserves of the company, provided that in
computing profits any amount representing unrealized gains, notional gains or revaluation of assets and any change in carrying amount of an asset or of a
liability on measurement of the asset or the liability at fair value shall be excluded. Before declaring dividends, we are required by the RBI to transfer
25.0 percent of our net profits (calculated under Indian GAAP) of each year to a reserve fund.

Bonus Shares
In addition to permitting dividends to be paid out of current or retained earnings calculated under Indian GAAP, the Companies Act permits our
Board of Directors, subject to the approval of our shareholders, to distribute to the shareholders, in the form of fully paid-up bonus equity shares, an amount
transferred from the company’s free reserves, securities premium account or the capital redemption reserve account. Bonus equity shares can be distributed
only with the prior approval of the RBI. These bonus equity shares must be distributed to shareholders in proportion to the number of equity shares owned
by them.

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Bonus shares can only be issued if the company has not defaulted in payments of the employees, such as, contribution to provident fund, gratuity and
bonus statutory dues or principal/interest payments on fixed deposits or debt securities issued by it. Bonus shares must not be issued in lieu of dividend.
Further, listed companies are also required to follow the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (the “SEBI ICDR
Regulations”) for issuance of bonus shares.

Preemptive Rights and Issue of Additional Shares

Subject to the Banking Regulation Act and other applicable guidelines issued by the RBI, the Companies Act gives shareholders the right to subscribe
for new shares in proportion to their existing shareholdings unless otherwise determined by a resolution passed by three-fourths of the shareholders present
and voting at a general meeting. Under the Companies Act and our Articles, in the event of an issuance of securities, subject to the limitations set forth
above, we must first offer the new equity shares to the holders of equity shares on a fixed record date. The offer, required to be made by notice, must
include:
• the right, exercisable by the shareholders of record, to renounce the shares offered in favor of any other person;
• the number of shares offered; and
• the period of the offer, which may not be less than 15 days from the date of the offer and shall not exceed 30 days. If the offer is not accepted,
it is deemed to have been declined.

Our Board of Directors is permitted to distribute equity shares not accepted by existing shareholders in the manner it deems beneficial for us in
accordance with our Articles. Holders of ADSs may not be able to participate in any such offer. See “Description of American Depositary Shares—Share
Dividends and Other Distributions”.

General Meetings of Shareholders

There are two types of general meetings of shareholders: annual general meetings and extraordinary general meetings. We are required to convene our
annual general meeting within six months after the end of each fiscal year. We may convene an extraordinary general meeting when necessary or at the
request of the shareholders holding on the date of the request at least 10 percent of our paid-up capital. A general meeting is generally convened by our
company secretary in accordance with a resolution of the Board of Directors. Written notice or notice via email or other permitted electronic means stating
the agenda of the meeting must be given at least 21 clear days prior to the date set for the general meeting to the shareholders whose names are in the
register at the record date. Shorter notice is permitted if consent is received from 95 percent of the members entitled to vote. Those shareholders who are not
registered at the record date do not receive notice of this meeting and are not entitled to attend or vote at this meeting.

The annual general meeting is held in Mumbai, the city in which our registered office is located. General meetings other than the annual general
meeting may be held at any location if so determined by a resolution of our Board of Directors.

Voting Rights
Section 108 of the Companies Act and Rule 20 of the Companies (Management and Administration) Rules, 2014 deal with the exercise of right to
vote by members by electronic means. In terms of Rule 20 of the Companies (Management and Administration) Rules, 2014, every listed company (other
than a company referred to in Chapters XB or XC of the SEBI ICDR Regulations) is required to provide to its members facility to exercise their right to
vote at general meetings by electronic means. Section 110 of the Companies Act allows such a company to transact all items of business at a general
meeting, provided the company offers to its members a facility to exercise their right to vote at general meetings by electronic means. The Ministry of
Corporate Affairs, has clarified that voting by show of hands would not be allowable in cases where Rule 20 is applicable.

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A shareholder has one vote for each equity share and voting may be on a poll or through electronic means or postal ballot. Under Section 12 of the
Banking Regulation Act as amended with effect from January 18, 2013 by the Banking Laws Amendment Act, 2012, no person holding shares in a banking
company shall, in respect of any shares held by such person, exercise voting rights on poll in excess of 10 percent of the total voting rights of all the
shareholders of the banking company, provided that the RBI may increase, in a phased manner, such ceiling on voting rights from 10 percent to 26 percent.
The Master Direction—Ownership in Private Sector Banks, Directions, 2016, issued by the RBI on May 12, 2016, states that the current level of ceiling on
voting rights is 15 percent. At a general meeting, upon a show of hands, every member holding shares and entitled to vote and present in person has one
vote. Upon a poll, the voting rights of each shareholder entitled to vote and present in person or by proxy is in the same proportion as the capital paid up on
each share held by such holder bears to the company’s total paid up capital, subject to the limits prescribed under the Banking Regulation Act. Voting is by
a show of hands, unless a poll is ordered by the Chairman of the meeting. However, voting by show of hands is not permitted for listed companies. The
Chairman of the meeting has a casting vote.

Unless the Articles provide for a larger number, the quorum for a general meeting is: (a) five members present (in person or by proxy) if the number
of members as of the date of the meeting is not more than one thousand; (b) fifteen members present (in person or by proxy) if the number of members as of
the date of the meeting is more than one thousand but not more than five thousand; and (c) thirty members present (in person or by proxy) if the number of
members as of the date of the meeting exceeds five thousand. Generally, resolutions may be passed by simple majority of the shareholders present and
voting at any general meeting. However, resolutions such as an amendment to the organizational documents, commencement of a new line of business, an
issue of additional equity shares (which is not a preemptive issue) and reductions of share capital, require that the votes cast in favor of the resolution
(whether by show of hands or on a poll) are not less than three times the number of votes, if any, cast against the resolution. As provided in our Articles, a
shareholder may exercise his voting rights by proxy to be given in the form prescribed by us. This proxy, however, is required to be lodged with us at least
48 hours before the time of the relevant meeting. A shareholder may, by a single power of attorney, grant general power of representation covering several
general meetings. A corporate shareholder is also entitled to nominate a representative to attend and vote on its behalf at all general meetings. The
Companies Act also provides for the passing of resolutions in relation to certain matters specified by the Government of India, by means of a postal ballot.
A notice to all the shareholders must be sent along with a draft resolution explaining the reasons therefore and requesting the shareholders to send their
assent or dissent in writing on a postal ballot within a period of 30 days from the date of dispatch of the notice. Shareholders may exercise their right to vote
at general meetings, through postal ballot by sending their votes through the postal arrangements or through electronic means (e-voting), for which separate
facilities are provided to the shareholders.

ADS holders have no voting rights with respect to the deposited shares.

Annual Report
At least 21 clear days before an annual general meeting, we must circulate either a detailed or abridged version of our Indian GAAP audited financial
accounts, together with the Directors’ Report and the Auditor’s Report, to the shareholders along with a notice convening the annual general meeting. We
are also required under the Companies Act to make available upon the request of any shareholder our complete balance sheet and profit and loss account.
The above-mentioned documents must also be made available for inspection at its registered office during working hours for a period of 21 days before the
date of the annual general meeting. A statement containing the salient features of these documents in a prescribed manner (or copies of these documents) is
required to be sent to every member of the company and to every debenture trustee at least 21 days before the date of the annual general meeting. Under the
Companies Act, we must file with the Registrar of Companies our Indian GAAP balance sheet and profit and loss account within 30 days of the conclusion
of the annual general meeting and our annual return within 60 days of the conclusion of that meeting.

Register of Shareholders, Record Dates and Transfer of Shares

The equity shares are in registered form. We maintain a register of our shareholders in Mumbai. We register transfers of equity shares on the register
of shareholders upon presentation of certificates in respect of the transfer of equity shares held in physical form together with a transfer deed duly executed
by the transferor and transferee. These transfer deeds are subject to stamp duty, which has been fixed at 0.25 percent of the transfer price.

For the purpose of determining equity shares entitled to annual dividends, the register of shareholders is closed for a period prior to the annual general
meeting. The Companies Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 permit
us, pursuant to a resolution of our Board of Directors and upon at least seven days’ advance notice to the stock exchanges, to set the record date and close
the register of shareholders after seven days’ public notice for not more than 30 days at a time, and for not more than 45 days in a year, in order for us to
determine which shareholders are entitled to certain rights pertaining to the equity shares. Trading of equity shares and delivery of certificates in respect of
the equity shares may, however, continue after the register of shareholders is closed.

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Transfer of Shares
Shares held through depositories are transferred in the form of book entries or in electronic form in accordance with the regulations laid down by the
SEBI. These regulations provide the regime for the functioning of the depositories and the participants and set out the manner in which the records are to be
kept and maintained and the safeguards to be followed in this system. Transfers of beneficial ownership of shares held through a depositary are exempt from
stamp duty. We have entered into an agreement for such depository services with the National Securities Depository Limited and the Central Depository
Services India Limited.

The SEBI requires that our equity shares for trading and settlement purposes be in book-entry form for all investors, except for transactions that are
not made on a stock exchange and transactions that are not required to be reported to the stock exchange. Transfers of equity shares in book-entry form
require both the seller and the purchaser of the equity shares to establish accounts with depositary participants appointed by depositories established under
the Depositaries Act, 1996. Charges for opening an account with a depositary participant, transaction charges for each trade and custodian charges for
securities held in each account vary depending upon the practice of each depositary participant. Upon delivery, the equity shares shall be registered in the
name of the relevant depositary on our books and this depositary shall enter the name of the investor in its records as the beneficial owner. The transfer of
beneficial ownership shall be done through the records of the depositary. The beneficial owner shall be entitled to all rights and benefits and subject to all
liabilities in respect of his securities held by a depositary.

The requirement to hold the equity shares in book-entry form will apply to the ADS holders when the equity shares are withdrawn from the
depositary facility upon surrender of the ADSs. In order to trade the equity shares in the Indian market, the withdrawing ADS holder will be required to
comply with the procedures described above.

Our equity shares are freely transferable, subject to the provisions of the Companies Act under which, if a transfer of equity shares contravenes the
provisions of Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992 or the regulations issued under it or any
other law in force at the time, the National Company Law Tribunal may, on application made by us, a depositary incorporated in India, an investor, the
SEBI or certain other parties, direct a rectification of the register of records. It was a condition of our listing that we transfer equity shares and deliver share
certificates duly endorsed for the transfer within 15 days of the date of lodgment of transfer. If a company without sufficient cause refuses to register a
transfer of equity shares within 30 days from the date on which the instrument of transfer is delivered to the company, the transferee may appeal to the
National Company Law Tribunal seeking to register the transfer of equity shares. The National Company Law Tribunal may, in its discretion, issue an
interim order suspending the voting rights attached to the relevant equity shares before completing its investigation of the alleged contravention. However,
effective from and on April 1, 2019, the SEBI decided that except in cases of transmission or transposition of securities, requests for effecting the transfer of
securities shall not be processed unless the securities are held in dematerialized form with a depositary. Our Articles provide for certain restrictions on the
transfer of equity shares, including granting power to the Board of Directors in certain circumstances, to refuse to register or acknowledge transfer of equity
shares or other securities issued by us. Furthermore, the RBI requires us to obtain its approval before registering a transfer of equity shares in favor of a
person which together with equity shares already held by him represent more than 5 percent of our share capital.

Our transfer agent, Datamatics Business Solutions Limited, is located in Mumbai. Certain foreign exchange control and security regulations apply to
the transfer of equity shares by a non-resident or a foreigner.

Disclosure of Ownership Interest

The provisions of the Companies Act generally require beneficial owners of equity shares of Indian companies that are not holders of record to
declare to the company details of the holder of record and holders of record to declare details of the beneficial owner. While it is unclear whether these
provisions apply to holders of an Indian company’s ADSs, investors who exchange ADSs for equity shares are subject to this provision. Failure to comply
with these provisions would not affect the obligation of a company to register a transfer of equity shares or to pay any dividends to the registered holder of
any equity shares in respect of which this declaration has not been made, but any person who fails to make the required declaration may be liable for an
initial fine of up to Rs. 50,000 coupled with a further fine of up to Rs. 1,000 for each day this failure continues. However, under the Banking Regulation
Act, a registered holder of any equity shares, except in certain conditions, shall not be liable to any suit or proceeding on the ground that the title to those
equity shares vests in another person.

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Acquisition by the Issuer of Its Own Shares

The Companies Act permits a company to acquire its own equity shares and reduce its capital under certain circumstances. Such reduction of capital
requires compliance with buy-back provisions specified in the Companies Act and by the SEBI.

ADS holders will be eligible to participate in a buy-back in certain cases. An ADS holder may acquire equity shares by withdrawing them from the
depositary facility and then sell those equity shares back to us. ADS holders should note that equity shares withdrawn from the depositary facility may only
be redeposited into the depositary facility under certain circumstances.

There can be no assurance that the equity shares offered by an ADS investor in any buy-back of shares by us will be accepted by us. The position
regarding participation of ADS holders in a buy-back is not clear. ADS investors are advised to consult their Indian legal advisers prior to participating in
any buy-back by us, including in relation to any regulatory approvals and tax issues relating to the buy-back.

Liquidation Rights
Subject to the rights of depositors, creditors and employees, in the event of our winding up, the holders of the equity shares are entitled to be repaid
the amounts of capital paid up or credited as paid up on these equity shares. All surplus assets remaining belong to the holders of the equity shares in
proportion to the amount paid up or credited as paid up on these equity shares, respectively, at the commencement of the winding up.

Acquisition of the Undertaking by the Government

Under the Banking Regulation Act, the Government may, after consultation with the RBI, in the interest of our depositors or banking policy or better
provision of credit generally or to a particular community or area, acquire our banking business. The RBI may acquire our business if it is satisfied that we
have failed to comply with the directions given to us by the RBI or that our business is being managed in a manner detrimental to the interest of our
depositors. Similarly, the Government of India may also acquire our business based on a report by the RBI.

Takeover Code
Under the Securities and Exchange Board of India (Substantial Acquisitions of Shares and Takeovers) Regulations, 2011, as amended (the “Takeover
Code”), upon the acquisition of shares which taken together with the shares/voting rights already held aggregates 5 percent or more of the outstanding
shares or voting rights of a publicly listed Indian company, a purchaser is required to notify the company and all the stock exchanges on which the shares of
such company are listed. Such notification is also required when a person holds 5 percent or more of the outstanding shares or voting rights in a target
company and there is a change in his holding either due to purchase or disposal of shares of 2 percent or more of the outstanding shares/voting rights in the
target company or if such change results in shareholding falling below 5 percent, if there has been a change from the previous disclosure.

No acquisition of shares/voting rights by an acquirer in a target company which entitles the acquirer, together with persons acting in concert with
them, to 25 percent or more of such shares or voting rights is permissible unless the acquirer makes a public announcement of an open offer for acquiring
the shares of the target company in the manner provided in the Takeover Code. The public announcement of an open offer is also mandatory where an
acquirer who, together with persons acting in concert with them, holds 25 percent of the shares/voting rights in the target company, but less than the
maximum permissible non-public shareholding, seeks to acquire an additional 5 percent or more of the shares/voting rights in the target company during
any fiscal year. However, the Takeover Code applies only to shares or securities convertible into shares which carry a voting right. This provision will apply
to an ADS holder only once he or she converts the ADSs into the underlying equity shares.

In terms of the Takeover Code, the acquirer or holder of shares/voting rights in a target company shall in accordance with the “Continual Disclosure”
requirements disclose to the target company and the stock exchanges the details of holdings of equity shares/voting rights if such holding of shares/voting
rights is 25 percent or more of the outstanding shares/aggregate voting rights as at March 31 every year.

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DESCRIPTION OF AMERICAN DEPOSITARY SHARES

American Depositary Shares
JPMorgan Chase Bank, N.A., as depositary, issues the American Depositary Shares, or ADSs. Each ADS represents an ownership interest in three
equity shares, which we have deposited with the custodian, as agent of the depositary, under the deposit agreement among ourselves, the depositary and
each ADR holder. In the future, each ADS will also represent any securities, cash or other property deposited with the depositary but which it has not
distributed directly to an ADR holder. The ADSs are evidenced by what is known as American Depositary Receipts or ADRs.

The depositary’s office is located at J.P. Morgan Depositary Receipts, 383 Madison Ave, Floor 11, New York, NY 10179.

Investors may hold ADSs either directly or indirectly through their broker or other financial institution. If an investor holds ADSs directly, by having
an ADR certificate evidencing a specific number of ADSs registered in his name on the books of the depositary, or by holding an ADS in the depositary’s
direct registration system, he is an ADR holder. This description assumes that the investor holds his ADSs directly. If an investor holds the ADSs through
his broker or financial institution nominee, he must rely on the procedures of such broker or financial institution to assert the rights of an ADR holder
described in this section. Investors should consult with their broker or financial institution to find out what these procedures are.

Because the depositary’s nominee will actually be the registered owner of the shares, investors must rely on the depositary to exercise the rights of a
shareholder on their behalf. The obligations of the depositary and its agents are set out in the deposit agreement. The deposit agreement and the ADSs are
governed by New York law.

The following is a summary of the material terms of the deposit agreement. Because it is a summary, it does not contain all the information that may
be important to investors. For more complete information, investors should read the entire deposit agreement and the form of ADR, which contains the
terms of the ADSs. Investors can read a copy of the amended and restated deposit agreement, which was filed as an exhibit to the registration statement on
Form F-6 on September 9, 2015. Investors may also obtain a copy of the amended and restated deposit agreement at the Securities and Exchange
Commission Office, Public Reference Room, which is located at 100 F Street, N.E., Washington, D.C. 20549. Investors may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. See “Description of Equity Shares—The Company”.

Share Dividends and Other Distributions

We may make various types of distributions with respect to our securities. The depositary has agreed to pay to the investor the cash dividends or other
distributions it or the custodian receives on shares or other deposited securities, after deducting its charges and expenses. The investor will receive these
distributions in proportion to the number of deposited securities that the investor’s ADSs represent. To the extent practicable, the depositary will deliver
such distributions to ADR holders in proportion to their interests in the following manner:

Cash
The depositary will distribute any United States dollars available to it resulting from a cash dividend or other cash distribution if this is practicable
and can be done in a reasonable manner. The depositary will distribute this cash in a practicable manner, and may deduct any taxes required to be withheld,
any expenses of converting foreign currency and transferring funds to the United States and other expenses and adjustments. If exchange rates fluctuate
during a time when the depositary cannot convert a foreign currency, investors may lose some or all of the value of the distribution.

Shares
In the case of a distribution in shares, the depositary will issue additional ADRs to evidence the number of ADSs representing such shares. Only
whole ADSs will be issued. The depositary will sell any shares which would result in fractional ADSs and distribute the net proceeds to the ADR holders
entitled to them.

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Rights to Receive Additional Shares

In the case of a distribution of rights to subscribe for additional shares or other rights, if we provide satisfactory evidence that the depositary may
lawfully distribute the rights, the depositary may arrange for ADR holders to instruct the depositary as to the exercise of the rights. However, if we do not
furnish such evidence, the depositary may:
• sell the rights, if practicable, and distribute the net proceeds as cash.
• if it is not practicable to sell the rights, allow the rights to lapse, in which case ADR holders will receive nothing.

We have no obligation to file a registration statement under the Securities Act in order to make any rights available to ADR holders or furnish
evidence that the depositary may lawfully make any rights available to ADR holders.

Other Distributions
In the case of a distribution of securities or property other than those described above, the depositary may either:
• distribute such securities or property in any manner it deems equitable and practicable; or
• to the extent the depositary deems distribution of such securities or property not to be equitable and practicable, sell such securities or
property and distribute any net proceeds in the same way it distributes cash; or

Any United States dollars will be distributed by checks drawn on a bank in the United States for whole dollars and cents (fractional cents will be
withheld without liability for interest and handled by the depositary in accordance with its then current practices).

The depositary may choose, after consultation with us, if practicable, any practical method of distribution for any specific ADR holder, including the
distribution of foreign currency, securities or property, or it may retain those items, without paying interest on or investing them, on behalf of the ADR
holder as deposited securities, in which case the ADSs will also represent the retained items.

The depositary is not responsible if it fails to determine that any distribution or action is lawful or reasonably practicable.

We cannot assure investors that the depositary will be able to convert any currency at a specified exchange rate or sell any property, rights, shares or
other securities at a specified price, or that any of such transactions can be completed within a specified time period. All purchases and sales of securities
will be handled by the depositary in accordance with its then current policies, which are currently set forth in the “Depositary Receipt Sale and Purchase of
Security” section available at https:// www.adr.com/Investors/FindOutAboutDRs , the location and contents of which the depositary shall be solely
responsible for.

Deposit, Withdrawal and Cancellation

The depositary issues ADSs upon the deposit of shares or evidence of rights to receive shares with the custodian after payment of the fees and
expenses owing to the depositary in connection with such issuance.

Except for shares that we deposit, no shares may be deposited by persons located in India, residents of India or for, or on the account of, such persons.
Under current Indian laws and regulations, the depositary cannot accept deposits of outstanding shares and issue ADRs evidencing ADSs representing such
shares without prior approval of the Government of India. However, an investor who surrenders an ADS and withdraws shares may be permitted to
redeposit those shares in the depositary facility in exchange for ADSs and the depositary may accept deposits of outstanding shares purchased by a
non-resident of India on the local stock exchange and issue ADSs representing those shares. However, in each case, the number of shares re-deposited or
deposited cannot exceed the number represented by ADSs converted into underlying shares.

Shares deposited in the future with the custodian must be accompanied by certain documents, including instruments showing that such shares have
been properly transferred or endorsed to the person on whose behalf the deposit is being made. To the extent delivery of certificates is impracticable, the
shares may be deposited by any other delivery means reasonably acceptable to the depositary or custodian, including by way of crediting the shares to an
account maintained by the custodian with us or an accredited intermediary acting as registrar for the shares.

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We will inform the depositary if any of the shares permitted to be deposited do not rank pari passu with other deposited securities and the depositary
will arrange for the issuance of temporary ADSs representing such shares until such time as the shares become fully fungible with the other deposited
securities.

The custodian will hold all deposited shares for the account of the depositary. ADR holders thus have no direct ownership interest in the shares and
only have such rights as are contained in the deposit agreement. The custodian will also hold any additional securities, property and cash received on or in
substitution for the deposited shares. The deposited shares and any such additional items are referred to as “deposited securities”.

Upon each deposit of shares, receipt of related delivery documentation and compliance with the other provisions of the deposit agreement, including
the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue an ADR or ADRs in the name
of the person entitled thereto evidencing the number of ADSs to which such person is entitled. All ADSs issued will be evidenced by way of registration in
the depositary’s direct registration system, unless certificated ADRs are specifically requested by the holder. Rather than receiving a certificate, registered
holders will receive periodic statements from the depositary showing the number of ADSs to which they are entitled. Certificated ADRs will be delivered at
the depositary’s designated transfer office.

When an investor turns in his ADR certificate at the depositary’s office, or provides proper instructions and documentation in the case of direct
registration ADSs, the depositary will, upon payment of certain applicable fees, charges and taxes, deliver the underlying shares. Delivery of deposited
securities in certificated form will be made at the custodian’s office or, at the investor’s risk and expense, the depositary may deliver such deposited
securities at such other place as may be requested by the investor. A stamp duty will be payable by the relevant ADR holder in respect of any withdrawal of
shares, unless the shares are held in dematerialized form. Any subsequent transfer by the holder of the shares after withdrawal will require the approval of
the RBI, which approval must be obtained by the purchaser and us under the provisions of the Foreign Management Regulation Act, 1999 unless the
transfer is on a stock exchange or in connection with an offer under the Indian takeover regulations.

The depositary may only restrict the withdrawal of deposited securities in connection with:
• temporary delays caused by closing the Bank’s transfer books or those of the depositary or the deposit of shares in connection with voting at a
shareholders’ meeting, or the payment of dividends;
• the payment of fees, taxes and similar charges; or
• compliance with any United States or foreign laws or governmental regulations relating to the ADRs or to the withdrawal of deposited
securities.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

Voting Rights
Investors who hold ADRs have no voting rights with respect to the deposited equity shares. The depositary will abstain from exercising the voting
rights of the deposited equity shares. The RBI examined the matter relating to the exercise of voting rights by the depositary and issued a circular dated
February 5, 2007 pursuant to which the Bank furnished to the RBI a copy of its agreement with the depositary. We have given an undertaking to the RBI
stating that we will not recognize voting by the depositary if the vote given by the depositary is in contravention of its agreement with us and that we or the
depositary will not bring about any change in our depositary agreement without the prior approval of the RBI.

Equity shares which have been withdrawn from the depositary facility and transferred on our register of shareholders to a person other than the
depositary or its nominee may be voted by that person. However, such shareholders may not receive sufficient advance notice of shareholder meetings to
enable them to withdraw the underlying shares and vote at such meetings.

Record Dates
The depositary may, after consultation with us, if practicable, fix record dates for the determination of the ADR holders, who will be entitled or
obligated (as the case may be) to receive any distribution on or in respect of deposited securities, or to pay the fee assessed by the depositary for
administration of the ADR program and any expenses provided for in the ADR, subject to the provisions of the deposit agreement.

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Reports and Other Communications

The depositary will make available for inspection by ADR holders at the offices of the depositary and at the transfer office any written
communications from us which are both received by the custodian or its nominee as a holder of deposited securities and made generally available to the
holders of deposited securities. The depositary will distribute copies of such communications, or English translations or summaries thereof, to ADR holders
when furnished by us.

Fees and Charges for Holders of American Depositary Shares

The depositary collects the following fees from holders of ADRs or intermediaries acting on their behalf:

Category Depositary actions Associated fee

(a) Issuing ADSs Issuing ADSs upon deposits of shares, issuances US$ 5.00 for each 100 ADSs (or portion thereof)
in respect of share distributions, rights and other issued or delivered.
distributions, stock dividends, stock splits,
mergers, exchanges of securities or any other
transaction or event or other distribution affecting
the ADSs or the deposited securities.
(b) Distributing dividends Distribution of cash. US$ 0.02 or less per ADS.
(c) Distributing or selling securities Distribution to ADR holders of securities US$ 5.00 for each 100 ADSs (or portion thereof),
received by the depositary or net proceeds from the fee being in an amount equal to the fee for the
the sale of such securities. execution and delivery of ADSs which would
have been charged as a result of the deposit of
such securities.
(d) Cancellation or reduction of ADSs Acceptance of ADSs surrendered for withdrawal US$ 5.00 for each 100 ADSs (or portion thereof)
of deposited shares, or the cancellation or reduced, canceled or surrendered (as the case
reduction of ADSs for any other reason. may be).

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(e) Transferring, splitting or combining ADRs Transfer, split or combination of depositary US$ 1.50 per ADR.
receipts.
(f) General depositary services Services performed by the depositary in US$ 0.01 per ADS per calendar year (or portion
administering the ADRs. thereof).
(g) Other Fees, charges and expenses incurred on behalf of The amount of such fees, charges and expenses
holders in connection with: incurred by the depositary and/or any of its
agents.
•   compliance with foreign exchange control
regulations or any law or regulation relating
to foreign investment;
•   the servicing of shares or other deposited
securities;
•   the sale of securities;
•   the delivery of deposited securities;
•   the depositary’s or its custodian’s
compliance with applicable law, rule or
regulation;
•   stock transfer or other taxes and other
governmental charges;

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•   cable, telex and facsimile transmission and

delivery charges;
•   transfer or registration fees for the
registration or transfer of deposited
securities on any applicable register in
connection with the deposit or withdrawal of
deposited securities;
•   the conversion of foreign currency into
United States dollars (which are deducted by
the depositary out of such foreign currency);
or
•   the fees of any division, branch or affiliate of
the depositary utilized by the depositary to
direct, manage and/or execute any public or
private sale of securities under the deposit
agreement.

As provided in the amended and restated deposit agreement, the depositary may collect its fees for making cash and other distributions to holders by
deducting fees from distributable amounts or by selling a portion of the distributable property. The depositary may generally refuse to provide services until
its fees for those services are paid.

Fees Paid by the Depositary to us

Direct and Indirect Payments
The depositary has agreed to contribute certain reasonable direct and indirect expenses related to our ADS program incurred by us in connection with
the program. Under certain circumstances, we may be required to repay to the depositary amounts contributed by them.

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The table below sets forth the contribution received by us from the depositary towards our direct and indirect expenses during fiscal 2019.

Contribution
Category received
Legal, accounting fees and other expenses
incurred in connection with our ADS US$ 4,230,946.17
program (approximately Rs. 292.6 million)

Payment of Taxes
ADR holders must pay any tax or other governmental charge payable by the custodian or the depositary on any ADS or ADR, deposited security or
distribution, and by holding or having held an ADR, the holder and all prior holders, jointly and severally, agree to indemnify, defend and save harmless the
depositary and its agents. If an ADR holder owes any tax or other governmental charge, the depositary may:
• deduct the amount thereof from any cash distributions; or
• sell deposited securities and deduct the amount owing from the net proceeds of such sale.

In either case the ADR holder remains liable for any shortfall. Additionally, if any tax or governmental charge is unpaid, the depositary may also
refuse to effect any registration, registration of transfer, split-up or combination of deposited securities or withdrawal of deposited securities (except under
limited circumstances mandated by securities regulations). If any tax or governmental charge is required to be withheld on any non-cash distribution, the
depositary may sell the distributed property or securities to pay such taxes and distribute any remaining net proceeds to the ADR holders entitled to them.

Reclassifications, Recapitalizations and Mergers

If we take certain actions that affect the deposited securities, including (1) any change in par value, split-up, consolidation, cancellation or other
reclassification of deposited securities or (2) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all
or substantially all of our assets, then the depositary may choose to:
• amend the form of ADR;
• distribute additional or amended ADRs;
• distribute cash, securities or other property it has received in connection with such actions;
• sell any securities or property received and distribute the proceeds as cash; or
• take no action.

If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited
securities and each ADS will then represent a proportionate interest in such property.

Amendment and Termination

We may agree with the depositary to amend the deposit agreement and the ADSs without the consent of ADR holders for any reason. ADR holders
must be given at least 30 days’ notice of any amendment that imposes or increases any fees or charges (other than stock transfer or other taxes and other
governmental charges, transfer or registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or prejudices any
substantial existing right of ADR holders. If an ADR holder continues to hold an ADR or ADRs after being notified of these changes, the ADR holder is
deemed to agree to, and be bound by, such amendment. Notwithstanding the foregoing, an amendment can become effective before notice is given if this is
necessary to ensure compliance with a new law, rule or regulation.

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No amendment will impair an ADR holder’s right to surrender its ADSs and receive the underlying securities, except in order to comply with
mandatory provisions of applicable law. If a governmental or regulatory body adopts new laws, rules or regulations which require the deposit agreement or
the ADS to be amended, the Bank and the depositary may make the necessary amendments, which could take effect before an ADR holder receives notice
thereof.

The depositary may terminate the deposit agreement by giving the ADR holders at least 30 days’ prior notice and it must do so at our request. After
termination, the depositary’s only responsibility will be (i) to deliver deposited securities to ADR holders who surrender their ADRs, and (ii) to hold or sell
distributions received on deposited securities. As soon as practicable after the expiration of six months from the termination date, the depositary will sell the
remaining deposited securities and hold the net proceeds of such sales, together with any other cash then held by it under the deposit agreement, in trust for
the pro rata benefit of ADR holders who have not yet surrendered their ADRs. After making those sales, the depositary shall have no obligations except to
account for such proceeds and other cash. The depositary will not be required to invest such proceeds or pay interest on them.

Limitations on Obligations and Liability to ADR Holders

The deposit agreement expressly limits the obligations and liability of the depositary, ourselves and our respective agents. Neither we nor the
depositary nor any such agent will be liable if:
• any present or future law, rule, regulation, fiat, order or decree of the United States, the Republic of India or any other country, or of any
governmental or regulatory authority or securities exchange or market or automated quotation system, the provisions of or regulation
governing any deposited securities, any present or future provision of our charter, any act of God, war, terrorism, nationalization or other
circumstance beyond its control shall prevent or delay, or shall cause it to be subject to any civil or criminal penalty in connection with any act
which the deposit agreement or the ADRs provide shall be done or performed by it;
• it exercises or fails to exercise discretion under the deposit agreement or the ADR;
• it takes any action or inaction in reliance upon the advice of or information from legal counsel, accountants, any person presenting shares for
deposit, any registered holder of ADRs, or any other person believed by it to be competent to give such advice or information;
• it performs its obligations under the deposit agreement without gross negligence or willful misconduct; or
• it relies upon any written notice, request, direction, instruction or document believed by it to be genuine and to have been signed, presented or
given by the proper party or parties.

Neither the depositary nor its agents have any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any
deposited securities or the ADRs. We and our agents shall only be obligated to appear in, prosecute or defend any action, suit or other proceeding in respect
of any deposited securities or the ADRs, which in our opinion may involve us in expense or liability, if indemnity satisfactory to us against all expense
(including fees and disbursements of counsel) and liability is furnished as often as we require.

The depositary will not be liable for the price received in connection with any sale of securities or any delay or omission to act nor will the depositary
be responsible for any error or delay in action, omission to act, default or negligence on the part of the party retained in connection with any sale or
proposed sale of securities.

The depositary may own and deal in any class of securities and in ADSs.

Disclosure of Interest in ADSs

From time to time we may request ADR holders and beneficial owners of ADSs to provide information as to:
• the capacity in which they own or owned ADSs;

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• the identity of any other persons then or previously interested in such ADSs; and
• the nature of such interest and various other matters.

Investors in ADSs agree to provide any information requested by us or the depositary pursuant to the deposit agreement. The depositary has agreed to
use reasonable efforts, without risk, liability or expense on the part of the depositary, to comply with written instructions received from us requesting that it
forward any such requests to investors in ADSs and other holders and beneficial owners and to forward to us any responses to such requests to the extent
permitted by applicable law.

We may restrict transfers of the shares where any such transfer might result in ownership of shares in contravention of, or exceeding the limits under,
applicable law or our organizational documents. We may also instruct ADR holders that we are restricting the transfers of ADSs where such a transfer may
result in the total number of shares represented by the ADSs beneficially owned by ADR holders contravening or exceeding the limits under the applicable
law or our organizational documents. We reserve the right to instruct ADR holders to deliver their ADSs for cancellation and withdrawal of the shares
underlying such ADSs and holders agree to comply with such instructions.

Requirements for Depositary Actions

We, the depositary or the custodian may refuse to:
• issue, register or transfer an ADR or ADRs;
• effect a split-up or combination of ADRs;
• deliver distributions on any such ADRs; or
• permit the withdrawal of deposited securities (unless the deposit agreement provides otherwise), until the following conditions have been met:
• the holder has paid all taxes, governmental charges and fees and expenses as required in the deposit agreement;
• the holder has provided the depositary with any information it may deem necessary or proper, including, without limitation, proof of identity
and the genuineness of any signature, and information as to citizenship, residence, exchange control approval, beneficial ownership of any
securities, compliance with applicable law, regulations, provisions of or governing deposited securities and terms of the deposit agreement and
the ADRs; and
• the holder has complied with such regulations as the depositary may establish consistent with the deposit agreement.

The depositary may also suspend the issuance of ADSs, the deposit of shares, the registration, transfer, split-up or combination of ADRs, or the
withdrawal of deposited securities (unless the deposit agreement provides otherwise), if the register for ADRs or any deposited securities is closed or if any
such action is deemed advisable by the depositary.

Books of Depositary
The depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADRs, which, in the case
of registered ADRs, shall include the depositary’s direct registration system. ADR holders may inspect the depositary’s designated records at all reasonable
times. Such register may be closed at any time from time to time, when deemed expedient by the depositary.

The depositary will maintain facilities for the delivery and receipt of ADRs.

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Pre-release of ADSs
The depositary may issue ADSs prior to the receipt of shares and deliver shares prior to the receipt of ADSs for the withdrawal of deposited
securities. Each such transaction is called a pre-release of the ADSs. A pre-release is closed out as soon as the underlying shares (or other ADSs) are
delivered to the depositary. The depositary may pre-release ADSs only if:
• the person or entity to whom ADSs or shares will be delivered:
• represents that, at the time of the pre-release, the applicant or its customer owns the shares or ADSs to be delivered;
• agrees to indicate the depositary as owner of such shares or ADSs in its records and to hold such shares or ADSs in trust for the depositary
until they have been delivered to the depositary or custodian;
• unconditionally guarantees to deliver the shares or ADSs to the depositary or custodian, as applicable;
• agrees to any additional restrictions or requirements that the depositary deems appropriate; and
• the depositary has received collateral for the full market value of the pre-released ADSs or shares.

In general, the number of pre-released ADSs and shares is limited to 30.0 percent of all ADSs outstanding at any given time (without giving effect to
those ADSs issued prior to the receipt of shares). However, the depositary may change or disregard such limit from time to time as it deems appropriate.
The depositary may also set limits with respect to the number of ADSs and shares involved in pre-release transactions with any one person on a
case-by-case basis as it deems appropriate. The depositary may retain for its own account any compensation received by it in conjunction with pre-release
transactions, including earnings on collateral but excluding the collateral itself.

The Depositary
The depositary is JPMorgan Chase Bank, N.A., a commercial bank offering a wide range of banking services to its customers both domestically and
internationally. JPMorgan Chase Bank, National Association is a wholly owned bank subsidiary of JPMorgan Chase & Co., a Delaware corporation.

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DIVIDEND POLICY
We have paid dividends every year since fiscal 1997. The following table sets forth, for the periods indicated, the dividend per equity share and the
total amount of dividends declared on the equity shares, both exclusive of dividend tax. All dividends were paid in rupees.

Dividend per equity share Total amount of dividends declared*

(in millions)
Relating to Fiscal Year
2015 8.00 US$ 0.116 20,052.0 US$ 289.9
2016 9.50 0.137 24,017.8 347.3
2017 11.00 0.159 28,188.0 407.6
2018 13.00 0.188 33,736.2 487.8
2019 15.00 0.217 40,849.6 590.7

* In the meeting of Board of Directors of the Bank held on July 20, 2019, the Board has declared a special interim dividend of Rs. 5.00 per
share to commemorate 25 years of HDFC Bank’s operations and fixed the record date as August 2, 2019.

Our dividends are generally declared and paid in the fiscal following the fiscal to which they relate. Under Indian law, a company pays dividends
upon a recommendation by its board of directors and approval by a majority of the shareholders at the annual general meeting of shareholders held within
six months of the end of each fiscal year. The shareholders have the right to decrease but not to increase the dividend amount recommended by the Board of
Directors.

We pay a 17.64 percent direct tax in respect of dividends paid by us. In addition, we pay a 12.0 percent surcharge on 17.64 percent direct tax and an
add-on education special tax at the rate of 4.0 percent of the total dividend distribution tax and surcharge. These are direct taxes paid by us; these taxes are
not payable by shareholders and are not withheld or deducted from the dividend payments set forth above. The tax rates imposed on us in respect of
dividends paid in prior periods varied. Further, as per the provisions of Section 115BBDA, if the dividend income of a certain specified resident exceeds Rs.
1.0 million, such dividend would be taxed at the rate of 10 percent on any amount exceeding Rs. 1.0 million in the hand of the shareholder.

Future dividends will depend on our revenues, cash flows, financial condition (including capital position) and other factors. ADS holders will be
entitled to receive dividends payable in respect of the equity shares represented by ADSs. One ADS represents three equity shares. Cash dividends in
respect of the equity shares represented by ADSs will be paid to the depositary in Indian rupees and, except in certain instances, will be converted by the
depositary into United States dollars. The depositary will distribute these proceeds to ADS holders. The equity shares represented by ADSs will rank
equally with all other equity shares in respect of dividends.

For a description of regulation of dividends, see “Supervision and Regulation—Special Provisions of the Banking Regulation Act—Restrictions on
Payment of Dividends”.

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SELECTED FINANCIAL AND OTHER DATA

The following tables set forth our selected financial and other data. Our selected income statement data for the fiscal years ended March 31, 2017,
2018 and 2019 and the selected balance sheet data as of March 31, 2018 and 2019 are derived from our audited financial statements included in this report.
Our selected balance sheet data as of March 31, 2015, March 31, 2016 and March 31, 2017 and selected income statement data for the fiscal years ended
March 31, 2015 and March 31, 2016 are derived from our audited financial statements not included in this report.

For the convenience of the reader, the selected financial data as of and for the year ended March 31, 2019 have been translated into U.S. dollars at the
rate on such date of Rs. 69.16 per US$1.00. The U.S. dollar equivalent information should not be construed to imply that the real amounts represent, or
could have been or could be converted into, U.S. dollars at such rates or at any other rate.

You should read the following data with the more detailed information contained in “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and our financial statements. Footnotes to the following data appear below the final table.

Year ended March 31,

2015 2016 2017 2018 2019 2019
(in millions, except per equity share data and ADS data)
Selected income statement data:
Interest and dividend revenue Rs.500,787.2 Rs.625,428.6 Rs.725,554.3 Rs.843,465.3 Rs.1,041,714.9 US$15,062.4
Interest expense 264,610.9 333,067.1 373,758.7 420,314.7 534,209.3 7,724.3
Net interest revenue 236,176.3 292,361.5 351,795.6 423,150.6 507,505.6 7,338.1
Provisions for credit losses 17,000.2 21,531.3 37,951.4 59,397.8 72,279.3 1,045.1
Net interest revenue after provisions for credit losses 219,176.1 270,830.2 313,844.2 363,752.8 435,226.3 6,293.0
Non-interest revenue, net 79,821.5 96,833.9 110,326.1 144,607.0 160,122.2 2,315.2
Net revenue 298,997.6 367,664.1 424,170.3 508,359.8 595,348.5 8,608.2
Non-interest expense 144,973.0 182,077.3 204,204.8 231,253.4 255,389.5 3,692.7
Income before income tax expense 154,024.6 185,586.8 219,965.5 277,106.4 339,959.0 4,915.5
Income tax expense 54,519.9 67,536.9 79,224.9 98,272.5 119,393.5 1,726.3
Net income before noncontrolling interest 99,504.7 118,049.9 140,740.6 178,833.9 220,565.5 3,189.2
Less: Net income attributable to shareholders of
noncontrolling interest 267.0 134.6 210.8 319.0 461.7 6.7
Net income attributable to HDFC Bank Limited Rs. 99,237.7 Rs.117,915.3 Rs.140,529.8 Rs.178,514.9 Rs. 220,103.8 US$ 3,182.5
Per equity share data:
Earnings per equity share, basic Rs. 40.94 Rs. 46.84 Rs. 55.23 Rs. 69.18 Rs. 82.13 US$ 1.19
Earnings per equity share, diluted 40.55 46.33 54.57 68.29 81.31 1.18
Dividends per share 8.00 9.50 11.00 13.00 15.00 0.22
Book value(1) 299.32 343.85 400.41 452.45 599.48 8.67
Equity share data:
Equity shares outstanding at end of period 2,506.5 2,528.2 2,562.5 2,595.1 2,723.3 2,723.3
Weighted average equity shares outstanding—basic 2,423.8 2,517.4 2,544.3 2,580.5 2,680.0 2,680.0
Weighted average equity shares outstanding—diluted 2,447.3 2,545.4 2,575.4 2,613.9 2,706.8 2,706.8
ADS data (where one ADS represents three shares):
Earnings per ADS—basic 122.82 140.52 165.69 207.54 246.39 3.57
Earnings per ADS—diluted 121.65 138.99 163.71 204.87 243.93 3.54

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As of March 31,
2015 2016 2017 2018 2019 2019
(in millions)
Selected balance sheet data:
Cash and due from banks, and restricted cash Rs. 341,124.3 Rs. 377,671.7 Rs. 430,708.6 Rs. 574,151.0 Rs. 734,872.6 US$ 10,625.7
Loans, net of allowance 3,896,115.0 4,935,474.3 5,910,412.8 7,263,671.8 8,963,232.6 129,601.3
Investments:
Investments held for trading 61,292.8 71,860.9 35,363.7 167,513.9 265,516.1 3,839.2
Investments available for sale, debt securities 1,503,057.7 1,877,503.7 2,109,877.9 2,221,443.3 2,633,348.4 38,076.2
Total 1,564,350.5 1,949,364.6 2,145,241.6 2,388,957.2 2,898,864.5 41,915.4
Total assets Rs.6,259,015.8 Rs.7,736,723.3 Rs.9,066,980.5 Rs.11,367,308.8 Rs.13,280,073.6 US$192,019.7
Long-term debt 457,934.4 522,313.5 730,920.7 932,906.3 1,044,553.0 15,103.4
Short-term borrowings 214,191.9 253,562.4 322,265.6 779,201.7 654,058.0 9,457.2
Total deposits 4,501,710.8 5,457,860.3 6,431,322.9 7,883,751.5 9,225,026.9 133,386.8
Of which:
Interest-bearing deposits 3,768,678.8 4,575,414.5 5,277,644.0 6,693,649.3 7,804,717.5 112,850.2
Non-interest bearing deposits 733,032.0 882,445.8 1,153,678.9 1,190,102.2 1,420,309.4 20,536.6
Total liabilities 5,507,448.2 6,865,928.1 8,039,079.4 10,190,815.5 11,644,449.0 168,369.8
Noncontrolling interest 1,315.5 1,485.0 1,847.5 2,329.7 3,049.3 44.1
HDFC Bank Limited shareholders’ equity 750,252.1 869,310.2 1,026,053.6 1,174,163.6 1,632,575.3 23,605.8
Total liabilities and shareholders’ equity Rs.6,259,015.8 Rs.7,736,723.3 Rs.9,066,980.5 Rs.11,367,308.8 Rs.13,280,073.6 US$192,019.7

Year ended March 31,

2015 2016 2017 2018 2019 2019
(in millions)
Period average(2)
Interest-earning assets Rs.4,878,731.8 Rs.6,334,288.6 Rs.7,584,354.9 Rs. 9,052,769.4 Rs.11,082,789.8 US$160,248.6
Loans, net of allowance 3,408,315.6 4,278,152.9 5,156,042.6 6,507,446.5 8,012,985.1 115,861.6
Total assets 5,289,353.5 6,776,037.8 8,099,122.2 9,634,335.7 11,774,471.6 170,249.7
Interest-bearing deposits 3,365,392.5 4,301,515.1 5,053,872.7 5,849,539.4 7,131,163.3 103,111.1
Non-interest bearing deposits 519,675.4 620,340.4 784,108.7 946,157.4 1,029,226.1 14,881.8
Total deposits 3,885,067.9 4,921,855.5 5,837,981.4 6,795,696.8 8,160,389.4 117,992.9
Interest-bearing liabilities 3,944,982.9 5,130,083.6 6,104,324.6 7,260,929.1 8,926,793.0 129,074.5
Long-term debt 449,057.2 485,713.4 646,512.9 881,556.7 1,015,061.9 14,677.0
Short-term borrowings 130,533.2 342,855.1 403,939.0 529,833.0 780,567.8 11,286.4
Total liabilities 4,673,939.3 5,955,268.7 7,155,571.9 8,553,295.8 10,355,177.0 149,727.8
Total shareholders’ equity 615,414.2 820,769.1 943,550.3 1,081,039.9 1,419,294.6 20,521.9

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As of or for the year ended March 31,

2015 2016 2017 2018 2019
(in percentage)
Profitability:
Net income attributable to HDFC Bank Limited as a percentage of:
Average total assets 1.9 1.7 1.7 1.9 1.9
Average total shareholders’ equity 16.1 14.4 14.9 16.5 15.5
Dividend payout ratio(3) 20.2 20.4 20.1 18.9 18.6
Spread(4) 4.3 4.1 4.1 4.2 4.0
Net interest margin(5) 4.8 4.6 4.6 4.7 4.6
Cost-to-net revenue ratio(6) 48.5 49.5 48.1 45.5 42.9
Cost-to-average assets ratio(7) 2.7 2.7 2.5 2.4 2.2
Capital:
Total capital adequacy ratio(8) 16.79 15.53 14.55 14.82 17.11
Tier I capital adequacy ratio(8) 13.66 13.22 12.79 13.25 15.78
Tier II capital adequacy ratio(8) 3.13 2.31 1.76 1.57 1.33
Average total shareholders’ equity as a percentage of average total assets 11.6 12.1 11.7 11.2 12.1
Asset quality:
Gross non-performing customer assets as a percentage of gross customer assets(9) 1.0 1.0 1.3 1.4 1.5
Net non-performing customer assets as a percentage of net customer assets(9) 0.4 0.4 0.6 0.6 0.6
Total allowance for credit losses as a percentage of gross non-performing credit assets 120.4 108.3 94.6 103.5 105.6

(1) Represents the difference between total assets and total liabilities, reduced by noncontrolling interests in subsidiaries, divided by the number of shares
outstanding at the end of each reporting period.
(2) Average balances are the average of daily outstanding amounts.
(3) Represents the ratio of total dividends payable on equity shares relating to each fiscal year, excluding the dividend distribution tax, as a percentage of
net income of that year. Dividends declared each year are typically paid in the following fiscal year. See “Dividend Policy”
(4) Represents the difference between yield on average interest-earning assets and cost of average interest-bearing liabilities. Yield on average interest-
earning assets is the ratio of interest revenue to average interest-earning assets. Cost of average interest-bearing liabilities is the ratio of interest
expense to average interest-bearing liabilities. For purposes of calculating spread, interest-bearing liabilities includes non-interest bearing current
accounts.
(5) Represents the ratio of net interest revenue to average interest-earning assets. The difference in net interest margin and spread arises due to the
difference in the amount of average interest-earning assets and average interest-bearing liabilities. If average interest-earning assets exceed average
interest-bearing liabilities, the net interest margin is greater than the spread. If average interest-bearing liabilities exceed average interest-earning
assets, the net interest margin is less than the spread.
(6) Represents the ratio of non-interest expense to the sum of net interest revenue after provision for credit losses and non-interest revenue.
(7) Represents the ratio of non-interest expense to average total assets.
(8) Calculated in accordance with RBI guidelines (Basel III Capital Regulations, generally referred to as “Basel III”). See also “Supervision and
Regulation”.
(9) Customer assets consist of loans and credit substitutes.

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SELECTED STATISTICAL INFORMATION

The following information should be read together with our financial statements included in this report as well as “Management’s Discussion and
Analysis of Financial Condition and Results of Operations”. Certain amounts presented in this section are in accordance with U.S. GAAP and certain
figures are presented according to RBI guidelines where noted. Footnotes appear at the end of each related section of tables.

Average Balance Sheet

The table below presents the average balances for our assets and liabilities together with the related interest revenue and expense amounts, resulting
in the presentation of the average yields and cost for each period. The average balance is the daily average of balances outstanding. The average yield on
average interest-earning assets is the ratio of interest revenue to average interest-earning assets. The average cost of average interest-bearing liabilities is the
ratio of interest expense to average interest-bearing liabilities. The average balances of loans include non-performing loans and are net of allowance for
credit losses.

Year ended March 31,

2017 2018 2019
Interest Average Interest Average Interest Average
Average revenue/ yield/ Average revenue/ yield/ Average revenue/ yield/
balance expense cost balance expense cost balance expense cost
(in millions, except percentages)
Assets:
Interest-earning assets:
Due from banks(1) Rs. 135,626.9 Rs. 5,792.1 4.3% Rs. 155,134.1 Rs. 6,969.3 4.5% Rs. 148,277.5 Rs. 7,221.5 4.9%
Investments available for sale debt securities 2,060,977.8 154,618.6 7.5 2,185,498.3 158,209.2 7.2 2,617,688.2 190,992.5 7.3
Investments held for trading 90,027.7 5,041.8 5.6 76,921.8 4,049.1 5.3 165,237.5 8,892.9 5.4
Loans, net:
Retail loans 3,641,118.5 418,143.7 11.5 4,629,220.5 515,334.1 11.1 5,655,160.9 626,359.1 11.1
Wholesale loans 1,514,924.1 134,543.1 8.9 1,878,226.0 152,124.6 8.1 2,357,824.2 201,323.9 8.5
Other assets 141,679.9 7,415.0 5.2 127,768.7 6,779.0 5.3 138,601.5 6,925.0 5.0
Total interest-earning assets: Rs.7,584,354.9 Rs.725,554.3 9.6% Rs.9,052,769.4 Rs.843,465.3 9.3% Rs.11,082,789.8 Rs.1,041,714.9 9.4%
Non-interest-earning assets:
Cash and due from banks, and restricted cash 309,118.0 346,111.0 415,721.0
Property and equipment 37,805.7 38,790.1 40,943.0
Other assets 167,843.6 196,665.2 235,017.8
Total non-interest earning assets 514,767.3 581,566.3 691,681.8
Total assets Rs.8,099,122.2 Rs.725,554.3 9.0% Rs.9,634,335.7 Rs.843,465.3 8.8% Rs.11,774,471.6 Rs.1,041,714.9 8.8%
Liabilities:
Interest-bearing liabilities:
Savings account deposits Rs.1,598,619.0 Rs. 63,784.0 4.0% Rs.1,919,734.0 Rs. 72,103.0 3.8% Rs. 2,226,287.0 Rs. 80,630.0 3.6%
Time deposits 3,455,253.7 244,294.3 7.1 3,929,805.4 254,614.8 6.5 4,904,876.3 329,396.4 6.7
Short-term borrowings(2) 403,939.0 21,899.3 5.4 529,833.0 26,299.4 5.0 780,567.8 39,101.8 5.0
Long-term debt 646,512.9 43,781.1 6.8 881,556.7 67,297.5 7.6 1,015,061.9 85,081.1 8.4
Total interest-bearing liabilities Rs.6,104,324.6 Rs.373,758.7 6.1% Rs.7,260,929.1 Rs.420,314.7 5.8% Rs. 8,926,793.0 Rs. 534,209.3 6.0%
Non-interest-bearing liabilities:
Non-interest-bearing deposits 784,108.7 946,157.4 1,029,226.1
Other liabilities 267,138.6 346,209.3 399,157.9
Total non-interest-bearing liabilities 1,051,247.3 1,292,366.7 1,428,384.0
Total liabilities Rs.7,155,571.9 Rs.373,758.7 5.2% Rs.8,553,295.8 Rs.420,314.7 4.9% Rs.10,355,177.0 Rs. 534,209.3 5.2%
Total shareholders’ equity 943,550.3 1,081,039.9 1,419,294.6
Total liabilities and shareholders’ equity Rs.8,099,122.2 Rs.373,758.7 4.6% Rs.9,634,335.7 Rs.420,314.7 4.4% Rs.11,774,471.6 Rs. 534,209.3 4.5%

(1) Includes securities purchased under agreements to resell.

(2) Includes securities sold under repurchase agreements.

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Analysis of Changes in Interest Revenue and Interest Expense

The following table sets forth, for the periods indicated, the allocation of the changes in our interest revenue and interest expense between average
balance and average rate.

Fiscal 2018 vs. Fiscal 2017 Fiscal 2019 vs. Fiscal 2018
Increase (decrease)(1) due to Increase (decrease)(1) due to
Change in Change in Change in Change in
Net change Average balance average rate Net change Average balance average rate
(in millions)
Interest revenue:
Cash and due from banks, and restricted cash Rs. 1,177.2 Rs. 833.1 Rs. 344.1 Rs. 252.2 Rs. (308.0) Rs. 560.2
Investments available for sale debt securities 3,590.6 9,338.1 (5,747.5) 32,783.3 31,323.0 1,460.3
Investments held for trading (992.7) (734.0) (258.7) 4,843.8 4,648.9 194.9
Loans, net:
Retail loans 97,190.4 113,473.0 (16,282.6) 111,025.0 114,209.7 (3,184.7)
Wholesale loans 17,581.5 32,265.5 (14,684.0) 49,199.3 38,844.5 10,354.8
Other assets (636.0) (656.2) 20.2 146.0 655.5 (509.5)
Total interest-earning assets Rs.117,911.0 Rs. 154,519.5 Rs. (36,608.5) Rs.198,249.6 Rs. 189,373.6 Rs. 8,876.0
Interest expense:
Savings account deposits Rs. 8,319.0 Rs. 12,812.3 Rs. (4,493.3) Rs. 8,527.0 Rs. 11,513.8 Rs. (2,986.8)
Time deposits 10,320.5 33,551.9 (23,231.4) 74,781.6 63,175.5 11,606.1
Short-term borrowings 4,400.1 6,825.3 (2,425.2) 12,802.4 12,445.8 356.6
Long-term debt 23,516.4 15,916.9 7,599.5 17,783.6 10,191.7 7,591.9
Total interest-bearing liabilities Rs. 46,556.0 Rs. 69,106.4 Rs. (22,550.4) Rs. 113,894.6 Rs. 97,326.8 Rs.16,567.8
Net interest revenue Rs. 71,355.0 Rs. 85,413.1 Rs. (14,058.1) Rs. 84,355.0 Rs. 92,046.8 Rs. (7,691.8)

(1) The changes in net interest revenue between periods have been reflected as attributed either to average balance or average rate changes. For purposes
of this table, changes which are due to both average balance and average rate have been allocated solely to changes in average rate.

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Yields, Spreads and Margins

The following table sets forth, for the periods indicated, the yields, spreads and interest margins on our interest-earning assets.

Year ended March 31,

2017 2018 2019
(in millions, except percentages)
Interest and dividend revenue Rs. 725,554.3 Rs. 843,465.3 Rs. 1,041,714.9
Average interest-earning assets 7,584,354.9 9,052,769.4 11,082,789.8
Interest expense 373,758.7 420,314.7 534,209.3
Average interest-bearing liabilities 6,104,324.6 7,260,929.1 8,926,793.0
Average total assets 8,099,122.2 9,634,335.7 11,774,471.6
Average interest-earning assets as a percentage of
average total assets 93.6% 94.0% 94.1%
Average interest-bearing liabilities as a percentage
of average total assets 75.4% 75.4% 75.8%
Average interest-earning assets as a percentage of
average interest-bearing liabilities 124.2% 124.7% 124.2%
Yield 9.6% 9.3% 9.4%
Cost of funds(1) 5.2% 4.9% 5.2%
Spread(2) 4.1% 4.2% 4.0%
Net interest margin(3) 4.6% 4.7% 4.6%

(1) Excludes total shareholders’ equity.

(2) Represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities. The yield on average
interest-earning assets is the ratio of interest revenue to average interest-earning assets. The cost of average interest-bearing liabilities is the ratio of
interest expense to average interest-bearing liabilities. For purposes of calculating spread, interest-bearing liabilities include non-interest bearing
current accounts.
(3) The net interest margin is the ratio of net interest revenue to average interest-earning assets. The difference in the net interest margin and spread arises
due to the difference in the amount of average interest-earning assets and average interest-bearing liabilities. If average interest-earning assets exceed
average interest-bearing liabilities, the net interest margin is greater than the spread. If average interest-bearing liabilities exceed average interest-
earning assets, the net interest margin is less than the spread.

Return on Equity and Assets

The following table presents selected financial ratios for the periods indicated.

Year ended March 31,

2017 2018 2019
(in millions, except percentages)
Net income Rs. 140,529.8 Rs. 178,514.9 Rs. 220,103.8
Average total assets 8,099,122.2 9,634,335.7 11,774,471.6
Average total shareholders’ equity 943,550.3 1,081,039.9 1,419,294.6
Net income as a percentage of average total assets 1.7% 1.9% 1.9%
Net income as a percentage of average total
shareholders’ equity 14.9% 16.5% 15.5%
Average total shareholders’ equity as a percentage
of average total assets 11.7% 11.2% 12.1%
Dividend payout-ratio 20.1% 18.9% 18.6%

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Investment Portfolio
Available for Sale Debt Investments
The following tables set forth, as of the dates indicated, information related to our investments available for sale debt securities.
At March 31,
2017 2018 2019
Gross Gross Gross Gross Gross Gross
Amortized unrealized unrealized Amortized unrealized unrealized Amortized unrealized unrealized
Cost gain loss Fair value cost gain loss Fair value cost gain loss Fair Value
(in millions)
Government
securities Rs. 1,619,137.6 Rs. 40,733.3 Rs. 2,811.3 Rs. 1,657,059.6 Rs. 1,872,187.9 Rs. 11,519.2 Rs. 17,572.9 Rs. 1,866,134.2 Rs. 2,292,568.3 Rs. 26,746.0 Rs. 10,310.6 Rs. 2,309,003.7
Government
securities
outside
India — — — — 4,223.8 — 6.8 4,217.0 7,201.6 3.3 — 7,204.9
Other debt
securities 429,973.5 1,041.4 749.9 430,265.0 333,385.3 495.4 1,682.1 332,198.6 277,475.7 930.8 1,570.1 276,836.4
Total debt
securities Rs. 2,049,111.1 Rs. 41,774.7 Rs. 3,561.2 Rs. 2,087,324.6 Rs. 2,209,797.0 Rs. 12,014.6 Rs. 19,261.8 Rs. 2,202,549.8 Rs. 2,577,245.6 Rs. 27,680.1 Rs. 11,880.7 Rs. 2,593,045.0
Others* 22,686.3 220.4 353.3 22,553.4 19,186.3 66.0 358.8 18,893.5 40,259.7 166.3 122.6 40,303.4
Total Rs. 2,071,797.4 Rs. 41,995.1 Rs. 3,914.5 Rs. 2,109,878.0 Rs. 2,228,983.3 Rs. 12,080.6 Rs. 19,620.6 Rs. 2,221,443.3 Rs. 2,617,505.3 Rs. 27,846.4 Rs. 12,003.3 Rs. 2,633,348.4

* Includes asset and mortgage backed securities and mutual funds.

Held for Trading Investments
The following table sets forth, as of the dates indicated, information related to our investments held for trading:
At March 31,
2017 2018 2019
Gross Gross Gross Gross Gross Gross
Amortized unrealized unrealized Amortized unrealized unrealized Amortized unrealized unrealized
cost gain loss Fair value cost gain loss Fair value cost gain loss Fair value
(in millions)
Government
securities Rs. 18,230.8 Rs. 38.5 Rs. 1.5 Rs. 18,267.8 Rs. 25,962.2 Rs. 19.0 Rs. 8.0 Rs. 25,973.2 Rs. 134,084.9 Rs. 163.2 Rs. 0.1 Rs. 134,248.0
Other debt
securities 17,106.4 5.1 15.6 17,095.9 49,982.3 62.8 0.4 50,044.7 33,990.6 15.8 1.1 34,005.3
Total debt
securities Rs. 35,337.2 Rs. 43.6 Rs. 17.1 Rs. 35,363.7 Rs. 75,944.5 Rs. 81.8 Rs. 8.4 Rs. 76,017.9 Rs. 168,075.5 Rs. 179.0 Rs. 1.2 Rs. 168,253.3
Non-debt
securities — — — — 91,488.6 7.4 — 91,496.0 96,935.6 327.2 — 97,262.8
Total Rs. 35,337.2 Rs. 43.6 Rs. 17.1 Rs. 35,363.7 Rs. 167,433.1 Rs. 89.2 Rs. 8.4 Rs. 167,513.9 Rs. 265,011.1 Rs. 506.2 Rs. 1.2 Rs. 265,516.1

Residual Maturity Profile

The following table sets forth, for the periods indicated, an analysis of the residual maturity profile of our investments in government and other debt
securities classified as available-for-sale debt securities and their market yields.

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At March 31, 2019

Up to one year One to five years Five to ten years More than ten years
Amount Yield Amount Yield Amount Yield Amount Yield
(in millions, except percentages)
Government securities Rs. 650,470.6 6.1% Rs. 401,561.2 6.8% Rs. 858,165.1 7.5% Rs. 398,806.8 7.7%
Government securities outside India 7,204.9 3.1 —
Other debt securities 111,404.9 7.8 152,932.1 8.3 10,677.9 8.7 1,821.5 8.0
Total debt securities, fair value Rs. 769,080.4 6.3% Rs. 554,493.3 7.2% Rs. 868,843.0 7.5% Rs. 400,628.3 7.7%
Total amortized cost Rs. 767,752.7 Rs. 547,095.3 Rs. 862,305.7 Rs. 400,091.9

Funding

Our funding operations are designed to ensure stability, low cost of funding and effective liquidity management. The primary source of funding is
deposits raised from retail customers, which were 74% and 77% of total deposits, as of March 31, 2018 and March 31, 2019, respectively. Wholesale
banking deposits represented 26% and 23% of total deposits, as of March 31, 2018 and March 31, 2019, respectively.

Total Deposits
The following table sets forth, for the periods indicated, our average outstanding deposits and the percentage composition by each category of
deposits. The average cost (interest expense divided by the average of the daily balance for the relevant period) of savings deposits was 4.0% in fiscal 2017,
3.8% in fiscal 2018 and 3.6% in fiscal 2019. The average cost of time deposits was 7.1% in fiscal 2017, 6.5% in fiscal 2018 and 6.7% in fiscal 2019. The
average deposits for the periods set forth are as follows:

Year ended March 31,

2017 2018 2019
Amount % of total Amount % of total Amount % of total
(in millions, except percentages)
Current deposits Rs. 784,108.7 13.4% Rs. 946,157.4 14.0% Rs. 1,029,226.1 12.6%
Savings deposits 1,598,619.0 27.4 1,919,734.0 28.2 2,226,287.0 27.3
Time deposits 3,455,253.7 59.2 3,929,805.4 57.8 4,904,876.3 60.1
Total Rs. 5,837,981.4 100.0% Rs. 6,795,696.8 100.0% Rs. 8,160,389.4 100.0%

As of March 31, 2019, individual time deposits in excess of Rs. 0.1 million had a balance to maturity profile as follows:

At March 31, 2019

Up to three months Three to six months Six to twelve months More than one year
(in millions)
Balance to maturity for time deposits exceeding Rs. 0.1 million
each Rs. 1,414,813.5 Rs. 1,067,735.1 Rs. 1,944,241.1 Rs. 719,123.3

Short-term Borrowings
The following table sets forth, for the periods indicated, information related to our short-term borrowings, which are comprised primarily of money-
market borrowings. Short-term borrowings include securities sold under repurchase agreements.

Years ended March 31,

2017 2018 2019
(in millions, except percentages)
Period end Rs. 322,265.6 Rs. 917,201.7 Rs. 828,058.0
Average balance during the period Rs. 403,939.0 Rs. 529,833.0 Rs. 780,567.8
Maximum outstanding Rs. 696,832.3 Rs. 917,619.6 Rs. 1,112,780.5
Average interest rate during the period(1) 5.4% 5.0% 5.0%
Average interest rate at period end(2) 3.4% 5.1% 5.6%

(1) Represents the ratio of interest expense on short-term borrowings to the average of daily balances of short-term borrowings.
(2) Represents the weighted average rate of short-term borrowings outstanding as of March 31, 2017, 2018 and 2019.

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Subordinated Debt
We also obtain funds from the issuance of unsecured non-convertible subordinated debt securities, which qualify as Tier I or Tier II risk-based capital
under the RBI’s guidelines for assessing capital adequacy. Subordinated debt and Innovative Perpetual Debt Instruments outstanding as of March 31, 2019
were Rs. 128.32 billion (previous year: Rs. 151.07 billion) and Rs. 83.00 billion (previous year: 80.00 billion), respectively. The breakup of the same is
shown hereunder:

Average
Year of Year of tenor Interest rate Step-up rate Face value
Type Currency issue maturity (years) (%) Year of call (%) (Rupees in billions)
Tier II INR 2010-11 2025-26 15.0 8.70 2020-21 9.20 11.05
Tier II INR 2011-12 2026-27 15.0 9.48 2021-22 — 36.50
Tier II INR 2012-13 2027-28 15.2 9.45 2022-23 — 34.77
Tier II INR 2012-13 2022-23 10.0 10.20 — — 2.50
Tier II INR 2012-13 2022-23 10.0 9.70 — — 1.50
Tier II INR 2012-13 2022-23 10.0 9.60 — — 2.00
Tier II INR 2013-14 2023-24 10.0 10.20 — — 1.00
Tier II INR 2013-14 2023-24 10.0 10.05 — — 0.50
Tier II INR 2013-14 2023-24 10.0 10.19 — — 0.80
Tier II INR 2014-15 2024-25 10.0 9.70 — — 2.00
Tier II INR 2014-15 2024-25 10.0 9.55 — — 1.00
Tier II INR 2014-15 2024-25 10.0 9.55 — — 2.00
Tier II INR 2016-17 2026-27 10.0 8.79 — — 2.20
Tier II INR 2016-17 2026-27 10.0 8.05 — — 1.70
Tier II INR 2017-18 2027-28 10.0 7.56 — — 20.00
Tier II INR 2017-18 2027-28 10.0 8.42 — — 1.50
Tier II INR 2017-18 2027-28 10.0 8.45 — — 1.30
Tier II INR 2018-19 2028-29 10.0 9.05 — — 2.50
Tier II INR 2018-19 2028-29 10.0 9.70 — — 3.50
Perpetual Bond INR 2017-18 — 8.85 2022-23 — 80.00
Perpetual Bond INR 2018-19 — 9.40 2028-29 — 2.00
Perpetual Bond INR 2018-19 — 9.15 2028-29 — 1.00

We have a right to redeem certain of the issuances as noted above under “year of call”. If not called, the interest rate on some of the debt instruments
increases to the step-up rate.

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Asset Liability Gap

The following table sets forth, for the periods indicated, our asset-liability gap position:
As of March 31, 2019(1)
Over Over
Total within 1 year 3 years Over
0-28 days 29-90 days 91-180 days 6-12 months one year to 3 years to 5 years 5 years Total
(in millions, except percentages)
Cash and due from banks, and
restricted cash(2)(3) 398,100.1 29,393.5 30,206.1 51,885.7 509,585.4 147,081.8 5,003.2 73,202.2 734,872.6
Investments held for trading(4) 170,804.0 94,712.1 — — 265,516.1 — — — 265,516.1
Investments available for sale debt
securities(5)(6) 825,100.3 159,499.5 177,104.0 282,752.8 1,444,456.6 761,569.7 76,024.6 351,297.5 2,633,348.4
Securities purchased under agreement
to resell 76,213.5 — — — 76,213.5 — — — 76,213.5
Loans, net(7)(8) 623,638.1 950,680.1 875,261.4 999,768.6 3,449,348.2 3,885,962.3 896,049.1 731,873.0 8,963,232.6
Accrued interest receivable 51,132.4 28,769.3 10,323.8 2,081.8 92,307.3 660.9 63.5 — 93,031.7
Other assets(13) 173.3 7,102.0 11,243.0 10,719.5 29,237.8 277,188.5 31,257.4 24,160.1 361,843.8
Total financial assets 2,145,161.7 1,270,156.5 1,104,138.3 1,347,208.4 5,866,664.9 5,072,463.2 1,008,397.8 1,180,532.8 13,128,058.7
Deposits(9)(10) 884,770.3 680,158.8 683,849.8 1,147,780.4 3,396,559.3 3,617,398.8 140,835.1 2,070,233.7 9,225,026.9
Debt(11) 119,720.2 217,928.1 411,804.2 189,051.8 938,504.3 342,630.9 167,032.6 250,443.2 1,698,611.0
Securities sold under repurchase
agreements 174,000.0 — — — 174,000.0 — — — 174,000.0
Other Liabilities(12)(13) 241,807.2 63,371.9 2,868.7 3,651.6 311,699.4 235,111.0 0.7 — 546,811.1
Total financial liabilities 1,420,297.7 961,458.8 1,098,522.7 1,340,483.8 4,820,763.0 4,195,140.7 307,868.4 2,320,676.9 11,644,449.0
Asset/liability gap 724,864.0 308,697.7 5,615.6 6,724.6 1,045,901.9 877,322.5 700,529.4 (1,140,144.1) 1,483,609.7
Cumulative gap 724,864.0 1,033,561.7 1,039,177.3 1,045,901.9 1,045,901.9 1,923,224.4 2,623,753.8 1,483,609.7 1,483,609.7
Cumulative gap as a percentage of
total financial assets 33.8% 30.3% 23.0% 17.8% 17.8% 17.6% 22.0% 11.3% 11.3%

(1) Assets and liabilities are classified into the applicable maturity categories based on residual maturity unless specifically mentioned.
(2) Cash on hand is classified in the “0-28” days category.
(3) Cash and due from banks, and restricted cash include balances with the RBI to satisfy its cash reserve ratio requirements. These balances are held in the form of
overnight cash deposits but we classify these balances as part of the applicable maturity categories on a basis proportionate to the classification of related deposits.
(4) Securities in the trading book are classified based on the expected time of realization for such investments. Units of open ended mutual funds, if any, are classified in
“0-28” days category.
(5) Securities held towards satisfying the statutory liquidity requirement prescribed by the RBI are classified based on the applicable maturity categories on a basis
proportionate to the classification of related deposits.
(6) Shares in the available-for-sale debt investment portfolio are classified in the “over 5 years” category. Units of open ended mutual funds, if any, are classified in
“0-28” days category.
(7) Includes net non-performing loans which are classified in the “Over 3 years to 5 years” and “Over 5 years” categories.
(8) Ambiguous maturity overdrafts are classified under various maturity categories based on a historical behavioral analysis that we have performed to determine the
appropriate maturity categorization of such advances.
(9) Current and savings deposits are classified under various maturity categories based on a historical behavioral analysis that we have performed to determine the
appropriate maturity categorization of such deposits.
(10) Time deposits under Rs. 20 million are classified under various maturity categories based on the historical behavioral analysis that we have performed to determine
the appropriate maturity categorization of such deposits taking into account rollovers and premature withdrawals. The rest have been classified under various maturity
categories based on the residual maturity.
(11) Includes short-term borrowings and long-term debt.
(12) Cash floats are classified under various maturity categories based on the historical behavioral analysis that we have performed to determine the appropriate maturity
categorization of such floats.
(13) Other assets and other liabilities are classified under various maturity categories based on historical behavioral analysis that we have performed to determine the
appropriate maturity categorization of such other assets and other liabilities.

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For further information on how we manage our asset liability risk, see “Business—Risk Management—Market Risk”.

Loan Portfolio and Credit Substitutes

As of March 31, 2019, our gross loan portfolio amounted to Rs. 9,111.5 billion. As of that date, our gross credit substitutes outstanding were
Rs. 272.9 billion. Almost all our gross loans and credit substitutes are to borrowers in India and approximately 90% are denominated in rupees. For a
description of our retail and wholesale loan products, see “Business—Retail Banking—Retail Loans and Other Asset Products” and “Business—Wholesale
Banking—Commercial Banking Products—Commercial Loan Products and Credit Substitutes”.

The following table sets forth, for the periods indicated, our gross loan portfolio classified by product group:

At March 31,
2015 2016 2017 2018 2019
(in millions)
Retail loans Rs. 2,720,988.5 Rs. 3,458,565.7 Rs. 4,048,961.3 Rs. 5,213,364.6 Rs. 6,237,903.6
Wholesale loans 1,222,460.6 1,534,268.7 1,939,948.4 2,162,814.4 2,873,561.0
Gross loans Rs. 3,943,449.1 Rs. 4,992,834.4 Rs. 5,988,909.7 Rs. 7,376,179.0 Rs. 9,111,464.6
Credit substitutes (at fair value) 195,058.9 297,241.0 419,540.6 324,031.5 272,886.8
Gross loans plus credit substitutes Rs. 4,138,508.0 Rs. 5,290,075.4 Rs. 6,408,450.3 Rs. 7,700,210.5 Rs. 9,384,351.4

Maturity and Interest Rate Sensitivity of Loans and Credit Substitutes

The following tables set forth, for the period indicated, the maturity and interest rate sensitivity of our loans and credit substitutes:

At March 31, 2019

Due in one Due in one Due after
year or less to five years five years
(in millions)
Retail loans Rs. 1,911,646.9 Rs. 3,912,771.8 Rs. 413,484.9
Wholesale loans 1,537,701.3 899,447.4 436,412.3
Gross loans Rs. 3,449,348.2 Rs. 4,812,219.2 Rs. 849,897.2
Credit substitutes (at fair value) 108,452.8 151,942.9 12,491.1
Gross loans plus credit substitutes Rs. 3,557,801.0 Rs. 4,964,162.1 Rs. 862,388.3

At March 31, 2019

Due in one Due in one Due after five
year or less to five years years
(in millions)
Interest rate classification of loans by maturity:
Variable rates Rs. 758,366.5 Rs. 2,134,154.8 Rs. 849,897.2
Fixed rates 2,690,981.7 2,678,064.4 —
Gross loans Rs. 3,449,348.2 Rs. 4,812,219.2 Rs. 849,897.2
Interest rate classification of credit substitutes by maturity:
Variable rates Rs. — Rs. — Rs. —
Fixed rates 108,452.8 151,942.9 12,491.1
Gross credit substitutes Rs. 108,452.8 Rs. 151,942.9 Rs. 12,491.1
Interest rate classification of loans and credit substitutes by
maturity:
Variable rates Rs. 758,366.5 Rs. 2,134,154.8 Rs. 849,897.2
Fixed rates 2,799,434.5 2,830,007.3 12,491.1
Gross loans and credit substitutes Rs. 3,557,801.0 Rs. 4,964,162.1 Rs. 862,388.3
Concentration of Loans and Credit Substitutes
Pursuant to the guidelines of the RBI, our exposure to individual borrowers is limited to 15% of our capital funds (as defined by the RBI and
calculated under Indian GAAP), and our exposure to a group of companies under the same management is limited to 40% of our capital funds. In the case
of infrastructure projects, such as power, telecommunications, road and port projects, an additional exposure of up to 5% of capital funds is allowed in
respect of individual borrowers and up to 10% in respect of group borrowers. We may, in exceptional circumstances and with the approval of our Board of
Directors, consider enhancement of exposure to a borrower by a further 5% of capital funds. See “Supervision and Regulation—Credit Exposure Limits”.

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The following table sets forth, for the periods indicated, our gross loans and fair value of credit substitutes outstanding by the borrower’s industry or
economic activity and as a percentage of our gross loans and fair value of credit substitutes (where such percentage exceeds 2.0% of the total). For the
purpose of industry-wise classification of retail loans the end use (i.e., business purpose or personal use) is taken into consideration. Accordingly, exposures
to individual and non-individual borrowers, where the credit facilities are for business purposes, are being reported under the industry relating to the activity
of the borrower. Where the credit facilities are for personal use, the exposure to the individual borrower is classified under Consumer Loans. From fiscal
2017, Agriculture and allied activities is classified under Agriculture Production - Food, Agriculture Production - Non Food, Agriculture - Allied, and
Animal Husbandry, respectively. Services are classified under Business Services, and Consumer Services, respectively, and Wholesale Trade is classified
under Wholesale Trade - non consumer goods (now named as Wholesale Trade - Industrial), and Wholesale Trade-consumer goods (now named as
Wholesale Trade - Non Industrial), respectively. Credit Card receivables and Housing Loans hitherto classified under retail loans are classified under
Consumer Loans from fiscal 2017. From fiscal 2018, Agri produce trade is added by classifying certain sub segments from Wholesale Trade - Industrial,
Wholesale Trade - Non Industrial and Retail Trade.
At March 31,
2015 2016 2017 2018 2019
(in millions, except percentages)
Consumer Loans Rs. 479,467.5 11.6% Rs.670,622.8 12.7% Rs. 1,526,978.2 23.8% Rs. 1,948,328.2 25.3% Rs. 2,477,945.6 26.4%
Retail Trade 190,434.7 4.6 258,095.4 4.9 323,818.6 5.1 386,399.2 5.0 446,928.5 4.8
Non-Banking Financial
Companies/Financial
Intermediaries 154,730.5 3.7 220,012.7 4.2 338,599.3 5.3 341,744.3 4.4 409,751.1 4.4
Road Transportation 131,762.3 3.2 184,398.2 3.5 241,771.3 3.8 310,740.7 4.0 376,547.1 4.0
Automobile & Auto Ancillary 215,063.9 5.2 210,699.3 4.0 271,963.5 4.2 312,786.0 4.1 363,393.0 3.9
Consumer Services — — — — 264,554.4 4.1 311,794.7 4.0 358,017.7 3.8
Agriculture Production - Food — — — — 284,748.8 4.4 319,141.4 4.1 330,092.5 3.5
Power 112,016.5 2.7 119,207.9 2.3 145,608.7 2.3 193,978.4 2.5 288,358.1 3.1
Telecom — — — — 129,510.8 2.0 — — 267,561.0 2.9
Real Estate & Property Services 91,871.9 2.2 125,193.8 2.4 170,245.8 2.7 235,683.0 3.1 259,035.6 2.8
Business Services — — — — 161,452.2 2.5 208,815.4 2.7 237,102.9 2.5
Food & Beverage 128,212.4 3.1 155,489.6 2.9 178,848.8 2.8 211,367.5 2.7 233,798.9 2.5
Housing Finance Companies — — — — 143,236.6 2.2 171,780.2 2.2 203,904.2 2.2
Iron & Steel 86,389.7 2.1 117,845.3 2.2 — — — — 201,003.0 2.1
Wholesale Trade - Non Industrial — — — — 237,302.7 3.7 183,081.2 2.4 200,337.7 2.1
Wholesale Trade - Industrial — — — — 170,084.4 2.7 167,357.3 2.2 192,776.2 2.1
Agriculture Production - Nonfood — — — — 202,350.3 3.2 199,451.2 2.6 192,657.8 2.1
Textiles & Garments — — — — — — 164,476.1 2.1 191,963.6 2.0
Agriculture - Allied — — — — 129,207.9 2.0 163,496.3 2.1 191,132.7 2.0
Activities allied to agriculture 422,894.4 10.2 550,848.4 10.4 — — — — — —
Wholesale Trade 314,066.2 7.6 362,316.5 6.8 — — — — — —
Services 230,486.5 5.6 310,019.3 5.9 — — — — — —
Coal & Petroleum Products — — — — — — — — — —
Others (including unclassified
retail) 1,581,111.5 38.2 2,005,326.2 37.8 1,488,168.0 23.2 1,869,789.4 24.5 1,962,044.2 20.9
Total Rs. 4,138,508.0 100.0% Rs. 5,290,075.4 100.0% Rs. 6,408,450.3 100.0% Rs. 7,700,210.5 100.0% Rs. 9,384,351.4 100.0%

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As of March 31, 2019, our ten largest exposures totaled Rs. 918.7 billion and represented 63.9% of our capital funds as per RBI guidelines. The
largest group of companies under the same management control accounted for 26.3% of our capital funds as per RBI guidelines.

Directed Lending
The RBI has established guidelines requiring Indian banks to lend 40% of their adjusted net bank credit (“ANBC”), as computed in accordance with
RBI guidelines, or the credit equivalent amount of off balance sheet exposures, whichever is higher, as of the corresponding date of the preceding year, to
certain sectors called “priority sectors”. Priority sectors are broadly comprised of agriculture, micro enterprises and other PSL, which includes small and
medium enterprises, residential mortgages, education, renewal energy and social infrastructure, among others, subject to satisfying certain criteria.
We are required to comply with the PSL requirements as of March 31 of each fiscal year, a date specified by the RBI for reporting. From fiscal 2017,
the assessment of whether we have achieved the PSL requirements is made at the end of the fiscal year based on the average of priority sector
target/sub-target achievement as at the end of each quarter. Accordingly, on the basis of average calculation, the Bank’s total PSL achievement for fiscal
2019 stood at 41.9%. The Bank met its priority sector lending requirements in fiscal 2019. The PSL master circular mentions that Scheduled Commercial
Banks having any shortfall in lending to priority sector shall be allocated amounts for contribution to the RIDF established with NABARD and other Funds
with NABARD, NHB, SIDBI or MUDRA Ltd., as decided by the RBI from time to time.
As of March 31, 2019, our total investments as directed by RBI in such deposits were Rs. 108.3 billion yielding returns ranging from 4.3% to 8.3%.
The following table sets forth, for the periods indicated, our loans, broken down by sector, forming part of our directed lending:
As of March 31,
2015 2016 2017 2018 2019
(in millions)
Directed lending:
Agriculture Rs. 392,441.4 Rs. 528,672.4 Rs. 631,861.6 Rs. 735,135.0 Rs. 742,724.9
Micro small and medium enterprises(1) 454,716.8 682,621.9 785,715.9 814,006.9 1,168,199.9
Other 221,829.8 217,302.5 223,502.7 205,145.0 295,582.8
Total directed lending Rs. 1,068,988.0 Rs. 1,428,596.8 Rs. 1,641,080.2 Rs. 1,754,286.9 Rs. 2,206,507.6

(1) Includes medium enterprises from fiscal 2016

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Non-Performing Loans
The following table sets forth, for the periods indicated, information about our non-performing loan portfolio:

As of March 31,
2015 2016 2017 2018 2019
(in millions, except percentages)
Non-performing loans:
Retail loans Rs. 25,835.2 Rs. 37,423.0 Rs. 52,704.0 Rs. 75,904.5 Rs. 102,268.8
Wholesale loans 13,489.6 15,559.7 30,275.7 32,812.8 38,153.7
Gross non-performing loans Rs. 39,324.8 Rs. 52,982.7 Rs. 82,979.7 Rs. 108,717.3 Rs. 140,422.5
Allowances for credit losses Rs. 24,709.0 Rs. 31,008.1 Rs. 45,730.1 Rs. 62,600.5 Rs. 85,783.0
Unallocated allowances for credit losses 22,625.1 26,352.0 32,766.8 49,906.7 62,449.0
Non-performing loans net of specific allowances
for credit losses 14,615.8 21,974.6 37,249.6 46,116.8 54,639.5
Gross loan assets 3,943,449.1 4,992,834.4 5,988,909.7 7,376,179.0 9,111,464.6
Net loan assets Rs. 3,896,115.0 Rs. 4,935,474.3 Rs. 5,910,412.8 Rs. 7,263,671.8 Rs. 8,963,232.6
Gross non-performing loans as a percentage of
gross loans 1.0% 1.1% 1.4% 1.5% 1.5%
Gross unsecured non-performing loans as a
percentage of gross non-performing loans 13.9% 11.1% 31.4% 27.9% 25.5%
Gross unsecured non-performing loans as a
percentage of gross unsecured loans. 0.6% 0.5% 1.7% 1.5% 1.3%
Non-performing loans net of specific allowances
for credit losses as a percentage of net loan assets 0.4% 0.4% 0.6% 0.6% 0.6%
Specific allowances for credit losses as a
percentage of gross non-performing loans 62.8% 58.5% 55.1% 57.6% 61.1%
Total allowances for credit losses as a percentage of
gross non-performing loans 120.4% 108.3% 94.6% 103.5% 105.6%

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Recognition of Non-Performing Loans

We classify our loan portfolio into loans that are performing and loans that are non-performing or impaired. We have categorized our gross loans
based on their performance status as follows:

At March 31,
2015 2016 2017 2018 2019
(in millions)
Performing Rs. 3,904,124.3 Rs. 4,939,851.7 Rs. 5,905,930.0 Rs. 7,267,461.7 Rs. 8,971,042.1
Non-performing or impaired:
On accrual status 2,431.2 4,291.3 — — —
On non-accrual status 36,893.6 48,691.4 82,979.7 108,717.3 140,422.5
Total non-performing or impaired 39,324.8 52,982.7 82,979.7 108,717.3 140,422.5
Total Rs. 3,943,449.1 Rs. 4,992,834.4 Rs. 5,988,909.7 Rs. 7,376,179.0 Rs. 9,111,464.6

We consider a loan to be performing when no principal or interest payment is three months or more past due and where we expect to recover all
amounts due to us. In the case of wholesale loans, we also identify loans as non-performing or impaired even when principal or interest payments are less
than three months past due but where we believe recovery of all principal and interest amounts is doubtful. Interest income from loans is recognized on an
accrual basis using effective interest method when earned except in respect of loans placed on non-accrual status, for which interest income is recognized
when received. Loans are placed on “non-accrual” status when interest or principal payments are three months past due.

Our methodology for determining specific and unallocated allowances is discussed separately below for each category of loans.

Retail
Our retail loan loss allowance consists of specific/allocated and unallocated allowances.

We establish a specific allowance on our retail loan portfolio based on factors such as the nature of the product, delinquency levels or the number of
days the loan is past due and the nature of the security available. Additionally we monitor loan to value ratios for loans against securities. The loans are
charged off against allowances typically when the account becomes 180 to 1,083 days past due depending on the type of loans. The defined delinquency
levels at which major loan types are charged off are 180 days past due for personal loans, credit card receivables, auto loans, commercial vehicle and
construction equipment finance, 720 days past due for housing loans and on a customer by customer basis in respect of retail business banking when we
believe that any future cash flows from these loans are remote, including realization of collateral, if applicable, and where any restructuring or any other
settlement arrangements are not feasible.

We also record unallocated allowances for retail loans by product type. Our retail loan portfolio is comprised of groups of large numbers of small
value homogeneous loans. We establish an unallocated allowance for loans in each product group based on our estimate of the overall portfolio quality,
asset growth, economic conditions and other risk factors. We estimate unallocated allowance for retail loans based on an internal credit slippage matrix,
which measures our historic losses for our standard loan portfolio. Subsequent recoveries, if any, against write off cases are adjusted to provision for credit
losses in the consolidated statement of income.

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Wholesale
The allowance for wholesale loans consists of specific and unallocated components. The allowance for such credit losses is evaluated on a regular
basis by us and is based upon our view of the probability of recovery of loans in light of historical experience, the nature and volume of the loan portfolio,
adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, factors affecting the industry which the
loan exposure relates to and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to
significant revision as more information becomes available. Loans are charged off against the allowance when management believes that the loan balance
cannot be recovered. Subsequent recoveries, if any, against write off cases are adjusted to provision for credit losses in the consolidated statement of
income.

We grade our wholesale loan accounts considering both qualitative and quantitative criteria. Wholesale loans are considered impaired when, based on
current information and events, it is probable that we will be unable to collect scheduled payments of principal or interest when due according to the
contractual terms of the loan agreement. Factors considered by us in determining impairment include payment status, the financial condition of the
borrower, the value of collateral held, and the probability of collecting scheduled principal and interest payments when due.

We establish specific allowances for each impaired wholesale loan customer in the aggregate for all facilities, including term loans, cash credits, bills
discounted and lease finance, based on either the present value of expected future cash flows discounted at the loan’s effective interest rate or the net
realizable value of the collateral if the loan is collateral dependent.

Wholesale loans that experience insignificant payment delays and payment shortfalls are generally not classified as impaired but are placed on a
surveillance watch list and closely monitored for deterioration. We determine the significance of payment delays and payment shortfalls on a case-by-case
basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay,
the borrower’s prior payment record, market information, and the amount of the shortfall in relation to the principal and interest owed.

The Bank has also established an unallocated allowance for wholesale standard loans based on the overall portfolio quality, asset growth, economic
conditions and other risk factors. We estimate our wholesale unallocated allowance based on an internal credit slippage matrix, which measures our historic
losses for our standard loan portfolio.

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Analysis of Non-Performing Loans by Industry Sector

The following table sets forth, for the periods indicated, our non-performing loans by borrowers’ industry or economic activity in each of the respective periods and as
a percentage of our loans in the respective industry or economic activity sector. These figures do not include credit substitutes, which we include for purposes of calculating
our industry concentration for RBI reporting. See “ Risk Factors—We have high concentrations of exposures to certain customers and sectors and if any of these exposures
were to become non-performing, the quality of our portfolio could be adversely affected and our ability to meet capital requirements could be jeopardized” .
As of March 31,
2015 2016 2017 2018 2019
Non % of Non % of Non % of Non % of Non % of
Gross performing loans in Gross performing loans in Gross performing loans in Gross performing loans in Gross performing loans in
Industry Loans loans industry Loans loans industry Loans loans industry Loans loans industry Loans loans industry
(in millions, except percentages)
Glass & Glass Products Rs. 5,895.8 Rs. 1,635.1 27.7% Rs. 8,111.7 Rs. 1,727.1 21.3% Rs. 10,165.3 Rs. 1,701.0 16.7% Rs. 10,877.3 Rs. 1,962.2 18.0% Rs. 14,017.0 Rs. 1,785.3 12.7%
Wholesale Trade - Non Industrial — — — — — — 232,111.9 15,722.9 6.8 180,841.8 15,239.0 8.4 200,089.4 15,856.7 7.9
Agriculture Production - Food — — — — — — 282,673.8 4,217.1 1.5 318,643.5 12,227.0 3.8 330,092.5 18,915.0 5.7
Paper, Printing and Stationery 26,216.3 859.4 3.3 28,610.4 178.5 0.6 31,448.5 1,634.9 5.2 38,025.5 1,592.8 4.2 41,926.3 1,881.6 4.5
Food and Beverage 121,172.2 1,101.1 0.9 152,253.7 1,871.7 1.2 166,494.3 3,361.2 2.0 210,780.7 7,007.4 3.3 233,798.9 8,577.3 3.7
Agriculture - Allied — — — — — — 129,207.9 3,218.8 2.5 163,496.3 6,184.0 3.8 191,132.7 6,641.6 3.5
Agriculture Production - Non Food — — — — — — 202,350.3 2,854.5 1.4 199,451.2 4,156.8 2.1 192,657.8 5,492.5 2.9
Infrastructure Development 63,146.3 870.9 1.4 63,931.9 2,991.7 4.7 88,135.0 2,738.2 3.1 109,841.9 3,366.7 3.1 128,273.5 3,652.2 2.8
Animal Husbandry — — — — — — 24,393.9 124.7 0.5 28,038.2 466.6 1.7 19,849.3 508.4 2.6
Agriculture Produce - Trade — — — — — — — — — 97,396.9 1,522.9 1.6 122,512.2 2,816.6 2.3
Wholesale Trade - Industrial — — — — — — 166,940.1 3,905.8 2.3 167,253.4 3,469.0 2.1 192,708.4 3,657.1 1.9
Mining and Minerals 45,844.4 761.2 1.7 54,165.4 534.5 1.0 57,585.4 1,183.8 2.1 49,165.3 303.0 0.6 65,879.6 1,220.4 1.9
Iron and Steel 84,913.9 4,793.8 5.6 97,934.7 4,712.7 4.8 106,816.0 4,499.4 4.2 135,431.1 4,196.0 3.1 195,488.6 3,943.2 2.0
Retail trade 189,593.5 1,769.0 0.9 253,373.6 2,450.3 1.0 320,876.9 3,731.5 1.2 385,217.8 6,279.0 1.6 445,757.8 7,767.0 1.7
Real Estate & Property Services 88,264.9 846.9 1.0 121,992.9 3,559.2 2.9 168,660.4 3,822.8 2.3 233,700.5 4,015.9 1.7 257,056.8 4,175.1 1.6
Road Transportation 131,240.2 1,849.8 1.4 183,707.5 1,826.0 1.0 241,771.3 2,518.7 1.0 310,740.7 3,313.8 1.1 376,547.1 5,536.7 1.5
Textiles & Garments 64,183.5 801.9 1.2 92,386.0 996.0 1.1 109,393.7 1,511.8 1.4 159,873.4 2,531.5 1.6 187,527.5 2,544.7 1.4
Business Services — — — — — — 159,666.1 1,450.0 0.9 207,868.8 2,224.1 1.1 236,853.7 3,074.9 1.3
Other Industries — — — — — — 315,497.4 5,426.8 1.7 334,256.9 3,028.6 0.9 376,953.2 4,730.1 1.3
Automobile & Auto Ancillary 192,017.4 1,404.7 0.7 199,606.7 1,789.3 0.9 240,301.6 2,353.5 1.0 299,680.3 2,608.6 0.9 352,979.1 4,262.9 1.2
Engineering 79,747.2 1,596.1 2.0 95,022.6 1,112.1 1.2 110,827.8 538.5 0.5 133,216.6 983.1 0.7 159,462.7 2,962.3 1.9
Gems and Jewellery 34,481.7 372.3 1.1 69,659.9 449.8 0.6 69,339.0 789.1 1.1 85,017.9 1,255.4 1.5 100,642.9 1,083.6 1.1
Consumer Services — — — — — — 260,053.9 2,331.4 0.9 308,333.2 2,754.2 0.9 354,060.4 3,771.1 1.1
Consumer Loans 479,467.5 2,392.3 0.5 670,622.8 3,818.7 0.6 1,526,978.2 10,760.3 0.7 1,948,328.2 15,236.4 0.8 2,477,945.6 22,513.7 0.9
Wood & Products 6,324.2 188.1 3.0 8,482.6 291.0 3.4 10,994.0 345.4 3.1 14,782.7 201.8 1.4 19,098.5 165.1 0.9
FMCG & Personal Care 8,192.3 22.7 0.3 10,785.2 55.1 0.5 18,499.9 45.6 0.2 26,273.4 117.8 0.4 31,209.3 221.1 0.7
Leather & Products 5,235.3 19.8 0.4 6,189.0 27.1 0.4 6,898.0 78.1 1.1 11,298.2 80.9 0.7 15,806.2 99.6 0.6
Drugs and Pharmaceuticals 40,114.5 386.7 1.0 36,854.5 372.0 1.0 31,133.3 381.7 1.2 54,444.1 410.2 0.8 57,963.6 359.8 0.6
Information Technology 21,913.3 591.5 2.7 15,365.5 200.4 1.3 23,518.6 171.5 0.7 40,074.1 117.8 0.3 33,414.7 176.5 0.5
Media & Entertainment 9,727.9 55.2 0.6 13,694.2 153.2 1.1 16,761.1 137.4 0.8 16,414.6 76.7 0.5 19,190.2 96.5 0.5
Consumer Durables 21,586.7 67.1 0.3 32,864.7 161.3 0.5 43,224.5 174.2 0.4 47,822.9 205.9 0.4 59,776.8 296.9 0.5
Plastic & Products 16,909.0 36.6 0.2 24,351.8 283.9 1.2 32,751.4 278.5 0.9 41,665.0 155.6 0.4 51,589.9 205.9 0.4
Non-ferrous Metals 14,642.5 44.2 0.3 23,968.0 41.1 0.2 33,010.3 247.7 0.8 40,081.6 119.2 0.3 64,986.2 190.7 0.3
Fishing 3,788.7 6.1 0.2 5,117.6 19.9 0.4 7,188.8 11.4 0.2 8,653.5 11.5 0.1 11,384.5 31.8 0.3
Chemical and Products 40,031.1 107.8 0.3 38,095.6 68.7 0.2 49,020.6 102.7 0.2 58,460.5 193.2 0.3 71,892.6 166.4 0.2
Telecom 41,137.6 14.0 0.0 69,477.6 54.6 0.1 108,104.6 47.4 0.0 125,842.1 576.3 0.5 246,272.4 530.0 0.2
Coal & Petroleum Products 40,153.4 74.5 0.2 46,279.5 97.3 0.2 48,513.8 119.7 0.2 53,206.1 135.6 0.3 92,504.7 187.8 0.2
Cement & Products 26,789.7 22.7 0.1 37,872.7 43.4 0.1 38,204.8 56.5 0.1 74,435.8 121.0 0.2 115,169.4 83.8 0.1
Other Non-Metallic Mineral Products 9,579.2 80.0 0.8 9,246.2 83.7 0.9 11,819.7 87.5 0.7 17,680.8 57.0 0.3 20,375.4 14.7 0.1
Rubber & Products 5,418.8 140.2 2.6 5,767.0 159.0 2.8 7,483.4 116.5 1.6 8,311.6 4.4 0.1 11,059.7 5.6 0.1
Fertilisers & Pesticides 49,186.2 1.4 0.0 69,044.6 2.3 0.0 64,778.6 1.5 0.0 81,113.1 1.9 0.0 91,942.1 41.7 0.0
Power 96,169.7 103.4 0.1 103,437.7 114.5 0.1 125,213.0 94.2 0.1 159,239.8 92.8 0.1 251,169.4 82.9 0.0
NBFC/Financial Intermediaries 94,744.7 981.5 1.0 130,684.6 957.5 0.7 180,220.7 76.6 0.0 231,249.9 111.7 0.0 311,477.1 84.4 0.0
Shipping 2,475.7 14.8 0.6 2,096.9 6.2 0.3 2,289.8 8.9 0.4 3,838.3 2.0 0.1 7,709.1 2.0 0.0
Tobacco & Products 529.5 7.6 1.4 531.1 4.4 0.8 — — — — — — 867.4 0.1 0.0
Capital Market Intermediaries 19,791.3 36.8 0.2 18,583.0 37.3 0.2 — — — — — — 46,092.7 9.2 0.0
Banks and Financial Institutions 21,511.5 0.4 0.0 14,494.9 13.0 0.1 — — — — — — — — —
Airlines 305.6 1.7 0.6 — — — — — — — — — — — —
Housing Finance Companies — — — — — — — — — — — — — — —
Railways 1,068.0 0.7 0.1 — — — — — — — — — — — —
Activities allied to agriculture 422,894.4 5,369.3 1.3 550,848.4 7,397.1 1.3 — — — — — — — — —
Wholesale Trade 308,806.4 3,608.2 1.2 349,927.1 4,671.8 1.3 — — — — — — — — —
Services 230,040.6 1,712.3 0.7 306,593.9 2,473.7 0.8 — — — — — — — — —
Miscellaneous industries 69,377.7 1,436.4 2.1 47,072.1 1,057.5 2.2 — — — — — — — — —
Retail advances not otherwise
classified 658,489.4 3,138.6 0.5 842,772.6 6,118.1 0.7 — — — — — — — — —
Total 39,324.8 52,982.7 82,979.7 108,717.3 140,422.5
Specific allowance for credit losses 24,709.0 31,008.1 45,730.1 62,600.5 85,783.0
Non-performing loans, net 14,615.8 21,974.6 37,249.6 46,116.8 54,639.5

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As of March 31, 2019, our gross non-performing loan as a percentage of gross loans in the respective industries was the highest in glass and Glass
Products, Wholesale Trade - Non Industrial and Paper and Agriculture Production - Food.

Glass and Glass Products

Due to existing competition and government policy, despite entry barriers, there is intense competition in the glass industry as the players face pricing
pressures from domestic players as well as cheap imports from China, Indonesia and Saudi Arabia. The risk of substitution from PET bottles exists in the
container glass segment. Also, since soda ash and natural gas are imported and dollar traded commodities, manufacturers are exposed to forex risks.

Wholesale Trade - Non Industrial

A consortium of banks, including us, provides credit facilities to state governments for procurement of food grains under the Targeted Public
Distribution and Other Welfare Schemes of the Government of India. The credit limit for procurement of food grains is authorized by the RBI and
consented to by the Ministry of Finance under Article 293 (3) of the Constitution of India. The outstanding balances of the state governments generally do
not exceed the food stock and receivables at any point in time. However, in the case of a state government, there was a gap between outstanding balance and
the food stock and receivables. This gap has been funded by the consortium through a term loan repayable over 20 years in equated monthly installments
with credit enhancements, including a letter of comfort from the Government of India.

Agriculture Production - Food

Agriculture production in India is largely dependent on the length of the monsoon season and is impacted by weather conditions which result in
uncertainty in crop yields and wide swings in farm income. Government policy on food grain pricing and procurement as well as the prevalent market
conditions impact farm income. In fiscal 2019, natural calamities like floods and draughts affected several Indian states thereby impacting farm output.
Several Indian state governments also announced farm loan waiver schemes. The uncertainty of repayment and the expectations of future waivers also
impacted cash flows for farmers. This has impacted recoveries in recent harvest cycles thereby resulting in a rise in delinquency.

Top Ten Non-Performing Loans

As of March 31, 2019 our top ten non-performing loans represented 18.6% of our gross non-performing loans and 0.3% of our gross loan portfolio.

The following table sets forth information regarding our ten largest non-performing loans. The table also sets forth our share of collateral value. We
periodically obtain details of collateral from borrowers and external valuation reports and carry out certain procedures for updating and assessing fair values
of collateral, however these procedures may not be conclusive to determine the precise net realizable values of any such collateral, which may be
substantially less. None of the loans is collateral dependent (i.e. the borrower has no means of repaying the impaired loan other than the collateral). Interest
payments not being serviced as of fiscal 2019 for these loans is because of specific factors which have temporarily resulted in inadequate cash flows. The
fair value of the collateral and our share thereof and the present value of expected future cash flows from these loans are adequate to cover the principal
outstanding net of allowances for credit losses. Our top non-performing loan is to a state government which is backed by credit enhancements including
letter of comfort from the Government of India.

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At March 31, 2019

Principal Currently
Gross outstanding net servicing
Type of banking principal of allowance Our share in all Interest
Industry arrangement outstanding for credit losses Collateral value payments
(in millions)
Borrower 1 Wholesale Trade-Non Industrial Consortium Rs. 11,902.8 Rs. 10,819.6 Rs. — Yes
Borrower 2 Agri Production-Food Consortium 2,880.3 1,871.1 633.2 No
Borrower 3 Real Estate & Property Services Multiple 2,502.7 — 3,209.5 No
Borrower 4 Iron and Steel Consortium 1,909.0 1,909.0 2,863.5 No
Borrower 5 Glass & Products Consortium 1,775.5 — 1,731.4 No
Borrower 6 Food and Beverage Multiple 1,350.3 — — No
Borrower 7 Engineering Consortium 1,179.6 527.4 885.1 No
Borrower 8 Infrastructure Development Consortium 1,039.5 — 1,439.1 No
Borrower 9 Paper, Printing and Stationery Multiple 810.7 — — No
Borrower 10 Mining and Minerals Consortium 708.7 73.4 3,020.0 No
Rs. 26,059.1 Rs. 15,200.5

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Restructuring of Non-Performing Loans

Our non-performing loans are restructured on a case-by-case basis after our management has determined that restructuring is the best means of
maximizing realization of the loan. These loans continue to be on a non-accrual basis and are reclassified as performing loans only after sustained
performance under the loan’s renegotiated terms for a period of at least one year.

The following table sets forth, as of the dates indicated, our non-performing loans that have been restructured through rescheduling of principal
repayments and deferral or waiver of interest:

At March 31,
2015 2016 2017 2018 2019
(in millions, except percentages)
Gross restructured loans Rs.4,165.6 Rs.4,245.8 Rs.3,069.3 Rs.3,012.9 Rs.3,013.0
Allowance for credit losses 2,056.9 2,090.2 686.4 1,561.7 2,340.6
Net restructured loan Rs.2,108.7 Rs.2,155.6 Rs.2,382.9 Rs.1,451.2 Rs. 672.4
Gross restructured loans as a percentage of gross non-performing
loans 10.6% 8.0% 3.7% 2.8% 2.1%
Net restructured loans as a percentage of net non-performing
loans 14.4% 9.8% 6.4% 3.1% 1.2%

If there is a failure to meet payment or other terms of a restructured loan, it may be considered a failed restructuring, in which case it is no longer
classified as a restructured loan. See “Supervision and Regulation—Restructured Assets” and “Supervision and Regulation—Resolution of Stressed Assets.”

Remediation Strategy for Non-Performing Loans

We focus on early problem recognition and active remedial management efforts in relation to our non-performing loans. Because we are involved
primarily in working capital finance with respect to wholesale loans, we track our borrower’s performance and liquidity on an ongoing basis. This enables
us to define remedial strategies proactively and manage our exposures to industries or customers that we believe are displaying deteriorating credit trends.
Relationship managers lead the recovery effort together with strong support from the credit group in the corporate office in Mumbai. Recovery is pursued
through, among others, legal processes, enforcement of collateral, negotiated one-time settlements and other similar strategies. The particular strategy
pursued depends upon the level of cooperation of the borrower, our assessment of the borrower’s management integrity and long-term viability, the credit
structure and the role of other creditors.

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Allowance for Credit Losses on Loans

The following table sets forth, for the periods indicated, movements in our allowance for credit losses:

For the years ended March 31,

2015 2016 2017 2018 2019
(in millions)
Specific allowance for credit losses at the beginning of
the period Rs. 20,649.2 Rs. 24,709.0 Rs. 31,008.1 Rs. 45,730.1 Rs. 62,600.5
Additions during the period
Retail 19,615.7 24,446.1 34,723.4 50,794.5 69,848.2
Wholesale 4,248.1 2,071.6 6,561.8 4,054.2 6,665.9
Less allowances no longer required on account of
write-offs (19,804.0) (20,218.6) (26,563.2) (37,978.3) (53,331.6)
Specific allowance for credit losses at the end of period Rs. 24,709.0 Rs. 31,008.1 Rs. 45,730.1 Rs. 62,600.5 Rs. 85,783.0
Unallocated allowance for credit losses at the
beginning of the period Rs. 21,964.0 Rs. 22,625.1 Rs. 26,352.0 Rs. 32,766.8 Rs. 49,906.7
Additions during the period 661.1 3,726.9 6,414.8 17,139.9 12,542.3
Unallocated allowance for credit losses at the end of
the period Rs. 22,625.1 Rs. 26,352.0 Rs. 32,766.8 Rs. 49,906.7 Rs. 62,449.0
Total allowance for credit losses at the beginning of the
period Rs. 42,613.2 Rs. 47,334.1 Rs. 57,360.1 Rs. 78,496.9 Rs. 112,507.2
Allowance no longer required on account of write-offs (19,804.0) (20,218.6) (26,563.2) (37,978.3) (53,331.6)
Additions during the period 24,524.9 30,244.6 47,700.0 71,988.6 89,056.4
Total allowance for credit losses at the end of the
period Rs. 47,334.1 Rs. 57,360.1 Rs. 78,496.9 Rs.112,507.2 Rs.148,232.0

Movements in our allowances for credit losses charged to expense do not include recoveries against write-off cases amounting to Rs. 12,590.8 million
and Rs. 16,777.1 million for fiscals 2018 and 2019, respectively. Allowances for credit losses for the periods presented have been disclosed net of
recoveries.

The following table sets forth, for the periods indicated, the allocation of the total allowance for credit losses:

As of March 31,
2015 2016 2017 2018 2019
(in millions)
Wholesale
Allocated Rs. 8,083.8 Rs. 7,413.4 Rs. 11,713.5 Rs. 15,323.0 Rs. 20,233.2
Unallocated 3,248.4 3,803.4 4,656.2 7,759.3 9,507.9
Subtotal Rs. 11,332.2 Rs. 11,216.8 Rs.16,369.7 Rs. 23,082.3 Rs. 29,741.1
Retail
Allocated 16,625.2 23,594.7 34,016.6 47,277.5 65,549.8
Unallocated 19,376.7 22,548.6 28,110.6 42,147.4 52,941.1
Subtotal Rs.36,001.9 Rs.46,143.3 Rs.62,127.2 Rs. 89,424.9 Rs. 118,490.9
Allowance for credit losses Rs.47,334.1 Rs.57,360.1 Rs.78,496.9 Rs.112,507.2 Rs.148,232.0

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our audited financial statements
included in this report. The following discussion is based on our audited financial statements, which have been prepared in accordance with U.S. GAAP,
and on information publicly available from the RBI and other sources.

Introduction
Overview
We are a new generation private sector bank in India. Our principal business activities are retail banking, wholesale banking and treasury services.
Our retail banking division provides various products such as deposit products, loans, credit cards, debit cards, third-party mutual funds and insurance
products, bill payment services and other services. Through our wholesale banking operations we provide products such as loans, deposit products,
documentary credits, guarantees, bullion trading, debt syndication services and foreign exchange and derivative products. We also provide cash
management services, clearing and settlement services for stock and commodity exchanges, tax and other collections for the Government, custody services
and correspondent banking services. Our treasury services segment undertakes trading operations on the proprietary account (including investments in
government securities), foreign exchange operations and derivatives trading both on the proprietary account and customer flows and borrowings.

Certain Factors Affecting our Results of Operations

Our revenue consists of interest and dividend revenue as well as non-interest revenue. Our interest and dividend revenue is primarily generated by
interest on loans, interest or dividends from securities and interest from other activities. We offer a range of loans to retail customers and working capital
and term loans to corporate customers. The primary components of our securities portfolio are statutory liquidity ratio investments, credit substitutes and
other investments. Statutory liquidity ratio investments principally consist of Government of India treasury securities. Credit substitute securities typically
consist of commercial paper and debentures issued by the same customers with whom we have a lending relationship in our wholesale banking business.
Other investments include asset-backed securities, mortgage-backed securities, deposit certificates issued by banks, as well as equity securities and units of
mutual funds. Interest revenue from other activities consists primarily of interest on our placements made to comply with the extant RBI guidelines on
shortfalls in directed lending sub-limits and interest from inter-bank placements.

Two important measures of our results of operations are net interest revenue, which is equal to our interest and dividend revenue net of interest
expense, and net interest revenue after allowance for credit losses. Interest expense includes interest on deposits as well as on borrowings. Our interest
revenue and expense are affected by fluctuations in interest rates as well as volume of activity. Our interest expense is also affected by the extent to which
we fund our activities with low-interest and non-interest bearing deposits, and the extent to which we rely on borrowings. Our allowance for credit losses is
comprised of specific and unallocated allowances for loan loss. Impairments of credit substitutes are not included in our loan loss provision, but are
reflected under “Non-interest revenue—other than temporary losses on available for sale debt securities” in our consolidated statements of income.

We also use net interest margin and spread to measure our results. Net interest margin represents the ratio of net interest revenue to average interest-
earning assets. Spread represents the difference between yield on average interest-earning assets and the cost of average interest-bearing liabilities,
including current accounts which are non-interest bearing.

Our non-interest revenue includes fee and commission income, realized gains and losses on sales of securities and spread from foreign exchange and
derivative transactions and income from affiliates. Our principal sources of fee and commission revenue are retail banking services, retail asset fees and
charges, credit card fees, home loan sourcing commissions, cash management services, documentary credits and bank guarantees and distribution of third
party mutual funds and insurance products.

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Our non-interest expense includes expenses for salaries and staff benefits, premises and equipment maintenance, depreciation and amortization,
expenditure for the purchase of priority sector lending certificates and administrative and other expenses. The costs of outsourcing back office and other
functions are included in administrative and other expenses.

Our financial condition and results of operations are affected by general economic conditions prevailing in India. During fiscal 2019, economic
growth moderated as compared to fiscal 2018. As per the estimates of the Indian Central Statistics Office (“CSO”), real GDP growth slowed down to
6.8 percent in fiscal 2019 from 7.2 percent in fiscal 2018. Growth rates first started to decrease in the first quarter of fiscal 2018 as GDP growth slowed
down to 6.0 percent, sharply lower than 9.4 percent expansion in the same quarter of fiscal 2017. The transitional impact of the GST and lingering residual
effects of demonetization were in part responsible for the slowdown. As the negative effects of GST, demonetization shock and supply disruptions gradually
faded, the economy started to recover. GDP growth bounced back to 8.2 percent in the fourth quarter of fiscal 2018 and 8.0 percent in the first quarter of
fiscal 2019. However, since then growth has slowed to 6.6 percent in the third quarter of fiscal 2019 and further down to 5.8 percent in the fourth quarter of
fiscal 2019. While our results may not necessarily track the GDP figures directly, how the economy performs affects the environment in which we operate.
For instance, a strong GDP growth may lead businesses to plan and invest confidently, in turn causing a stronger demand for bank credit.

On the other hand, inflation also moderated during fiscal 2019, with the average level of CPI declining to 3.4 percent in fiscal 2019 from 3.6 percent
in fiscal 2018 and 4.5 percent in fiscal 2017. A range of supply side measures, including prudent food stock management, appropriate monetary policy
action and subdued global commodity prices partially led to the decline in inflation. As a result of , inter alia, declining inflationary pressures, the RBI
reduced the policy repo rate by 25 basis points from 6.25 percent in fiscal 2017 to 6.00 percent in fiscal 2018. Higher inflation generally leads to higher
interest rates and raises the cost of funds for businesses, making it difficult for them to borrow. Higher interest rates also affect us as our spreads could
compress.

In June 2018, the RBI had increased the policy repo rate to 6.25 percent. This was followed by a further increase of 25 basis points to 6.50 percent in
August 2018. Recent moderation in economic growth, coupled with lower inflation, led the RBI to cut repo rates in February 2019, in April 2019 and June
2019 in order to provide a stimulus for the economy. The repo rate now stands at 5.75 percent effective June 6, 2019. In its 6th June 2019 monetary policy
review, the RBI also shifted its monetary policy stance from “neutral” to “accommodative”. A lower interest rate scenario, adds to the economic growth and
is generally beneficial to the environment in which we operate, provided inflation is under control.

On the fiscal side, the Government appears to be committed to fiscal consolidation by reducing the fiscal deficit from 4.5 percent in fiscal 2014 to
3.5 percent in fiscal 2017. However, given rising pressures on the fiscal side, the Government strayed slightly from its fiscal consolidation path. The fiscal
deficit as a percentage of GDP stood at 3.5 percent in fiscal 2018 versus the 3.2 percent target. For fiscal 2019, the revised estimates show a slightly higher
fiscal deficit at 3.4 percent of GDP compared to the budgeted fiscal deficit of 3.3 percent. For fiscal 2020 the budget projects a fiscal deficit of 3.3 percent,
higher than the 3.1 percent target set out in the fiscal 2019 medium-term fiscal framework. The focus of this year’s budget has been primarily on reviving
the rural economy, infrastructure, health, employment generation and smaller businesses. Declining fiscal deficits tend to have a favorable impact on our
operations, as lower fiscal deficit allows the central bank to reduce rates, given a sustainable level of inflation and also does not crowd out private
investments. Notwithstanding the pace of growth in India, we believe we have maintained a strong balance sheet and a low cost of funds. As of March 31,
2019, net non-performing customer assets (which consist of loans and credit substitutes) constituted 0.6 percent of net customer assets. In addition, our net
customer assets represented 100.1 percent of our deposits and our deposits represented 69.5 percent of our total liabilities and shareholders’ equity. Our
average non-interest bearing current accounts and low-interest bearing savings accounts represented 39.9 percent of our average total deposits for the period
ended March 31, 2019. These low-cost deposits and the cash float associated with our transactional services led to an average cost of funds (including
equity) for fiscal 2019 of 4.5 percent.

The Ministry of Corporate Affairs, in its press release dated January 18, 2016, issued a roadmap for the implementation of Indian Accounting
Standards (“IND-AS”) converged with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”)
with certain carve outs for scheduled commercial banks, insurance companies and non-banking financial companies (the “2016 Roadmap”), which was
subsequently confirmed by the RBI through its circular dated February 11, 2016. The 2016 Roadmap requires such institutions to prepare IND-AS-based
financial statements for accounting periods commencing on or after April 1, 2018, with comparative financial information for accounting periods
commencing on or after April 1, 2017. The implementation of IND-AS by banks requires certain legislative changes in the format of financial statements to
comply with disclosures required by IND-AS. In April 2018, the RBI deferred the effective date for implementation of IND-AS by one year, by which point
the necessary legislative amendments were expected to have been completed. The legislative amendments recommended by the RBI are under consideration
of the Government of India. Accordingly, the RBI, in March 2019 deferred the implementation of IND-AS until further notice.

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In conjunction with the implementation of IND-AS for our local Indian results, we may adopt IFRS for the purposes of our filings pursuant to
Section 13 or 15(d) of, and our reports pursuant to Rule 13a-16 or 15d-16 under, the Exchange Act. Should we choose to do so, we would be permitted to
file two years, rather than three years, of statements of income, changes in shareholders’ equity and cash flows prepared in accordance with IFRS.

The implementation of IND-AS is expected to result in significant changes to the way we prepare and present our financial statements under Indian
GAAP. The areas that are expected to have significant accounting impact on the adoption of IND-AS are summarized below:

(a) Financial assets shall be classified under amortized cost, fair value through other comprehensive income or fair value through profit/loss
categories on the basis of the nature of the cash flows and the intention of holding the financial assets.

(b) Interest will be recognized in the income statement using the effective interest method, whereby the coupon, fees net of transaction costs and all
other premiums or discounts will be amortized over the life of the financial instrument.

(c) Stock options will be required to be fair valued on the date of grant and be recognized as staff expense in the income statement over the vesting
period of the stock options.

(d) The impairment requirements of IND-AS 109, Financial Instruments, are based on an Expected Credit Loss (“ECL”) model that replaces the
incurred loss model under the extant framework. We will be generally required to recognize either a 12-month or lifetime ECL, depending on whether there
has been a significant increase in credit risk since initial recognition. IND-AS 109 will change our current methodology for calculating the provision for
standard assets and non-performing assets (“NPAs”). We will be required to apply a three-stage approach to measure ECL on financial instruments
accounted for at amortized cost or fair value through other comprehensive income. Financial assets will migrate through the following three stages based on
the changes in credit quality since initial recognition:

Stage 1: 12—months ECL

For exposures which have not been assessed as credit-impaired or where there has not been a significant increase in credit risk since initial
recognition, the portion of the ECL associated with the probability of default events occurring within the next 12 months will need to be recognized.

Stage 2: Lifetime ECL—not credit-impaired

For credit exposures where there has been a significant increase in credit risk since initial recognition but are not credit-impaired, a lifetime ECL will
need to be recognized.

Stage 3: Lifetime ECL—credit impaired

Financial assets will be assessed as credit impaired when one or more events having a detrimental impact on the estimated future cash flows of that
asset have occurred. For financial assets that have become credit impaired, a lifetime ECL will need to be recognized.

Interest revenue will be recognized at the original effective interest rate applied on the gross carrying amount for assets falling under stages 1 and 2
and on written down amount for the assets falling under stage 3.

(e) Accounting impact on the application of IND-AS at the transition date shall be recognized in Equity.

Critical Accounting Policies

We have set forth below some of our critical accounting policies under U.S. GAAP. Investors should keep in mind that we prepare our general
purpose financial statements in accordance with Indian GAAP and also report to the RBI and the Indian stock exchanges in accordance with Indian GAAP.
In certain circumstances, we may take action that is required or permitted by Indian banking regulations which may have consequences under Indian GAAP
that may be different from those under U.S. GAAP.

Allowance for Credit Losses

We provide an allowance for credit losses based on management’s best estimate of losses inherent in the loan portfolio which includes troubled debt
restructuring. The allowance for credit losses consists of allowances for retail loans and wholesale loans.

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Retail
Our retail loan loss allowance consists of specific allowance and allowance for loans collectively evaluated for impairment (termed as “unallocated
allowances”).

We establish a specific allowance on the retail loan portfolio based on factors such as the nature of the product, delinquency levels or the number of
days the loan is past due and the nature of the security available. Additionally, we monitor loan to value ratios for loan against securities. The loans are
charged off against allowances typically when the account becomes 180 to 1,083 days past due depending on the type of loan. The defined delinquency
levels at which major loan types are charged off are 180 days past due for personal loans, credit card receivables, auto loans, commercial vehicle and
construction equipment finance, 720 days past due for housing loans and on a customer by customer basis in respect of retail business banking when
management believes that any future cash flows from these loans are remote including realization of collateral, if applicable, and where any restructuring or
any other settlement arrangements are not feasible.

We also record unallocated allowances for retail loans by product type. Our retail loan portfolio is comprised of groups of large numbers of small
value homogeneous loans. We establish an unallocated allowance for loans in each product group based on our estimate of the overall portfolio quality,
asset growth, economic conditions and other risk factors. We estimate our unallocated allowance for retail loans based on an internal credit slippage matrix,
which measures our historic losses for our standard loan portfolio. Subsequent recoveries, if any, against write-off cases, are adjusted to provision for credit
losses in the consolidated statement of income.

Wholesale
The allowance for wholesale loans consists of specific and unallocated components. The allowance for such credit losses is evaluated on a regular
basis by management and is based upon management’s view of the probability of recovery of loans in light of historical experience, the nature and volume
of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, factors affecting the
industry which the loan exposure relates to and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available. Loans are charged off against the allowance when management believes that the
loan balance may not be recovered. Subsequent recoveries, if any, against write-off cases, are adjusted to provision for credit losses in the consolidated
statement of income.

We grade our wholesale loan accounts considering both qualitative and quantitative criteria. Wholesale loans are considered impaired when, based on
current information and events, it is probable that we will be unable to collect scheduled payments of principal or interest when due according to the
contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, the financial condition of
the borrower, the value of collateral held, and the probability of collecting scheduled principal and interest payments when due.

We establish specific allowances for each impaired wholesale loan customer in the aggregate for all facilities, including term loans, cash credits, bills
discounted and lease finance, based on either the present value of expected future cash flows discounted at the loan’s effective interest rate or the net
realizable value of the collateral if the loan is collateral dependent. Collateral values are generally based on appraisals from internal and external valuation
sources.

Wholesale loans that experience insignificant payment delays and payment shortfalls are generally not classified as impaired but are placed on a
surveillance watch list and closely monitored for deterioration. Management determines the significance of payment delays and payment shortfalls on a
case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons
for the delay, the borrower’s prior payment record, market information, and the amount of the shortfall in relation to the principal and interest owed. These
factors are considered by the Bank for selection of loans for credit reviews and assessment of impairment.

We have also established an unallocated allowance for wholesale standard loans based on the overall portfolio quality, asset growth, economic
conditions and other risk factors. We estimate our wholesale unallocated allowance based on an internal credit slippage matrix, which measures our historic
losses for our standard loan portfolio.

Revenue Recognition
Interest income from loans and from investments is recognized on an accrual basis using effective interest method when earned except in respect of
loans or investments placed on non-accrual status, where it is recognized when received. Fees and commissions from guarantees issued are amortized over
the contractual period of the commitment. Dividends from investments are recognized when declared. Realized gains and losses on sale of securities are
recorded on the trade date and are determined using the weighted average cost method. Other fees and income are recognized when earned, which is when
the service that results in the income has been provided. We amortize the annual fees on credit cards over the contractual period of the fees.

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Investments in Securities
Investments consist of securities purchased as part of our treasury operations, such as government securities and other debt and equity securities, and
investments purchased as part of our wholesale banking operations, such as credit substitute securities issued by our wholesale banking customers. Credit
substitute securities typically consist of commercial paper and short-term debentures issued by the same customers with whom we have a lending
relationship in our wholesale banking business. Investment decisions for credit substitute securities are subject to the same credit approval processes as for
loans, and we bear the same customer credit risk as we do for loans extended to those customers. Additionally, the yield and maturity terms are generally
directly negotiated by us with the issuer. As our exposures to such securities are similar to our exposures on our loan portfolio, additional disclosures have
been provided on impairment status in note 7 of the consolidated financial statements and on concentrations of credit risk in note 11 of the consolidated
financial statements.

All other securities including mortgage and asset-backed securities are actively managed as part of our treasury operations. The issuers of such
securities are either government, public financial institutions or private issuers. These investments are typically purchased from the market, and debt
securities are generally publicly rated.

Securities that are held principally for resale in the near term are classified as held for trading (“HFT”) and are carried at fair value, with changes in
fair value recorded in net income. Debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity
(“HTM”) and are carried at amortized cost.

All debt securities that are not classified as HTM or HFT are classified as available for sale debt securities (“AFS”) and are carried at fair value.
Unrealized gains and losses on such securities, net of applicable taxes, are reported in accumulated other comprehensive income (loss), a separate
component of shareholders’ equity.

Up to March 31, 2018 equity securities with readily determinable fair values that were not classified as HFT were classified as available for sale and
were carried at fair value. Unrealized gains and losses on such securities, net of applicable taxes, were reported in accumulated other comprehensive income
(loss), a separate component of shareholders’ equity. Dividend income on such securities was included in Interest and dividend revenue- available for sale
debt securities. Non-marketable equity securities were carried at cost.

We adopted ASU 2016-01 and ASU 2018-03 with effect from April 1, 2018. The available-for-sale category was eliminated for equity securities
which were reclassified to other assets. This resulted in a cumulative catch-up reclassification from AOCI to retained earnings (see note 2 (w)(ii) and note
14). Marketable securities are measured at fair value, change in fair value recorded in earnings. Non- marketable equity securities under the measurement
alternative are carried at cost plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment
of the same issuer and impairment, if any. The Bank’s review for impairment for equity method, cost method and measurement alternative securities
typically includes an analysis of the facts and circumstances of each security, the intent or requirement to sell the security, and the expectations of cash
flows.

Fair values are based on market quotations where a market quotation is available or otherwise based on present values at current interest rates for
such investments.

Transfers between categories are recorded at fair value on the date of the transfer.

Declines in the fair values of held to maturity and available for sale debt securities below their carrying value that are other than temporary are
reflected in net income as other than temporary impairment losses, based on management’s best estimate of the fair value of the investment. We conduct a
review each year to identify other than temporary declines based on an evaluation of all significant factors. Our review of impairment generally entails
identification and evaluation of investments that have indications of possible impairment, analysis of evidential matter, including an evaluation of factors or
triggers that would or could cause individual investments to have other than temporary impairment and documentation of the results of these analyses, as
required under business policies. Estimates of any declines in the fair values of credit substitute securities that are other than temporary are measured on a
case-by-case basis together with loans to those customers. We do not recognize an impairment for debt securities if the cause of the decline is related solely
to interest rate increase and we do not intend to sell the security and it is not more likely than not that we will be required to sell the security before recovery
of its amortized cost basis.

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Business Combination
We account for acquired businesses using the purchase method of accounting which requires that the assets acquired and liabilities assumed be
recorded at the date of acquisition at their respective fair values. The application of the purchase method requires certain estimates and assumptions,
especially concerning the determination of the fair values of the acquired intangible and tangible assets, as well as the liabilities assumed at the date of the
acquisition. The judgments made in the context of the purchase price allocation can materially impact our future results of operations. The valuations are
based on information available at the acquisition date. Purchase consideration in excess of Bank’s interest and the acquiree’s net fair value of identifiable
assets and liabilities is recognized as goodwill.

Goodwill and Other Intangibles

Under applicable accounting guidance, goodwill is reviewed at the reporting unit level for potential impairment at least on an annual basis at the end
of the reporting period, or more frequently if events or circumstances indicate a potential impairment. This analysis is a two-step process. The first step of
the goodwill impairment test compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit
exceeds its carrying amount, then the goodwill of the reporting unit is considered not impaired; however, if the carrying amount of the reporting unit
exceeds its fair value, the second step is to be performed. The second step involves calculating an implied fair value of goodwill for each reporting unit for
which the first step indicated possible impairment. The implied fair value of goodwill is determined in the same manner as the amount of goodwill
recognized in a business combination, which is the excess of the fair value of the reporting unit, as determined in the first step, over the aggregate fair
values of the individual assets, liabilities and identifiable intangibles as if the reporting unit was being acquired in a business combination. The adjustments
to measure the assets, liabilities and intangibles at fair value are for the purpose of measuring the implied fair value of goodwill and such adjustments are
not reflected in the consolidated balance sheet. If the implied fair value of goodwill exceeds the goodwill assigned to the reporting unit, there is no
impairment. If the goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess. An
impairment loss recognized cannot exceed the amount of goodwill assigned to a reporting unit, and the loss establishes a new basis in the goodwill.
Subsequent reversal of goodwill impairment losses is not permitted. ASC 350-20 “Goodwill” stipulates that goodwill of a reporting unit shall be tested on
an annual basis and in the interim period under certain circumstances. Accordingly, we have determined that we will test the goodwill on our books for
impairment at annual rests, unless circumstances warrant us to carry out impairment tests in an interim period. We examined our goodwill that had arisen on
acquisition of CBoP for possible impairment as of March 31, 2019. The results of the first step of the impairment test showed no indication of impairment.
Accordingly, we did not perform the second step of the impairment test.

Intangible assets consist of branch network representing contractual and non-contractual customer relationships, customer list, core deposit intangible
and favorable leases. These are amortized over their estimated useful lives. Amortization of intangible assets is computed in a manner that best reflects the
economic benefits of the intangible assets as follows:

Useful lives Amortization

(years) method
Branch network 6 Straight-line
Customer lists 2 Straight-line
Core deposit 5 Straight-line
Favorable leases 1 to 15 Straight-line

Fair Value Measurements

FASB ASC 820 (Topic 820) “Fair Value Measures and Disclosures” establishes a fair value hierarchy structure that prioritizes the inputs to valuation
techniques used to determine the fair value of an asset or liability. ASC 820 distinguishes between inputs that are based on observed market data and
unobservable inputs that reflect market participants’ assumptions. It emphasizes the use of valuation methodologies that maximize market inputs. For
financial instruments carried at fair value, the best evidence of fair value is a quoted price in an actively traded market (Level 1). Where the market for a
financial instrument is not active, valuation techniques are used. The majority of valuation techniques use market inputs that are either observable or
indirectly derived from and corroborated by observable market data for substantially the full term of the financial instrument (Level 2). Because Level 1 and
Level 2 instruments are determined by observable inputs, less judgment is applied in determining their fair values. In the absence of observable market
inputs, the financial instrument is valued based on valuation techniques that feature one or more significant unobservable inputs (Level 3). The
determination of the level of fair value hierarchy within which the fair value measurement of an asset or a liability is classified often requires judgment. We
consider the following factors in developing the fair value hierarchy:
• whether the asset or liability is transacted in an active market with a quoted market price that is readily available;
• the size of transactions occurring in an active market;

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• the level of bid-ask spreads;

• whether only a few transactions are observed over a significant period of time;
• whether the inputs to the valuation techniques can be derived from or corroborated with market data; and
• whether significant adjustments are made to the observed pricing information or model output to determine the fair value.

Level 1 inputs are unadjusted quoted prices in active markets that the reporting entity has the ability to access at the measurement date for the
identical assets or liabilities. A financial instrument is classified as a Level 1 measurement if it is listed on an exchange. We regard financial instruments
such as equity securities and bonds listed on the primary exchanges of a country to be actively traded.

Level 2 inputs are inputs that are observable either directly or indirectly, such as quoted prices for similar assets and liabilities in active markets, for
substantially the full term of the financial instrument but do not qualify as Level 1 inputs. We generally classify derivative contracts and investments in debt
securities, units of mutual funds, mortgage-backed securities and asset-backed securities as Level 2 measurements. Currently, substantially all such items
qualify as Level 2 measurements. Level 2 items are fair valued using quoted prices for similar assets and liabilities in active markets, and inputs that are
observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs are unobservable estimates that management expects market participants would use to determine the fair value of the asset or liability.
That is, Level 3 inputs incorporate market participants’ assumptions about risk and the risk premium required by market participants in order to bear that
risk. We develop Level 3 inputs based on the best information available in the circumstances.

If quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based
parameters. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to
reflect counterparty credit quality, among other things, as well as unobservable parameters. Any such valuation adjustments are applied consistently over
time.

We review and update our fair value hierarchy classifications semi-annually. Changes from one half year to the next related to the observability of
inputs to a fair value measurement may result in a reclassification between hierarchy levels. Imprecision in estimating unobservable market inputs can
impact the amount of revenue, loss or changes in common shareholder’s equity recorded for a particular financial instrument. Furthermore, while we
believe our valuation methods are appropriate, the use of different methodologies or assumptions to determine the fair value of certain financial assets and
liabilities could result in a different estimate of fair value at the reporting date. See Note 32 of the consolidated financial statements, “ Fair Value
Measurement “ for further details including the classification hierarchy associated with assets and liabilities measured at fair value.

As of March 31, 2019, our Level 3 instruments recorded at fair value on a recurring basis were available-for-sale mortgage and asset-backed
securities aggregating Rs. 38,812.9 million. The Level 3 instruments comprised 1.3 percent of our total securities portfolio and 0.3 percent of our total
assets, as of March 31, 2019. The valuation of these mortgage and asset-backed securities is dependent on the estimated cash flows that the underlying trust
would pay out. The cash flows for mortgage and asset-backed securities are discounted at the yield-to-maturity rates and credit spreads published by Fixed
Income Money Market and Derivatives Association on month ends. Available-for-sale securities aggregating Rs. 6.6 billion and Rs. 0.1 billion classified as
Level 1 as of March 31, 2017 and March 31, 2018 were transferred to Level 2 during fiscal 2018 and fiscal 2019, respectively.

A control framework has been established, which is designed to ensure that fair values are either determined or validated by a function independent of
the risk-taker. To that end, the ultimate responsibility for the validation of the valuation model rests with the treasury analytics section. The valuation model
is also reviewed by the market risk department. The middle office department, which functions independent of the risk taker, is responsible for reporting fair
values. Wherever necessary the valuation model is vetted through independent experts. In addition, the model prices are compared with market maker
quotes. The types of valuation techniques used include present value based models, Black-Scholes valuation models, including variations and interest rate
models as used by market practitioners. Where appropriate the models are calibrated to market prices. The models used, apply appropriate control processes
and procedures to ensure that the derived inputs are used to value only those instruments that share similar risk to the relevant benchmark indexes and
therefore demonstrate a similar response to market factors. Market data used along with interpolation techniques are as per market conventions.

The validation process consists of an independent validation of the pricing model. The pricing model validation for significant product variants is
conducted using an external validation agency or authority. In addition the model prices are also validated by comparing with market maker quotes. All
market data conventions are adhered to in terms of yield curve components, volatility surfaces and calibration instruments.

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Recently Issued Accounting Pronouncements Not Yet Effective

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”. The update generally requires recognition of lease assets and lease liabilities
on the balance sheet and disclosure of key information about leasing arrangements. In particular, the guidance requires a lessee, of operating or finance
leases, to recognize on the balance sheet a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the
lease term. However, for leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets
and lease liabilities. Previously, a lessee was not required to recognize lease assets and lease liabilities arising from operating leases. Lessor accounting is
largely unchanged. Expanded disclosures about the nature and terms of lease agreements will be required prospectively. The guidance will be effective for
the interim and annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The Bank does not plan to early adopt the
ASU. The Bank expects to adopt the guidance in fiscal 2020. In July 2018, the FASB issued ASU 2018-11 “Leases (Topic 842) - Targeted improvements”
which permits the update to be adopted using a modified cumulative effect approach wherein the guidance is applied only to existing contracts as of the date
of initial application, and to new contracts transacted after that date, or a cumulative-effect adjustment to retained earnings at the effective date without
revising prior comparative periods. The Bank expects to recognize lease liabilities and corresponding assets at their present value predominantly related to
all of the Rs. 85.9 billion of future minimum lease payments required under operating leases as disclosed in note 27. The effect of the adoption will depend
on the lease portfolio at the time of transition.

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments”. The ASU introduces a new accounting model, the Current Expected Credit Losses model (CECL), which requires earlier recognition of credit
losses, while also providing transparency about credit risk. The CECL model utilizes a lifetime “expected credit loss” measurement objective for the
recognition of credit losses for loans, held to maturity securities and other receivables at the time the financial asset is originated or acquired. The expected
credit losses is required to be adjusted each period for changes in expected lifetime credit losses. The update requires use of judgment in determining the
relevant information and estimation methods that are appropriate for measurement of expected credit losses which is to be based on relevant information
about past events, historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. In
regard to Available-for-Sale Debt Securities, the credit losses is required to be recorded through an allowance and the ASU limits the amount of the
allowance for credit losses to the amount by which fair value is below amortized cost. While the update changes the measurement of the allowance for
credit losses, it does not change the Bank’s credit risk of its loan portfolios. The amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. While early adoption is permitted beginning fiscal 2020, the Bank does not expect
to elect that option. The Bank expects to adopt the guidance in fiscal 2021. The amendments represent a significant departure from the existing GAAP. The
credit loss estimation models and processes to be used in implementing the update are under design and development. The Bank has been assessing the key
differences and gaps between its current allowance methodologies and models with those it is considering to use upon adoption. The allowance
methodologies and model to be adopted will be validated and tested which is expected to be completed by fiscal 2020. The Bank expects the update will
result in an increase in the allowance for credit losses given the change to estimated losses over the contractual life adjusted for expected prepayments with
an anticipated material impact from longer duration portfolios, as well as the addition of an allowance for debt securities. At the date of adoption this may
have a resulting negative adjustment to retained earnings. The ultimate impact will be dependent on the characteristics of the Bank’s portfolio at date of
adoption as well as the macroeconomic conditions and forecasts as of that date. At this point in implementation we are not able to provide a more precise
estimate of the impact. In November 2018, the FASB issued ASU 2018-19 to clarify that receivables arising from operating leases are not within the scope
of Subtopic 326-20. Instead, impairment of receivables arising from operating leases are be accounted for in accordance with Topic 842, Leases.

In January 2017, the FASB issued ASU No. 2017-04 “Intangibles-Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment”.
The amendment in this update simplifies the subsequent measurement of goodwill impairment by eliminating the requirement to calculate the implied fair
value of goodwill (i.e., the current Step 2 of the goodwill impairment test) to measure a goodwill impairment charge. The impairment test is simply the
comparison of the fair value of a reporting unit with its carrying amount (the current Step 1), with the impairment charge being the deficit in fair value but
not exceeding the total amount of goodwill allocated to that reporting unit. The simplified one-step impairment test applies to all reporting units (including
those with zero or negative carrying amounts). The amendments in the ASU are effective for fiscal years beginning after December 15, 2019, including
interim periods within those fiscal years. The Bank expects to adopt the guidance in fiscal 2021. Early adoption is permitted for interim and annual goodwill
impairment testing dates after January 1, 2017. The adoption of this guidance is not expected to have a material impact on the Bank’s consolidated financial
position or results of operations or disclosures.

In March 2017, the FASB issued ASU 2017-08 “Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20)—Premium Amortization on
Purchased Callable Debt Securities”. This update amends the amortization period for certain purchased callable debt securities held at a premium. The
update requires entities to amortize premiums on debt securities by the first call date when the securities have fixed and determinable call dates and prices.
ASU 2017-08 does not change the accounting for discounts, which continue to be recognized over the contractual life of a security. The amendments in the
ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted,
including adoption in an interim period but such adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.
Adoption of the ASU is on a modified retrospective basis through a cumulative effect adjustment to retained earnings as of the beginning of the year of
adoption. The Bank expects to adopt the guidance in fiscal 2020. The impact of this ASU is not expected to be material.

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In June 2018, the FASB issued ASU No. 2018-07, “Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based
Payment Accounting”. This update simplifies the accounting for share-based payment transactions for acquiring goods and services from nonemployees,
applying some of the same requirements as employee share-based payment transactions. The ASU will not affect the accounting for share-based payment
awards to nonemployee directors, which will continue to be treated as employee share-based transactions under the current standards. ASU 2018-07 is
effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The
requirements of the ASU will be adopted through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The
Bank expects to adopt the guidance in fiscal 2020. The adoption of this guidance is not expected to have a material impact on the Bank’s consolidated
financial position or results of operations or disclosures, as it is not the Bank’s practice to issue stock-based awards to pay for goods and services from
nonemployees.

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure
Requirements for Fair Value Measurement”. The amendments modify certain disclosure requirements for fair value measurements. Entities are required to
disclose and describe the range and weighted-average of significant observable inputs used to develop Level 3 fair value measurements prospectively. The
amendments in the ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption
is permitted. The Bank expects to adopt the guidance in fiscal 2021. The adoption of this guidance is not expected to have a material impact on the Bank’s
consolidated financial position or results of operations.

In August 2018, the FASB issued ASU No. 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s
Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”. The update aligns the requirements for
capitalizing implementation costs incurred to develop or obtain internal-use software, regardless of whether they convey a license to the hosted software.
The accounting for the service element of a hosting arrangement that is a service contract is not affected by this ASU. The amendments are effective for
public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. An entity has the option to apply
amendments in the ASU either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted.
The Bank expects to adopt the guidance in fiscal 2021. The adoption of this guidance is not expected to have a material impact on the Bank’s consolidated
financial position or results of operations.

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Fiscal Year Ended March 31, 2019 Compared to Fiscal Year Ended March 31, 2018
Net Interest Revenue after Allowance for Credit Losses
Our net interest revenue after allowances for credit losses increased by 19.6 percent from Rs. 363.8 billion in fiscal 2018 to Rs. 435.2 billion in fiscal
2019. Our net interest margin was 4.6 percent for fiscal 2019. The following table sets out the components of net interest revenue after allowance for credit
losses

Year ended March 31,

Increase/ % Increase/
2018 2019 Decrease Decrease
(in million, except percentages)
Interest on loans Rs. 667,458.7 Rs. 827,683.0 Rs. 160,224.3 24.0
Interest on securities, including dividends and
interest on trading assets 162,258.3 199,885.4 37,627.1 23.2
Other interest revenue 13,748.3 14,146.5 398.2 2.9
Total interest and dividend revenue 843,465.3 1,041,714.9 198,249.6 23.5
Interest on deposits 326,717.8 410,026.4 83,308.6 25.5
Interest on short-term borrowings 26,004.4 39,054.3 13,049.9 50.2
Interest on long-term debt 67,297.5 85,081.1 17,783.6 26.4
Other interest expense 295.0 47.5 (247.5) (83.9)
Total interest expense 420,314.7 534,209.3 113,894.6 27.1
Net interest revenue Rs. 423,150.6 Rs. 507,505.6 Rs. 84,355.0 19.9
Less: Allowance for credit losses:
Retail 52,577.1 64,051.0 11,473.9 21.8
Wholesale 6,820.7 8,228.3 1,407.6 20.6
Total Rs. 59,397.8 Rs. 72,279.3 Rs. 12,881.5 21.7
Net interest revenue after allowance for credit
losses Rs. 363,752.8 Rs. 435,226.3 Rs. 71,473.5 19.6

Interest and Dividend Revenue

Interest income on loans increased by 24.0 percent, primarily due to an increase in our average loan book. The average balance of our total loan book
increased by 23.1 percent from Rs. 6,507.4 billion in fiscal 2018 to Rs. 8,013.0 billion in fiscal 2019. Our average balance of retail loans increased by
22.2 percent from Rs. 4,629.2 billion in fiscal 2018 to Rs. 5,655.2 billion in fiscal 2019. The growth in retail loans was across the product segments. Our
average balance of wholesale loans increased by 25.5 percent from Rs. 1,878.2 billion in fiscal 2018 to Rs. 2,357.8 billion in fiscal 2019. Retail loan yields
remained stable at 11.1 percent in 2019 as compared to fiscal 2018. Wholesale loan yields increased from 8.1 percent in fiscal 2018 to 8.5 percent in fiscal
2019.

Interest on securities, including dividends and interest on trading assets, increased by 23.2 percent from Rs. 162.3 billion in fiscal 2018 to Rs.
199.9 billion in fiscal 2019. This was primarily driven by an increase in the average balance of investments. The average balance of our investments
increased by Rs. 518.9 billion from Rs. 2,263.8 billion in fiscal 2018 to Rs. 2,782.7 billion in fiscal 2019. Investment yields remained stable at 7.2 percent
in 2019 as compared to fiscal 2018.

Other interest revenue increased by 2.9 percent from Rs. 13.7 billion in fiscal 2018 to Rs. 14.2 billion in fiscal 2019, primarily due to increase in yield
on dues from banks from 4.5 percent in 2018 to 4.9 percent in 2019. The average balance of dues from banks and other interest earning assets increased by
1.1 percent from Rs. 281.5 billion in fiscal 2018 to Rs. 284.6 billion in fiscal 2019.

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Interest Expense
Our interest expense on deposits increased by 25.5 percent from Rs. 326.7 billion in fiscal 2018 to Rs. 410.0 billion in fiscal 2019. This increase was
primarily due to an increase in our average interest bearing deposits, which increased by 21.9 percent from Rs. 5.849.5 billion in fiscal 2018 to Rs.
7,131.2 billion in fiscal 2019. This increase was augmented by an increase in the average cost of our deposits. The average cost of our deposit, including
non-interest bearing deposits increased from 4.8 percent in fiscal 2018 to 5.0 percent in fiscal 2019.

The average balance of our savings account deposits increased from Rs. 1,919.7 billion in fiscal 2018 to Rs. 2,226.3 billion in fiscal 2019 and the
average balance of our time deposits increased from Rs. 3,929.8 billion in fiscal 2018 to Rs. 4,904.9 billion in fiscal 2019. Cost of time deposits increased
from 6.5 percent in fiscal 2018 to 6.7 percent in fiscal 2019.

Interest expense on our short-term borrowings increased by 48.7 percent from Rs. 26.3 billion in fiscal 2018 to Rs. 39.1 billion in fiscal 2019
primarily on account of an increase in the average balance of our short-term borrowings. The average balance of our short-term borrowings increased by
47.3 percent from Rs. 529.8 billion in fiscal 2018 to Rs. 780.6 billion in fiscal 2019. The cost of our short-term borrowings remained stable at 5.0 percent in
fiscals 2018 and 2019. Interest expense on our long-term debt increased by 26.4 percent primarily on account of an increase in our average balance of long-
term debt from Rs. 881.6 billion in fiscal 2018 to Rs. 1,015.1 billion in fiscal 2019. This increase was further augmented by an increase in the cost of our
long-term debt, which increased from 7.6 percent in fiscal 2018 to 8.4 percent in fiscal 2019.

Allowance for Credit Losses

Our loan loss allowance for credit losses consists of specific and unallocated components. Allowances for credit losses increased by 21.7 percent
from Rs. 59.4 billion in fiscal 2018 to Rs. 72.3 billion in fiscal 2019.

Our loan loss allowance for credit losses in our retail loan portfolio increased by 21.8 percent from Rs. 52.6 billion in fiscal 2018 to Rs. 64.1 billion in
fiscal 2019. Our retail specific loan loss allowance increased from Rs. 38.6 billion in fiscal 2018 to Rs. 53.3 billion in fiscal 2019. This increase was
primarily due to higher allowances in our auto loans and personal loans/ credit card segments. Our retail unallocated allowances decreased from Rs. 14.0
billion in fiscal 2018 to Rs. 10.8 billion in fiscal 2019, primarily attributable to a decrease in allowances in our retail business banking and agriculture
segments and partially-offset by an increase in allowances in our personal loan and credit card segments.

Our loan loss allowance for credit losses in our wholesale loan portfolio increased by 20.6 percent from Rs. 6.8 billion in fiscal 2018 to Rs. 8.2 billion
in fiscal 2019. Our wholesale specific loan loss allowance increased from Rs. 3.7 billion in fiscal 2018 to Rs. 6.5 billion in fiscal 2019. Our wholesale
unallocated loan loss allowance decreased from Rs. 3.1 billion in fiscal 2018 to Rs. 1.7 billion in fiscal 2019. Our wholesale unallocated loan loss was
higher in fiscal 2018 primarily on account of an increase in our estimate of losses in our wholesale loan portfolio.

Non-Interest Revenue
Our non-interest revenue increased by 10.7 percent from Rs. 144.6 billion in fiscal 2018 to Rs. 160.1 billion in fiscal 2019. The following table sets
forth the components of our non-interest revenue:

Years ended March 31,

Increase/ % Increase/
2018 2019 Decrease Decrease
(in million, except percentages)
Fees and commissions Rs. 120,060.9 Rs. 134,155.2 Rs. 14,094.3 11.7
Realized gains/(loss) on AFS securities 10,704.1 1,515.0 (9,189.1) (85.8)
Trading securities gains/(loss), net (63.4) 1,028.4 1,091.8 *
Foreign exchange transactions 6,209.5 1,917.8 (4,291.7) (69.1)
Derivatives gains/(loss) 6,742.6 12,409.1 5,666.5 84.0
Other 953.3 9,096.7 8,143.4 854.2
Total non-interest revenue Rs. 144,607.0 Rs. 160,122.2 Rs. 15,515.2 10.7

* Not meaningful

Fees and commissions increased by 11.7 percent from Rs. 120.1 billion in fiscal 2018 to Rs. 134.2 billion in fiscal 2019, primarily on account of an
increase in payments and cards business fees and deposit related fees.

The realized gain on AFS securities was primarily attributable to the sale of Government of India securities. The gain on trading securities was
primarily on account of realized and mark-to-market gains on units of mutual funds.

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In fiscal 2019, derivative transactions (unadjusted for credit spread) resulted in a gain of Rs. 12.4 billion, primarily on account of a gain of Rs.
10.9 billion from forward exchange contracts due to mark-to-market gains and gains on cancellations of forward exchange contracts. In fiscal 2019,
currency swaps and currency options resulted in a gain of Rs. 0.8 billion (unadjusted for credit spreads) and interest rate derivatives and forward rate
agreements resulted in a gain of Rs. 0.7 billion (unadjusted for credit spreads). In fiscal 2018, derivative transactions (unadjusted for credit spreads) resulted
in a gain of Rs. 6.0 billion, primarily on account of a gain of Rs. 6.9 billion from forward exchange contracts due to mark-to-market gains and gains on
cancellations of forward exchange contracts. In fiscal 2018, currency swaps and currency options resulted in a loss of Rs. 1.9 billion (unadjusted for credit
spreads), partially offset by a gain of Rs. 1.0 billion (unadjusted for credit spreads) from interest rate derivatives and forward rate agreements. Income from
foreign exchange transactions amounted to Rs. 1.9 billion during fiscal 2019 as compared to Rs. 6.2 billion during fiscal 2018. As a result, income from
foreign exchange transactions and derivatives increased from Rs. 13.0 billion in fiscal 2018 to Rs. 14.3 billion in fiscal 2019.

Other non-interest revenue was primarily attributable to the gain on sale of some of our equity investments and mark-to-market gains on our equity
instruments that are carried at fair value. This was primarily because our equity investments were measured at fair value with changes in the fair value
recognized through net income in accordance with ASU 2016-01 “Financial Instruments—Overall (Subtopic 825-10)” which we adopted in fiscal 2019.
Certain of our equity investments were measured at prices observed in orderly transactions during the year.

Non-Interest Expense
Our non-interest expense was comprised of the following:

Years ended March 31,

percent
Increase/ Increase/ 2018 % of 2019 % of
2018 2019 Decrease Decrease net revenues net revenues
(in million, except percentages)
Salaries and staff benefits Rs. 98,483.7 Rs. 104,652.6 Rs. 6,168.9 6.0 19.4 17.6
Premises and equipment 29,816.9 29,527.7 (289.2) (1.0) 5.9 5.0
Depreciation and amortization 9,678.9 12,247.8 2,568.9 26.5 1.9 2.1
Administrative and other 93,272.9 108,960.4 15,687.5 16.8 18.3 18.2
Amortization of intangibles 1.0 1.0 — — — —
Total non-interest expense Rs. 231,253.4 Rs. 255,389.5 Rs. 24,136.1 10.4 45.5 42.9

Total non-interest expense increased by 10.4 percent from Rs. 231.3 billion in fiscal 2018 to Rs. 255.4 billion in fiscal 2019. Our net interest revenue
after allowances for credit losses increased by 19.6 percent from Rs. 363.8 billion in fiscal 2018 to Rs. 435.2 billion in fiscal 2019. Our net revenue
increased by 17.1 percent from Rs. 508.4 billion in fiscal 2018 to Rs. 595.3 billion in fiscal 2019. As a result, our non-interest expense as a percentage of
our net revenues was 42.9 percent in fiscal 2019 as compared to 45.5 percent in fiscal 2018.

Salaries and staff benefits increased by 6.3 percent from Rs. 98.5 billion in fiscal 2018 to Rs. 104.7 billion in fiscal 2019 primarily attributable to an
increase in the number of our employees and annual wage revisions. The number of our employees increased from 88,253 as of March 31, 2018 to 98,061
as of March 31, 2019.

Premises and equipment costs decreased by 1.0 percent from Rs. 29.8 billion in fiscal 2018 to Rs. 29.5 billion in fiscal 2019 primarily on account of a
decrease in equipment maintenance costs. Depreciation and amortization expenses increased from Rs. 9.7 billion in fiscal 2018 to Rs. 12.2 billion in fiscal
2019.

Administrative and other expenses increased by 16.8 percent from Rs. 93.3 billion in fiscal 2018 to Rs. 109.0 billion in fiscal 2019, primarily on
account of higher cards related costs backed by an increase in cards spends, expenditure for the purchase of priority sector lending certificates and insurance
expenses. As of March 31, 2019, we had 5,103 banking outlets and 13,160 ATMs across 2,748 locations, which increased from 4,787 banking outlets and
12,635 ATMs across 2,691 locations as of March 31, 2018. This also led to an overall increase in our non-interest expense. We continued to amortize the
intangible assets (i.e., favorable leases) that were acquired on the merger of CBoP over their estimated remaining useful life. This amortization resulted in a
charge of Rs. 1.0 million in fiscal 2019.

Income Tax
Our income tax expense, net of interest earned on income tax refunds, increased by 21.5 percent, from Rs. 98.3 billion in fiscal 2018 to Rs.
119.4 billion in fiscal 2019. Our effective tax rate was 35.5 percent in fiscal 2018 and 35.1 percent in fiscal 2019. The effective tax rate was lower in fiscal
2019 primarily on account of lower stock-based compensation and higher income exempt from taxes in fiscal 2019 as compared to in fiscal 2018.

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The following table gives a reconciliation of the Indian statutory income tax rate to our annual effective income tax rate for fiscals 2018 and 2019:

Year ended March 31,

2018 2019
Effective statutory income tax rate 34.61% 34.94%
Adjustments to reconcile statutory income tax rate to effective income tax rate:
Stock-based compensation (net of forfeitures) 0.82 0.55
Income exempt from taxes (0.19) (0.42)
Interest on income tax refunds — (0.10)
Effect of change in statutory tax rate (0.08) —
Other, net 0.30 0.15
Annual effective income tax rate 35.46% 35.12%

Net Income
As a result of the foregoing factors, our net income after taxes increased by 23.3 percent from Rs. 178.5 billion in fiscal 2018 to Rs. 220.1 billion in
fiscal 2019.

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Fiscal Year Ended March 31, 2018 Compared to Fiscal Year Ended March 31, 2017
Net Interest Revenue after Allowance for Credit Losses
Our net interest revenue after allowances for credit losses increased by 15.9 percent from Rs. 313.8 billion in fiscal 2017 to Rs. 363.8 billion in fiscal
2018. Our net interest margin was 4.7 percent for fiscal 2018. The following table sets out the components of net interest revenue after allowance for credit
losses:

Year ended March 31,

Increase/ % Increase/
2017 2018 Decrease Decrease
(in million, except percentages)
Interest on loans Rs. 552,686.8 Rs. 667,458.7 Rs. 114,771.9 20.8
Interest on securities, including dividends and interest
on trading assets 159,660.4 162,258.3 2,597.9 1.6
Other interest revenue 13,207.1 13,748.3 541.2 4.1
Total interest and dividend revenue 725,554.3 843,465.3 117,911.0 16.3
Interest on deposits 308,078.3 326,717.8 18,639.5 6.1
Interest on short-term borrowings 21,821.9 26,004.4 4,182.5 19.2
Interest on long-term debt 43,781.1 67,297.5 23,516.4 53.7
Other interest expense 77.4 295.0 217.6 281.1
Total interest expense 373,758.7 420,314.7 46,556.0 12.5
Net interest revenue Rs. 351,795.6 Rs. 423,150.6 Rs. 71,355.0 20.3
Less: Allowance for credit losses:
Retail 31,341.7 52,577.1 21,235.4 67.8
Wholesale 6,609.7 6,820.7 211.0 3.2
Total Rs. 37,951.4 Rs. 59,397.8 Rs. 21,446.4 56.5
Net interest revenue after allowance for credit losses Rs. 313,844.2 Rs. 363,752.8 Rs. 49,908.6 15.9

Interest and Dividend Revenue

Interest income on loans increased by 20.8 percent, primarily due to an increase in our average loan book. The average balance of our total loan book
increased by 26.2 percent from Rs. 5,156.0 billion in fiscal 2017 to Rs. 6,507.4 billion in fiscal 2018. Our average balance of retail loans increased by
27.1 percent from Rs. 3,641.1 billion in fiscal 2017 to Rs. 4,629.2 billion in fiscal 2018. The growth in retail loans was across the product segments. Our
average balance of wholesale loans increased by 24.0 percent from Rs. 1,514.9 billion in fiscal 2017 to Rs. 1,878.2 billion in fiscal 2018. Retail loan yields
decreased to 11.1 percent in fiscal 2018 as compared to 11.5 percent in fiscal 2017. Wholesale loan yields decreased from 8.9 percent in fiscal 2017 to
8.1 percent in fiscal 2018.

Interest on securities, including dividends, increased by 1.6 percent from Rs. 159.7 billion in fiscal 2017 to Rs. 162.3 billion in fiscal 2018. This was
primarily driven by an increase in the average balance of investments. The average balance of our investments increased by Rs. 111.3 billion from Rs.
2,152.5 billion in fiscal 2017 to Rs. 2,263.8 billion in fiscal 2018. This increase was partially offset by a decline in yield on investments from 7.4 percent in
fiscal 2017 to 7.2 percent in fiscal 2018.

Other interest revenue increased by 4.1 percent from Rs. 13.2 billion in fiscal 2017 to Rs. 13.7 billion in fiscal 2018, primarily due to an increase in
our average balance of cash equivalents and term placements.. Average balance of our cash equivalents and term placements increased by 2.1 percent from
Rs. 275.8 billion in fiscal 2017 to Rs. 281.5 billion in fiscal 2018.

Interest Expense
Our interest expense on deposits increased by 6.1 percent from Rs. 308.1 billion in fiscal 2017 to Rs. 326.7 billion in fiscal 2018. This increase was
primarily due to an increase in our average interest bearing deposits, which increased by 15.7 percent from Rs. 5,053.9 billion in fiscal 2017 to Rs.
5,849.5 billion in fiscal 2018. This increase was partially offset by a decline in the average cost of our deposits, including non-interest bearing deposits,
which decreased from 5.3 percent in fiscal 2017 to 4.8 percent in fiscal 2018.

The average balance of our savings account deposits increased from Rs. 1,598.6 billion in fiscal 2017 to Rs. 1,919.7 billion in fiscal 2018 and the
average balance of our time deposits increased from Rs. 3,455.3 billion in fiscal 2017 to Rs. 3,929.8 billion in fiscal 2018. Cost of time deposits decreased
from 7.1 percent in fiscal 2017 to 6.5 percent in fiscal 2018.

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Interest expense on our short-term borrowings increased by 19.2 percent from Rs. 21.8 billion in fiscal 2017 to Rs. 26.0 billion in fiscal 2018 on
account of an increase in our average balance of short-term borrowings and offset by a decrease in the cost of our short-term borrowings. The average
balance of our short-term borrowings increased by 31.2 percent from Rs. 403.9 billion in fiscal 2017 to Rs. 529.8 billion in fiscal 2018. The cost of our
short-term borrowings decreased from 5.4 percent in fiscal 2017 to 5.0 percent in fiscal 2018. Interest expense on our long-term debt increased by
53.7 percent primarily on account of an increase in our average balance of long-term debt from Rs. 646.5 billion in fiscal 2017 to Rs. 881.6 billion in fiscal
2018. This increase was further augmented by an increase in the cost of our long-term debt, which increased from 6.8 percent in fiscal 2017 to 7.6 percent
in fiscal 2018. During fiscal 2018, we raised debt capital instruments eligible for inclusion in Additional Tier I and Tier II capital under the Basel III capital
regulations amounting to Rs.80.0 billion and Rs.20.0 billion respectively.
Allowance for Credit Losses
Our loan loss allowance for credit losses consists of specific and unallocated components. Allowances for credit losses increased by 56.5 percent
from Rs. 38.0 billion in fiscal 2017 to Rs. 59.4 billion in fiscal 2018.
Our loan loss allowance for credit losses in our retail loan portfolio increased by 67.8 percent from Rs. 31.3 billion in fiscal 2017 to Rs. 52.6 billion in
fiscal 2018. Our specific loan loss allowance increased from Rs. 25.8 billion in fiscal 2017 to Rs. 38.6 billion in fiscal 2018. This increase was primarily
due to higher allowances in our agriculture and personal loans segments. The increase was further augmented by higher retail unallocated allowances,
which increased from Rs. 5.6 billion in fiscal 2017 to Rs. 14.0 billion in fiscal 2018. This increase was attributable to the growth in our retail loan portfolio
and an increase in our estimate of losses primarily in our agriculture and auto loans segments, partially offset by a decrease in our estimate of losses
primarily in our personal loans and credit cards segment.
Our loan loss allowance for credit losses in our wholesale loan portfolio increased by 3.2 percent from Rs. 6.6 billion in fiscal 2017 to Rs. 6.8 billion
in fiscal 2018. Our specific loan loss allowance decreased from Rs. 5.8 billion in fiscal 2017 to Rs. 3.7 billion in fiscal 2018. Our wholesale unallocated
loan loss allowance increased from Rs. 0.9 billion in fiscal 2017 to Rs. 3.1 billion in fiscal 2018. This increase was attributable to the growth in our
wholesale loan portfolio and estimated losses thereon.
Non-Interest Revenue
Our non-interest revenue increased by 31.1 percent from Rs. 110.3 billion in fiscal 2017 to Rs. 144.6 billion in fiscal 2018. The following table sets
forth the components of our non-interest revenue:
Years ended March 31,
Increase/ % Increase/
2017 2018 Decrease Decrease
(in million, except percentages)
Fees and commissions Rs. 94,120.3 Rs. 120,060.9 Rs. 25,940.6 27.6
Realized gains/(loss) on AFS securities 9,592.8 10,704.1 1,111.3 11.6
Trading securities gains/(loss), net 467.2 (63.4) (530.6) (113.6)
Foreign exchange transactions 11,282.7 6,209.5 (5,073.2) (45.0)
Derivatives gains/(loss) (5,738.5) 6,742.6 12,481.1 (217.5)
Other 601.6 953.3 351.7 58.5
Total non-interest revenue Rs. 110,326.1 Rs. 144,607.0 Rs. 34,280.9 31.1
Fees and commissions increased by 27.6 percent from Rs. 94.1 billion in fiscal 2017 to Rs. 120.1 billion in fiscal 2018, primarily on account of an
increase in fees and charges on retail assets, fees on debit and credit cards and commissions on distribution of mutual funds and insurance products.
The gain on AFS securities was primarily attributable to the sale of Government of India securities.
In fiscal 2018, derivative transactions (unadjusted for credit spread) resulted in a gain of Rs. 6.0 billion, primarily on account of a gain of Rs.
6.9 billion from forward exchange contracts due to mark-to-market gains and gains on cancellations of forward exchange contracts. In fiscal 2018, currency
swaps and currency options resulted in a loss of Rs. 1.9 billion (unadjusted for credit spreads), partially offset by a gain of Rs. 1.0 billion (unadjusted for
credit spreads) from interest rate derivatives and forward rate agreements. In fiscal 2017, derivative transactions (unadjusted for credit spread) resulted in a
loss of Rs. 5.8 billion, primarily on account of a loss of Rs. 4.4 billion from forward exchange contracts due to mark-to-market loss, partially offset by gains
on cancellations of forward exchange contracts. In fiscal 2017, currency swaps resulted in a loss of Rs. 2.4 billion (unadjusted for credit spread), partially
offset by a gain of Rs. 1.0 billion (unadjusted for credit spread) from currency options, interest rate derivatives, and forward rate agreements. The gain from
derivative transactions (including gain of Rs. 0.8 billion on account of credit spread) was Rs. 6.7 billion as compared to a loss from derivative transactions
(net of gain of Rs. 0.1 billion on account of credit spread) of Rs. 5.7 billion in fiscal 2017. Income from foreign exchange transactions amounted to Rs.
6.2 billion during fiscal 2018 as compared to Rs. 11.3 billion during fiscal 2017. As a result, income from foreign exchange transactions and derivatives
increased from Rs. 5.5 billion in fiscal 2017 to Rs. 13.0 billion in fiscal 2018.

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Non-Interest Expense
Our non-interest expense was comprised of the following:

Years ended March 31,

percent
Increase/ Increase/ 2017 % of 2018 % of
2017 2018 Decrease Decrease net revenues net revenues
(in million, except percentages)
Salaries and staff benefits Rs. 92,663.0 Rs. 98,483.7 Rs. 5,820.7 6.3 21.8 19.4
Premises and equipment 28,024.2 29,816.9 1,792.7 6.4 6.6 5.9
Depreciation and amortization 8,876.9 9,678.9 802.0 9.0 2.1 1.9
Administrative and other 74,637.7 93,272.9 18,635.2 25.0 17.6 18.3
Amortization of intangibles 3.0 1.0 (2.0) (66.7) 0.0 0.0
Total non-interest expense Rs. 204,204.8 Rs. 231,253.4 Rs. 27,048.6 13.2 48.1 45.5

Total non-interest expense increased by 13.2 percent from Rs. 204.2 billion in fiscal 2017 to Rs. 231.3 billion in fiscal 2018. Our net interest revenue
after allowances for credit losses increased by 15.9 percent from Rs. 313.8 billion in fiscal 2017 to Rs. 363.8 billion in fiscal 2018. As a result, our
non-interest expense as a percentage of our net revenues was 45.5 percent in fiscal 2018 as compared to 48.1 percent in fiscal 2017.

Salaries and staff benefits increased by 6.3 percent from Rs. 92.7 billion in fiscal 2017 to Rs. 98.5 billion in fiscal 2018 primarily attributable to wage
revisions. The number of our employees increased from 84,325 as of March 31, 2017 to 88,253 as of March 31, 2018

Premises and equipment costs increased by 6.4 percent from Rs. 28.0 billion in fiscal 2017 to Rs. 29.8 billion in fiscal 2018 on account of an increase
in rent, electricity, equipment maintenance and other infrastructure costs. Depreciation and amortization expenses increased from Rs. 8.9 billion in fiscal
2017 to Rs. 9.7 billion in fiscal 2018.

Administrative and other expenses increased by 25.0 percent from Rs. 74.6 billion in fiscal 2017 to Rs. 93.3 billion in fiscal 2018, primarily on
account of higher cards related costs backed by an increase in cards spends, expenditure for the purchase of priority sector lending certificates and insurance
expenses. As of March 31, 2018, we had 4,787 banking outlets and 12,635 ATMs across 2,691 locations, which increased from 4,715 banking outlets and
12,260 ATMs across 2,657 locations as of March 31, 2017. This also led to an overall increase in our non-interest expense. We continued to amortize the
intangible assets (i.e., favorable leases) that were acquired on the merger of CBoP over their estimated remaining useful life. This amortization resulted in a
charge of Rs. 1.0 million in fiscal 2018.

Income Tax
Our income tax expense, net of interest earned on income tax refunds, increased by 24.0 percent, from Rs. 79.2 billion in fiscal 2017 to Rs.
98.3 billion in fiscal 2018. Our effective tax rate was 36.0 percent in fiscal 2017 and 35.5 percent in fiscal 2018. The effective tax rate was lower in fiscal
2018 primarily on account of lower stock-based compensation in fiscal 2018 as compared to in fiscal 2017.

The following table gives a reconciliation of the Indian statutory income tax rate to our annual effective income tax rate for fiscals 2017 and 2018:

Year ended March 31,

2017 2018
Effective statutory income tax rate 34.61% 34.61%
Adjustments to reconcile statutory income tax rate to effective income tax rate:
Stock-based compensation (net of forfeitures) 1.29 0.82
Income exempt from taxes (0.45) (0.19)
Effect of change in statutory tax rate — (0.08)
Other, net 0.57 0.30
Annual effective income tax rate 36.02% 35.46%

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Net Income
As a result of the foregoing factors, our net income after taxes increased by 27.0 percent from Rs. 140.5 billion in fiscal 2017 to Rs. 178.5 billion in
fiscal 2018.

Liquidity and Capital Resources

Our growth is financed by a combination of cash generated from operations, increases in our customer deposits, borrowings and new issuances of
equity capital and other securities qualifying as Tier I and Tier II capital.

The following table sets forth our cash flows from operating activities, investing activities and financing activities in a condensed format. We have
aggregated certain line items set forth in the cash flow statement that is part of our financial statements included elsewhere in this report in order to facilitate
an understanding of significant trends in our business.

Year ended March 31,

2017 2018 2019
(in million)
Cash Flows from Operating Activities:
Net income before non-controlling interest Rs. 140,740.6 Rs. 178,833.9 Rs. 220,565.5
Non-cash adjustments to net income 51,339.4 69,065.3 88,974.5
Net change in other assets and liabilities 187,192.2 (153,625.0) (126,267.8)
Net cash provided by operating activities Rs. 379,272.2 Rs. 94,274.2 Rs. 183,272.2
Cash Flows from Investing Activities:
Net change in term placements 17,830.3 (8,806.4) 24,447.4
Net change in investments (202,859.4) (149,594.3) (390,904.0)
Net change in repurchase and resell agreements (355,040.1) (462,018.6) 609,805.1
Loans purchased net of repayments (68,686.5) 21,777.2 (150,642.9)
Increase in loans originated, net of principal collections (956,914.2) (1,440,601.9) (1,610,724.3)
Net additions to property and equipment (12,534.2) (9,086.4) (16,142.7)
Activity in equity securities, net — 4.7 (2,821.4)
Net cash used in investing activities Rs. (1,578,204.1) Rs. (2,048,325.7) Rs. (1,536,982.8)
Cash Flows from Financing Activities:
Net increase in deposits 979,662.7 1,447,097.0 1,331,850.9
Net increase (decrease) in short-term borrowings 68,703.2 456,558.6 (127,707.1)
Proceeds from issuance of shares by subsidiaries to
non-controlling interest 301.9 366.5 459.8
Net increase in long-term debt 211,974.6 200,366.9 96,009.1
Proceeds from issuance of equity shares for options exercised 22,615.1 27,259.1 22,008.2
Net proceeds from issuance of equity shares — — 235,896.2
Payment of dividends and dividend tax (29,280.9) (34,490.3) (41,015.2)
Purchase of subsidiary shares from non controlling interest — (143.3) —
Net cash provided by financing activities Rs. 1,253,976.6 Rs. 2,097,014.5 Rs. 1,517,501.9
Effect of exchange rate changes on cash and due from banks,
and restricted cash (2,007.8) 479.4 (3,069.7)
Net change in cash and due from banks, and restricted cash 53,036. 9 143,442.4 160,721.6
Cash and due from banks, and restricted cash, beginning of year 377,671.7 430,708.6 574,151.0
Cash and due from banks, and restricted cash, end of year Rs. 430,708.6 Rs. 574,151.0 Rs. 734,872.6

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Fiscal Year Ended March 31, 2019 Compared to Fiscal Year Ended March 31, 2018
Cash Flows from Operating Activities
Our net cash provided by operating activities reflects our net income, adjustments for tax and non-cash charges (such as depreciation and
amortization), as well as changes in other assets and liabilities. Our net cash provided by operating activities increased from Rs. 94.3 billion in fiscal 2018
to Rs. 183.3 billion in fiscal 2019, mainly due to higher cash flows in fiscal 2019 as compared to fiscal 2018. This was largely a result of an increase in our
net income and a lesser increase in our investment portfolio held for trading in fiscal 2019 as compared to fiscal 2018, partially offset by a decrease in our
bills payable.

Cash Flows from Investing Activities

We used our cash from operations and financing activities primarily to invest in our loan book and debt securities. Loans originated and purchased,
net of principal collections and repayments, increased from Rs. 1,418.8 billion in fiscal 2018 to Rs. 1,761.4 billion in fiscal 2019, largely on account of an
increase in both retail and wholesale loan portfolios. The increase in investments in fiscal 2019 was Rs.241.3 billion, primarily on account of an increase in
available-for-sale Government of India securities, partially offset by a decrease in our investments in credit substitutes.

Cash Flows from Financing Activities

Our primary sources of cash flows from financing activities are deposits and, to a lesser extent, borrowings. Our total deposits increased by 17.0 percent
from Rs. 7,883.8 billion in fiscal 2018 to Rs. 9,225.0 billion in fiscal 2019. There was a 19.3 percent increase in our time deposits from Rs. 4,455.7 billion
in fiscal 2018 to Rs. 5,317.7 billion in fiscal 2019. Savings account deposits increased by 11.1 percent from Rs. 2,238.0 billion as of March 31, 2018 to Rs.
2,487.0 billion as of March 31, 2019. Our non-interest-bearing current account deposits increased by 19.3 percent from Rs. 1,190.1 billion as of March 31,
2018 to Rs. 1,420.3 billion as of March 31, 2019. Savings account deposits at Rs. 2,487.0 billion and current account deposits at Rs. 1,420.3 billion
accounted for 42.4 percent of total deposits as of March 31, 2019. Our short-term borrowings decreased by Rs. 125.1 billion from Rs. 779.2 billion in fiscal
2018 to Rs. 654.1 billion in fiscal 2019. Our long-term debt increased by 12.0 percent from Rs. 932.9 billion in fiscal 2018 to Rs. 1,044.6 billion in fiscal
2019. During fiscal 2019, we raised long-term debt accounting to Rs. 320.1 billion including the long-term debt of Rs. 60.0 billion for lending to the
affordable housing sector and for financing infrastructure projects loans.

Pursuant to shareholder and regulatory approvals, we raised equity share capital through a preferential allotment to the Housing Development Finance
Corporation Limited, concluding a qualified institutional placement and making an American Depositary Share offering aggregating to Rs. 235.9 billion,
net of issuance costs, during fiscal 2019

Fiscal Year Ended March 31, 2018 Compared to Fiscal Year Ended March 31, 2017
Cash Flows from Operating Activities
Our net cash provided by operating activities reflects our net income, adjustments for tax and non-cash charges (such as depreciation and
amortization), as well as changes in other assets and liabilities. Our net cash provided by operating activities decreased from Rs. 379.3 billion in fiscal 2017
to Rs. 94.3 billion in fiscal 2018, mainly due to lower cash flows in fiscal 2018 as compared to fiscal 2017. This was largely a result of a decrease in our
bills payable and remittances in transit and an increase in our investments held for trading, partially offset by an increase in our net income.

Cash Flows from Investing Activities

We used our cash from operations and financing activities primarily to invest in our loan book and debt securities. Loans originated and purchased,
net of principal collections and repayments, increased from Rs. 1,025.6 billion in fiscal 2017 to Rs. 1,418.8 billion in fiscal 2018, largely on account of an
increase in both retail and wholesale loan portfolios. The increase in investments in fiscal 2018 was Rs. 149.6 billion, primarily on account of an increase in
available-for-sale Government of India securities, partially offset by a decrease in our investments in credit substitutes and other debt securities.

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Cash Flows from Financing Activities

Our primary sources of cash flows from financing activities are deposits and, to a lesser extent, borrowings. Our total deposits increased by
22.6 percent from Rs. 6,431.3 billion in fiscal 2017 to Rs. 7,883.8 billion in fiscal 2018. There was a 33.3 percent increase in our time deposits from Rs.
3,341.9 billion in fiscal 2017 to Rs. 4,455.7 billion in fiscal 2018. Of the US $ 3.4 billion FCNR deposits, raised in fiscal 2014 under the RBI swap window,
US $ 3.03 billion were redeemed up to March 2018. Savings account deposits increased by 15.6 percent from Rs. 1,935.8 billion as of March 31, 2017 to
Rs. 2,238.0 billion as of March 31, 2018. Our non-interest-bearing current account deposits increased by 3.2 percent from Rs. 1,153.7 billion as of
March 31, 2017 to Rs. 1,190.1 billion as of March 31, 2018. Savings account deposits at Rs. 2,238.0 billion and current account deposits at Rs.
1,190.1 billion accounted for 43.5 percent of total deposits as of March 31, 2018. Our short-term borrowings increased by Rs. 456.9 billion from Rs.
322.3 billion in fiscal 2017 to Rs. 779.2 billion in fiscal 2018. Our long-term debt increased by 27.6 percent from Rs. 730.9 billion in fiscal 2017 to Rs.
932.9 billion in fiscal 2018. During fiscal 2018, we raised debt capital instruments eligible for inclusion in Additional Tier I capital and Tier II capital under
the Basel III capital regulations amounting to Rs. 80.0 billion and Rs. 20.0 billion, respectively. During fiscal 2018, we also raised Rs. 23.0 billion by an
overseas issuance of Rupee denominated bonds.

Financial Condition
Assets
The following table sets forth the principal components of our assets as of March 31, 2018 and March 31, 2019:

As of March 31,
Increase/ % Increase/
2018 2019 (decrease) (decrease)
(in million except percentages)
Cash and due from banks, and restricted cash Rs. 574,151.0 Rs. 734,872.6 Rs. 160,721.6 28.0
Investments held for trading 167,513.9 265,516.1 98,002.2 58.5
Investments available for sale debt securities 2,221,443.3 2,633,348.4 411,905.1 18.5
Securities purchased under agreements to resell 650,018.6 76,213.5 (573,805.1) (88.3)
Loans, net 7,263,671.8 8,963,232.6 1,699,560.8 23.4
Accrued interest receivable 77,894.7 93,031.7 15,137.0 19.4
Property and equipment 38,968.1 43,187.8 4,219.7 10.8
Intangibles 1.0 — (1.0) (100.0)
Goodwill 74,937.9 74,937.9 — —
Other assets 298,708.5 395,733.0 97,024.5 32.5
Total assets Rs. 11,367,308.8 Rs. 13,280,073.6 Rs. 1,912,764.8 16.8

Our total assets increased by 16.8 percent from Rs. 11,367.3 billion as of March 31, 2018 to Rs. 13,280.1 billion as of March 31, 2019.

Our cash and due from banks, and restricted cash increased from Rs. 574.2 billion as of March 31, 2018 to Rs. 734.9 billion as of March 31, 2019,
primarily on account of net cash provided by our operating and financing activities, partially offset by net cash used in our investing activities. Cash and due
from banks, and restricted cash is comprised of cash and balances due from banks. We are also required to maintain cash balances with the RBI to meet our
cash reserve ratio requirement. Banks in India, including us, are required to maintain a specific percentage of our demand and time liabilities by way of a
balance in a current account with the RBI. This is to maintain the solvency of the banking system. We have classified the cash reserve maintained with the
RBI as restricted cash.

Securities held under the trading portfolio are for trading purposes and are generally sold within 90 days from date of purchase. Investments held for
trading increased by 58.5 percent from Rs. 167.5 billion as of March 31, 2018 to Rs. 265.5 billion as of March 31, 2019 primarily on account of an increase
in our investments in Government securities.

Investments available for sale debt securities increased by 18.5 percent primarily on account of an increase in our Government securities, partially
offset by a decrease in our investments in credit substitutes.

Net loans increased by 23.4 percent on account of an increase in both retail and wholesale loan portfolios. Our gross retail loan portfolio increased by
19.7 percent from Rs. 5,213.4 billion as of March 31, 2018 to Rs. 6,237.9 billion as of March 31, 2019. The growth in retail loans was across product
segments. Our gross wholesale loan book increased by 32.9 percent from Rs. 2,162.8 billion as of March 31, 2018 to Rs. 2,873.6 billion as of March 31,
2019.

Accrued interest receivable increased by 19.4 percent from Rs. 77.9 billion as at March 31, 2018 to Rs. 93.0 billion as of March 31, 2019, primarily
on account of an increase in our loans and investment securities.

Our property and equipment increased by Rs. 4.2 billion. We added 72 banking outlets and 375 ATMs in fiscal 2018 and 316 banking outlets and 525
ATMs in fiscal 2019.

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We paid a purchase consideration of Rs. 102.8 billion to acquire the net assets of CBoP at a fair value of Rs. 27.8 billion, thereby recognizing
unidentified intangibles (goodwill) of Rs. 74.9 billion during fiscal 2009. The primary purpose of the acquisition was to realize potential synergies, growth
opportunities and cost savings from combining our businesses. The goodwill arising from the business combination is tested on an annual basis for
impairment. The said goodwill has not been impaired as of March 31, 2019 and has been carried forward at the same value as the value at the acquisition
date.

Other assets increased by 32.5 percent from Rs. 298.7 billion as of March 31, 2018 to Rs. 395.7 billion as of March 31, 2019, primarily on account of
an increase in derivatives from Rs. 50.8 billion as of March 31, 2018 to Rs. 132.5 billion as of March 31, 2019. This was largely attributable to an increase
in mark-to-market gains from forward exchange contracts.

Liabilities and Shareholders’ Equity

The following table sets forth the principal components of our liabilities and shareholders’ equity as of March 31, 2018 and March 31, 2019:

As of March 31,
Increase/ Increase/
2018 2019 (decrease) (decrease)
(in million, except percentages) %
Liabilities
Interest bearing deposits Rs. 6,693,649.3 Rs. 7,804,717.5 Rs. 1,111,068.2 16.6
Non-interest bearing deposits 1,190,102.2 1,420,309.4 230,207.2 19.3
Total deposits 7,883,751.5 9,225,026.9 1,341,275.4 17.0
Securities sold under repurchase agreements 138,000.0 174,000.0 36,000.0 26.1
Short-term borrowings 779,201.7 654,058.0 (125,143.7) (16.1)
Accrued interest payable 65,514.4 79,372.5 13,858.1 21.2
Long-term debt 932,906.3 1,044,553.0 111,646.7 12.0
Accrued expenses and other liabilities 391,441.6 467,438.6 75,997.0 19.4
Total liabilities 10,190,815.5 11,644,449.0 1,453,633.5 14.3
Non-controlling interest in subsidiaries 2,329.7 3,049.3 719.6 30.9
HDFC Bank Limited shareholders’ equity 1,174,163.6 1,632,575.3 458,411.7 39.0
Total liabilities and shareholders’ equity Rs. 11,367,308.8 Rs.13,280,073.6 Rs. 1,912,764.8 16.8

Our total liabilities increased by 14.3 percent from Rs. 10,190.8 billion as of March 31, 2018 to Rs. 11,644.4 billion as of March 31, 2019. This
increase was primarily attributable to the growth in our deposits and borrowings. The increase in our interest-bearing deposits was on account of an increase
in time deposits and savings deposits. Time deposits increased by 19.3 percent from Rs. 4,455.7 billion as of March 31, 2018 to Rs. 5,317.7 billion as of
March 31, 2019. Savings account deposits increased by 11.1 percent from Rs. 2,238.0 billion as of March 31, 2018 to Rs. 2,487.0 billion as of March 31,
2019. Our non-interest bearing demand deposits increased by 19.3 percent from Rs. 1,190.1 billion as of March 31, 2018 to Rs. 1,420.3 billion as of
March 31, 2019.

Most of our funding requirements are met through short-term and medium-term funding sources. Of our total non-equity sources of funding,
primarily comprised of deposits and borrowings, deposits accounted for 79.2 percent, short-term borrowings accounted for 5.6 percent and long-term debt
accounted for 9.0 percent as of March 31, 2019. Our short-term borrowings, comprised primarily of money market borrowings, decreased by
Rs. 125.1 billion from Rs. 779.2 billion as of March 31, 2018 to Rs. 654.1 billion as of March 31, 2019. Our long-term debt increased by 12.0 percent from
Rs. 932.9 billion in fiscal 2018 to Rs. 1,044.6 billion in fiscal 2019. During fiscal 2019, we raised long-term debt amounting to Rs. 320.1 billion including
the long-term debt of Rs. 60.0 billion for funding the affordable housing sector and for financing infrastructure project loans.

Accrued interest payable increased by Rs. 13.9 billion from Rs. 65.5 billion as of March 31, 2018 to Rs. 79.4 billion as of March 31, 2019. This
increase was primarily on account of interest accrued on our time deposits and long-term debt.

Accrued expenses and other liabilities increased by 19.4 percent from Rs. 391.4 billion as of March 31, 2018 to Rs.467.4 billion as of March 31,
2019, which was largely attributable to a increase in our derivatives .

On July 17, 2018, we made a preferential allotment of 39,096,817 equity shares to Housing Development Finance Corporation Limited at an issue
price of Rs. 2,174.09 per equity share. On August 2, 2018, we issued 17,500,000 American Depositary Shares (“ADSs”) representing 52,500,000 equity
shares at a price of US$ 104.00 per ADS. We also allotted 12,847,222 equity shares pursuant to a qualified institutional placement offering at a price of Rs.
2,160.0 per equity share. Consequent to these issuances, our shareholders’ equity increased by Rs. 235.9 billion, net of share issue expenses of
Rs. 1.3 billion. Shareholders’ equity also increased on exercise of 23,772,304 stock options by employees and on an increase in our retained earnings and in
our accumulated other comprehensive income (primarily on account of mark-to-market gains on available for sale debt securities).

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Capital
We are a banking company within the meaning of the Indian Banking Regulation Act, 1949, registered with and subject to supervision by the RBI.
Failure to meet minimum capital requirements could lead to regulatory actions by the RBI that, if undertaken, could have a material effect on our financial
position. The RBI issued detailed guidelines for implementation of Basel III capital regulations in May 2012. The minimum capital requirements under
Basel III are being phased-in as per the guidelines prescribed by the RBI. Accordingly, we are required to maintain a minimum Common Equity Tier I ratio
of 7.525 percent, a minimum total Tier I capital ratio of 9.025 percent and a minimum total capital ratio of 11.025 percent (each including capital
conservation buffer and additional capital applicable to us as a Domestic-Systemically Important Bank (“D-SIB”)) as of March 31, 2019.

Our regulatory capital and capital adequacy ratios measured in accordance with Indian GAAP and calculated under Basel III as of March 31, 2018
and March 31, 2019 are as follows:

As of March 31,
2018 2019 2019
(in million, except percentages)
Tier I capital Rs. 1,060,049.0 Rs. 1,470,227.6 US$ 21,258.4
Tier II capital 125,354.7 124,348.8 1,798.0
Total capital Rs. 1,185,403.7 Rs. 1,594,576.4 US$ 23,056.4
Total risk weighted assets Rs. 8,001,259.8 Rs. 9,319,298.7 US$134,749.8
Capital ratios of the Bank:
Common Equity Tier I 12.25% 14.93% 14.93%
Tier I 13.25% 15.78% 15.78%
Total capital 14.82% 17.11% 17.11%
Minimum capital ratios required by the RBI:*
Tier I 8.875% 9.025% 9.025%
Total capital 10.875% 11.025% 11.025%

* The Tier I and Total capital ratio includes capital conservation buffer and additional capital applicable to us as a Domestic-Systemically Important Bank
(“D-SIB”).

Capital Expenditure
Our capital expenditures consist principally of expenditures relating to our branch network expansion, as well as investments in our technology and
communications infrastructure. Our capital expenditure was Rs. 16.1 billion in fiscal 2019. We have current plans for capital expenditures of approximately
Rs. 21.9 billion in fiscal 2020. Our budgeted capital expenditure is primarily to expand our branch and ATM network, to upgrade and expand our hardware,
data center, network and other systems, to add new equipment in and expand our existing premises and to relocate our banking outlets and back-offices. We
may use these budgeted amounts for other purposes depending on, among other factors the business environment prevailing at the time, and consequently
our actual capital expenditures may be higher or lower than our budgeted amounts.

Financial Instruments and Off-Balance Sheet Arrangements

Our foreign exchange and derivative product offerings to our customers cover a range of products, including foreign exchange and interest rate
transactions and hedging solutions, such as spot and forward foreign exchange contracts, forward rate agreements, currency swaps, currency options, and
interest rate derivatives. These transactions enable our customers to transfer, modify or reduce their foreign exchange and interest rate risks. A specified
group of relationship managers from our Treasury front office works on such product offerings jointly with the relationship managers from Wholesale
Banking.

We enter into forward exchange contracts, currency options, forward rate agreements, currency swaps and rupee interest rate swaps with inter-bank
participants, similar to our Wholesale Banking business, where we enter into such transactions with our customers. To support our clients’ activities, we are
an active participant in the Indian inter-bank foreign exchange market. We also trade, to a more limited extent, for our own account. We also engage in
proprietary trades of rupee-based interest rate swaps and use them as part of our asset liability management.

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Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. A currency option is a contract
where the purchaser of the option has the right but not the obligation to either purchase or sell and the seller of the option agrees to sell or purchase an
agreed amount of a specified currency at a price agreed in advance and denominated in another currency on a specified date or by an agreed date in the
future. A forward rate agreement is a financial contract between two parties to exchange interest payments for a “notional principal” amount on a settlement
date, for a specified period from a start date to a maturity date. Currency swaps are commitments to exchange cash flows by way of interest in one currency
against another currency and exchanges of principal amounts at maturity (or on specified intermittent dates) based on predetermined rates. Rupee interest
rate swaps are commitments to exchange fixed and floating rate cash flows in rupees.

We earn profit on customer transactions by way of a margin as a mark-up over the inter-bank exchange or interest rate. We earn profit on inter-bank
transactions by way of a spread between the purchase rate and the sale rate. These profits are recorded as income from foreign exchange and derivative
transactions. The Bank’s Board of Directors imposes limits on our ability to hold overnight positions in foreign exchange and derivatives and the same are
intimated to RBI. The following table presents the aggregate notional principal amounts of the Bank’s outstanding forward exchange and derivative
contracts as of March 31, 2019, together with the fair values on each reporting date:

As of March 31, 2019

Notional Gross Assets Gross Liabilities Net Fair Value Notional Net Fair Value
(In million)
Interest rate derivatives Rs. 3,159,867.1 Rs. 27,932.0 Rs. 27,102.8 Rs. 829.2 US$ 45,689.2 US$ 12.0
Forward rate agreements
Currency options 282,096.9 2,326.1 2,617.2 (291.1) 4,078.9 (4.2)
Currency swaps 197,044.2 5,841.0 4,070.7 1,770.3 2,849.1 25.6
Forward exchange contracts 5,561,859.5 96,425.0 94,658.3 1,766.7 80,420.2 25.5
Total Rs. 9,200,867.7 Rs. 132,524.1 Rs. 128,449.0 Rs. 4,075.1 US$133,037.4 US$ 58.9

We have not designated the above derivative contracts as accounting hedges and accordingly the contracts are recorded at fair value on the balance
sheet with subsequent changes in fair value recorded in earnings.

Guarantees and Documentary Credits

As a part of our commercial banking activities, we issue documentary credits and guarantees. Documentary credits, such as letters of credit, enhance
the credit standing of our customers. Guarantees generally represent irrevocable assurances that we will make payments in the event that the customer fails
to fulfill its financial or performance obligations. Financial guarantees are obligations to pay a third-party beneficiary where a customer fails to make
payment towards a specified financial obligation. Performance guarantees are obligations to pay a third-party beneficiary where a customer fails to perform
a non-financial contractual obligation. The nominal values of guarantees and documentary credits for the dates set forth below were as follows:

As of March 31,
2018 2019 2019
(In million)
Nominal values:
Bank guarantees:
Financial guarantees Rs. 237,417.3 Rs. 254,075.9 US$ 3,673.7
Performance guarantees 214,088.3 285,748.4 4,131.7
Documentary credits 395,452.7 475,617.8 6,877.1
Total Rs. 846,958.3 Rs. 1,015,442.1 US$14,682.5

Guarantees and documentary credits outstanding increased by 19.9 percent to Rs. 1,015.4 billion as of March 31, 2019 from Rs. 847.0 billion as of
March 31, 2018, principally due to growth in our trade finance business.

Undrawn commitments
The Bank has outstanding undrawn commitments to provide loans and financing to customers. These loan commitments aggregated to
Rs. 452.0 billion and Rs. 452.9 billion (US$ 6.5 billion) as of March 31, 2018 and March 31, 2019, respectively. Among other things, the making of a loan
is subject to a review of the creditworthiness of the customer at the time the customer seeks to borrow, at which time the Bank has the unilateral right to
decline to make the loan. If the Bank were to make such loans, the interest rates would be dependent on the lending rates in effect when the loans were
disbursed. Further, the Bank has unconditional cancellable commitments aggregating to Rs. 2,738.5 billion and Rs. 3,150.9 billion (US$ 45.6 billion) as of
March 31, 2018 and March 31, 2019, respectively. See also Note 24 to the Bank’s consolidated financial statements included elsewhere in this report.

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Contractual Obligations and Commercial Commitments

The table below summarizes our principal contractual obligations as of March 31, 2019:
Contractual Obligations

Payments due by period, as of March 31, 2019

Total Less than 1 year 1-3 years 3-5 years After 5 years
(in million)
Subordinated debt (a) Rs. 128,315.8 Rs. — Rs. — Rs. 8,300.0 Rs. 120,015.8
Other long-term debt 833,239.3 261,201.6 268,082.3 94,214.2 209,741.2
Operating leases (b) 85,892.8 10,538.6 19,022.1 15,241.5 41,090.6
Short-term borrowings 654,058.0 654,058.0 — — —
Securities sold under repurchase agreements 174,000.0 174,000.0 — — —
Unconditional purchase obligations (c) 5,503.6 5,503.6 — — —
Total Rs. 1,881,009.5 Rs. 1,105,301.8 Rs. 287,104.4 Rs.117,755.7 Rs. 370,847.6

(a) Scheduled maturities of subordinated debt do not include perpetual bonds of Rs. 82,997.9 million (net of debt issuance cost).
(b) Operating leases are principally for the lease of office, branch and ATM premises, residential premises for executives and office equipments.
(c) Unconditional purchase obligations represent committed capital contracts as of March 31, 2019. See “—Note 27—Commitments and contingencies”
of our consolidated financial statements.

Commercial Commitments
Our commercial commitments consist principally of letters of credit, guarantees, forward exchange and derivative contracts.

We have recognized a liability of Rs. 3.5 billion as of March 31, 2019, in accordance with FASB ASC 460-10 in respect of guarantees issued or
modified. Based on historical trends, in accordance with FASB ASC 450, we have recognized a liability of Rs. 2.6 billion as of March 31, 2019.

As part of our risk management activities, we continuously monitor the creditworthiness of customers as well as guarantee exposures. However, if a
customer fails to perform a specified obligation to a beneficiary, the beneficiary may draw upon the guarantee by presenting documents that are in
compliance with the guarantee. In that event, we make payment on account of the defaulting customer to the beneficiary, up to the full notional amount of
the guarantee. The customer is obligated to reimburse us for any such payment. If the customer fails to pay, we would, as applicable, liquidate collateral
and/or set off accounts; if insufficient collateral is held, we recognize a loss.

The residual maturities of the above commitments as of March 31, 2019 are set forth in the following table:

Amount of commitment expiration per period, as of March 31, 2019

Total amounts
Committed* Up to 1 year 1-3 years 3-5 years Over 5 years
(in million)
Documentary credits Rs. 475,617.8 Rs. 444,544.3 Rs. 30,704.2 Rs. 335.6 Rs. 33.7
Guarantees 539,824.3 376,450.2 121,679.8 31,328.3 10,366.0
Forward exchange and derivative contracts 9,200,867.7 6,697,369.1 1,224,141.8 1,076,290.1 203,066.7
Total Rs.10,216,309.8 Rs. 7,518,363.6 Rs. 1,376,525.8 Rs. 1,107,954.0 Rs. 213,466.4

* Denotes nominal values of documentary credits and guarantees and notional principal amounts of forward exchange and derivative contracts.

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Extent of dependence on single customer exposures

Our exposure to a borrower is subject to the regulatory limits established by the RBI from time to time, or specific approval by RBI. The exposure-
ceiling limit for a single borrower is 15 percent of our capital funds. This limit may be exceeded by an additional 5 percent (i.e. up to 20 percent) provided
the additional credit exposure is on account of infrastructure or by an additional 10 percent (i.e. up to 25 percent) provided the credit exposure is to oil
companies to whom bonds have been issued by the Government of India. In addition to the above exposure limit, we may, in exceptional circumstances,
with the approval of the Board, consider increasing our exposure to a borrower up to an additional 5 percent of the capital funds. Our exposure to a single
NBFC or NBFC-asset financing companies (“AFC”) should not exceed 10.0 percent or 15.0 percent, respectively, of our capital funds. We may, however,
assume exposures on a single NBFC or NBFC-AFC up to 15.0 percent or 20.0 percent, respectively, if it is on account of funds on-lent by the NBFC or
NBFC-AFC to the infrastructure sector. Our exposure to infrastructure finance companies (“IFC”) should not exceed 15.0 percent of our capital funds.
However, this may be exceeded by an additional 5 percent (i.e. up to 20 percent) if the same is on account of funds on-lent by the IFC to the infrastructure
sector. In June 2019, the RBI issued the revised Large Exposures Framework, which aims to align the exposure norms for Indian banks with BCBS
standards. The guidelines have come into effect from April 1, 2019, except for certain provisions which will become effective from April 1, 2020. See “—
Large Exposures Framework—Supervision and Regulation.”

Our exposures to our ten largest borrowers as of March 31, 2019, based on the higher of the outstanding balances of or limits on, funded and
non-funded exposures, computed as per RBI guidelines, were as follows. None of these exposures were impaired as of March 31, 2019:

March 31, 2019

Funded Non-Funded Total
Borrower Industry Exposure Exposure Total Exposure Exposure
(in million)
Borrower 1 Telecom Rs.146,141.2 Rs. 6,457.1 Rs.152,598.3 US$2,206.5
Borrower 2 Coal and Petroleum 27,488.9 115,089.5 142,578.4 2,061.6
Borrower 3 Financial Intermediaries / NBFC 120,004.3 312.8 120,317.1 1,739.7
Borrower 4 Power 92,271.4 1,200.0 93,471.4 1,351.5
Borrower 5 /Financial Intermediaries / NBFC 80,008.5 32.6 80,041.1 1,157.3
Borrower 6 Telecom 57,604.0 14,843.9 72,447.9 1,047.5
Borrower 7 Coal and Petroleum 32,948.9 34,806.0 67,754.9 979.7
Borrower 8 Cement 51,283.8 15,163.0 66,446.8 960.8
Borrower 9 Iron and Steel 43,602.4 22,513.2 66,115.6 956.0
Borrower 10 Non-ferrous Metals 30,559.1 26,347.9 56,907.0 822.8

Of the total exposure to these ten borrowers, approximately 51 percent was secured by collateral. As of March 31, 2019, of our exposure to our ten
largest borrowers, exposure to five borrowers was equal to or more than 5 percent of our capital funds and was mainly comprised of large credit facilities to
these borrowers.

There were no exposures that exceeded the regulatory ceiling established by RBI.

Cross border exposures

The RBI requires banks in India to implement RBI prescribed guidelines on country risk management in respect of those countries where a bank has
net funded exposure in excess of a prescribed percentage of its total assets. In the normal course of business, we have both direct and indirect exposure to
risks related to counter parties and entities in foreign countries. We monitor such cross-border exposures on an ongoing basis. As of March 31, 2019, our
aggregate country risk exposure was 3.7 percent of our total assets and our net funded exposure to any other country did not exceed 1 percent of our total
assets as per the said guidelines.

Cyber Security
We offer internet and mobile banking services to our customers. Our internet and mobile banking channel includes multiple services, such as
electronic funds transfer, bill payment services, usage of credit cards on-line, requesting account statements and requesting check books. We are therefore
exposed to cyber threats, such as hacking, phishing and trojans, targeting our customers, wherein fraudsters send unsolicited mails to our customers seeking
account sensitive information; hacking, wherein hackers seek to hack into our website with the primary intention of causing reputational damage to us; and
data theft, wherein cyber criminals may intrude into our network with the intention of stealing our internal data or our customer information or to extort
money.

We have implemented various measures to mitigate risks that emanate from offering online banking to our customers. These are briefly enumerated
below:

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• Phishing: We identify phishing sites and trojans targeting our customers and then shut down such sites. Forensic information such as
customers details, which may have been compromised are retrieved from such sites and acted upon..We have implemented Secure Access
which provides an additional layer of security in addition to the customer identification (ID) and password requirement for internet banking
transactions. This system evaluates every critical financial transaction based on our risk model and helps us to determine whether the
incumbent transaction is genuine or suspicious. Should the transaction be deemed suspicious, the system has the option of either declining the
transaction or asking for additional authentication. As a practice, we send awareness mails to our customers educating them about phishing
and the measures that they need to take to protect themselves from falling prey to it.
• Hacking and Data Theft: We have implemented network firewall, web application firewalls and intrusion prevention system at the perimeter
of our network to block any attempts made to hack or intrude into our network. Our 24 by 7 cybersecurity operations center(CSOC) analyzes
logs of its perimeter defenses to identify any attempts made to intrude into our network. We have developed an Incident Management
Procedure, a Cybersecurity Policy and a Cyber Crisis Management Plan for the incident management process to ensure that in the event of
any incident, relevant stakeholders are made aware of what their role is in resolving the incident. We also test our internet-facing
infrastructure and applications for vulnerability. Any vulnerability thus identified is remediated in a time-bound manner. In addition, we have
deployed a host intrusion prevention solution on the internet banking setup to protect against the unpatched vulnerabilities and exploits. We
have defined baseline security standards for the technologies in use. These standards were created taking into consideration industry-best
practices and are reviewed on a regular basis to counter new threat vectors and avoid obsolescence.We continuously perform daily malware
scanning of the default landing pages of internet websites so that the customers are not compromised by malware that has been injected on the
non-logged web pages. We have also subscribed to anti- DDOS services (Distributed Denial Of Services).

We have also undertaken internal data security measures that are taken with respect to breaches or theft of material or sensitive customer data. These
are briefly enumerated below:
• Data Loss Prevention (“DLP”): Information is an important asset of any organization that supports business processes and management
decisions. Usage and protection of business information can be heavily influenced by individuals in the end user environment, where most of
the corporate data is processed, shared and stored. We have implemented enterprise solutions such as DLP to monitor sensitive data stored,
transmitted and shared by users, and to prevent and detect data breaches. Individual business functions are also involved in incident reviews
which helps create a sense of ownership and awareness amongst our employees.
• Laptop Encryption: Data encryption helps ensure that business-critical and sensitive data does not fall into the wrong hands, thereby
preventing reputational damage or curtailing any monetary losses. The cost arising out of loss of data residing in a laptop is far higher than the
cost of replacing the actual device. We have therefore implemented a laptop encryption tool on the Bank’s laptops.

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MANAGEMENT

Directors and Senior Management

Our Memorandum and Articles of Association (“Articles”) provide that, until otherwise determined by the general meeting of shareholders, the
number of our directors shall not be less than 3 or more than 15, excluding directors appointed pursuant to the terms of issued debt. Our Board of Directors
consisted of 10 members as of March 31, 2019.

As per the Indian Companies Act, 2013 (the “Companies Act”), unless the Articles provide for the retirement of all directors at every annual general
meeting, not less than two-thirds of the total number of directors shall be persons whose period of office is liable to determination by retirement of directors
by rotation. However, any retiring director may be re-appointed by resolution of the shareholders. Pursuant to the Companies Act, every company shall
have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year (i.e. an Indian resident).

Under the terms of our Articles, our promoter, Housing Development Finance Corporation Limited (“HDFC Limited”), has a right to nominate the
non-retiring directors to our Board, so long as HDFC Limited, its subsidiaries or any other company promoted by HDFC Limited, either singly or in the
aggregate, holds not less than 20 percent of our paid-up equity share capital. The directors so nominated by HDFC Limited currently are the Chairperson
and the Managing Director of the Bank.

The Banking Regulation Act, 1949 (“the Banking Regulation Act”) and subsequent RBI notification dated November 24, 2016 requires that not less
than 51 percent of the board members shall consist of persons who have specialized knowledge or practical experience in one or more of the following
areas: accounting, finance, agriculture and rural economy, banking, co-operation, economics, law, small-scale industry, information technology, payment
and settlement systems, human resources, risk management, business management and any other matter which in the opinion of the RBI will be useful to
the banking company. Of these, not less than two directors shall have specialized knowledge or practical experience in respect of agriculture and the rural
economy, co-operation or small-scale industry. Mr. Malay Patel is the Independent Director on the Board having specialized knowledge and practical
experience in small scale industry and Mr. Umesh Chandra Sarangi is the Independent Director on the Board having specialized knowledge and practical
experience in agriculture and rural economy. Mr. Srikanth Nadhamuni is the Non-Executive and Non-Independent Director on the Board of the Bank having
expertise in Information Technology.

Interested directors may not vote at board proceedings, except in relation to contracts or arrangements with a company in which that director (or two
or more directors together) holds not more than 2 percent of the paid-up share capital. None of our directors or members of our senior management holds
1 percent or more of our equity shares.

Our Board of Directors, as of March 31, 2019, comprised of:

Name Position Age

Mrs. Shyamala Gopinath Part-time Non-Executive Chairperson 69
Mr. Keki Mistry Non-Executive Director 64
Mr. Malay Patel Non-Executive Director 42
Mr. Umesh Chandra Sarangi Non-Executive Director 67
Mr. Srikanth Nadhamuni Non-Executive Director 55
Mr. Sanjiv Sachar Non-Executive Director 61
Mr. Sandeep Parekh Non-Executive Director 48
Mr. M.D Ranganath Non-Executive Director 57
Mr. Aditya Puri Managing Director 68
Mr. Kaizad Bharucha Executive Director 53

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The following are brief biographies of our directors:

Mrs. Shyamala Gopinath, 69 years of age, is the part-time Non-Executive Chairperson of the Bank. She holds a Master’s degree in commerce and is
a certified associate of the Indian Institute of Bankers. She has over 41 years of experience in financial sector policy formulation in different capacities at
the RBI. As Deputy Governor of the RBI for seven years, and a member of the RBI’s board of directors, she guided and influenced national policies in
diverse areas such as regulation, supervision and development of financial markets, capital account management, management of government borrowings
and foreign-exchange reserves and the payment and settlement system. She has served on several committees while with the RBI. During 2001 to 2003, she
worked as senior financial sector expert in the then Monetary Affairs and Exchange Department of the International Monetary Fund (Financial Institutions
Division). She was on the Corporate Bonds and Securitisation Advisory Committee (CoBoSAC), a Sub-Committee of SEBI. She served as the Chairperson
on the Advisory Board on Bank, Commercial and Financial Frauds for two years from 2012 to 2014. In addition to her work for HDFC Bank, she serves as
an Independent Director for several other companies, including Tata Elxsi Limited, Colgate-Palmolive (India) Limited, CMS Info Systems Limited., Lodha
Developers Limited, BASF India Limited, and not-for-profit entities. She is also Chairperson of the Board of Governors of the Indian Institute of
Management, Raipur. She does not hold any shares in the Bank as of March 31, 2019.

Mr. Keki Mistry, 64 years of age, is a Non- Executive Director of the Bank. He holds a Bachelor’s degree in commerce from the University of
Mumbai. He is a fellow member of the ICAI. He has over three decades of varied experience in the banking and financial services domain. He worked with
AF Ferguson and Co, a chartered accountancy firm, followed by stints at Hindustan Unilever Limited and Indian Hotels Company Limited. In the year
1981, he joined HDFC Limited. He was appointed to the board of directors of HDFC Limited as an executive director in 1993 and was promoted to the post
of Managing Director in November 2000. In October 2007, he was appointed as Vice Chairman and Managing Director of HDFC Limited and was
appointed the Vice Chairman and CEO in January 2010. He is currently the Chairman of the CII National Council on Corporate Governance and also a
member of the Primary Markets Advisory Committee set up by SEBI. He is currently on the Board of following 8 (eight) public companies: HDFC Limited
as Vice Chairman and CEO, GRUH Finance Limited as Chairman, HDFC Asset Management Limited, HDFC Life Insurance Company Limited, HDFC
ERGO General Insurance Company Limited, Greatship (India) Limited, Torrent Power Limited and Tata Consultancy Services Limited. He, along with his
relatives, holds 296,130 equity shares in the Bank as of March 31, 2019.

Mr. Malay Patel, 42 years of age, is a Non-Executive Director of the Bank. He holds a major in engineering (mechanical) from Rutgers University,
Livingston, NJ, USA, and an A.A.B.A. in business from Bergen County College, Fairlawn, NJ, USA. He is a director on the board of directors of Eewa
Engineering Company Private Limited, a company in the plastics and packaging industry. He has been involved in varied roles such as export, import,
procurement, sales and marketing, among others in Eewa Engineering Company Private Limited. He has special knowledge and practical experience in
matters relating to small scale industries in terms of Section 10-A (2)(a) of the Banking Regulation Act, 1949. He is not a director in any other public
company. He does not hold any shares in the Bank as of March 31, 2019.

Mr. Umesh Chandra Sarangi, 67 years of age, is a Non-Executive Director of the Bank. He holds a Master’s degree in Science (Botany) from the
Utkal University, where he was a gold medalist. He has 36 years of experience in the Indian Administrative Services. As the previous chairman of the
National Bank for Agriculture and Rural Development (NABARD) from December 2007 to December 2010, he focused on rural infrastructure, accelerated
initiatives such as microfinance, financial inclusion, watershed development and tribal development. He has been appointed as a Director having specialized
knowledge and experience in agriculture and rural economy pursuant to Section 10-A (2)(a) of the Banking Regulation Act, 1949. Mr. Sarangi is not a
director in any other public company. Mr. Sarangi does not hold any shares in the Bank as of March 31, 2019.

Mr. Srikanth Nadhamuni, 55 years of age, is a Non-Executive Director of the Bank. He holds a Bachelor’s degree in Electronics and
Communications from the National Institute of Engineering and a Master’s degree in Electrical Engineering from Louisiana State University. He is a
technologist and an entrepreneur with 29 years of experience in the areas of CPU design, Healthcare, e-Governance, National ID, Biometrics, Financial
Technology and Banking. Presently, he is the Chairman of Novopay Solutions Private Limited, a company involved in the area of mobile payments and is
the chief executive officer of Khosla Labs Private Limited, a start-up incubator. He has also been a co-founder of e-Governments Foundation which aims to
improve governance in Indian cities and creation of Municipal enterprise resource planning suite which improves service delivery of cities. He was the
Chief Technology Officer of Aadhaar (UID Authority of India) from 2009 to 2012 where he participated in the design and development of the world’s
largest biometric based ID system. He was instrumental in the development of several banking and financial protocols including MicroATM, Aadhaar
Enabled Payment System (AEPS) and Aadhaar Payment Bridge (APB). He spent 14 years in Silicon Valley, working for global companies, such as Sun
Microsystems (CPU design), Intel Corporation (CPU design), Silicon Graphics (Interactive TV) and WebMD (Internet Healthcare). He was appointed as a
Director for his expertise in the field of Information Technology. He is not a director in any other public company. He does not hold any shares in the Bank
as of March 31, 2019.

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Mr. Sanjiv Sachar, 61 years of age, is an Additional Independent Director on the Board of the Bank. Mr. Sachar, is a Fellow Associate of the ICAI.
On October 31st, 2016 he retired as the Senior Partner of Egon Zehnder, the world’s largest privately held executive search firm. He set up the Egon
Zehnder practice in India in 1995 and played a key role in establishing the firm as a market leader in the executive search space across various country
segments. Over the course of his two decades at Egon Zehnder, he mentored senior executives across multiple industry sectors who have gone on to become
board members, CEOs, or CFOs of large corporates in India and overseas. He has also been the co-founder of the chartered accountancy and management
consulting firm, Sachar Vasudeva and Associates and co-founded executive search firm, Direct Impact. He is an independent director on the board of
KDDL Limited. He does not hold any shares in the Bank as of March 31, 2019.

Mr. Sandeep Parekh, 48 years of age, is a Non-Executive Director of the Bank. He holds an LL.M. (Securities and Financial Regulations) degree
from Georgetown University and an LL.B. degree from Delhi University. He is the managing partner of Finsec Law Advisors, a financial sector law firm
based in Mumbai. He was an Executive Director of SEBI from 2006 to 2008, heading the enforcement and legal affairs departments. He is a faculty
member of the Indian Institute of Management, Ahmedabad. He has worked for law firms in Delhi, Mumbai and Washington, D.C. Mr. Parekh focuses on
securities regulation, investment regulation, private equity, corporate governance and financial regulation. He is admitted to practice law in New York and is
a member of Mensa. He was recognized by the World Economic Forum as a “Young Global Leader” in 2008. He was Chairman and member of various
SEBI and RBI committees and sub-committees and is presently the chairman of SEBI’s proxy advisory working group and a member of SEBI’s mutual
fund advisory committee. He is not a director in any other public company. He does not hold any shares in the Bank as of March 31, 2019.

Mr. M.D. Ranganath, 57 years of age, is a Non-Executive Director of the Bank. He holds Master’s degree in technology from IIT, Madras and a
Bachelor’s degree in Engineering from the University of Mysore. He is a PGDM from IIM, Ahmedabad and a member of CPA, Australia. He has over 26
years of experience in the global IT services and financial services industry. He was Chief Financial Officer of Infosys Limited, a globally listed IT services
corporation, till November 2018. During his 18 year tenure at Infosys, he was an integral part of the growth and transformation of Infosys into a globally
respected IT services company. He effectively covered leadership roles in a wide variety of areas including strategy, finance, M&A, consulting, risk
management, and corporate planning—culminating in his appointment as role of Chief Financial Officer, where he worked closely with the Board of
Infosys and its committees in formulating and executing its strategic priorities. Prior to Infosys, he worked at ICICI Limited for eight years, where he was
responsible for credit, treasury, equity portfolio management and corporate planning. In 2017 and 2018, he was the recipient of the Best CFO Asia award in
the technology sector, by the Institutional Investor, based on a poll of the buy-side and sell-side investor community. He is not a director in any other public
company. He does not hold any shares in the Bank as of March 31, 2019.

Mr. Aditya Puri, 68 years of age, is and has been the Managing Director of the Bank since September 1994. He holds a Bachelor’s degree in
commerce from Punjab University and is an associate member of the Institute of Chartered Accountants of India (“ICAI”). Prior to joining the Bank, he was
the chief executive officer of Citibank, Malaysia from 1992 to 1994. He has over four decades of experience in the banking sector in India and abroad.
Recently, he received the AIMA-JRD Tata Corporate Leadership Award for the year 2018. He was also honored for his corporate and philanthropic
leadership by the American Indian Foundation (AIF) at their annual New York Gala, where he was recognized for transformative initiatives undertaken by
HDFC Bank under his leadership. He is the Non-Executive Chairman of HDB Financial Services Limited, a subsidiary of the Bank. He, along with his
relatives, holds 3,704,544 equity shares in the Bank as of March 31, 2019.

Mr. Kaizad Bharucha, 53 years of age, is an Executive Director of the Bank. He holds a Bachelor of Commerce degree from the University of
Mumbai. He has been associated with the Bank since 1995. In his current position as Executive Director, he is responsible for Wholesale Banking covering
areas of Corporate Banking, Emerging Corporate Group, Business Banking, Healthcare Finance, Agricultural Lending, Department for Special Operations
and Banking Initiatives Group. In his previous position as Group Head—Credit and Market Risk, he was responsible for the Risk Management activities in
the Bank, including the Credit Risk, Market Risk, Debt Management, Risk Intelligence and Control functions. He is a career banker with over three decades
of banking experience. Prior to joining the Bank, he worked at SBI Commercial and International Bank in various areas including Trade Finance and
Corporate Banking. He has represented HDFC Bank as a member of the working group constituted by the RBI to examine the role of the Credit Information
Bureau and on the sub-committee with regard to adoption of the Basel II guidelines. He is not a director in any other public company. He, along with his
relatives, holds 891,551 equity shares in the Bank as of March 31, 2019.

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Senior Management
As of March 31, 2019, our senior management was comprised of the following:

Name Position Age

Mr. Aditya Puri Managing Director 68
Mr. Kaizad Bharucha Executive Director 53
Mr. Abhay Aima Head – Equities, Private Banking, Third Party Products, NRI and
International Consumer Business 56
Mr. Ashish Parthasarthy Treasurer 51
Ms. Ashima Bhat Head – Strategy, Business Finance, Administration and Infrastructure,
Corporate Social Responsibility 48
Mr. Ashok Khanna Head – Secured Loans (Vehicles) 62
Mr. Arvind Kapil Head – Unsecured , Home, Mortgages and Working Capital Loans 47
Mr. Bhavesh Zaveri Head – Operations and Technology 53
Mr. Chakrapani Venkatachari Head – Internal Audit and Quality Initiatives Group 55
Mr. Dhiraj Relli Currently on secondment to HDFC Securities Limited (HSL), our
subsidiary 48
Mr. Jimmy Tata Chief Risk Officer 52
Mr. Munish Mittal Chief Information Officer 50
Mr. Nitin Chugh Head – Digital Banking 47
Mr. Nirav Shah Head – Emerging Corporates Group, Infrastructure Finance Group and
Rural Banking Group 47
Mr. Parag Rao Head – Card Payment Products, Merchant Acquiring Services and
Marketing 53
Mr. Rakesh Singh Head – Investment Banking, Private Banking , Capital Market and
Financial Institutions 50
Mr. Rajesh Kumar Head – Retail Credit and Risk 47
Mr. Rahul Shukla Head – Corporate Banking and Business Banking 50
Mr. Sashidhar Jagdishan Chief Financial Officer 54
Ms. Smita Bhagat Head – Government and Institutional Business , Ecommerce and Start-ups 53
Mr. Arvind Vohra Head – Retail Branch Banking 47
Mr. Srinivasan Vaidyanathan Head – Finance 55
Mr. Vinay Razdan Head – Human Resources 52
Mr. S Sampathkumar Head – Liability Products, Third Party Products and Non-Resident
Business 46
Mr. Benjamin Frank Head – Wholesale Credit 54

A brief biography of each of the members of the Bank’s senior management is set out below:

Mr. Abhay Aima is the Head of Equities, Private Banking, Third Party Products, NRI and International Consumer Business. He is a graduate of the
National Defence Academy. Mr. Aima serves as a director of Raab Investment Private Limited, HDFC Securities Limited and Bluechip Corporate
Investment Centre Limited.

Mr. Ashish Parthasarthy is the Treasurer for the Bank. He holds a Bachelor’s degree in engineering from the Karnataka Regional Engineering
College (now known as the National Institute of Technology, Karnataka) and has a post-graduate diploma in Management from the Indian Institute of
Management in Bangalore. He has over 28 years of experience in banking, with particular expertise in the interest rate and currency markets.

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Ms. Ashima Bhat is the Head of Strategy, Business Finance, Administration and Infrastructure, Corporate Social Responsibility. Ms. Bhat has over
21 years of experience in banking. She completed a Master’s degree in Management Studies, majoring in Marketing, from Narsee Monjee Institute of
Management Studies. Ms Bhat joined the Bank in 1994 in its start-up stage. She has since held various roles across the Bank. She was the regional head for
Corporate Banking and responsible for setting up the Supply Chain business in the Bank and was also head of SME business and Emerging Corporates
group.

Mr. Ashok Khanna is the Head of Secured Loans (Vehicles). Mr. Khanna has over 27 years of experience in the automobile companies and banking
industry in various sales and marketing roles. Prior to joining the Bank, he was the Executive Director for Retail Assets at Centurion Bank of Punjab. He
has also worked with automobile manufacturers, such as Kinetic Engineering, Toyota (in the Middle East) and other related companies, such as Firestone
Tyres.

Mr. Arvind Kapil is the Head of Unsecured, Home, Mortgages and Working Capital Loans. He holds a Master’s in Management Studies degree from
Bharati Vidyapeeth Institute of Management Studies and Research and a Bachelor’s degree in Engineering from K.J. Somaiya College of Engineering in
Mumbai. Mr. Kapil has over 24 years of experience in the finance industry and he joined the Bank from Countrywide Consumer Financial Services.

Mr. Bhavesh Zaveri is the Head of Operations and Technology. He holds a Master’s degree in Commerce from Mumbai University and is a Certified
Associate of the Indian Institute of Bankers. He has over 27 years of experience in banking, having worked with Oman International Bank and Barclays
prior to joining the Bank in April 1998. Mr. Zaveri also serves as Director of The Clearing Corporation of India Ltd. (CCIL), SWIFT India Domestic
Services, HDB Financial Services and Goods and Service Tax Network (GSTN).

Mr. Chakrapani Venkatachari is the Head of Internal Audit and Quality Initiatives Group. He holds a Bachelor’s degree in Commerce from
Mumbai University and is an Associate Member of the Institute of Company Secretaries of India, a Certified Associate of the Indian Institute of Bankers
and a Certified Information System Auditor. He has over 32 years of banking experience, having worked with Bank of Baroda and Standard Chartered Bank
prior to joining the Bank in 1994.

Mr. Dhiraj Relli is currently on secondment to HDFC Securities Limited (HSL), our subsidiary and currently holds the position of Managing
Director and Chief Executive Officer at HSL. An employee of HDFC since 2008, he has served as Senior Executive Vice President and Head of Branch
Banking at HDFC Bank. Mr Relli is a member of the Trading Member Advisory Committee of National Stock Exchange and a Member of the Advisory
Committee of Bombay Stock Exchange. Mr Relli is a B.Com. (Honours) graduate from Delhi University and a qualified chartered accountant from the
Institute of Chartered Accountants of India. He completed the Advance Management Program from the Indian Institute of Management, Bangalore

Mr. Jimmy Tata is Chief Risk Officer. He holds a Masters of Financial Management from the Jamnalal Bajaj Institute of Management Studies at
Mumbai University and is qualified as a Chartered Financial Analyst with the Institute of Chartered Financial Accountants in Hyderabad. Mr. Tata has been
with the Bank since 1994 and has over 29 years of experience. Prior to joining the Bank he was working as Financial Analyst in Financial Division of
Apple Industries Limited.

Mr. Munish Mittal is the Chief Information Officer. He holds a Bachelor’s degree in Science from Punjab University and a Master of Business
Administration from the Indira Gandhi National Open University. Mr. Mittal has more than 30 years of experience, having worked at Bank of Punjab,
Datapro, ESPL prior to joining the Bank in August 1996.

Mr. Nitin Chugh is the Head of Digital Banking. He holds a Bachelor’s degree in Technology from the National Institute of Technology in
Kurukshetra and has a Post-Graduate Diploma in Management from the All India Management Association in New Delhi. Mr. Chugh has nearly 26 years of
experience in sales and marketing with 21 years in retail banking.

Mr. Nirav Shah is Head of Emerging Corporates, Infrastructure Finance Group and Rural Banking Group. He holds a Master’s in Management
Studies from K.J. Somaiya Management Institute at Mumbai University. He has over 22 years of professional experience, joining the Bank from Global
Trust Bank in July 1999.

Mr. Parag Rao is Head of Card Payment Products, Merchant Acquiring Services and Marketing. He also heads marketing for the Bank. He holds a
Master’s in Management Studies degree from S.P. Jain Institute of Management at Mumbai University and a Bachelor of Engineering from the Regional
Engineering College in Jamshedpur. He has over 27 years of professional experience, joining the Bank from IBM Global Services in April 2002.

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Mr. Rakesh Singh is the Head of Investment Banking, Private Banking, Capital Market and Financial Institutions. He holds a Masters in Business
Administration from the Institute of Management Technology, Ghaziabad and has over 22 years of experience in the financial sector. Mr. Singh joined the
Bank from Rothschild in India where he was the Managing Director and Co-Head of Financing Advisory. Earlier in his career, he held key positions at
Morgan Stanley, Merrill Lynch, Standard Chartered Bank and ANZ Investment Bank.

Mr. Rajesh Kumar is the Head of Underwriting, Risk Intelligence and Control and Risk Analytics. He holds a Bachelor’s degree in Science from
Bangalore University and a Post Graduate Diploma in Management from T A Pai Management Institute in Manipal. He has over 22 years of experience in
handling credit function and joined the Bank in 2000.

Mr. Rahul Shukla is the Head of Corporate Banking and Business Banking. He holds a Bachelor’s degree in Technology from IIT Varanasi and Post
Graduate Diploma in Management from IIM Bangalore. He has over 26 years of banking experience, joining the Bank from Citi Bank in March 2018.

Mr. Sashidhar Jagdishan is the Chief Financial Officer. He holds a Bachelor of Science degree in Physics from the University of Mumbai and a
Masters in Economics of Money, Banking and Finance from the University of Sheffield in the United Kingdom. He is also a Chartered Accountant of the
Institute of Chartered Accountants of India. Mr. Jagdishan has been with the Bank since 1996.

Ms. Smita Bhagat is the Head of Government and Institutional Business, Ecommerce and Startups. She holds a Masters in Business Administration
from Podar Institute of Management and a Master’s in Commerce from University of Rajasthan and has completed the Executive Program from IIM
Ahmedabad. Ms. Bhagat currently leads HDFC Bank’s effort to significantly scale its government, institutional and start–up businesses across India. She
has almost 21 years of work experience and has worked with companies like HDFC Ltd, ICICI Bank before joining HDFC Bank in 1999.

Mr Arvind Vohra is the Head of Retail Branch Banking. He has a postgraduate degree in marketing and finance from Xavier Institute of
Management, Bhubaneswar and has completed a senior leadership program from London Business School. He has close to two and a half decades of
experience working across banking, telecommunications and consumer goods sectors. He has held leadership positions in sales and marketing, and business
leadership roles in global organisations such as Whirlpool, Philips and Standard Chartered Bank. For the last eight years, he led business operations at
Vodafone India. In addition, he served on the board of directors for Vodafone India’s consumer fixed line subsidiary and led incubation of the consumer IOT
(“Internet of Things”) business. He joined the Bank from Vodafone in September 2018.

Mr. Srinivasan Vaidyanathan is the Head of Finance. He is a commerce graduate, a Fellow of the Institute of Chartered Accountants of India, a
Fellow of the Institute of Cost and Works Accountants of India, a Fellow of the Association of International Accountants, UK, Member of CMA, USA, and
has a Masters in Business Administration. He has over 27 years of experience in the financial services industry. He joined the Bank from Citi Bank in 2018.

Mr. Vinay Razdan is Head of Human Resources. He is an alumnus of Delhi University and holds a post graduate qualification in Personnel
Management and Industrial Relations from XLRI, Jamshedpur. Mr. Vinay has over three decades of experience in different roles within the human
resources function and has worked across geographies and industry segments. He has held leadership positions with leading organizations in the FMCG, IT
Services and Telecommunication sectors. He joined the Bank in September 2018.

Mr. S. Sampath Kumar is Head of Liability Products, Third Party Products and Non-Resident Business. He has two and half decades of experience
and is an alumnus of the University of Madras, Tamil Nadu.

Mr. Benjamin Frank is Head of Wholesale Credit. He has a Bachelor of Science degree from University of Madras, a Master’s degree in Business
Administration from ICFAI University and is a Certified Financial Risk Manager (FRM) from the Global Association of Risk Professionals. He has over 30
years of experience in the banking industry across Branch Banking, International Banking, Corporate Banking and Credit Risk Management. He was
previously with IDBI Bank and State Bank of India. He joined the Bank in April 2004.

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Corporate Governance
Audit Committee
The Audit Committee of the Bank, as of March 31, 2019, has Mr. M.D Ranganath, Mrs. Shyamala Gopinath, Mr. Umesh Chandra Sarangi and
Mr. Sanjiv Sachar as its members. During the year Mr. Bobby Parikh and Mr. Partho Datta ceased to be members of the committee pursuant to their
resignation as directors of the Bank. Each member of the Audit Committee is an Independent Director. The Audit Committee is chaired by
Mr. M.D Ranganath. The Audit Committee met seven times during fiscal 2019.

The terms of reference of the Audit Committee include, inter alia, the following:
a. Overseeing the Bank’s financial reporting process and disclosure of financial information to ensure that the financial statement is correct,
sufficient and credible;
b. Recommending the appointment and removal of external auditors and the fixing of their fees;
c. Reviewing with management the annual financial statements and auditors report before their submission to the Board, with special emphasis
on accounting policies and practices, compliance with accounting standards disclosure of related party transactions and other legal
requirements relating to financial statements;
d. Reviewing the adequacy of the Audit and Compliance functions, including their policies, procedures, techniques and other regulatory
requirements; and
e. Any other terms of reference as may be included from time to time in the Companies Act, 2013 and Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015 (the “SEBI Listing Regulations”), including any amendments or
re-enactments thereof from time to time.

The Board has also adopted a charter for the Audit Committee in connection with certain United States regulatory standards as the Bank’s securities
are also listed on the New York Stock Exchange.

Nomination and Remuneration Committee

The terms of reference of the Nomination and Remuneration Committee include scrutinizing the nominations of the directors with reference to their
qualifications and experience, to identify “fit and proper” persons and assess their competency and reviewing the compensation levels of the Bank’s
employees vis-à-vis other banks and the banking industry in general.

The criteria for assessing the competency of the persons nominated are as follows:

• Academic qualifications;

• Previous experience;

• Track record; and

• Integrity of the candidate.

For assessing the integrity and suitability, features like criminal records, financial position, civil actions undertaken to pursue personal debts, refusal
of admission to and expulsion from professional bodies, sanctions applied by regulators or similar bodies and previous questionable business practices are
considered.

The Bank’s compensation policy provides a fair and consistent basis for motivating and rewarding employees appropriately according to their job
profile or role size, performance, contribution, skill and competence.

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The Nomination and Remuneration Committee also formulates criteria for the evaluation of performance of individual Directors including
Independent Directors, the Board of Directors and its committees. The criteria for the evaluation of performance of Directors (including Independent
Directors) include personal attributes, such as attendance at meetings, communication skills, leadership skills and adaptability, and professional attributes
such as their understanding of the Bank’s core business and strategic objectives, industry knowledge, independent judgment, and adherence to the Bank’s
Code of Conduct, ethics and values. Mr. Sanjiv Sachar, Mrs. Shyamala Gopinath, Mr. Sandeep Parekh and Mr. M.D Ranganath were the members of the
Nomination and Remuneration Committee as of March 31, 2019. During the year Mr. Bobby Parikh and Mr. Partho Datta ceased to be members of the
committee pursuant to their resignation as directors of the Bank. All members of the Nomination and Remuneration Committee are Independent Directors.
The Nomination and Remuneration Committee is chaired by Mr. Sanjiv Sachar. The Committee met eleven times during fiscal 2019.

Stakeholders’ Relationship Committee

The Stakeholders’ Relationship Committee approves and monitors the transfer, transmission, splitting and consolidation of shares and considers
requests for dematerialization of shares. Allotments of shares to employees exercising stock options granted under the various Employees Stock Option
Schemes (“ESOSs”), which are made in terms of the powers delegated by the Board in this regard. The Stakeholders’ Relationship Committee also
monitors the redress of grievances from shareholders relating to matters such as the transfer of shares and non-receipt of our annual report and dividends.

As of March 31, 2019, the Stakeholders’ Relationship Committee consisted of Mr. Umesh Chandra Sarangi, Mr. Malay Patel, Mr. Aditya Puri and
Mr. Sandeep Parekh. The Stakeholders’ Relationship Committee is chaired by Mr. Umesh Chandra Sarangi, who is an Independent Director. During the
year, Mr. Parekh Sukthankar ceased to be a member of the committee pursuant to his resignation. The power to approve share transfers and
dematerialization requests has been delegated to executives of the Bank to avoid delays that may arise due to the non-availability of the members of the
Committee. During fiscal 2019 Mr. Santosh Haldankar, Vice President-Legal and Company Secretary of the Bank, was the Compliance Officer responsible
for expediting the share transfer formalities. The Stakeholders’ Relationship Committee met four times during fiscal 2019.

As of March 31, 2019, 234 instruments of transfer for 49,313 equity shares were pending for transfer, which have since been processed. The details of
the transfers are reported to the Board from time to time. During the year ended March 31, 2019, the Bank received 5,855 complaints from the shareholders.
The Bank has attended to all the complaints. One hundred and one complaints remained pending and five complaints have not been resolved to the
satisfaction of the shareholders as of March 31, 2019. Besides 15,905, letters were received from the shareholders relating to change of address, nomination
requests, updating of email IDs and PAN No(s), updation of complete bank account details, such as core banking account no, IFSC and/MICR code,
mandate paying for dividends by the National Automated Clearing House (NACH) and National Electronic Fund Transfer (NEFT), claim of shares from
Unclaimed Suspense account, and from the Authority of Investors Education and Protection Fund, queries relating to the annual reports, non-receipt of
shares upon sub-division of the Bank’s shares from the face value of Rs 10/- each to the face value of Rs 2/- each, amalgamation, request for revalidation of
dividend warrants and other investor related matters. These letters have also been responded to.

Risk Policy and Monitoring Committee

The Risk Policy and Monitoring Committee has been formed as per the guidelines of RBI on asset liability management/risk management systems.
The Committee develops Bank’s credit and market risk policies and procedures, verifies adherence to various risk parameters and prudential limits for
treasury operations and reviews its risk monitoring system. The Committee also ensures that the Bank’s credit exposure to any one group or industry does
not exceed the internally set limits and that the risk is prudentially diversified.

As of March 31, 2019, the Risk Policy and Monitoring Committee consisted of, Mr. Srikanth Nadhamuni, Mrs. Shyamala Gopinath,
Mr. M.D Ranganath and Mr. Aditya Puri. During the year, Mr. Partho Datta ceased to be a member of the committee pursuant to his cessation as a director
of the Bank and Mr. Paresh Sukthankar ceased to be a member of the committee pursuant to his resignation as director of the Bank. The Committee is
chaired by Mr. Srikanth Nadhamuni. The Committee met five times during fiscal 2019.

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Credit Approval Committee

The Credit Approval Committee approves those credit exposures that are beyond the approval powers delegated to executives of the Bank to facilitate
the prompt disbursement of loans. As of March 31, 2019, the Credit Approval Committee consisted of Mr. Keki Mistry, Mr. Malay Patel, Mr. Aditya Puri,
Mr. Kaizad Bharucha and Mr. Srikanth Nadhamuni. The Credit Approval Committee met thirteen times during fiscal 2019.

Premises Committee
The Premises Committee approves the purchase and leasing of premises for the use of Bank’s banking outlets, back offices, ATMs and executive
residences in accordance with the guidelines laid down by the Board. As of March 31, 2019, Mr. Keki Mistry, Mr. Aditya Puri and Mr. Malay Patel were the
members of the Premises Committee. The Premises Committee met five times during fiscal 2019.

Fraud Monitoring Committee

Pursuant to the directions of the RBI, the Bank has constituted a Fraud Monitoring Committee, exclusively dedicated to the monitoring and following
up of cases of fraud involving amounts of Rs. 10 million and above. The objectives of the Fraud Monitoring Committee are the effective detection and
immediate reporting of fraud, including any actions taken against the perpetrators of such fraud, to the concerned regulatory and enforcement agencies. The
terms of reference of the Fraud Monitoring Committee include:
a. identify the systemic lacunae, if any, that facilitated perpetration of the fraud and put in place measures to plug the same;
b. identify the reasons for delay in detection, if any, and report to the top management of the Bank and the RBI;
c. monitor the progress of the investigation by the Central Bureau of Investigation and police authorities and the recovery position;
d. ensure that staff accountability is examined at all levels in all cases of fraud and that staff side action, if required, is completed quickly without
loss of time;
e. review the efficacy of the remedial action taken to prevent any recurrence of fraud, such as the strengthening of internal controls; and
f. put in place other measures as may be considered relevant to strengthen preventive measures to protect against future instances of fraud.

As of March 31, 2019, the members of the Fraud Monitoring Committee were Mrs. Shyamala Gopinath, Mr. Umesh Chandra Sarangi, Mr. Keki
Mistry, Mr. Malay Patel, Mr. Aditya Puri and Mr. Sandeep Parekh. During the year, the Fraud Monitoring Committee met five times during fiscal 2019.

Customer Service Committee

The Customer Service Committee monitors the quality of services rendered to the Bank’s customers and also ensures the implementation of directives
received from the RBI in this regard. The terms of reference of the Customer Service Committee are to formulate a comprehensive deposit policy
incorporating the issues arising from the death of a depositor in relation to the operation of the deceased’s account, the product approval process, the annual
survey of depositor satisfaction and the triennial audit of such services.

As of March 31, 2019, the members of the Customer Service Committee were Mrs. Shyamala Gopinath, Mr. Keki Mistry, Mr. Malay Patel,
Mr. Srikanth Nadhamuni, Mr. Aditya Puri and Mr. Sandeep Parekh. The Customer Service Committee met four times during fiscal 2019.

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Corporate Social Responsibility (“CSR”) Committee

The Board has constituted a CSR Committee with the following terms of reference:
a. to formulate the Bank’s CSR strategy, policy and goals;
b. to monitor the Bank’s CSR policy and performance;
c. to review the CSR projects and initiatives from time to time;
d. to ensure legal and regulatory compliance with respect to CSR; and
e. to ensure reporting and communication to stakeholders on the Bank’s CSR.

As of March 31, 2019, the members of CSR Committee were Mr. Umesh Chandra Sarangi, Mr. Sanjiv Sachar, Mr. Malay Patel and Mr. Aditya Puri.
During the year Mr. Bobby Parikh and Mr. Partho Datta ceased to be members of the committee pursuant to their resignation as directors of the Bank and
Mr. Paresh Sukthankar ceased to be a member of the committee pursuant to his resignation as director of the Bank. The Committee met four times during
fiscal 2019.

Digital Transaction Monitoring Committee

In order to promote digital transactions of the Bank and to provide directions in terms of strategy and action plans including monitoring the progress
of achievement in the digital transactions space the terms of reference of the Digital Transaction Monitoring Committee include:
a. Framing of the Bank-level strategy and action plans for achieving the target of digital transactions in an organized manner, as may be set by
the Government, regulatory authorities and IBA from time to time;
b. Monitoring the progress of achievement in digital transactions in line with the Bank’s strategy and action plans;
c. Reviewing and exploring new opportunities for increasing the digital transactions of the Bank from time to time and giving the necessary
directions in implementing and improving high level of digitalization in Bank; and
d. Any other terms of reference as may be specified by the Government, regulatory authorities and IBA from time to time.

As of March 31, 2019, the members of Digital Transaction Monitoring Committee were Mr. Srikanth Nadhamuni, Mr. Malay Patel, Mr. Aditya Puri,
and Mr. M.D. Ranganath. During the year, Mr. Parekh Sukthankar ceased to be a member of the committee pursuant to his resignation as Director of the
Bank. The Committee met four times during fiscal 2019.

Review Committee for Willful Defaulters’ Identification

The Board has constituted a Review Committee for Willful Defaulters Identification to review the orders passed by the Committee of Executives for
Identification of Willful Defaulters and provide the final decision with regard to identified willful defaulters. As of March 31, 2019, Mrs. Shyamala
Gopinath, Mr. Aditya Puri, Mr. Umesh Chandra Sarangi, Mr. Sandeep Parekh and Mr. Sanjiv Sachar were the members of the Review Committee for
Willful Defaulters Identification. During the year, Mr. Bobby Parikh and Mr. Partho Datta ceased to be members of the committee pursuant to their
resignation as directors of the Bank. The Review Committee for Willful Defaulters’ Identification is chaired by Mrs. Shyamala Gopinath or Mr. Aditya Puri
in her absence. No meetings of the Review Committee for Willful Defaulters’ Identification were held during fiscal 2019.

Review Committee for Non-Cooperative Borrowers

The Board has constituted a Review Committee to review matters related to non-cooperative borrowers, which are handled by the internal committee
of executives appointed for this purpose. As of March 31, 2019, Mrs. Shyamala Gopinath, Mr. Aditya Puri, Mr. Umesh Chandra Sarangi, Mr. Sandeep
Parekh and Mr. Sanjiv Sachar were the members of the Review Committee for Non-Cooperative Borrower. During the year, Mr. Bobby Parikh and
Mr. Partho Datta ceased to be members of the committee pursuant to their resignation as directors of the Bank. The Review Committee for
Non-Cooperative Borrowers is chaired by Mrs. Shyamala Gopinath or Mr. Aditya Puri in her absence. No meetings of the Review Committee for
Non-Cooperative Borrowers were held during fiscal 2019.

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Meeting of the Independent Directors

The Independent Directors of the Bank held a meeting on January 16, 2019 and March 7, 2019 without the presence of the Non-Independent
Directors and senior management team of the Bank. All the Independent Directors attended the meeting. The Independent Directors discussed matters as
required under the relevant provisions of the Companies Act, 2013 and the SEBI Listing Regulations, 2015.

Committees of Executives
We have also established committees of executives that meet frequently to discuss and determine the management of assets and liabilities and other
operations and personnel issues.

Borrowing Powers of Directors

At the annual general meeting held on July 21, 2015, our shareholders passed a special resolution, pursuant to Section 180 (1)(c) of the Companies
Act, authorizing the Board of Directors to borrow, for business purposes of the Bank, such sum or sums of money as they may deem necessary,
notwithstanding the fact that the money borrowed or to be borrowed from time to time (with the exception of: (i) the acceptance of deposits of money from
the public which are repayable on demand and can be withdrawn by check, draft, order or otherwise; and (ii) temporary loans obtained in the ordinary
course of business from banks, whether in India or overseas) will exceed our aggregate paid-up capital and free reserves, subject to the condition that the
total outstanding amount of such borrowings shall not exceed Rs. 500 billion over and above our aggregate paid-up capital and free reserves at any time.
The terms on which the Board of Directors may borrow funds may include the lender’s right to appoint directors, the allotment of shares to certain public
financial institutions and, with prior shareholder and regulatory approval, the allotment of shares to other entities.

Compensation of Directors and Members of Our Senior Management

The compensation arrangements for our Chairperson, Managing Director and Executive Directors are approved by the shareholders and the RBI on
the recommendation of our Board of Directors.

During fiscal 2019, the aggregate amount of compensation paid to our Managing Director, Deputy Managing Director, Executive Director and
members of our senior management as on March 31, 2019 was Rs. 784.4 million. This remuneration includes basic salary, allowances, performance bonus,
and cash allowances in lieu of perquisites or the taxable value of perquisites (if availed) as computed under the income tax rules, but excludes gratuities,
provident fund settlements, superannuation settlements and perquisites upon the exercise of stock options.

Under our organizational documents, each director, except the Managing Director, Deputy Managing Director and Executive Director, is entitled to
sitting fees for attending each meeting of the Board of Directors or of a Board committee. The amount of sitting fees is decided by the Board from time to
time in accordance with applicable regulations prescribed by the Companies Act or the Government of India. Directors are paid sitting fees at the rate of Rs.
50,000 for attending committee meetings and Rs. 100,000 for attending Board meetings, respectively.

We reimburse directors for travel and related expenses in connection with Board and committee meetings and related matters. Stock options have not
been granted to Non-Executive Directors.

Mrs. Shyamala Gopinath, Chairperson, was paid remuneration of Rs. 3.5 million during fiscal 2019. Mrs. Shyamala Gopinath is also paid sitting fees
for attending Board and Committee meetings.

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The details of the remuneration paid during fiscal 2019 to Mr. Aditya Puri, Managing Director, Mr. Paresh Sukthankar, Deputy Managing Director
and Mr. Kaizad Bharucha, Executive Director are as follows:

Particulars Aditya Puri Paresh Sukthankar* Kaizad Bharucha

(Rs. in million, except stock options)
Basic 54.4 17.1 18.9
Allowances and perquisites 32.9 22.1 21.0
Provident fund 6.5 2.0 2.3
Superannuation 8.2 2.6 2.8
Performance bonus** 34.7 19.6 13.7
Number of stock options granted during the year 492,000 — 171,000

* Mr. Paresh Sukthankar, tendered his resignation from the Board of the Bank on August 10, 2018 which came into effect on
November 8, 2018.
** Refers to deferred bonus tranches for earlier years. Bonus pertaining to fiscal 2018 is pending RBI approval as at March 31, 2019 and
on RBI approval, the approved amounts will be paid and disclosed in the above table for the next fiscal year.

The Bank provides a gratuity scheme for the benefit of all employees who have completed a minimum of five years of continuous service, including
our Managing Director, Deputy Managing Director, Executive Director and officers. This scheme provides for the payment of a gratuity in the form of a
lump-sum payment upon the retirement, termination or resignation of employment or death while in employment of its employees in an amount equal to 15
days’ basic salary, payable for each completed year of service. The Bank makes annual contributions to a gratuity fund administered by trustees and
managed by insurance companies. The Bank accounts for the liability of future gratuity benefits based on an independent external actuarial valuation, which
is carried out annually. Perquisites, which are evaluated as per the income tax rules, where applicable, or, alternatively, at the actual cost to the Bank, are
also provided to directors. Available perquisites include furnished accommodation, including gas, electricity, water, telephone, furnishings and the use of a
vehicle, club fees, personal accident insurance, reimbursement for medical expenses, leave and leave travel concessions and retirement benefits, such as
provident funds, superannuation and gratuity.

The details of sitting fees paid to Non-Executive Directors during fiscal 2019 are as follows:

Name of the Director Sitting Fees (Rs.) Commission # (Rs.)

Mrs. Shyamala Gopinath 3,000,000 —
Mr. Partho Datta* 1,050,000 1,000,000
Mr. Bobby Parikh* 2,150,000 1,000,000
Mr. Malay Patel 2,950,000 1,000,000
Mr. Keki Mistry 2,050,000 1,000,000
Mr. Umesh Chandra Sarangi 2,000,000 1,000,000
Mr. Srikanth Nadhamuni 1,400,000 1,000,000
Mr. Sanjiv Sachar$ 1,000,000 —
Mr. Sandeep Parekh$ 350,000 —
Mr. M.D. Ranganath$ 250,000 —

* Mr. Partho Datta and Mr. Bobby Parikh ceased to be directors of the Bank with effect from September 29, 2018 and January 26, 2019,
respectively
$ Mr. Sanjiv Sachar, Mr. Sandeep Parekh and Mr. M.D. Ranganath were appointed as Directors of the Bank with effect from July 21, 2018,
January 19, 2019 and January 31, 2019, respectively.
# Refers to commission for FY 2017-18, paid out in FY 2018-19

During fiscal 2019 there were no other pecuniary relationships or transactions of the Non-Executive Directors vis-a-vis the Bank, except banking
transactions in the ordinary course of business done on arm’s-length basis.

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At the 22nd annual general meeting of the Bank held on July 21, 2016 the shareholders have approved the payment of profit-related commission to
Non-Executive Directors, including Independent Directors, but excluding the Chairperson with effect from the fiscal 2016 (being the year in which RBI
issued guidelines on compensation to non-executive directors of private sector banks), not exceeding in aggregate 1percent of the net profit of the Bank for
the relevant fiscal subject to a maximum of Rupees one million per annum per Director.

The details of remuneration paid to employees who were employed throughout the year and were in receipt of remuneration of more than Rs.
10.2 million per annum and those employed for part of the year and were in receipt of remuneration of more than Rs. 0.85 million per month are given in
Annexure 7 to the Directors’ Report.

Other than our Chairperson, Managing Director, Deputy Managing Director and Executive Director, none of our Directors has a service contract with
us.

Loans to Members of Our Senior Management

Loans to members of our senior management are granted in the normal course of business, as is the case with employees of the Bank. All loans
granted to members of senior management are in accordance with the provisions of local regulations. The table below provides the details of loans granted
to our senior management as of March 31, 2019:

Largest amount Amount outstanding Interest rate as of

outstanding since as of March 31, March 31, 2019
Name March 31, 2018 2019 % Nature of Loan
(Rs. in millions, except percentages)
Mr. Aditya Puri 27.32 24.73 8.8 Housing Loan
Mr. Kaizad Bharucha 4.12 4.04 8.8 Housing Loan
Ms. Ashima Bhat 4.15 4.07 8.8 Housing Loan
Mr. Abhay Aima 5.58 5.42 8.8 Housing Loan
Mr. Ashish Parthasarthy 5.09 5.00 8.8 Housing Loan
Mr. Arvind Kapil 13.97 13.74 8.8 Housing Loan
Mr. Arvind Kapil 0.24 0.14 5.0 Personal Loan
Mr. Bhavesh Zaveri 15.00 14.52 8.8 Housing Loan
Mr. Bhavesh Zaveri 0.64 0.52 5.0 Personal Loan
Mr. Benjamin Frank 0.7 0.59 8.8 Housing Loan
Mr. Benjamin Frank 0.28 0.18 5.0 Personal Loan
Mr. Dhiraj Relli 4.11 3.70 8.8 Housing Loan
Mr. Jimmy Tata 0.13 — 5.0 Personal Loan
Mr. Munish Mittal 4.31 3.65 8.8 Housing Loan
Mr. Munish Mittal 0.35 0.43 5.0 Personal Loan
Mr. Navin Puri 0.22 — 8.8 Housing Loan
Mr. Navin Puri 0.27 — 5.0 Personal Loan
Mr. Nirav Shah 14.39 14.17 8.8 Housing Loan
Mr. Nirav Shah 0.39 0.25 5.0 Personal Loan
Mr. Nitin Chugh 14.63 14.39 8.8 Housing Loan
Mr. Nitin Chugh 0.59 0.59 5.0 Personal Loan
Mr. Rajesh Kumar 1.35 1.33 8.8 Housing Loan
Mr. Rajesh Kumar 0.03 — 5.0 Personal Loan
Mr. Rakesh Singh 14.47 14.17 8.8 Housing Loan
Mr. Sashidhar Jagdishan 5.72 5.59 8.8 Housing Loan
Ms. Smita Bhagat 15.00 14.62 8.8 Housing Loan
Mr. S. Sampathkumar 1.87 1.84 8.8 Housing Loan
Mr. S. Sampathkumar 0.71 0.57 5.0 Personal Loan
Mr. V. Chakrapani 12.43 11.15 8.8 Housing Loan

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Employees Stock Options

Our shareholders approved plan “A” in January 2000, plan “B” in June 2003, plan “C” in June 2005, plan “D” in June 2007, plan “E” in June 2010,
plan “F” in June 2013 and Plan “G” in July 2016 for the issuance of stock options to employees and directors of the Bank under the ESOSs, namely
ESOS-001 to ESOS- 031. Under plan “A”, the option price is set as the average of the daily closing prices on the BSE during the 60 days preceding the
grant date. Under plan “B”, the option price is set as the closing price on the business day preceding the grant date on whichever stock exchange in India
has the highest trading volume for our shares during the two weeks preceding the date of grant. Under plans “C”, “D”, “E”, “F” and “G”, the option price is
set as the closing price on the business day preceding the grant date on the stock exchange which has the highest trading volume. Our Nomination and
Remuneration Committee (formerly, the Compensation Committee) has issued options under these plans several times since January 2000. Stock options
granted under ESOS-001 to ESOS-009 vest at the rate of 30.0 percent, 30.0 percent and 40.0 percent on each of the three successive anniversaries following
the date of grant, stock options granted under ESOS-010 to ESOS-013 vest at the rate of 50.0 percent on each of the two successive anniversaries following
the date of grant, those granted under ESOS-014 and ESOS-015 vest completely on the first anniversary of the date of the grant, stock options granted under
ESOS-016 to ESOS-018 vest at the rate of 75.0 percent and 25.0 percent on each of the two successive anniversaries following the date of grant, stock
options granted under ESOS-019 to ESOS-026 vest at the rate of 40.0 percent, 30.0 percent and 30.0 percent on each of the three successive anniversaries,
stock options granted under ESOS-027 and ESOS-028 vest at the rate of 40.0 percent, 30.0 percent and 30.0 percent at intervals of fifteen months, twenty-
seven months and thirty –nine months, respectively and the options granted under ESOS-029 to ESOS-31 vest at the rate of 35.0 percent, 30.0 percent,
20.0 percent and 15.0 percent on each of the four successive anniversaries. All of the above are subject to standard vesting conditions. In fiscal 2019,
23.8 million equity shares having a face value of Rs. 2.0 each were allotted as a result of the exercise of stock options by the employees of the Bank. This
resulted in our paid-up capital increasing by Rs. 47.5 million and the share premium by Rs. 21,960.7 million. As of March 31, 2019, 68,306,411 options
convertible to equity shares of Rs. 2.0 each were outstanding.

Other Compensation
All employees, including our Managing Director, Executive Director and officers, receive the benefit of our gratuity and provident fund retirement
schemes. Our superannuation fund covers all employees at a senior manager level or above, including our Managing Director. Our gratuity fund, required
under Indian law to be paid to an employee following the completion of a minimum of five years of continuous service, is a defined benefit plan which,
upon the retirement, termination of employment or death while in employment of such employee, pays a lump sum equal to 15 days’ basic salary for each
completed year of service. The superannuation fund is a retirement plan under which we contribute annually 13.0 percent (15.0 percent for the Managing
Director, Deputy Managing Director and an Executive Director) of the eligible employee’s annual salary to the administrator of the fund. In the case of the
provident fund, as required by Indian law, each of the employer and the employee contribute monthly at a determined rate of 12.0 percent of the employee’s
basic salary. Of this 12.0 percent, the Bank contributes a specified amount (8.33 percent of the lower of Rs. 15,000 or the employee’s basic salary) to the
pension scheme administered by the Regional Provident Fund Commissioner, and the balance is contributed to a fund set up by the Bank and administered
by a board of trustees.

Controls and Procedures

Disclosure Controls and Procedures
The Bank performed an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures as of March 31, 2019.
Based on this evaluation, our Principal Executive Officer, Mr. Aditya Puri, and our Principal Financial Officer, Mr. Sashidhar Jagdishan, have concluded
that our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), are
effective to provide reasonable assurance that the information required to be disclosed in filings and submissions under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that such information is accumulated and
communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions
about required disclosure.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and
the circumvention or overriding of controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable
assurance of achieving their control objectives.

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Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and
15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our
internal control over financial reporting includes those policies and procedures that:
• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of our assets;
• provide reasonable assurance that transactions are recorded as necessary to permit the preparation of financial statements in accordance with
generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our
management and directors; and
• provide reasonable assurance regarding the prevention or timely detection of unauthorized acquisitions, use or dispositions of our assets that
could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness for future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2019. In conducting its assessment,
management based its evaluation on the framework contained in the Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013). Based on its assessment, management has concluded that our internal control over financial reporting
was effective as of March 31, 2019. Our independent registered public accounting firm, KPMG, has performed an integrated audit and has issued their
report, included herein, on (1) our consolidated financial statements, and (2) the effectiveness of our internal controls over financial reporting as of
March 31, 2019.

Changes in Internal Controls

There were no changes in our internal controls or in other factors that could, or are reasonably likely to, materially affect these controls during the
period covered by this report.

Audit Committee Financial Expert

Mr. M.D Ranganath and Mr. Sanjiv Sachar are the Audit Committee financial experts, as defined in Item 401(h) of Regulation S-K, and are
independent pursuant to the applicable SEC rules.

Code of Ethics
We have a written Code of Ethics, which is applicable to the Board Members and officials of the Bank one level below the Board. We believe the
code constitutes a “code of ethics”, as defined in Item 16B of Form 20-F. We will provide a copy of such Code of Ethics to any person without charge upon
request. Requests may be made by writing to [email protected].

We also have a whistleblower policy that contains procedures for receiving, retaining and treating complaints received, and procedures for the
confidential and anonymous submission by employees of complaints, regarding questionable accounting or auditing matters or conduct which results in a
violation of law by the Bank or in a substantial mismanagement of the Bank’s resources. Under this whistleblower policy, our employees are encouraged to
report questionable accounting matters or any fraudulent financial information provided to our shareholders, the government or the financial markets, or any
conduct that results in a violation of law by the Bank, to our management (on an anonymous basis, if employees so desire). Under this policy we have also
prohibited discrimination, retaliation or harassment of any kind against any employee who, based on the employee’s reasonable belief that such conduct or
practices have occurred or are occurring, reports such information or participates in an investigation.

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Principal Accountant Fees and Services

The following table sets forth for the fiscal years indicates the fees pertaining to our principal accountant and its associated entities for various
services provided during these periods:

Fiscal Year Ended

Type of Services March 31, 2018 March 31, 2019 Description of Services
(in millions)
Audit services Rs. 44.4 Rs. 52.2 Audit of financial statements
Audit-related services 2.4 2.7 Limited review
Tax services 1.5 2.4 Tax services
Other services 1.8 6.4 Certification/other services
Total Rs. 50.1 Rs. 63.7

Our Audit Committee charter requires us to receive the approval of our Audit Committee on every occasion on which we engage our principal
accountants or their associated entities to provide any non-audit services to us. All of the non-audit services provided to us by our principal accountants or
their associated entities in the previous two fiscal years have been pre-approved by our Audit Committee.

Compliance with NYSE Listing Standards on Corporate Governance

We are incorporated under the Companies Act and our equity shares are listed on the BSE Limited (formerly known as Bombay Stock Exchange
Limited) and the National Stock Exchange of India Limited, which are the major stock exchanges in India. Our corporate governance framework is in
compliance with the Companies Act, the regulations and guidelines of the Securities and Exchange Board of India (“SEBI”) and the requirements of the
listing agreements entered into with the Indian stock exchanges (“Listing Agreement”). We also have American Depositary Shares (“ADSs”) listed on the
New York Stock Exchange (the “NYSE”).

Companies listed on the NYSE must comply with certain standards of corporate governance set forth in Section 303A of the NYSE’s Listed
Company Manual. Listed companies that are foreign private issuers, as the term is defined in Rule 3b-4 of the Exchange Act, are permitted to follow home
country practices in lieu of the provisions of this Section 303A, except that foreign private issuers are required to comply with the requirements of Sections
303A.06, 303A.11 and 303A.12(b) and (c) of the NYSE’s Listed Company Manual. As per these requirements, a foreign private issuer must:
1. Establish an independent audit committee that has specified responsibilities and authority. [NYSE Listed Company Manual Section 303A.06];
2. Provide prompt written notice by its chief executive officer if any executive officer becomes aware of any non-compliance with any
applicable corporate governance rules. [NYSE Listed Company Manual Section 303A.12(b)];
3. Provide to the NYSE annual written affirmations with respect to its corporate governance practices, and interim written affirmations in the
event of a change to the board or a board committee. [NYSE Listed Company Manual Section 303A.12(c)]; and
4. Include a statement of significant differences between its corporate governance practices and those followed by United States companies in
the annual report of the foreign private issuer. [NYSE Listed Company Manual Section 303A.11].

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In a few cases, the Indian corporate governance rules under SEBI Listing Regulations differ from those in the NYSE’s Listed Company Manual as
summarized below:

NYSE Corporate Governance Standards applicable to NYSE Listed

Companies Corporate Governance Rules as per SEBI Listing Regulations

An NYSE listed company needs to have a majority of independent directors. [ The board of a listed company must have a combination of executive and
NYSE Listed Company Manual Section 303A.01 ] non-executive directors, including at least one female independent
director, and not less than 50 percent of the directors may be
non-executive directors. If: (i) the chairperson of the board of directors is
a non-executive director, at least one-third of the board of directors must
comprise of independent directors; (ii) the company does not have a
regular non-executive chairperson, at least half of the board of directors
must comprise of independent directors; and (iii) the regular
non-executive chairperson is a promoter of the listed company or is
related to any promoter or person occupying management positions at
the level of board of director or at one level below the board of directors,
at least half of the board of directors of the listed company must consist
of independent directors.

A director must meet certain criteria in order to qualify as “independent”. An A director must meet certain criteria in order to qualify as “independent”.
NYSE listed company must disclose the identity of its independent directors and
the basis upon which it is determined that they are independent. [NYSE Listed
Company Manual Section 303A.02 ]

Executive Sessions
Non-management directors need to meet at regularly scheduled executive The board of directors of a listed company must meet at least four times
sessions without management. [ NYSE Listed Company Manual a year, with a maximum time gap of 120 days between any two
Section 303A.03 ] meetings. The independent directors of the listed company must hold at
least one meeting each year without the presence of the non-independent
directors and the members of management, and all the independent
directors have to endeavor to be present at such meeting.

Nominating/Corporate Governance Committee

An NYSE listed company needs to have a nominating/corporate governance A listed company needs to have a nomination and remuneration
committee composed entirely of independent directors. [ NYSE Listed Company committee. All members of the nomination and remuneration committee
Manual Section 303A.04 ] must be non-executive directors and at least 50 percent must be
independent directors.

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Listed companies in India are not required to constitute a separate

corporate governance committee. The Companies Act, 2013 and the SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 (the
“SEBI Listing Regulations”) prescribe the corporate governance
requirements which include, inter alia, obligations regarding the
appointment of internal auditors, the constitution of the board of directors
as per the prescribed composition and the constitution of audit committee
and nomination and remuneration committee.

The nominating/corporate governance committee needs to have a written The nomination and remuneration committee must have the terms of
charter that addresses certain specific committee purposes and responsibilities reference specified in the SEBI Listing Regulations and the Companies
and provides for an annual performance evaluation of the committee. [NYSE Act, 2013 such as formulating criteria to determine the qualifications,
Listed Company Manual Section 303A.04 ] positive attributes and independence of directors, formulating criteria to
evaluate the performance of directors, recommending remuneration policy
for directors and devising a board diversity policy.

Compensation Committee
An NYSE listed company needs to have a compensation committee composed A listed company is permitted to have a combined nomination and
entirely of independent directors. Compensation committee members must remuneration committee. All members of the nomination and
satisfy certain additional independence requirements set forth in remuneration committee must be non-executive directors and at least
Section 303A.02 of the NYSE Listed Company Manual by the deadline 50 percent must be independent directors. The chairperson of the
specified therein. [ NYSE Listed Company Manual Section 303A.05] nomination and remuneration committee must be an independent director.

The compensation committee needs to have a written charter that addresses The terms of reference and the role of the nomination and remuneration
certain specific purposes and responsibilities of the committee and provides for committee have been specified under the Companies Act, 2013 and SEBI
an annual performance evaluation of the committee. [ NYSE Listed Company Listing Regulations and must include, inter alia, formulating the policy
Manual Section 303A.05] relating to the remuneration of directors, key managerial personnel and
other employees, formulating criteria to determine the qualifications,
positive attributes and independence of directors and formulating criteria
to evaluate the performance of directors.

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Audit Committee
An NYSE listed company needs to have an audit committee with at least three A listed company must have a qualified and independent audit committee.
members. All the members of the audit committee must satisfy the The audit committee should have minimum of three directors as members
independence requirements of Rule 10A-3 under the Exchange Act and the and two-thirds of such members should be independent directors. All
requirements of NYSE Corporate Governance Standard 303A.02. [ NYSE members of the audit committee should be financially literate and at least
Listed Company Manual Sections 303A.06 and 303A.07 ] one member must have accounting or related financial management
expertise.

The audit committee needs to have a written charter that addresses certain The terms of reference and the role of the audit committee of a listed
specific purposes of the committee, provides for an annual performance company have been specified in the SEBI Listing Regulations and the
evaluation of the committee and sets forth certain specific minimum duties and Companies Act, 2013 and include, inter alia, oversight of the listed
responsibilities. [NYSE Listed Company Manual Section 303A.07 ] company’s financial reporting process and disclosure of its financial
information to ensure that such information is correct, sufficient and
credible, the recommendation for appointment and remuneration of the
auditors of the listed company, and the review of the auditor’s
independence and performance.

Internal Audit Function

An NYSE listed company needs to have an internal audit function to provide A listed company must appoint an internal auditor to conduct an internal
management and the audit committee with ongoing assessments of the audit. The auditor must review the accounts of the company and submit a
company’s risk management processes and system of internal control. A report along with financial statements of the company placed before the
company may choose to outsource this function to a third party service company in a general meeting. It is the role of the audit committee to
provider other than its independent auditor. [NYSE Listed Company Manual review the adequacy of the company’s internal audit function and all
Section 303A.07 ] internal audit reports relating to internal control weaknesses of the
company. The audit committee should also evaluate the internal financial
controls and risk management systems of the company.

In addition, a listed company must put in place procedures to inform board

members about risk assessment and minimization procedures. The board
of directors is responsible for framing, implementing and monitoring the
company’s risk assessment and minimization plan. Further, the top 500
listed companies (determined on the basis of market capitalization as at
the end of the immediately previous financial year) must establish a risk
management committee, consisting of a majority of board members, and
define the roles and responsibilities of the risk management committee.
The board may delegate the monitoring and review of the risk
management plan to the risk management committee.

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Shareholder Approval of Equity Compensation Plans

Shareholders must be given the opportunity to vote on all equity-compensation Under the SEBI (Share Based Employee Benefits) Regulations, 2014,
plans and material revisions thereto, with limited exemptions. [NYSE Listed shareholders’ approval is required for all equity compensation plans and
Company Manual Section 303A.08] material revisions thereto.

Corporate Governance Guidelines/Code of Ethics

An NYSE listed company needs to adopt and disclose corporate governance A listed company is required to comply with all mandatory corporate
guidelines. [NYSE Listed Company Manual Section 303A.09] governance requirements as prescribed under the Companies Act, 2013
and the SEBI Listing Regulations, and disclose such compliance to stock
exchanges in the corporate governance report contained in the listed
company’s annual report. The listed company should also state in its
annual report the extent to which it has complied with the
non-mandatory corporate governance requirements.
An NYSE listed company needs to adopt and disclose a code of business conduct A listed company needs to adopt a code of conduct (or code of ethics),
and ethics for directors, officers and employees, and promptly disclose any which is applicable to all members of the board of directors and senior
waivers of the code for directors or executive officers. [NYSE Listed Company management. The company’s annual report must contain a declaration
Manual Section 303A.10] signed by the CEO stating that all board members and senior
management personnel have complied with the code of conduct. The
company’s annual report and the yearly compliance report on corporate
governance must also disclose any non-compliance with the code by the
board members and senior management.

Certifications as to Compliance
The CEO of each NYSE listed company has to certify on an annual basis that he The CEO and the CFO are required to provide an annual certification on
or she is not aware of any violation by the company of the NYSE corporate the true and fair view of the company’s financial statements and
governance listing standards. This certification, as well as the CEO/CFO compliance with existing accounting standards, applicable laws and
certification required under Section 302 of the Sarbanes-Oxley Act of 2002, must regulations. In addition, a listed company is required to submit a
be disclosed in the company’s annual report to shareholders. [NYSE Listed quarterly compliance report, and an annual corporate governance report
Company Manual Section 303A.12] to stock exchanges which must include a certificate from either the
auditors or the practicing company secretary regarding the company’s
compliance with the conditions of corporate governance.

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Posting of Charters and Guidelines on Website

An NYSE listed company is required to post the charters of its audit, A listed company must maintain a functional website containing
compensation, and nominating/corporate governance committees, its corporate information about the company including, inter alia, information
governance guidelines, and its code of business conduct and ethics on the regarding the composition of various board committees, the company’s
company’s website, and to state in its proxy statement or annual report that these code of conduct, details of certain of its policies, a copy of the annual
documents are so posted. The listed company’s website address must be included report and contact information.
in such postings. [NYSE Listed Company Manual Sections 303A.04, 303A.05,
303A.07, 303A.09 and 303A.10]

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Memorandum and Articles of Association

Our main objective is to carry on banking and related activities. Our objective and purpose can be found in clauses A and B of our Articles.

Under the Articles, a director may not vote, participate in discussions or be counted for the purpose of a quorum with respect to any decision relating
to whether we will enter into any contract or arrangement if the director is directly or indirectly interested in such contract or arrangement. The Board of
Directors may not hold meetings in the absence of a quorum. Under the Companies Act, the quorum for meetings of the Board is one-third of the total
number of directors (any fraction contained in that one-third being rounded off as one) or two directors, whichever is higher. However, where the number of
interested directors is equal to or exceeds two-thirds of the total number of directors present, the remaining number of directors (i.e., directors who are not
interested) present at the meeting, being not less than two will constitute the quorum during such time. Pursuant to the Companies Act, our directors have
the power to borrow money for business purposes only with the consent of the shareholders (with certain limited exceptions) through a special resolution
(with three-fourths majority).

Sections 172 to 187 of the Articles set forth certain rights and restrictions relating to dividend distributions. One of these restrictions is that dividends
may be approved only at a general meeting of shareholders, but in no event in an amount greater than the amount recommended by the Board of Directors.

Subject to the Companies Act, the profits of a company are divisible among shareholders in proportion to the amount of capital paid up on the shares
held by those shareholders. In the event of liquidation, any surplus will be distributed in proportion to the capital paid up or which ought to have been paid
up on the shares held by the shareholders at the time of commencement of the winding up. The Board of Directors may make calls on shareholders in
respect of all money unpaid on the shares held by them and not by the conditions of allotment thereof.

The rights and privileges of any class of shareholders may not be modified without the approval of three-fourths of the issued shares of that class or
the sanction of a special resolution passed at a separate meeting of the holders of the issued shares of that class.

The annual general meeting shall be called for at a time during business hours at our registered office or at some other place within Mumbai as the
Board of Directors may determine. The notice of the meeting shall specify it as the “annual general meeting”. Any general meeting of the shareholders of
the Bank other than its annual general meeting is called an “extraordinary general meeting”. The Board of Directors is required to call an extraordinary
general meeting upon the request of a set number of shareholders, as set forth in the Companies Act.

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PRINCIPAL SHAREHOLDERS

The following table contains information relating to the beneficial ownership of our equity shares as of March 31, 2019 by:
• each person or group of affiliated persons known by us to beneficially own 5 percent or more of our equity shares; and
• our individual directors and their relatives as a group.

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to equity shares.
Unless otherwise indicated, the persons listed in the table have sole voting and sole investment control with respect to all equity shares beneficially owned.
All shares issued in India have the same voting rights. We have not issued different classes of securities.

We were founded by our promoter HDFC Limited, a housing finance company in India. As of March 31, 2019, HDFC Limited, together with its
subsidiaries (“HDFC Group”), held an aggregate of 21.38 percent of our equity shares.

Percentage of
Total Equity
Shares
Number of Shares Outstanding
HDFC Group 582,312,917 21.38%
Directors and relatives 4,897,885 0.18%

The ADSs are represented by underlying equity shares. As on March 31, 2019, Indian equity shares totaling 525,488,147 were held in the form of
ADSs and constituted 19.3 percent of the Bank’s capital. In our records, the depositary, JPMorgan Chase Bank, N.A., was the only shareholder with respect
to equity shares underlying ADSs. We are unable to estimate the number of record holders of ADSs in the United States.

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RELATED PARTY TRANSACTIONS

The following is a summary of transactions we have engaged in with our promoter and principal shareholder, HDFC Limited, and its subsidiaries and
other related parties, including those in which we or our management have a significant equity interest. Figures herein reflecting our equity interests exclude
shares held by our employees welfare trust, established for the benefit of our employees.

All transactions with HDFC group companies and the other related parties listed below are on terms that we believe are as favorable to us as those
that could be obtained from a non-affiliated third party in an arm’s-length transaction. In addition, the RBI guidelines stipulate that we can only transact
business with HDFC Limited and its affiliates on an arm’s-length basis.

Housing Development Finance Corporation Limited (“HDFC Limited”)

Home Loans
We participate in the home loan business by selling loans provided by HDFC Limited. Under this arrangement, HDFC Limited approves and
disburses the loans, which are kept on the books of HDFC Limited, and we are paid a sourcing fee. We also have an option but not an obligation to purchase
up to 70 percent of the fully disbursed home loans sourced under this arrangement. During fiscal 2019, we purchased home loans aggregating Rs.
239,824.2 million from HDFC Limited under the above arrangement, some of which qualified as priority sector advances. We earned Rs. 2,611.1 million
from HDFC Limited in fiscal 2019 as fees for selling these loans. We paid Rs. 4,627.0 million to HDFC Limited towards administration and servicing of
these loans. An amount of Rs. 305.2 million was receivable from HDFC Limited as of March 31, 2019. An amount of Rs. 836.4 million was payable to
HDFC Limited as of March 31, 2019.

Property
We have facilities located on properties owned or leased by HDFC Limited. In fiscal 2019, we paid an aggregate of Rs.31.2 million as rental fees,
maintenance and service charges to HDFC Limited for use of these properties. We believe that we pay market rates for these properties. As of March 31,
2019, HDFC Limited held a deposit of Rs. 4.7 million that we have paid to secure these leased properties.

Other Transactions
We also enter into foreign exchange and derivative transactions with HDFC Limited. The notional principal amount and the mark to market gains in
respect of foreign exchange and derivative contracts outstanding as of March 31, 2019 were Rs. 58,655.0 million and Rs. 143.1 million, respectively. We
have issued guarantee of Rs. 3.7 million on behalf of HDFC Limited. During fiscal 2019, we subscribed to debt securities of Rs. 6,850.0 million issued by
HDFC Limited. We earned Rs.7.3 million by rendering of various services to HDFC Limited. As of March 31, 2019, an amount of Rs. 0.3 million was
receivable from HDFC Limited towards these services.

As proposed in the previous fiscal year, we paid a dividend of Rs. 5,111.7 million to HDFC Limited during fiscal 2019.

HDFC Life Insurance Company Limited (“HDFC Life”)

In fiscal 2019, we paid HDFC Life Rs. 1,429.0 million as our contribution towards superannuation, gratuity and term insurance. In the same period,
we received fees and commissions from HDFC Life aggregating Rs. 11,855.7 million for the sale of insurance policies and other services. As of March 31,
2019, Rs. 1,250.1 million was receivable from HDFC Life. During fiscal 2019, we sold to HDFC Life, debt securities of Rs. 20,933.4 million. We have
issued guarantee of Rs. 839.5 million on behalf of HDFC Life. As proposed in the previous fiscal year, we paid a dividend of Rs. 218.0 million to HDFC
Life during fiscal 2019.

HDFC Asset Management Company Limited (“HDFC AMC”)

During fiscal 2019, we earned Rs. 395.3 million fees from HDFC AMC for the distribution of units of mutual funds and other services rendered. As
of March 31, 2019, fees of Rs. 0.2 million were receivable from HDFC AMC. We have issued a guarantee of Rs. 250.0 million on behalf of HDFC AMC.

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HDFC Ergo General Insurance Company Limited (“HDFC Ergo”)

We paid Rs. 1,412.7 million to HDFC Ergo towards insurance premiums in fiscal 2019. During fiscal 2019, we received Rs. 2,249.2 million for the
sale of insurance policies and other services rendered. As of March 31, 2019, an amount of Rs. 151.1 million was receivable from HDFC Ergo. As of
March 31, 2019, HDFC Ergo had invested Rs. 250.0 million in the Bank’s Tier II bonds. We have given a guarantee of Rs. 32.9 million on behalf of HDFC
Ergo. During fiscal 2019, we sold to HDFC Ergo, debt securities of Rs. 1,252.6 million.

GRUH Finance Limited (“GRUH Finance”)

During fiscal 2019, we earned Rs. 10.2 million fees from GRUH Finance for rendering cash management and other services. As of March 31, 2019,
our investments in debt securities of GRUH Finance amounted to Rs. 13,150.0 million.

Credila Financial Services Private Limited (“Credila”)

During fiscal 2019, we earned Rs. 47.9 million fees from Credila for sourcing education loans. During fiscal 2019, we subscribed to debt securities of
Rs. 6,490.6 million issued by Credila. As of March 31, 2019, our investments in debt securities of Credila amounted to Rs. 10,000.0 million. As of
March 31, 2019, Rs. 16.1 million was receivable from Credila.

Salisbury Investments Private Limited (“Salisbury Investments”)

We have paid a security deposit of Rs. 35.0 million to Salisbury Investments and, in fiscal 2019, we paid rent of Rs. 6.6 million for the residential
accommodation of our managing director to Salisbury Investments in which the relatives of the managing director hold a stake.

Key Management Personnel

In fiscal 2019, we paid a total remuneration of Rs. 258.8 million to Mr. Aditya Puri, our managing director, Mr. Paresh Sukthankar, our deputy
managing director and Mr. Kaizad Bharucha, our executive director. In the same fiscal year, we paid Rs. 2.4 million and Rs. 3.7 million to Mr. Paresh
Sukthankar and Mr. Kaizad Bharucha, respectively, as rent for their residential accommodation. During the year, Mr. Paresh Sukthankar ceased to be a key
management personnel of the Bank (w.e.f. November 8, 2018). As of March 31, 2019, the outstanding balance of the security deposit we had given to
Mr. Kaizad Bharucha was Rs. 7.6 million. As of March 31, 2019, the outstanding balances of the housing loans given to Mr. Aditya Puri and Mr. Kaizad
Bharucha were Rs. 24.7 million and Rs. 4.0 million, respectively. As proposed in the previous fiscal year, during fiscal 2019, we paid dividend on our
equity shares aggregating to Rs. 74.3 million to Mr. Aditya Puri, Mr. Paresh Sukthankar and Mr. Kaizad Bharucha.

HDFC Pension Management Company Limited (“HDFC PMC”)

We have given a guarantee of Rs. 5.0 million on behalf of HDFC PMC. During fiscal 2019, we sold to HDFC PMC, debt securities of
Rs. 50.2 million.

HDFC Investments Limited (“HDFC Investments”)

As proposed in the previous fiscal year, we paid a dividend of Rs. 1, 950.0 million to HDFC Investments during fiscal 2019.

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Other Strategic Investments

We frequently partner with other HDFC group companies when making strategic investments. We currently have two strategic investments in which
HDFC group companies are co-investors. We are required to comply with the RBI regulations on holding an equity stake in another company. The
following is a list of strategic investments made by us and the HDFC group companies:

HDFC Bank HDFC Bank Total HDFC

Company Type of Business Investment Ownership Group ownership
(in millions)
Computer Age Management Services Unit capital accounting and
Private Limited (“CAMS”) transfer agency services Rs. 2.0 6.5% 12.5%
Softcell Technologies Business-to-business software
Limited (“Softcell”) services Rs. 26.0 12.0% 26.0%

We routinely conduct business with some of the companies in which we have made strategic investments. During the years the Bank and other group
companies reduced stake in CAMS consequent to which CAMS ceased to be a related party.

We have entered into normal banking transactions with some of the above parties and we believe all such transactions to be at arm’s-length.

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TAXATION

Indian Taxation
The following is a summary of the principal Indian tax consequences for non-resident investors of the ADSs and the equity shares issuable on
surrender of ADSs for equity shares (conversion). The summary is based on the provisions of Section 115AC and other applicable provisions of the Income
Tax Act, 1961 (43 of 1961) (Indian Income Tax Act) and the Depositary Receipt Scheme, 2014 promulgated by the Government of India (the “Depositary
Receipt Scheme”) (together, the “Section 115AC Regime”). Further, it only addresses the tax consequences for persons who are non-residents, as defined in
the Indian Income Tax Act, who acquire ADSs or equity shares (upon conversion) and who hold such ADSs or equity shares (upon conversion) as capital
asset as per Indian Income Tax Act, and does not address the tax consequences which may be relevant to other classes of non-resident investors, including
dealers. The summary assumes that the person continues to remain a non-resident when income by way of dividends and capital gains is earned.

EACH INVESTOR IS ADVISED TO CONSULT HIS/HER TAX ADVISOR ABOUT THE PARTICULAR TAX CONSEQUENCES
APPLICABLE TO HIS/HER INVESTMENT IN THE ADSs.
The following discussion describes the material Indian income tax and stamp duty consequences of the purchase, ownership and disposal of the
ADSs.

This summary is not intended to constitute a complete analysis of the tax consequences under Indian law of the acquisition, ownership and sale of the
ADSs (or equity shares upon conversion) by non-resident investors. Investors should therefore consult their tax advisors about the tax consequences of such
acquisition, ownership and sale including, specifically, tax consequences under Indian law, the laws of the jurisdiction of their residence, any tax treaty
between India and their country of residence or the United States, the country of residence of the overseas depositary bank (the “Depositary”), as applicable,
and, in particular, the Section 115AC regime. The Indian Income Tax Act is amended every year by the Finance Act of the relevant year. Some or all of the
tax consequences of the Section 115AC regime may be modified or amended by future amendments to the Indian Income Tax Act.

Taxation of Distributions
Indian companies distributing dividends are subject to a dividend distribution tax. We are required to pay a dividend distribution tax currently at the
rate of 20.56 percent (including applicable surcharge and education cess) on the total amount distributed or declared or paid as a dividend. Under
Section 10(34) of the Indian Income Tax Act, income by way of dividends referred to in Section 115-O received on our shares is exempt from income tax in
the hands of shareholders. Accordingly, dividends distributed to the Depositary in respect of the equity shares underlying the ADSs and to ADS holders in
respect of the ADSs and dividends distributed to the holders of the equity shares following conversion of the ADSs would not be taxable in the hands of
holders.

This exemption on taxation of dividend under section 10(34) is now subject to provisions of section 115BBDA. Section 115BBDA applies to a
resident specified assessee i.e., persons other than domestic companies, fund/university/trust/institution/other entities referred to clauses (iv), (v), (vi) and
(via) under section 10(23C) and a trust or institution registered under section 12A or section 12AA. The section provides that where income of the resident
specified assessee includes any income in aggregate exceeding rupees ten lakhs, income-tax shall be payable on such dividend which is in excess of rupees
ten lakhs.

Distribution to non-residents of bonus ADSs or bonus shares or rights to subscribe for equity shares for the purposes of this section, (“Rights”) made
with respect to ADSs or equity shares should not be subject to Indian tax provided that there is no disproportionate or non-uniform allotment.

Taxation of Capital Gains in Relation to ADSs

The taxation of capital gains in the hands of the non-resident investor in the time of ADSs and after conversion of ADSs into equity shares is set forth
below.

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Transfer of ADSs between non-residents

The transfer of ADSs by a non-resident to another non-resident outside India is covered under Section 115AC of the Indian Income Tax Act.
However, pursuant to a specific exemption under Section 47(viia) of the Indian Income Tax Act, this is not considered a “transfer” and therefore is not
liable to capital gains tax in India.

Conversion of ADSs into Equity Shares

The receipt of equity shares by a non-resident upon conversion of ADSs should not constitute a taxable event for Indian income tax purposes as per
the provisions of section 47(xa) of the Indian Income Tax Act.

Sale of Equity Shares Received Upon Conversion of ADSs

Finance Act, 2018 has withdrawn the exemption granted to gains arising on account of transfer of a long-term capital asset being an equity shares
listed on a recognized stock exchange. To tax such gains, new section 112A has been inserted under the Act. However, for the purpose of computing the
period of holding of such equity share, provisions of Explanation 1(i)(f) to section 2(42A) provides that the period of holding of the ADSs shall also be
considered. If, on the other hand, equity shares received upon conversion of ADSs and the total period of holding is below 12 months from the date of
conversion, and the sale is through a recognized stock exchange and STT is paid in respect of such sale, then the gains realized are considered short-term
capital gains. Such gains are taxable at the rate of 15.0 percent, plus the applicable surcharge and education cess, under Section 111A(1)(b)(i) of the Indian
Income Tax Act.

In respect of a sale and purchase of equity shares entered into on a recognized stock exchange, both the buyer and the seller are required to pay STT
on the basis of the transaction value of the securities, if the transaction is a delivery based transaction, which means that the transaction involves actual
delivery or transfer of shares. The seller of the shares is required to pay applicable STT of the transaction value of the securities if the transaction is a
non-delivery based transaction, which means that the transaction is settled without taking actual delivery or transfer of the shares, as would be the case with
our equity shares.

For the purpose of computing capital gains tax on the sale of the equity shares the cost of acquisition of equity shares received in exchange for ADSs
will be determined on the basis of the prevailing price of the equity shares on the BSE or the NSE as of the date on which the depositary gives notice to its
custodian for the delivery of such equity shares upon redemption of the ADSs. A non-resident holder’s holding period (for the purpose of determining the
applicable Indian capital gains tax) in respect of equity shares received in exchange for ADSs commences on the date on which a request for redemption of
the ADSs was made by the relevant Depositary to its custodian.

The provision of the Double Taxation Avoidance Agreement (the “DTAA”) entered into by the Government of India with the country of residence of
the non-resident investor will be applicable to the extent they are more beneficial to the non-resident investor [section 90(2)]. The India-United States
income tax treaty does not limit India’s ability to tax capital gains. However, section 90(2A) has made the beneficial provision clause provided under
section 90(2) is now subject to the provisions of General Anti-Avoidance Rules under Chapter X-A.

Tax on Buy-back of Shares

Finance (No. 2) Bill, 2019 has proposed to amend section 115QA of the Act. The effect of this amendment would mean that a company listed on the
stock exchange would have to pay the additional income tax on distributed income on the buyback of shares. Distributed income has been defined under the
Act as the difference between the money received by the shareholder on buyback and the issue price of the shares which the Company would have received
at the time of issuance of the shares.

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Tax Deduction at Source

Tax on long-term and short-term capital gains, if payable, as discussed above, upon a sale of equity shares, is to be deducted at source by the person
responsible for paying the non-resident, in accordance with the relevant provisions of the Indian Income Tax Act, and the non-resident will be entitled to a
certificate evidencing such tax deduction in accordance with the provisions of Section 203 of the Indian Income Tax Act. However, as per the provisions of
Section 195 of the Indian Income Tax Act, any income other than income from salaries or other specific sections provided for the purpose of withholding
tax or the provisions of the DTAA subject to Chapter X-A of the Act, (whichever is more beneficial to the assessee, unless a lower withholding tax
certificate) is obtained from the tax authorities. Further, the non-resident investor must furnish a certificate of his or her residence in a country outside India
as per section 90(4) of the Indian Income Tax Act, and such other documents as may be prescribed as per the provision of section 90(5) of the Indian
Income Tax Act, to get the benefit of the applicable DTAA. The withholding tax rates are subject to the recipients of income furnishing details, as may be
prescribed, to the payer. Failure to provide such details will result in the applicable withholding tax rate being the higher of the rates in force or
20.0 percent, in accordance with section 206AA of the Indian Income Tax Act.

Capital Losses
Neither Section 115AC nor the Depositary Receipt Scheme deals with capital losses arising on a transfer of equity shares in India. In general terms,
losses arising from a transfer of a capital asset in India can only be set off against capital gains on transfer of another capital asset. Furthermore, a long-term
capital loss can be set off only against a long-term capital gain. To the extent that losses are not absorbed in the year of transfer, they may be carried forward
for a period of eight assessment years immediately succeeding the assessment year for which the loss was first determined by the assessing authority and
may be set off against the capital gains assessable for such subsequent assessment years. In order to set off capital losses as above, the non-resident investor
would be required to file appropriate and timely tax returns in India and undergo the customary assessment procedures.

Stamp Duty
There is no stamp duty on the sale or transfer of ADSs outside India.

Generally, the transfer of ordinary shares in physical form would be subject to Indian stamp duty at the applicable rate of the market value of the
ordinary shares on the trade date, and such stamp duty customarily is borne by the transferee, i.e., the purchaser. In order to register a transfer of equity
shares in physical form, it is necessary to present a stamped deed of transfer. An acquisition of shares in physical form from the depositary in exchange for
ADSs representing such equity shares will not render an investor liable for Indian stamp duty. We will be required to pay stamp duty at the applicable rate
on the share certificate. However, since our equity shares are compulsorily deliverable in dematerialized form (except for trades of up to 500 equity shares,
which may be delivered in physical form) there would be no stamp duty payable in India on transfer.

Other Taxes
At present, there is no wealth tax, gift tax or inheritance tax which may apply to the ADSs or the underlying shares.

Material United States Federal Income Tax Consequences

The following summary describes certain material United States federal income tax consequences relating to an investment in our ADSs or equity
shares as of the date hereof. This summary is based on the Internal Revenue Code, its legislative history, existing final, temporary and proposed Treasury
Regulations, rulings and judicial decisions, all as of the date hereof and all of which are subject to prospective and retroactive rulings and changes.

This summary does not purport to address all United States federal income tax consequences that may be relevant to a particular investor, and you are
urged to consult your own tax advisor regarding your specific tax situation. The summary applies only to investors who own ADSs or equity shares as
“capital assets” (generally, property held for investment) under the Internal Revenue Code, and does not address the tax consequences that may be relevant
to investors in special tax situations, including, for example:
• insurance companies;
• regulated investment companies and real estate investment trusts;
• tax-exempt organizations;
• broker-dealers;

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• traders in securities that elect to mark-to-market;

• banks or certain other financial institutions;
• United States investors whose functional currency is not the United States dollar;
• certain former citizens or residents of the United States subject to Section 877 of the Internal Revenue Code;
• investors that hold our ADSs or equity shares as part of a hedge, straddle or conversion transaction; or
• holders that own, directly, indirectly or constructively 10.0 percent or more of our total combined voting stock.

Further, this summary does not address the alternative minimum tax consequences of an investment in ADSs or equity shares, or the indirect
consequences to owners of equity or partnership interests in entities that own our ADSs or equity shares. In addition, this summary does not address the
United States federal estate or gift, state, local and foreign tax consequences of an investment in our ADSs or equity shares.

You should consult your own tax advisor regarding the United States federal, state, local and foreign and other tax consequences of purchasing,
owning and disposing of our ADSs or equity shares in your particular circumstances.

Taxation of U.S. Holders

You are a “U.S. Holder” if you are, for United States federal income tax purposes, a beneficial owner of ADSs or equity shares and you are:
• an individual who is a citizen or resident of the United States;
• a corporation (or other entity taxable as a corporation for United States federal income tax purposes) created or organized in or under the laws
of the United States, any state thereof, or the District of Columbia;
• an estate, the income of which is subject to United States federal income tax regardless of its source; or
• a trust, if a court within the United States is able to exercise primary supervision over its administration and one or more United States persons
have the authority to control all substantial decisions of the trust, or if the trust has made a valid election to be treated as a United States
person.

If a partnership holds ADSs or equity shares, the tax treatment of a partner will generally depend upon the status of the partner and upon the activities
of the partnership. Partners of partnerships holding our ADSs or equity shares should consult their own tax advisors.

For United States federal income tax purposes, a U.S. Holder of an ADS will generally be treated as the owner of the equity shares represented by the
ADS. Accordingly, no gain or loss will be recognized upon the exchange of an ADS for equity shares. A U.S. Holder’s tax basis in the equity shares will be
the same as the tax basis in the ADS surrendered therefore, and the holding period in the equity shares will include the period during which the holder held
the surrendered ADS.

The U.S. government has expressed concerns that parties to whom ADSs are released before the underlying shares are delivered to the depositary
(“pre-release”), or intermediaries in the chain of ownership between holders of ADSs and the issuer of the security underlying the ADSs, may be taking
actions that are inconsistent with the claiming of foreign tax credits by holders of ADSs. These actions would also be inconsistent with the claiming of the
reduced rate of tax, described below, applicable to dividends that constitute qualified dividend income received by certain non-corporate holders.
Accordingly, the availability of the reduced tax rate for qualified dividend income received by certain non-corporate U.S. Holders, each described below,
could be affected by actions taken by such parties or intermediaries.

This discussion assumes that we are not, and will not become, a passive foreign investment company (“PFIC”) for United States federal income tax
purposes, as described below.

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Distributions on ADSs or Equity Shares

The gross amount of cash distributions made by us to a U.S. Holder with respect to ADSs or equity shares generally will be taxable to such U.S.
Holder as ordinary dividend income when such U.S. Holder receives the distribution, actually or constructively, to the extent paid out of our current or
accumulated earnings and profits (as determined for United States federal income tax purposes). Indian companies distributing dividends are subject to a
dividend distribution tax and such dividend distributions are not taxable in the hands of the recipient. See “Indian Taxation of the ADSs—Taxation of
Distributions”. Indian dividend distribution tax, therefore, should not be treated as part of the gross amount of the dividend received by the U.S. Holder and
should not be eligible for a credit or deduction against a U.S. Holder’s United States federal income taxes as the dividend distribution tax is imposed on the
company making the distribution and not the U.S. Holder. Dividends paid on the ADSs or equity shares will generally be treated as “passive category”
foreign source income, which may be relevant to certain United States Holders in computing their foreign tax credit limitations.

Subject to the discussion above regarding “pre-release”, if dividends constitute qualified dividend income (“QDI”), individual U.S. Holders of our
ADSs or equity shares will generally pay tax on such dividends at a reduced rate, provided certain holding period requirements and other conditions are
satisfied. Assuming we are not a PFIC in the taxable year in which we pay the dividends or in the preceding taxable year, dividends paid by us will be QDI
if we are a qualified foreign corporation (“QFC”) at the time the dividends are paid. We believe that we are currently, and will continue to be, a QFC so we
expect all dividends paid by us to be QDI for United States federal income tax purposes. Distributions in excess of our current and accumulated earnings
and profits (as determined for United States federal income tax purposes) will be treated first as a non-taxable return of capital reducing such U.S. Holder’s
tax basis in the ADSs or equity shares. Any distribution in excess of such tax basis will be treated as capital gain and will be either long-term or short-term
capital gain depending upon whether the U.S. Holder held the ADSs or equity shares for more than one year. However, we currently do not, and we do not
intend to, calculate our earnings and profits under United States federal income tax principles. Therefore, a U.S. Holder should expect that a distribution
generally will be reported as dividend income. Dividends paid by us generally will not be eligible for the dividends-received deduction available to certain
United States corporate shareholders.

The amount of any cash distribution paid in Indian rupees will equal the United States dollar value of the distribution, calculated by reference to the
exchange rate in effect at the time the distribution is received by the depositary, in the case of ADSs, or by the U.S. Holder, in the case of equity shares,
regardless of whether the payment is in fact converted to United States dollars at that time. Generally, a U.S. Holder should not recognize any foreign
currency gain or loss if such Indian rupees are converted into United States dollars on the date received and it is expected that the depositary will in the
ordinary course convert foreign currency received by it as distributions into United States dollars on the date of receipt. If the Indian rupees are not
converted into United States dollars on the date of receipt, however, gain or loss may be recognized upon a subsequent sale or other disposition of the
Indian rupees. Such foreign currency gain or loss, if any, will be United States source ordinary income or loss.

Sale or Exchange of ADSs or Equity Shares

A U.S. Holder will generally recognize capital gain or loss upon the sale, exchange or other disposition of ADSs or equity shares measured by the
difference between the United States dollar value of the amount received and the U.S. Holder’s tax basis (determined in United States dollars) in the ADSs
or equity shares. Any gain or loss will be long-term capital gain or loss if the ADSs or equity shares in the sale, exchange or other taxable disposition have
been held for more than one year and will generally be United States source gain or loss. The holding period for equity shares withdrawn from the
depositary facility will include the holding period of the ADSs exchanged therefor. Your ability to deduct capital losses is subject to limitations. Under
certain circumstances described under “Indian Taxation of the ADSs—Taxation of Capital Gains in Relation to ADSs”, you may be subject to Indian tax
upon the disposition of ADSs or equity shares. In such circumstances and subject to applicable limitations a U.S. Holder entitled to the benefits of the India-
United States income tax treaty may be able to credit the Indian tax against the U.S. Holder’s United States federal income tax liability. You should consult
your tax advisor regarding the availability of the foreign tax credit under your particular circumstances.

For cash-basis U.S. Holders who receive foreign currency in connection with a sale or other taxable disposition of equity shares, the amount realized
will be based upon the United States dollar value of the foreign currency received with respect to such equity shares as determined on the settlement date of
such sale, exchange or other taxable disposition.

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Pursuant to the Treasury Regulations applicable to foreign currency transactions, accrual-basis U.S. Holders may elect the same treatment required of
cash-basis taxpayers with respect to a sale, exchange or other taxable disposition of ADSs or equity shares, provided that the election is applied consistently
from year to year. Such election cannot be changed without the consent of the Internal Revenue Service (the “IRS”). Accrual-basis U.S. Holders that do not
elect to be treated as cash-basis taxpayers for this purpose may have foreign currency gain or loss for United States federal income tax purposes because of
differences between the United States dollar value of the foreign currency received prevailing on the date of such sale, exchange or other taxable disposition
and the value prevailing on the date of payment. Any such foreign currency gain or loss will generally be treated as ordinary income or loss that is sourced
from within the United States, in addition to the gain or loss, if any, recognized on the sale, exchange or other taxable disposition of ADSs or equity shares.

Medicare Tax
Certain U.S. Holders who are individuals, estates, or trusts are required to pay a 3.8 percent Medicare surtax on all or part of that holder’s “net
investment income”, which includes, among other items, dividends on, and capital gains from the sale or other taxable disposition of, the ADSs or equity
shares, subject to certain limitations and exceptions. Prospective investors should consult their own tax advisors regarding the effect, if any, of this surtax on
their ownership and disposition of the ADSs or equity shares.

Passive Foreign Investment Company Rules

U.S. Holders generally will be subject to a special, adverse tax regime that would differ in certain respects from the tax treatment described above if
we are, or were to become, a PFIC for United States federal income tax purposes. Although the determination of whether a corporation is a PFIC is made
annually and thus may be subject to change, based on an active banking exception, we do not believe that we are, nor do we expect to become, a PFIC.
However, the matter is not free from doubt. We urge you to consult your own tax advisor regarding the potential application of the PFIC rules.

Information with Respect to Foreign Financial Assets

Individuals (and, under proposed Treasury Regulations, certain entities) who are U.S. Holders that own “specified foreign financial assets”, including
stock of a non-U.S. corporation not held through a financial institution, with an aggregate value in excess of certain dollar thresholds may be required to file
an information report with respect to such assets on IRS Form 8938 with their United States federal income tax returns. Penalties apply for failure to
properly complete and file IRS Form 8938. U.S. Holders are encouraged to consult their tax advisors regarding the application of this reporting requirement
to their ownership of our ADSs or equity shares.

Taxation of Non-U.S. Holders

A “Non-U.S. Holder” is a beneficial owner of our ADSs or equity shares that is neither a U.S. Holder nor a partnership or other entity or arrangement
treated as a partnership for U.S. federal income tax purposes. If a partnership holds our ADSs or equity shares, the tax treatment of a partner will generally
depend upon the status of the partner and upon the activities of the partnership. Partners in partnerships holding our ADSs or equity shares should consult
their own tax advisors.

Distributions on ADSs or Equity Shares

Non-U.S. Holders generally will not be subject to United States federal income or withholding tax on dividends received from us with respect to
ADSs or equity shares, unless such income is considered effectively connected with the Non-U.S. Holder’s conduct of a United States trade or business for
United States federal income tax purposes (and, if required by an applicable income tax treaty, the income is attributable to a permanent establishment
maintained in the United States).

Sale or Exchange of ADSs or Equity Shares

Non-U.S. Holders generally will not be subject to United States federal income tax on any gain realized upon the sale, exchange or other taxable
disposition of ADSs or equity shares unless:
• such gain is considered effectively connected with the Non-U.S. Holder’s conduct of a United States trade or business (and, if required by an
applicable income tax treaty, the income is attributable to a permanent establishment maintained in the United States); or
• such Non-U.S. Holder is an individual that is present in the United States for 183 days or more during the taxable year of the disposition and
certain other conditions are met.

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In addition, if you are a corporate Non-U.S. Holder, any effectively connected dividend income or gain (subject to certain adjustments) may be
subject to an additional branch profits tax at a rate of 30.0 percent (or such lower rate as may be specified by an applicable income tax treaty).

Backup Withholding and Information Reporting

In general, dividends on ADSs or equity shares, and payments of the proceeds of a sale, exchange or other taxable disposition of ADSs or equity
shares, paid to a U.S. Holder within the United States or through certain U.S.-related financial intermediaries are subject to information reporting and may
be subject to backup withholding at a rate currently equal to 28.0 percent unless the U.S. Holder:
• is a corporation or other exempt recipient; or
• provides an accurate taxpayer identification number and certifies that no loss of exemption from backup withholding applies to such U.S.
Holder.

Non-U.S. Holders generally are not subject to information reporting or backup withholding. However, such Non-U.S. Holders may be required to
provide a certification to establish their non-U.S. status in connection with payments received within the United States or through certain U.S.-related
financial intermediaries.

Backup withholding is not an additional tax. Holders generally will be allowed a credit of the amount of any backup withholding against their United
States federal income tax liability or may obtain a refund of any amounts withheld under the backup withholding rules that exceed such income tax liability
by filing a refund claim with the IRS.

Foreign Account Tax Compliance Act

Sections 1471 through 1474 of the Internal Revenue Code (provisions commonly known as “FATCA” or the Foreign Account Tax Compliance Act)
impose (a) certain reporting and due diligence requirements on foreign financial institutions and, (b) potentially require such foreign financial institutions to
deduct a 30.0 percent withholding tax from (i) certain payments from sources within the United States, and (ii) “foreign passthru payments” (which is not
yet defined in current guidance) made to certain non-U.S. financial institutions that do not comply with such reporting and due diligence requirements or
certain other payees that do not provide required information. The United States has entered into a number of IGAs with other jurisdictions with respect to
FATCA which may modify the operation of this withholding. The Bank as well as relevant intermediaries such as custodians and depositary participants are
classified as financial institutions for these purposes. Given that India has entered into a Model 1 IGA with the United States for giving effect to FATCA,
Indian financial institutions such as the Bank are also required to comply with FATCA, based on the terms of the IGA and relevant rules made pursuant
thereto.

Under current guidance it is not clear whether or to what extent payments on ADSs or equity shares will be considered “foreign passthru payments”
subject to FATCA withholding or the extent to which withholding on “foreign passthru payments” will be required under the applicable IGA. Investors
should consult their own tax advisers on how the FATCA rules may apply to payments they receive in respect of the ADSs or equity shares.

Should any withholding tax in respect of FATCA be deducted or withheld from any payments arising to any investor, neither the Bank nor any other
person will pay additional amounts as a result of the deduction or withholding.

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SUPERVISION AND REGULATION

The main legislation governing commercial banks in India is the Banking Regulation Act, 1949 (the “Banking Regulation Act”). The provisions of
the Banking Regulation Act are in addition to and not, save as expressly provided in the Banking Regulation Act, in derogation of the Companies Act,
2013, Companies Act, 1956 and any other law currently in force. Other important laws include the Reserve Bank of India Act, 1934, the Negotiable
Instruments Act, 1881, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the “SARFAESI Act”)
and the Bankers’ Books Evidence Act, 1891. Additionally, the RBI, from time to time, issues guidelines to be followed by banks. Compliance with all
regulatory requirements is evaluated with respect to our financial statements under Indian GAAP.

RBI Regulations
Commercial banks in India are required under the Banking Regulation Act to obtain a license from the RBI to carry on banking business in India.
Before granting the license, the RBI must be satisfied that certain conditions are complied with, including (i) that the Bank is or will be in a position to pay
its present and future depositors in full as their claims accrue; (ii) that the affairs of the Bank will not be or are not likely to be conducted in a manner
detrimental to the interests of present or future depositors; (iii) that the general character of the proposed management of the Bank will not be prejudicial to
the public interest or the interest of its depositors; (iv) that the Bank has adequate capital and earnings prospects; (v) that public interest will be served if a
license is granted to the Bank; (vi) that having regard to the banking facilities available in the proposed principal area of operations of the Bank, the
potential scope for expansion of banks already in existence in the area and other relevant factors the grant of the license would not be prejudicial to the
operation and consolidation of the banking system consistent with monetary stability and economic growth; and (vii) any other condition, the fulfillment of
which would, in the opinion of the RBI, be necessary to ensure that the carrying on of banking business in India by the Bank will not be prejudicial to the
public interest or the interests of the depositors. The RBI can cancel the license if the Bank fails to meet the above conditions or if the Bank ceases to carry
on banking operations in India.

Being licensed by the RBI, we are regulated and supervised by the RBI. It requires us to furnish statements, information and certain details relating to
our business. The RBI has issued guidelines for commercial banks on recognition of income, classification of assets, valuation of investments, maintenance
of capital adequacy and provisioning for non-performing and restructured assets among others. The RBI has set up a Board for Financial Supervision, under
the chairmanship of its Governor, with the primary objective of undertaking consolidated supervision of the financial sector comprised of commercial
banks, financial institutions and non-banking finance companies (“NBFCs”). This Board oversees the functioning of the Department of Banking
Supervision, Department of Non-Banking Supervision and Financial Institutions Division of the RBI and gives directions relating to regulatory and
supervisory issues. The appointment of the auditors of banks is subject to the approval of the RBI. The RBI can direct a special audit in the interest of the
depositors or in the public interest.

Entry of New Banks in the Private Sector

In February 2013, the RBI released guidelines for licensing of new banks in the private sector. The key items covered under these guidelines are as
follows: (i) promoters eligible to apply for banking licenses; (ii) corporate structure; (iii) minimum voting equity capital requirements for new banks;
(iv) regulatory framework; (v) foreign shareholding cap; (vi) corporate governance; (vii) prudential norms; (viii) exposure norms; and (ix) business plan.
The RBI has permitted private sector entities owned and controlled by Indian residents and entities in the public sector in India to apply to the RBI for a
license to operate a bank through a wholly owned non-operative financial holding company (“NOFHC”), subject to compliance with certain specified
criteria. Such a NOFHC is permitted to be the holding company of the bank as well as any other financial services entity, with the objective that the holding
company ring-fences the regulated financial services entities in the group, including the bank, from other activities of the group. Pursuant to these
guidelines, two banks, namely IDFC Bank and Bandhan Bank, commenced banking operations in fiscal 2016.

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In November 2014, RBI released guidelines on licensing of payments banks and small finance banks in the private sector. The objective of setting up
of payments banks is to further financial inclusion by providing (i) small savings accounts and (ii) payments/remittance services to migrant labor workforce,
low income households, small businesses, other unorganized sector entities and other users. Payments banks are allowed to accept deposits of up to Rs.
100,000. However, they are not allowed to undertake lending activities or issue credit cards. The foreign shareholding in payments banks would be as per
the Foreign Direct Investment (“FDI”) policy for private sector banks, as amended from time to time. In August 2015, the RBI gave in-principle approvals
to 11 applicants to set up payments banks. In September 2015, the RBI also granted “in-principle” approval to ten applicants to setup small finance banks.
All 10 applicants have received their final license. In August 2016, the RBI released the guidelines for “on-tap” Licensing of Universal Banks in the Private
Sector. The guidelines aim at moving from the current “stop and go” licensing approach (wherein the RBI notifies the licensing window during which a
private entity may apply for a banking license) to a continuous or “on-tap” licensing regime. Among other things, the new guidelines specify conditions for
the eligibility of promoters, corporate structure and foreign shareholdings. One of the key features of the new guidelines is that, unlike the February 2013
guidelines (mentioned above), the new guidelines make the NOFHC structure non-mandatory in the case of promoters being individuals or standalone
promoting/converting entities which do not have other group entities.

In May 2016, the RBI also issued the Reserve Bank of India (Ownership in Private Sector Banks) Directions, 2016. These guidelines prescribe
requirements regarding shareholding and voting rights in relation to all private sector banks licensed by the RBI to operate in India. The guidelines specify
the following ownership limits for shareholders based on their categorization:
(i) In the case of individuals and non-financial entities (other than promoters/promoter group), 10.0 percent of the paid up capital. However, in the case
of promoters being individuals and non-financial entities in existing banks, the permitted promoter/promoter group shareholding shall be as
prescribed under the February 2013 guidelines, i.e., 15.0 percent.
(ii) In the case of entities from the financial sector, other than regulated or diversified or listed, 15.0 percent of the paid-up capital.
(iii) In the case of “regulated, well diversified, listed entities from the financial sector” shareholding by supranational institutions, public sector
undertaking or government, up to 40.0 percent of the paid-up capital is permitted for both promoters/promoter group and non-promoters.

Financial Holding Company Structure in India

The RBI constituted a Working Group in June 2010 to examine the feasibility of introducing a Financial Holding Company (“FHC”) Structure in
India under the chairpersonship of the Deputy Governor. In May 2011, the Working Group submitted its report to recommend a roadmap for the
introduction of a holding company structure in the Indian financial sector together with the required regulatory, supervisory and legislative framework. The
report served as a guiding document for the introduction of an alternate organizational structure for banks and financial conglomerates in India. Key
recommendations of the Working Group were as follows: (i) FHC structure; (ii) regulatory framework; (iii) statutory and taxation related changes; (iv) caps
on expansion in non-banking business; (v) capital raising; and (vi) transitioning to the FHC structure.

In August 2013, the RBI issued a discussion paper titled “Banking Structure in India—The Way Forward”. The key recommendations in the paper
relate to: (i) adoption of the FHC structure; (ii) differential licensing (allowing banks to be licensed to provide only specified services); (iii) consolidation of
large-sized Indian banks; (iv) requiring large foreign banks to operate through subsidiaries in India and the reduction of the Government’s ownership of
state-owned banks to ease the burden on the state where these banks will have to be capitalized to comply with Basel III requirements.

On April 7, 2014, the RBI introduced a new category of NBFCs called NOFHCs and, accordingly, amended the Non-Banking Financial
(Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007. The RBI directions define a NOFHC as a non-deposit
taking NBFC which holds the shares of a banking company and the shares of all other financial services companies in its group, whether regulated by RBI
or by any other financial regulator, to the extent permissible under the applicable regulatory prescriptions.

Under the Guidelines for “on-tap” Licensing of Universal Banks in the Private Sector, the RBI has made the NOFHC structure non-mandatory in the
case of promoters being individuals or standalone promoting/converting entities which do not have other group entities.

Regulations Relating to the Opening of Banking Outlets

Section 23 of the Banking Regulation Act provides that banks must obtain the prior permission of the RBI to open new banking outlets. The RBI may
cancel a license for violations of the conditions under which it was granted.

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The RBI issues instructions and guidelines to banks on branch authorization from time to time. Centers are categorized as Tier 1 to Tier 6 based on
population (as per the 2011 census) and classified in the following manner:
• Tier 1—100,000 and above;
• Tier 2—50,000 to 99,999;
• Tier 3—20,000 to 49,999;
• Tier 4—10,000 to 19,999;
• Tier 5—5,000 to 9,999; and
• Tier 6—Less than 5,000.

The RBI, with effect from September 19, 2013, granted general permission to domestic scheduled commercial banks like us to open banking outlets
in Tier 1 to Tier 6 centers, subject to reporting to the RBI and prescribed conditions such as (i) at least 25 percent of the total number of banking outlets
opened during the fiscal year must be opened in unbanked rural (Tier 5 and Tier 6) centers, which are defined as centers that do not have a brick and mortar
structure of any scheduled commercial bank for customer-based banking transactions; and (ii) the total number of banking outlets opened in Tier 1 centers
during a fiscal cannot exceed the total number of banking outlets opened in Tier 2 to Tier 6 centers and all centers in the north eastern states of India and the
state of Sikkim. The RBI also permitted banks to open banking outlets in Tier 1 centers over and above the number permitted in accordance with the
paragraph above, as an incentive for opening more banking outlets in underbanked districts of underbanked States, subject to specified conditions.

The RBI also permitted scheduled commercial banks to install off-site/mobile ATMs at centers/places identified by them, without the need to get
permission from the RBI in each case. This, however, is subject to certain conditions, including for closure/shifting of any such off-site/mobile ATMs,
wherever the RBI considers it necessary. Banks need to report full details of the off-site ATMs installed by them in terms of the above general permission as
a part of the periodic reports submitted to the RBI.

In May 2017, the RBI has further liberalized the branch authorization policy. Some of the key changes made pursuant to the revised guidelines are as
follows:
• The concept of “branch” has been replaced by “banking outlets”. A banking outlet for a domestic scheduled commercial bank has been
defined as a fixed point service delivery unit, manned by either bank’s staff or its business correspondent where services of acceptance of
deposits, encashment of checks/cash withdrawal or lending of money are provided for a minimum of four hours per day for at least five days a
week.
• At least 25.0 percent of the total number of “banking outlets” opened during a financial year must be opened in unbanked rural centers (Tier 5
and Tier 6). The definition of unbanked rural centers has been modified to mean a rural (Tier 5 and 6) center that does not have a CBS enabled
banking outlet of a scheduled commercial bank.
• The restriction on the number of banking outlets that may be opened in Tier 1 centers has been removed.

Capital Adequacy Requirements

The RBI issued guidelines for the implementation of the New Capital Adequacy Framework (“Basel II”). In order to maintain consistency and
harmony with international standards, foreign banks in India and Indian banks having operational presence outside India were advised to adopt the
Standardized Approach for Credit Risk and Basic Indicator Approach for Operational Risk with effect from March 31, 2008, while other commercial banks
were advised to adopt these approaches with effect from March 31, 2009.

Under these guidelines, we were required to maintain a minimum ratio of capital to risk-adjusted assets and off-balance sheet items of 9 percent, at
least 6 percent of which must be Tier I capital. Until March 31, 2013, we were also required to ensure that our Basel II minimum capital requirement
continued to be higher than the prudential floor of 80 percent of the minimum capital requirement computed as per the Basel I framework for credit and
market risks. In May 2013, the RBI withdrew the requirement of parallel run and prudential floor for implementation of Basel II vis-à-vis Basel I.

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In May 2012, the RBI released guidelines on implementation of Basel III capital regulations in India with effect from April 1, 2013. The RBI has also
issued master circular on “Basel III Capital Regulations” consolidating all relevant guidelines on Basel III. The key items covered under these guidelines
include: (i) improving the quality, consistency and transparency of the capital base; (ii) enhancing risk coverage; (iii) graded enhancement of the total
capital requirement; (iv) introduction of capital conservation buffer and countercyclical buffer; and (v) supplementing the risk-based capital requirement
with a leverage ratio. One of the major changes in the Basel III capital regulations is that the Tier I capital will predominantly consist of common equity of
the banks which includes common shares, reserves and stock surplus. Innovative instruments and perpetual non-cumulative preference share will not be
considered a part of CET-I capital. Basel III also defines criteria for instruments to be included in Tier II capital to improve their loss absorbency. The
guidelines also set out criteria for loss absorption through conversion/write-off of all non-common equity regulatory capital instruments at the point of
non-viability. The point of non-viability is defined as a trigger event upon the occurrence of which non-CET-I and Tier II instruments issued by banks in
India may be required to be, at the option of the RBI, written off or converted into common equity.

Under the Basel III capital regulations, the capital funds of a bank are classified into CET-I, Additional Tier I (“AT-I”) and Tier II capital. Tier I
capital, comprised of, among others, CET-I and AT-I, provides the most permanent and readily available support against unexpected losses. CET-I capital is
comprised of paid-up equity capital and reserves consisting of any statutory reserves, free reserves and capital reserves. By its circular dated March 2016,
the RBI has allowed banks, at their discretion, to include foreign currency translation reserves arising due to the translation of financial statements of their
foreign operations in terms of Accounting Standard (“AS”) 11 as CET-I capital at a discount of 25.0 percent, subject to certain conditions. Further, the RBI
has permitted deferred tax assets which relate to timing differences (other than those related to accumulated losses) to be recognized in the CET-I capital up
to 10.0 percent of a bank’s CET-I capital, at the discretion of banks (instead of full deduction from CET-I capital), subject to certain terms and conditions.

AT-I capital is comprised of, among others, perpetual non-cumulative preference shares and debt capital instruments eligible for inclusion as AT-I
capital. Regulatory adjustments/deductions such as equity investments in financial subsidiaries (in accordance with the directions of the RBI), intangible
assets, deferred tax assets (in the manner and to the extent, specified by the RBI), gaps in provisioning and losses in the current period and those brought
forward from the previous period are required to be deducted from CET-I capital in a phased manner and fully deducted therefrom by March 31, 2017.

Tier II capital consists of revaluation reserves at a discount of 55.0 percent, general provisions and loss reserves (allowed up to a maximum of
1.25 percent of the total credit risk weighted assets), hybrid debt capital instruments (which combine features of both equity and debt securities) such as
perpetual cumulative preference shares, redeemable non-cumulative preference shares/redeemable cumulative preference shares and debt capital
instruments (which should be fully paid up, with a fixed maturity of minimum five years and should not contain clauses that permit step-ups or other
incentives to redeem). In its circular dated March 1, 2016, the RBI has stated that revaluation reserves arising out of a change in the carrying amount of a
bank’s property consequent to its revaluation may, at the discretion of the bank, be considered as CET-I capital. As of January 1, 2013, capital instruments
which are not Basel III compliant (such as capital debt instruments with step-ups) are being phased-out in a gradual manner (at a rate of 10.0 percent per
year).

Risk adjusted assets considered for determining the capital adequacy ratios are the aggregation of risk weighted assets of credit risk, market risk and
operational risk.

In respect of credit risk, the risk adjusted assets and off-balance sheet items considered for determining the capital adequacy ratio are the risk
weighted total of certain funded and non-funded exposures. Degrees of credit risk expressed as percentage weighting have been assigned to various balance
sheet asset items and conversion factors to off-balance sheet items. The value of each item is multiplied by the relevant weight and/or conversion factor to
arrive at risk-adjusted values of assets and off-balance sheet items. Standby letters of credit and general guarantees are treated similar to funded exposures
and are subject to a 100.0 percent credit conversion factor. The credit conversion factor for certain off-balance sheet items such as performance bonds, bid
bonds and standby letters of credit related to particular transactions is 50.0 percent while that for short-term self-liquidating trade-related contingencies such
as documentary credits collateralized by the underlying shipments is 20.0 percent. The credit conversion factor for other commitments like formal standby
facilities and credit lines is either 20.0 percent or 50.0 percent, based on the original maturity of the facility. Differential risk weights for credit exposures
linked to their external credit rating or asset class have been prescribed.

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The RBI has prescribed a matrix of risk weights varying from 35.0 percent to 75.0 percent (since revised to a maximum of 50.0 percent for loans
sanctioned on or after June 7, 2017) for individual housing loans based on the size of the loan and the loan-to-value ratios. Consumer credit and advances
that are included in our capital market exposure carry a risk weight of 125.0 percent or higher corresponding to the rating of the exposure. Exposure to
venture capital funds are risk weighted at 150.0 percent. Other loans/credit exposures are risk-weighted based on their ratings or turnover. The RBI has also
prescribed detailed guidelines for the capital treatment of securitization exposures.

The RBI requires banks in India to compute the capital requirements for operational risk under the “Basic Indicator Approach”. Under this approach,
banks must hold capital for operational risk equal to the average over the previous three years of a fixed percentage of positive annual gross income. The
BCBS has set this percentage at 15.0 percent which has been followed by the RBI.

Banks are required to maintain a capital charge for market risks on their trading books in respect of securities included under the held-for-trading and
available-for-sale categories, open gold position, open foreign exchange position limits, trading positions in derivatives and derivatives entered into for
hedging trading book exposures. With effect from fiscal 2015, banks are also required to quantify incurred credit valuation adjustment losses and standard
credit valuation adjustment capital charge on their derivatives portfolio.

The Basel III capital regulations require a bank to maintain a minimum CET-I capital ratio of 5.5 percent, a minimum Tier I capital ratio of
7.0 percent and a capital conservation buffer of 2.5 percent of its risk weighted assets with the minimum overall capital adequacy ratio of 9.0 percent of its
risk weighted assets. The transitional arrangements for the implementation of Basel III capital regulations in India began from April 1, 2013, and the
guidelines were to be fully phased-in and implemented as of March 31, 2019. In January 2019, RBI has decided to defer the implementation of the last
tranche of capital conservation buffer from March 31, 2019 to March 31, 2020. In September 2014, the RBI reviewed its guidelines on Basel III capital
regulations with a view to facilitate issuance of non-equity regulatory capital instruments by banks under Basel III framework. Accordingly, certain specific
eligibility criteria of such instruments were amended. These amendments were also intended to incentivize investors and to increase the investor base.

Domestic Systemically Important Banks

In July 2014, the RBI released a framework for dealing with domestic systemically important banks (“D-SIBs”). The D-SIB framework requires that
the RBI disclose the names of banks designated as D-SIBs every year in August. Banks identified as systemically important based on their size, inter-
connectedness in the financial system, complexity and lack of readily available substitutes or financial infrastructure would be required to maintain
additional CET-I capital ranging from 0.2 percent to 0.8 percent of risk-weighted assets (“RWAs”). D-SIBs may implement the increased capital
requirement in a phased manner from April 2016 to April 2019. Our Bank has been classified as a domestic systemically important bank by RBI during
fiscal 2018. The higher capital requirements under the bucketing structure, as provided in the D-SIB Framework, in the form of additional CET-I, shall be
phased-in from April 1, 2018, and will become fully effective from April 1, 2019.

Countercyclical Capital Buffer

In February 2015, the RBI released guidelines for implementation of Countercyclical Capital Buffer (“CCCB”). The CCCB regime requires banks to
build up a buffer of capital in good times which may be used to maintain flow of credit to the real sector in difficult times. It also achieves the broader
macro-prudential goal of restricting the banking sector from indiscriminate lending in the periods of excess credit growth that have often been associated
with the building up of system-wide risk. While the framework for CCCB has taken effect, the activation of CCCB will take place when notified by the
RBI. Some of the key points mentioned in the guidelines are as follows: (i) CCCB may be maintained in the form of CET I capital or other fully loss
absorbing capital only, and the amount of the CCCB may vary from 0.0 to 2.5 percent of total risk weighted assets of the banks; (ii) the CCCB decision
would normally be pre-announced with a lead time of four quarters; however, depending on the CCCB indicators, the banks may be advised to build up the
requisite buffer in a shorter time period; and (iii) banks will be subject to restrictions on discretionary distributions (including dividend payments, share
buybacks and staff bonus payments) if they do not meet the requirement on CCCB. In its first bi-monthly monetary policy statement for fiscal 2017, the
RBI stated that, following the review and empirical testing of CCCB indicators, it was not necessary to activate the CCCB regime at that point in time.
There has been no additional guidance as to when the RBI expects to announce the implementation of the CCCB regime.

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Loan Loss Provisions and Non-Performing Assets

The RBI has issued guidelines on income recognition, asset classification, provisioning standards and the valuation of investments applicable to
banks, which are revised from time to time. These guidelines are applied for the calculation of impaired assets under Indian GAAP. For our consolidated
financial statements prepared in accordance with U.S. GAAP, loan loss provision is made in accordance with ASC 310 and ASC 450 and as described under
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and under note 2i, “Allowance for credit losses”, to our
consolidated financial statements. The principal features of the RBI guidelines are set forth below.

Non-Performing Assets
An asset, including a leased asset, becomes non-performing when it ceases to generate income for the bank.

The RBI guidelines stipulate the criteria for determining and classifying a non-performing asset (“NPA”). An NPA is a loan or an advance where:
• interest and/or an installment of principal remain overdue (as defined below) for a period of more than 90 days in respect of a term loan;
• the account remains “out-of-order” (as defined below) in respect of an overdraft or cash credit for more than 90 days;
• the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted;
• the installment of principal or interest thereon remains overdue for two crop seasons for short duration crops;
• the installment of principal or interest thereon remains overdue for one crop season for long duration crops;
• the amount of a liquidity facility remains outstanding for more than 90 days, in respect of securitization transactions undertaken in accordance
with the RBI guidelines on securitization dated February 1, 2006; or
• in respect of derivative transactions, the overdue receivables representing the positive mark-to-market value of a derivative contract, remain
unpaid for a period of 90 days from the specified due date for payment.

Banks should classify an account as an NPA only if the interest imposed during any quarter is not fully repaid within 90 days from the end of the
relevant quarter.

“Overdue”
Any amount due to the Bank under any credit facility is “overdue” if it is not paid on the due date fixed by the Bank.

“Out-of-Order” Status
An account should be treated as “out-of-order” if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power for
90 days. In circumstances where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but (i) there are
no credits continuously for a period of 90 days as of the date of the balance sheet of the Bank; or (ii) the credits are not sufficient to cover the interest
debited during the same period, these accounts should be treated as “out-of-order”.

Asset Classification
Banks are required to classify NPAs into the following three categories based on the period for which the asset has remained non-performing and the
realizability of the dues:

Sub-standard Assets: Assets that are non-performing for a period less than or equal to 12 months. Such an asset has well-defined credit weaknesses
that jeopardize the liquidation of the debt and is characterized by the distinct possibility that the Bank will sustain some loss if deficiencies are not
corrected.

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Doubtful Assets: An asset will be classified as doubtful if it remains in the substandard category for a period of 12 months. A loan classified as
doubtful has all the weaknesses inherent in assets that are classified as sub-standard, with the added characteristic that the weaknesses make collection or
liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable.

Loss Assets: Assets on which losses have been identified by the Bank or internal or external auditors or on inspection by the RBI, but the amount has
not been written off fully. Such an asset is considered uncollectable and of such little value that its continuance as a bankable asset is not warranted,
although there may be some salvage or recovery value.

There are separate asset classification guidelines that will apply to projects under implementation before the commencement of their commercial
operation.

Restructured Assets
The RBI has issued prudential guidelines on the restructuring of advances by banks. The guidelines essentially deal with the norms/conditions, the
fulfillment of which is required to maintain the category of the restructured account as a “standard asset”. A standard asset can be restructured by
rescheduling principal repayments and/or the interest element, subject to compliance with certain conditions, but must be separately disclosed as a
restructured asset.

The following categories of advances are not eligible for being classification as a standard asset upon restructuring: (a) consumer and personal
advances; (b) advances classified as capital market exposures; and (c) advances classified as commercial real estate exposures.

The criteria to be fulfilled for the restructured advance to be treated as a “standard asset” includes the viability of the business, infusion of promoters’
contribution, full security coverage and cap on maximum tenor of repayment. The economic loss, if any, arising as a result of a restructuring needs to be
provided for in the books of the Bank. The provision is computed as the difference between the fair value of the account before and after restructuring.

Similar guidelines apply to sub-standard assets. Sub-standard accounts which have been subjected to restructuring, whether in respect of a principal
installment or interest amount, are eligible to be upgraded to the standard category only after the specified period, i.e., a period of one year after the date
when the first payment of interest or of principal, whichever is earlier, falls due, subject to satisfactory performance during the period.

In May 2013, the RBI issued additional guidelines in relation to restructured assets wherein such regulatory forbearance regarding asset classification
on restructured accounts will be withdrawn for all restructurings with effect from April 1, 2015, with the exception of provisions related to changes in “Date
of Commencement of Commercial Operations” (“DCCO”) in respect of infrastructure as well as non-infrastructure project loans. This implies that a
standard account would immediately be classified as a sub-standard account upon restructuring. These guidelines are also applicable to non-performing
assets, which, upon restructuring, would continue to have the same asset classification as prior to the restructuring and may be classified into lower
categories in accordance with applicable asset classification norms based on the pre-restructuring repayment schedule. However, the standard asset
classification may be retained, subject to specified conditions, in respect of certain loans granted for infrastructure projects given the importance of the
infrastructure sector in national growth and development and the uncertainty involved in obtaining approvals from various authorities.

Resolution of Stressed Assets

In June 2019, the RBI issued the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019. These directions
replace the erstwhile framework for the resolution of stressed assets (including the framework for revitalizing distressed assets, the joint lenders forum
mechanism, strategic debt restructuring, and the scheme of sustainable structuring of stressed assets).

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As set out in the circular, lenders must recognize developing stress in loan accounts, immediately on default. Lenders must put in place policies
approved by their board of directors for the resolution of stressed assets, including the timelines for such resolution, and they are expected to implement the
resolution plan before default occurs. If a default occurs, lenders have a review period of 30 days within which their resolution strategy must be decided.
The RBI directions provide the timelines within which the banks are required to implement the resolution plan, depending on the aggregate exposure of the
borrower to the lender. For large accounts with the aggregate exposure of the lenders being Rs. 20 billion or more, the RBI has specified that the resolution
plan must be implemented within 180 days from the end of the review period. If implementation of the resolution plan is delayed, lenders are required to
make an additional provision of 20.0 percent of the total outstanding in addition to any provisions already made and those provisions required to be made as
per the asset classification status of the borrower, subject to a total provision of 100.0 percent of the total amount outstanding. Lenders are required to make
appropriate disclosures of implemented resolution plans in their financial statements under “Notes on Accounts”.

Act Relating to Recovery of NPAs

As a part of the financial sector reforms, the Government introduced the SARFAESI Act. The SARFAESI Act provides banks and other lenders
increased powers in the recovery of the collateral underlying NPAs.

Provisioning and Write-Offs

Provisions are based on guidelines specific to the classification of assets. The following guidelines apply to various asset classifications:

Standard Assets
Banks are required to make general provisions for standard assets for the funded outstanding on a global portfolio basis. The provisioning
requirement for housing loans at teaser rates is 2.0 percent and will reduce to 0.40 percent after one year from the date on which the teaser rates are reset at
higher rates if the accounts remain standard. In November 2012, the RBI increased the provisioning requirement for restructured standard assets from
2.0 percent to 2.75 percent. In May 2013, the RBI increased the provisioning requirement for all types of accounts restructured to 5.0 percent with effect
from June 1, 2013. For the stock of restructured standard accounts as of May 31, 2013, this increase was required to be implemented in a phased manner by
March 31, 2016. The provisioning requirements for other loans range from 0.25 percent to 1.0 percent on the outstanding loans based on the type of
exposure. Derivative exposures, such as credit exposures computed as per the current marked to market value of the contract arising on account of the
interest rate and foreign exchange derivative transactions and gold are subject to the same provisioning requirement applicable to the loan assets in the
standard category of the concerned counterparties. All conditions applicable for the treatment of the provisions for standard assets would also apply to the
aforesaid provisions for derivatives and gold exposures.

In February 2014, the RBI directed banks to form a JLF if the aggregate exposure of both fund-based and non-fund based facilities taken together of
lenders in an account is Rs. 1,000 million and above and the account is reported by any of the lenders to CRILC as special mention account-2 (“SMA-2”). If
the lenders fail to convene the JLF or fail to agree upon a common CAP within the stipulated time frame, the account will be subjected to accelerated
provisioning of 5.0 percent if the account is classified as a standard asset in the accounts of the lenders. In October 2014, the RBI decided that accelerated
provisioning will be applicable only to the lead Bank having responsibility to convene the JLF and not to all the lenders in the consortium or multiple
banking arrangements. In case the lead Bank fails to convene the JLF, the Bank with the second-largest aggregate exposure shall convene the JLF.

The RBI has also introduced incremental provisioning requirements with effect from April 1, 2014, for banks’ exposures to entities with unhedged
foreign currency exposure. Banks are required to collect specific information from its customers and assess the extent to which a customer is exposed to
unhedged foreign currency on account of volatility in the exchange rate of the rupee vis-à-vis foreign currencies and calculate the incremental provisions
based on the methodology prescribed by the RBI.

By its circular dated April 18, 2017, the RBI has advised banks to make provisions at higher rates in respect of standard advances to stressed sectors
of the economy, and requires Bank to (i) put in place a Board-approved policy for making provisions for standard assets at rates higher than the regulatory
minimum based on evaluation of risk and stress in various sectors; (ii) review the policy on a quarterly basis; and (iii) review the telecom sector by June 30,
2017, and consider making provisions for standard assets in this sector at higher rates.

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Sub-Standard Assets
A general provision of 15.0 percent on total outstanding loans is required without making any allowance for the Export Credit Guarantee Corporation
of India guarantee cover and securities available. The unsecured exposures which are identified as sub-standard are subject to an additional provision of
10.0 percent, i.e., a total of 25.0 percent on the outstanding balance. However, unsecured loans classified as sub-standard in relation to infrastructure
lending, where certain safeguards such as escrow accounts are available, are subject to an additional provision of only 5.0 percent (i.e., a total of
20.0 percent on the outstanding balance).

Unsecured exposure is defined as an exposure where the realizable value of security, as assessed by the Bank, approved valuers or the RBI’s
inspecting officers, is not more than 10 percent, ab initio, of the outstanding exposure. Exposure includes all funded and non-funded exposures (including
underwriting and similar commitments). Security means tangible security properly discharged to the Bank and will not include intangible securities such as
guarantees and comfort letters.

Doubtful Assets
A 100.0 percent provision is made against the unsecured portion of the doubtful asset. In cases where there is a secured portion of the asset,
depending upon the period for which the asset remains doubtful, a 25.0 percent to 100.0 percent provision is required to be made against the secured asset
as follows:
• Up to one year: 25.0 percent provision.
• One to three years: 40.0 percent provision.
• More than three years: 100.0 percent provision.

Loss Assets
The entire asset is required to be written off or 100.0 percent of the outstanding amount is required to be provided for.

Floating Provisions
In June 2006, the RBI issued prudential standards on the creation and utilization of floating provisions (provisions which are not made in respect of
specific non-performing assets or are made in excess of regulatory requirements for provisions for standard assets). Floating provisions must be held
separately and cannot be reversed by credit to the profit and loss account. The RBI has permitted banks to utilize a prescribed percentage of the floating
provisions held by them for making specific loan loss allowances for impaired accounts under extraordinary circumstances. Until the utilization of such
provisions, they can be netted off from gross non-performing assets to arrive at disclosure of net non-performing assets, or alternatively, can be treated as
part of Tier II capital within the overall ceiling of 1.25 percent of credit RWAs.

Provisioning Coverage Ratio

With a view to ensuring counter-cyclical provisioning in the banking system, the RBI mandated that banks should augment their provisioning
cushions consisting of specific provisions against NPAs as well as floating provisions (to the extent not used at Tier II capital), and ensure that their total
Provisioning Coverage Ratio (“PCR”), including the above floating provisions, is not less than 70 percent as of September 30, 2010. Under the current
regime (i) the PCR of 70.0 percent may be computed with reference to the gross NPA position in the relevant banks as of September 30, 2010; (ii) the
surplus of the provision under PCR over the amount required by the guidelines, would be treated as “countercyclical provisioning buffer”; and (iii) banks
may utilize up to a prescribed percentage of the countercyclical provisioning buffer/floating provisions held by them for making specific provisions for
NPAs during periods of system wide downturn, as per the policy approved by the bank’s board of directors. The RBI released a discussion paper on
dynamic loan loss provisioning framework in March 30, 2012. The framework proposes to replace the existing standards of general provisioning and
recommends that banks make provisions on their loan book based on historical loss experience for different asset classes. Banks can draw down from
dynamic provisions during periods of downturn. The RBI has advised that the dynamic provision framework is expected to be in place with improvement in
the system.

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Regulations Relating to Sale of Assets to Asset Reconstruction Companies

The SARFAESI Act provides for the sale of financial assets by banks and financial institutions to asset reconstruction companies. The RBI has also
issued guidelines to banks on the process to be followed for the sale of financial assets to asset reconstruction companies. These guidelines provide that a
Bank may sell financial assets to an asset reconstruction company provided the asset is an NPA. A Bank could also sell a standard asset only if (i) the asset
is under consortium or multiple banking arrangement; (ii) at least 75.0 percent by value of the of the asset is classified as non-performing in the books of
other banks and financial institutions; and (iii) at least 75.0 percent by value of the banks and financial institutions in the consortium or multiple banking
arrangements agree to the sale of the asset to a securitization company or a reconstruction company. The banks selling financial assets must ensure that
there is no known liability being transferred to them and that they do not assume any operational, legal or any other type of risks relating to the financial
assets sold. Further, banks cannot sell financial assets at a contingent price with an agreement to bear a part of the shortfall on ultimate realization.
However, banks may sell specific financial assets with an agreement to share any surplus realized by the asset reconstruction company in the future. While
each bank is required to make its own assessment of the value offered in the sale before accepting or rejecting an offer for purchase of financial assets by an
asset reconstruction company, in consortium or multiple banking arrangements where more than 75.0 percent, by value of the banks or financial institutions,
accept the offer, the remaining banks or financial institutions are obliged to accept the offer. Consideration for the sale may be in the form of cash or
bonds/debentures issued by the asset reconstruction company or trusts set up by it to acquire financial assets. Banks can also invest in security receipts or
pass-through certificates issued by the asset reconstruction company or trusts set up by it to acquire the financial assets.

Guidelines on Sale and Purchase of Non-Performing Assets (“NPAs”) among Banks, Financial Institutions and Non-banking Financial Institutions
In order to increase the options available to banks for resolving their NPAs and to develop a healthy secondary market for NPAs, in July 2005, the
RBI issued guidelines for the purchase and sale of NPAs among banks, financial institutions and NBFCs. In terms of these guidelines, banks’ boards are
required to establish policies covering, among others, a valuation procedure to be followed to ensure that the economic value of financial assets is
reasonably estimated based on the assessed cash flows arising out of repayment and recovery prospects. Purchases and sales of NPAs must be without
recourse to the seller, on a cash basis, with the entire consideration being paid up-front, and after the sale there should not be any known liability devolving
on the seller. Previously, an asset needed to be classified by the seller as non-performing for at least two years to be eligible for sale and the purchasing bank
needed to have held the NPA in its books for at least 15 months before it could sell the asset to another bank.

In February 2014, the RBI issued guidelines wherein the requirement of a minimum holding period of two years by the seller in relation to sale
transactions with other banks, financial institutions and NBFCs, was removed. These guidelines reduce the purchasing bank’s holding period requirement to
12 months before it can sell the asset to another bank, financial institution or NBFC. In accordance with these RBI guidelines, the asset cannot be sold back
to the original seller.

Further, to incentivize the early sale of NPAs to securitization companies and/or reconstruction companies, banks are allowed to spread over any
shortfall, if the sale value is lower than the net book value, over a period of two years for NPAs sold up to March 31, 2016. In its circular of June 2016, the
RBI has further extended the dispensation of amortizing the shortfall on the sale of NPAs to securitization companies and reconstruction companies to
March 31, 2017. However, in respect of NPAs sold during the period from April 1, 2016 to March 31, 2017, banks may amortize the shortfall over a period
of only four quarters from the quarter in which the sale took place.

Guidelines on Sale of Standard Assets

The RBI first issued guidelines for the securitization of standard assets in February 2006. The guidelines provide that for a transaction to be treated as
a securitization, a two-stage process must be followed. In the first stage there must be a sale of a single asset or pooling and transferring of assets to a
bankruptcy remote special purpose vehicle (“SPV”) in return for immediate cash payment and in the second stage repackaging and selling the security
interests representing claims on incoming cash flows from the asset or pool of assets to third-party investors should be effected. Further, for enabling the
transferred assets to be removed from the balance sheet of the seller in a securitization structure, the isolation of assets or “true sale” from the seller or
originator to the SPV is an essential prerequisite. Also, an arm’s-length relationship must be maintained between the originator, the seller and the SPV.

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Certain regulatory standards for capital adequacy, valuation, profit and loss on sale of assets, income recognition and provisioning, accounting
treatment for securitization transactions and disclosure standards have been prescribed. The guidelines are applicable for originators and have prescribed
provisions for service providers like: credit enhancers, liquidity support providers and underwriters and investors. Quarterly reporting to the audit
sub-committee of the board of directors by originating banks of the securitization transactions has also been prescribed. Apart from banks, these guidelines
are also applicable to financial institutions and NBFCs.

In May 2012, the RBI revised the guidelines on transfer of assets through securitization and direct assignment of cash flows. These guidelines govern
the securitization of debt obligations of a homogenous pool of obligors as well as the direct sale or transfer of a single standard asset. The roles of both the
selling and purchasing banks have been defined more clearly. All on-balance sheet standard assets except those expressly disallowed in the guidelines are
eligible for securitization subject to being held by the originating bank for a minimum holding period. The guidelines also prescribe a minimum retention
requirement, i.e., the minimum part of the securitized debts that the originator is required to retain during the term of securitization. Overseas banking
outlets of Indian banks cannot undertake securitization in other jurisdictions unless there is a minimum retention requirement in that jurisdiction. These
requirements have been established to ensure that the originator exercises due diligence with regard to the securitized assets. The guidelines also establish
the upper limit on the total retained exposure of the originator, the disclosures to be made by the originators, applicability of capital adequacy and asset
classification and provisioning norms to these transactions. The norms also stipulate stress testing and extensive monitoring requirements on the purchased
portfolios. Transactions which do not meet the requirements established by the guidelines will be assigned very high-risk weights under capital adequacy
norms. The guidelines on transfer of assets through securitization and direct assignment of cash flows do not apply to:
• transfer of loan accounts of borrowers by a bank to other bank/financial institutions/NBFCs and vice versa, at the request/instance of
borrower;
• inter-bank participations;
• trading in bonds;
• sale of entire portfolio of assets consequent upon a decision to exit the line of business completely (which should have the approval of the
board of directors of the Bank);
• consortium and syndication arrangements and arrangement under corporate debt restructuring mechanism; and
• any other arrangement/transactions, specifically exempted by the RBI.

Regulations Relating to Making Loans

The provisions of the Banking Regulation Act govern loans made by banks in India. The RBI issues directions covering the loan activities of banks.
Major guidelines include norms for bank lending to priority sectors, non-bank financial companies, guidelines on banks’ benchmark lending rates, base
rates and norms for loans against shares.

In terms of Section 20(1) of the Banking Regulation Act, a bank cannot grant any loans and advances against the security of its own shares. A
banking company is prohibited from entering into any commitment for granting any loans or advances to or on behalf of any of its directors, or any firm in
which any of its directors has an interest as a partner, manager, employee or guarantor or any other company (not being a subsidiary of the banking
company or a company registered under section 8 of the Companies Act, 2013 or a Government company), or the subsidiary or the holding company of
such a company of which any of the directors of the bank is a director, managing agent, manager, employee or guarantor or in which he holds substantial
interest, or any individual in respect of whom any of its directors is a partner or guarantor. There are certain exceptions in this regard which exclude any
transaction which the RBI may specify by general or special order as not being a loan or advance for the purpose of such section. The Government may, on
the recommendation of the RBI and subject to conditions as it may deem fit to impose, exempt any banking company from the restriction on lending to the
subsidiary, holding company or any other company in which any of the directors of the banking company is a director, managing agent, manager, employee,
guarantor or in which such person holds substantial interest.

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In the context of granting greater functional autonomy to banks, effective October 18, 1994, the RBI decided to remove restrictions on the lending
rates of scheduled commercial banks for credit limits of over Rs. 0.2 million. Banks were given the freedom to fix the lending rates for such credit limits
subject to the Benchmark Prime Lending Rate (“BPLR”) and spread guidelines. The BPLR system, however, fell short of its original objective of bringing
transparency to lending rates. This was mainly because under the BPLR system, banks could lend below BPLR. Banks consequently were advised by the
RBI to switch over to the system of Base Rate with effect from July 1, 2010. The base rate system was aimed at enhancing transparency in lending rates of
banks and enabling better assessment of transmission of the monetary policy. The Base Rate included all elements of the lending rates that were common
across all categories of borrowers. Banks were allowed to choose any benchmark to arrive at their Base Rate for a specific tenor that could be disclosed. For
loans sanctioned up to June 30, 2010, the BPLR was applicable. However, for loans sanctioned up to June 30, 2010, but renewed from July 1, 2010, the
Base Rate was applicable.

In December 2015, the RBI issued revised guidelines on computing interest rates on advances based on the marginal cost of funds. The revised
guidelines were issued with a view to improving the transmission of policy rates into bank lending rates, improving transparency in the methodology
followed by banks for determining interest rates on advances, and ensuring the availability of bank credit at interest rates which are fair to the borrowers as
well as the banks. The guidelines came into effect from April 1, 2016. Pursuant to the revised guidelines, all rupee loans sanctioned and credit limits
renewed with effect from April 1, 2016, will be priced with reference to the MCLR. Actual lending rates will be determined by adding the components of
spread to the MCLR. Banks will review and publish their MCLR of different maturities every month on a pre-announced date. The guidelines provide that
existing loans and credit limits linked to the Base Rate may continue until repayment or renewal. Certain types of loans, including fixed rate loans with
tenor over three years and loans linked to a market determined external benchmark, are exempt from provisions of MCLR. The existing borrowers will have
the option to move to MCLR-linked loan at mutually acceptable terms.

Directed Lending
Priority Sector Lending
The guidelines on lending to the priority sector are set forth in the RBI Master Directions on Priority Sector Lending—Targets and Classification as
updated from time to time. The priority sector is broadly comprised of agriculture, micro, small and medium enterprises (“MSMEs”), education, housing,
export credit, social infrastructure, renewable energy, and others subject to certain limits. The guidelines take into account the revised definition of MSMEs
as per the Micro, Small and Medium Enterprises Development Act, 2006.

The priority sector lending targets are linked to the adjusted net bank credit (“ANBC”) or the credit equivalent amount of off-balance sheet exposures
(“CEOBE”), whichever is higher, as on the corresponding date of the previous year. Domestic banks are required to achieve total priority sector lending
equivalent to 40.0 percent of their ANBC or CEOBE. Of the total priority sector advances, agricultural advances are required to be 18.0 percent of ANBC
or CEOBE, whichever is higher. Advances to weaker sections are required to be 10.0 percent of ANBC or CEOBE, whichever is higher. Within the
18.0 percent target for agriculture, a target of 8.0 percent of ANBC or CEOBE, whichever is higher, is prescribed for small and marginal farmers. Banks
have also been directed to ensure that their overall direct lending to non-corporate farmers does not fall below the system-wide average of the achievements
over the last three years (which will be notified by the RBI at the beginning of each year, the current percentage being 11.7 percent). The RBI further
reiterated that the banks should continue to undertake all efforts to reach the level of 13.5 percent of direct lending to the beneficiaries who earlier
constituted the direct agriculture sector. The target for micro enterprises is set at 7.5 percent.

Loans to individuals up to Rs. 3.5 million in metropolitan centers (with population of 1 million or more) and loans up to Rs. 2.5 million in other
centers for the purchase or construction of a dwelling unit per family (provided the overall cost of the dwelling unit in the metropolitan center and at other
centers does not exceed Rs. 4.5 million and Rs. 3.0 million, respectively), excluding loans granted by banks to their own employees, are to be treated as part
of priority sector lending. Loans to individual borrowers for educational purposes, including vocational courses up to Rs. 1.0 million, are also to be treated
as part of priority sector lending. Investments by banks in securitized assets and outright purchases of loans representing loans to various categories of
priority sector are eligible for classification under the priority sector only if certain criteria are fulfilled.

Bank loans up to a limit of Rs. 50 million per borrower for building social infrastructure for activities, namely schools, health care facilities, drinking
water facilities and sanitation facilities in certain eligible centers as prescribed by the RBI are treated as priority sector lending. Further, Bank loans up to a
limit of Rs. 150 million to borrowers for purposes like solar-based power generators, biomass-based power generators, windmills, micro-hydel plants and
for non-conventional energy based public utilities like street lighting systems, and remote village electrification are also treated as priority sector lending.
Additionally, in March 2018, the RBI removed the loan limits applicable to MSMEs for classification under the priority sector.

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Banks are required to ensure compliance with priority sector lending targets on a quarterly basis. Domestic scheduled commercial banks having a
shortfall in lending to priority sector targets are allocated amounts for contribution to the Rural Infrastructure Development Fund established with the
National Bank for Agriculture and Rural Development or funds with other financial institutions, as may be decided by the RBI, as and when funds are
required by them. The interest rates on banks’ contributions to these schemes and periods of deposits, among other things, are fixed by the RBI from time to
time. Additionally, as per RBI guidelines, non-achievement of priority sector targets and sub-targets is taken into account by the RBI when granting
regulatory clearances and approvals for various purposes. While computing priority sector achievement, a simple average of all quarters will be arrived at
and considered for computation of overall shortfall/ excess at the end of the year.

Foreign banks having 20 or more banking outlets in India were brought on par with domestic banks for priority sector targets in a phased manner over
a maximum period of five years commencing on April 1, 2013, and since have a priority sector lending target of 40.0 percent of ANBC. In March 2018, the
RBI directed such banks to achieve a sub-target of 8.0 percent of ANBC or CEOBE, whichever is higher, for banks lending to small and marginal farmers.
Further, a sub-target of 7.5 percent of ANBC or CEOBE, whichever is higher, for banks lending to microenterprises has also become applicable for foreign
banks with 20 banking outlets or more from March 31, 2018.

Further, foreign banks with less than 20 banking outlets are directed to achieve a total priority sector lending target of 40.0 percent of ANBC or
CEOBE, whichever is higher, on par with other banks by fiscal 2020.

In order to enable banks to achieve the priority sector lending target and sub-targets, the RBI, in its circular dated April 7, 2016, has introduced the
Priority Sector Lending Certificates (“PSLC”) Scheme. The scheme permits banks to purchase PSLCs in the event of a shortfall from those banks that have
achieved a surplus in their priority sector lending targets. There are four kinds of PSLCs:
(i) PSLC Agriculture: counting for achievement towards the total agriculture lending target;
(ii) PSLC SF/MF: counting for achievement towards the sub-target for lending to small and marginal farmers;
(iii) PSLC Micro Enterprises: counting for achievement towards the sub-target for lending to micro enterprises; and
(iv) PSLC General: counting for achievement towards the overall priority sector target.

Export Credit
The RBI also requires banks to make loans to exporters. We provide export credit for pre-shipment and post-shipment requirements of exporters in
rupees as well as foreign currencies. With effect from April 1, 2015, incremental export credit extended by domestic banks over the corresponding date of
the preceding year, up to 2.0 percent of ANBC or CEOBE, whichever is higher, subject to a limit of Rs. 25 crore per borrower, to units having turnover of
up to Rs.100 crore, shall be classified as priority sector lending. A similar limit is applicable to foreign banks with 20 or more banking outlets in India with
effect from April 1, 2017. Until March 31, 2017, foreign banks with 20 or more banking outlets are allowed to count a certain percentage of their export
credit limit as priority sector lending. Foreign banks with less than 20 banking outlets are allowed to classify up to 32.0 percent of ANBC or CEOBE,
whichever is higher, as priority sector lending. The interest rates applicable for all tenors of rupee-denominated export credit advances are required to be at
or above Base Rate. As per RBI directions, the Base Rate system has been replaced by the MCLR and all rupee loans and credit limits sanctioned or
renewed with effect from April 1, 2016, are required to be priced with reference to the MCLR. Existing loans and credit limits may remain linked to the
Base Rate until repayment or renewal. With effect from May 5, 2012, the RBI has deregulated the interest rates on export credit in foreign currencies and
has permitted banks to determine their own interest rates in respect thereof.

Lending to Infrastructure Sector and Affordable Housing Sector

In order to allow banks to provide long-term funds for project loans to the infrastructure sector and the affordable housing sector, the RBI, in
July 2014, issued guidelines for the issuance of long-term bonds by banks for financing infrastructure sector loans and lending to the affordable housing
sector. Under these guidelines, banks are permitted to issue long-term fully paid, redeemable and unsecured bonds with a minimum maturity of seven years
to enable lending to long-term projects in certain specified infrastructure sub-sectors and the affordable housing sector as prescribed in the guidelines. To
encourage lending to these sectors, these long-term bonds are not subject to cash reserve ratio (“CRR”) or statutory liquidity ratio (“SLR”) requirements.
These bonds are also not included in the computation of ANBC for the purposes of priority sector lending targets subject to the guidelines. However, any
infrastructure or affordable housing loans acquired from other banks and financial institutions (such as those that could be involved in a business
combination with the Bank) will require the prior approval of the RBI to avail these regulatory incentives.

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Credit Exposure Limits

As a prudential measure aimed at better risk management and avoiding the concentration of credit risks, the RBI has advised banks to fix limits on
their exposure to specific industries and sectors and has prescribed regulatory limits on banks’ exposures to individual borrowers and borrower groups. In
addition, banks are also required to observe certain statutory and regulatory exposure limits in respect of advances against or investments in shares,
convertible debentures or bonds, units of equity-oriented mutual funds and all exposures to venture capital funds (VCFs).

The RBI limits exposure to individual borrowers to not more than 15.0 percent of the capital funds of a Bank and limits exposure to a borrower group
to not more than 40.0 percent of the capital funds of a bank. The capital funds for this purpose are comprised of Tier I and Tier II capital, as defined under
the capital adequacy standards and as per the published accounts as of March 31 of the previous year. The infusion of Tier I or Tier II capital, either through
domestic or overseas issuances, after the published balance sheet date is also eligible for inclusion in the capital funds for determining the exposure ceiling.
In the case of infrastructure projects, such as power, telecommunications, road and port projects, an additional exposure of up to 5.0 percent of capital funds
is allowed in respect of individual borrowers and up to 10.0 percent in respect of group borrowers. Banks may, in exceptional circumstances and with the
approval of their boards, consider increasing their exposure to an individual borrower or a borrower group by a further 5.0 percent of capital funds. With
effect from May 2008, the RBI revised the prudential limit to 25.0 percent of capital funds in respect of a bank’s exposure to oil companies to which
specified oil bonds have been issued by the Government of India. Banks need to make appropriate disclosures in their annual financial statements in respect
of exposures where they have exceeded the prudential exposure limits during the year.

Exposures (both lending and investment, including off balance sheet exposures) of a bank to a single NBFC, NBFC-Asset Financing Company
(AFC), or NBFC-Infrastructure Finance Company (IFC) should not exceed 10.0 percent, 15.0 percent and 15.0 percent, respectively, of a bank’s capital
funds. A Bank may, however, assume exposures on a single NBFC, NBFC-AFC, or NBFC-IFC up to 15.0 percent, 20.0 percent and 20.0 percent,
respectively, of its capital funds, provided the exposure in excess of 10.0 percent, 15.0 percent and 15.0 percent (referred to above) is on account of funds
that the NBFC, NBFC-AFC, or NBFC-IFC has lent out to the infrastructure sector. Further, all banks may consider fixing internal limits for their aggregate
exposure to all NBFCs combined.

Exposure includes credit exposure (funded and non-funded credit limits) and investment exposure (including underwriting and similar commitments).
The sanctioned limits or outstandings, whichever is higher, would be included when arriving at the exposure limit. However, in the case of fully drawn term
loans, where there is no scope for re-drawing of any portion of the sanctioned limit, banks may consider the outstanding as the exposure. For the purpose of
exposure norms, banks shall compute their credit exposures, arising on account of the interest rate and foreign exchange derivative transactions and gold,
using the Current Exposure Method. While computing credit exposures, banks may exclude “sold options”, provided that the entire premium or fee or any
other form of income is received or realized.

Credit exposure comprises the following elements:

• all types of funded and non-funded credit limits; and
• facilities extended by way of equipment leasing, hire purchase finance and factoring services.

Apart from limiting exposures to an individual or a group of borrowers, as indicated above, the RBI guidelines also require banks to consider fixing
internal limits for aggregate commitments to specific sectors, so that their exposures are evenly spread across various sectors. These limits are subject to a
periodic review by banks.

In August 2016, the RBI has issued a circular imposing certain restrictions on lending by banks to large borrowers. The circular aims to mitigate the
risk posed to the banking system by large loans to single corporate borrowers, and also encourage large corporates with borrowings from the banking
system above a cut-off level to tap the market for their working capital and term loan needs. As per the circular, which is effective April 1, 2017, banks are
required to keep exposures to specified borrowers within a normally permitted lending limit (“NPLL”) specified in the circular from the fiscal succeeding
that in which the borrower is identified as a specified borrower. For incremental exposures in excess of the NPLL, banks are required to maintain an
additional provision of 3.0 percent on such excess. Additional risk weight of 75.0 percent over and above the applicable risk weight for the exposure to the
specified borrower is also required to be maintained by the Bank in case of any incremental exposure. The guidelines define “specified borrowers” as
having an aggregate fund based credit limit (as described in the circular) of over Rs. 250 billion at any time during fiscal 2018; Rs. 150 billion at any time
during fiscal 2019; and Rs. 100 billion at any time from April 1, 2019, onwards.

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In December 2018, the RBI issued guidelines in relation to bank credit to large borrowers. The guidelines state that borrowers having a fund-based
working capital limit of Rs. 1,500 million and above from the banking system, will need to have a loan component of at least 40.0 percent. Accordingly, for
such borrowers drawings up to 40.0 percent of the total fund-based working capital limits shall only be allowed from the loan component, and drawings in
excess of this may be allowed as cash credit facility. These guidelines will become effective from April 1, 2019, and with effect from July 1, 2019, the
mandatory loan component will be revised to 60.0 percent.

Large Exposures Framework

In June 2019, the RBI issued the revised Large Exposures Framework, which aims to align the exposure norms for Indian Banks with BCBS
standards. The guidelines have come into effect from April 1, 2019, except for certain provisions which will become effective from April 1, 2020. The
framework defines “large exposures” and governs banks’ exposures to counterparties. The framework prescribes that the sum of all exposure values of a
bank to a single counterparty must not be higher than 20.0 percent of the bank’s available eligible capital base at all times, and that to a group of connected
counterparties must not be higher than 25.0 percent of the bank’s available eligible capital base. Tier I capital fulfilling the criteria mentioned in the Basel
III guidelines issued by RBI is required to be considered as eligible capital base for this purpose.

Regulations Relating to Capital Market Exposure Limits

The RBI has issued guidelines on financing to participants in the capital markets. These guidelines place a ceiling on the overall exposure of a bank to
the capital markets.

The aggregate exposure that a bank has to the capital markets in all forms (both fund and non-fund based) must not exceed 40 percent of its net worth
(both for the stand-alone and the consolidated bank) as of March 31 of the previous year. Within this overall ceiling, the bank’s direct investment in shares,
convertible bonds/debentures, units of equity-oriented mutual funds and exposure to VCFs must not exceed 20 percent of its net worth (both for the stand-
alone and the consolidated Bank). Net worth is comprised of the aggregate of paid-up capital, free reserves (including share premium but excluding
revaluation reserves), investment fluctuation reserve and credit balance in the profit and loss account, less the debit balance in the profit and loss account,
accumulated losses and intangible assets. There are guidelines on loans against equity shares in respect of amount, margin requirement and purpose.

The following exposures are subject to the ceiling:

• direct investment in equity shares, convertible bonds, convertible debentures and units of equity-oriented mutual funds, the fund assets of
which are not exclusively invested in corporate debt;
• advances against shares/bonds/debentures or other securities or advances without security to individuals for investment in shares (including in
primary offerings and employee stock option plans), convertible bonds, convertible debentures and units of equity-oriented mutual funds;
• advances for any other purposes where shares or convertible bonds or convertible debentures or units of equity oriented mutual funds are
taken as primary security;
• advances for any other purposes to the extent secured by collateral of shares, convertible bonds, convertible debentures or units of equity
oriented mutual funds, i.e., where the primary security other than shares or convertible bonds or convertible debentures or units of equity
oriented mutual funds does not fully secure the advances;
• secured and unsecured advances to stockbrokers and guarantees issued on behalf of stockbrokers and market makers;

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• loans sanctioned to companies against the security of shares/bonds/debentures or other securities or on a clean basis for meeting a promoter’s
contribution to the equity of new companies;
• bridge loans to companies against expected equity flows/issues;
• underwriting commitments taken up by banks in respect of primary issues of shares or convertible bonds or convertible debentures or units of
equity-oriented mutual funds;
• financing to stockbrokers for margin trading;
• all exposure to venture capital funds (both registered and unregistered); and
• irrevocable payment commitments issued by custodian banks in favor of stock exchanges.

Regulations Relating to Other Loan Exposures

The RBI requires banks to have put in place a policy for exposure to real estate with the approval of their boards. The policy is required to include
exposure limits, collateral to be considered, collateral cover and margins and credit authorization. The RBI has also permitted banks to extend financial
assistance to Indian companies for the acquisition of equity in overseas joint ventures or wholly owned subsidiaries or in other overseas companies, new or
existing, as strategic investments. Banks are not, however, permitted to provide companies “acquisition finance” to acquire companies in India.

Limits on Intra-group Transactions and Exposures

In February 2014, the RBI issued guidelines on the management of intra-group transactions and exposures which have been in effect since October 1,
2014. These guidelines contain both quantitative limits for the financial intra-group transactions and exposures (“ITEs”) and prudential measures for the
non-financial ITEs to ensure that the banks engage in ITEs in a prudent manner in order to contain the concentration and contagion risk arising out of ITEs.
These measures are aimed at ensuring an arm’s-length relationship in dealings with group entities and prescribe minimum requirements with respect to
group risk management and group-wide oversight and prudential limits on intra-group exposures. Effective October 2014, a bank’s exposure to a
non-financial or unregulated financial services entity in its group will be capped at 5.0 percent of its paid-in capital and reserves and its exposure to a
regulated financial services company in its group will be capped at 10.0 percent of its paid-in capital and reserves. In the event a bank’s current intra-group
exposure is more than the limits stipulated in the guidelines, that bank was required to bring the exposure within the limits by no later than March 31, 2016.
Any exposure beyond the permissible limits subsequent to March 31, 2016, is deducted from CET-I capital of the bank.

Regulation Relating to Country Risk Management

The RBI has issued detailed guidelines on country risk management that cover banks’ exposure to those countries to which they have a net funded
exposure of 1.0 percent or more of their total assets and no provision is maintained on such country exposure. The countries are categorized into seven risk
categories, namely: insignificant, low, moderate, high, very high, restricted and off-credit. Required provisioning is based on exposures exceeding 180 days
on a graded scale ranging from 0.25 percent to 100.0 percent. Banks may maintain a lower level of provisioning of 25.0 percent of the requirement in
respect of exposures with a contractual maturity of less than 180 days.

Regulations Relating to Investments

Exposure Limits
Credit exposure limits specified by the RBI in respect of a bank’s lending to individual borrowers and borrower groups apply in respect of
non-convertible debt instruments. Within the overall capital market exposure ceiling, a bank’s direct investments in equity securities, convertible bonds and
debentures and units of equity-oriented mutual funds should not exceed 20.0 percent of its net worth as of March 31 of the previous year. A bank’s
aggregate investment in subordinated bonds eligible for Tier II capital status issued by other banks or financial institutions is restricted to up to 10.0 percent
of the investing bank’s capital funds (Tier I plus Tier II capital). Investments in the instruments issued by banks or financial institutions that are eligible for
capital status are either risk weighted or deducted from the investee bank’s capital, for capital adequacy purposes, depending upon the extent of investment
as prescribed by the RBI under the Basel III capital regulations.

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In order to contain the risks arising out of investment by banks in non-statutory liquidity ratio (“non-SLR”) securities, and, in particular, the risks
arising out of investment in bonds through private placement, the RBI has issued detailed guidelines on investment by banks in non-SLR securities. Banks
have been advised to restrict their new investments in unlisted securities to 10.0 percent of their total non-SLR investments as of March 31 of the previous
year. Banks are permitted to invest in unlisted non-SLR securities within this limit, provided that such securities comply with disclosure requirements for
listed companies as prescribed by the SEBI. Banks’ investments in unlisted non-SLR securities may exceed the limit of 10.0 percent by an additional
10.0 percent, provided further that the investment is on account of investments in securitization papers issued for infrastructure projects and
bonds/debentures issued by securitization companies or reconstruction companies set up under the SARFAESI Act and registered with the RBI. Investments
in security receipts issued by securitization companies or reconstruction companies registered with the RBI, investments in asset-backed securities and
mortgage-backed securities, that are rated at or above the minimum investment grade and investments in unlisted convertible debentures will not be treated
as unlisted non-SLR securities for computing compliance with the prudential limits. The guidelines relating to listing and rating requirements of non-SLR
securities do not apply to investments in VCFs, commercial paper, certificates of deposit and mutual fund schemes where any part of the corpus can be
invested in equity. Banks are not permitted to invest in unrated non-SLR securities, except in the case of unrated bonds of companies engaged in
infrastructure activities, within the overall ceiling of 10.0 percent for unlisted non-SLR securities.

The total investment by banks in liquid/short-term debt schemes (by whatever name called) of mutual funds with a weighted average maturity of the
portfolio of not more than one year, will be subject to a prudential cap of 10.0 percent of their net worth as on March 31 of the previous year. The weighted
average maturity would be calculated as average of the remaining period of maturity of securities weighted by the sums invested.

Non-Performing Investments
The RBI has defined non-performing investments as those where principal or interest is unpaid for more than 90 days including preference shares
where a fixed dividend is not paid or declared. The non-availability of the latest balance sheet of a company in whose equity securities a bank has invested
will also render those equity shares non-performing investments. If any credit facility availed of by the issuer is an NPA in the books of the Bank,
investment in any of the securities issued by the same issuer would also be treated as a Non-Performing Investment (“NPI”) and vice versa. However, if
only preference shares have been classified as an NPI, the investment in any of the other performing securities issued by the same issuer may not be
classified as an NPI and any performing credit given to that borrower need not be treated as an NPA.

Restrictions on Investments in a Single Company

In terms of Section 19(2) of the Banking Regulation Act, no banking company may hold shares in any company except as provided in
sub-section (1) of that Act, whether as pledgee, mortgagee or absolute owner of an amount exceeding 30.0 percent of the paid-up share capital of that
company or 30.0 percent of its own paid-up share capital and reserves, whichever is lower. Further, in terms of Section 19(3) of the Banking Regulation
Act, banks must not hold shares, whether as pledgee, mortgagee or absolute owner, in any company in the management of which the managing director, any
other director or manager of the Bank is in any manner concerned or interested.

Limit on Transactions through Individual Brokers

Guidelines issued by the RBI require banks to empanel brokers for transactions in securities. These guidelines also require that a disproportionate part
of the bank’s business should not be transacted only through one broker or a few brokers. The RBI specifies that not more than 5.0 percent of the total
transactions through empanelled brokers can be transacted through one broker during a year. If for any reason this limit is breached, the RBI has stipulated
that the board of directors of the bank concerned should be informed on a half-yearly basis of such occurrences. These guidelines are not applicable to
banks’ dealings through Primary Dealers.

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Repo Directions
In July 2018, the RBI has issued the Repurchase Transactions (Repo) (Reserve Bank) Directions, 2018. These directions are applicable to repurchase
transactions (Repo), excluding repo/reverse repo transactions under Liquidity Adjustment Facility and Marginal Standing Facility. The directions also cover
repo contracts where a third entity (known as Tri-Party Agent) acts as an intermediary between two parties to the repo to facilitate services like collateral
selection and payment and settlement.

Valuation of Investments
The RBI has issued guidelines for the categorization and valuation of banks’ investments. The salient features of the guidelines are given below.
• Banks are required to classify their entire portfolio of approved securities under three categories: “held for trading”, “available for sale” and
“held to maturity” banks must decide the category of investment at the time of acquisition.
• Held to maturity (“HTM”) investments compulsorily include: (i) recapitalization bonds received from the Government; (ii) investments in
subsidiaries and joint ventures; and (iii) investment in the long-term bonds (with a minimum residual maturity of seven years) issued by
companies engaged in infrastructure activities. The minimum residual maturity of these bonds must be of seven years at the time of
investment in these bonds. Once invested, banks may continue to classify these investments under the HTM category even if the residual
maturity falls below seven years subsequently. Held to maturity investments also include any other investments identified for inclusion in this
category subject to the condition that such investments cannot exceed 25 percent of total investments. Banks are permitted to exceed the limit
of 25 percent of investments for the held to maturity category provided the excess is comprised only of investments eligible for statutory
liquidity ratio and the aggregate of such investments in the held to maturity category does not exceed a specified percentage of the prescribed
demand and time liabilities.
• Profit on the sale of investments in the HTM category is appropriated to the capital reserve account after being recognized in the profit and
loss account. Loss on any sale is recognized in the profit and loss account.
• Investments under the held for trading category must be sold within 90 days.
• Available for sale and held for trading securities are required to be valued at market or fair value at prescribed intervals. The market price of
the security available from the stock exchange, the price of securities in subsidiary general ledger transactions, the RBI price list or prices
declared by the Primary Dealers Association of India jointly with the Fixed Income Money Market and Derivatives Association of India
serves as the “market value” for investments in available for sale and held for trading securities.
• Profit or loss on the sale of investments in both the held for trading and available for sale categories is recorded in the income statement.
• Shifting of investments from or to HTM is generally not allowed. However, it is permitted only under exceptional circumstances with the
approval of the board of directors once a year, normally at the beginning of the accounting year; shifting of investments from available for
sale to held for trading may be done, subject to depreciation, if any, applicable on the date of transfer, with the approval of the board of
directors, the asset liability management committee or the investment committee; shifting from held for trading to available for sale is
generally not permitted, save for under exceptional circumstances where banks are not able to sell the security within 90 days due to tight
liquidity conditions, or extreme volatility, or the market becoming unidirectional, in which case transfer is permitted only with the approval of
the board of directors, the asset liability management committee or the investment committee.

The one-time transfer of securities to/from HTM category with the approval of board of directors is permitted to be undertaken by banks at the
beginning of the accounting year. Additionally, in order to enable banks to shift their excess SLR securities and direct sale from the HTM category to
AFS/HFT for the purposes of complying with the existing SLR requirements, the RBI by way of a circular dated October 4, 2017, permitted such shifting as
per specified timelines in addition to the shifting permitted at the beginning of the accounting year. Furthermore, such additional shifting of securities
explicitly permitted by the RBI from time to time, direct sales from HTM for bringing down SLR holdings in HTM category, sales to the RBI under
pre-announced OMO auctions and repurchase of Government securities by the Government of India from banks will be excluded from the 5.0 percent cap
prescribed for value of sales and transfers of securities to/from HTM category under paragraph 2.3(ii) of the master circular on “Prudential Norms for
Classification, Valuation and Operation of Investment Portfolio by Banks”.

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HTM securities are not marked to market and are carried at acquisition cost. Any premium on acquisition of held to maturity securities is amortized.

Depreciation or appreciation for each basket within the available for sale categories is aggregated. While net depreciation is provided for, net
appreciation in each basket, if any, is not recognized except to the extent of depreciation already provided.

Investments in security receipts or pass through certificates issued by asset reconstruction companies or trusts set up by asset reconstruction
companies are valued at the lower of redemption value of the security receipts or the net book value of the underlying financial asset.

Prohibition on Short Selling

The RBI does not permit short selling of securities by banks, except short selling of central government securities subject to stipulated conditions.
The RBI has permitted scheduled commercial banks to undertake short sales of central government securities, subject to the short position being covered
within a maximum period of three months, including the day of trade. The short positions must be covered only by an outright purchase of an equivalent
amount of the same security or through a long position in the when issued market or allotment in primary auction.

In February 2015, the RBI permitted re-repo of government securities, including state development loans and treasury bills, acquired under reverse
repo subject to conditions prescribed by the RBI.

In September 2014, scheduled commercial banks and primary dealers or bond houses were permitted to execute the sale leg of short sale transactions
in relation to government securities in the over the counter market. In its circular dated October 29, 2015, the RBI has allowed custodians and banks to
short-sell in the government bond market with primary members or individual bank customers, who invest through lenders.

Regulations Relating to Deposits

The RBI has permitted banks to independently determine rates of interest offered on fixed deposits. However, banks are not permitted to pay interest
on current account deposits. From April 1, 2010, payment of interest on a savings account deposit is calculated on a daily product basis against the previous
practice of interest being payable on the minimum balance held in the account during the period from the tenth day to the last calendar day of the month.
With effect from October 25, 2011, the RBI permitted banks to offer varying rates of interest on savings deposits of resident Indians subject to the following
conditions:
• each bank will have to offer a uniform interest rate on savings bank deposits up to Rs. 0.1 million, irrespective of the amount in the account
within this limit. While calculating interest on such deposits, banks are required to apply the uniform rate set by them on end-of-day balance
up to Rs. 0.1 million; and
• for any end-of-day savings bank deposits over Rs. 0.1 million a bank may provide differential rates of interest, if it so chooses, by ensuring
that it does not discriminate in interest paid on such deposits, between one deposit and another of similar amount, accepted on the same date,
at any of its offices.

With effect from December 16, 2011, the RBI also permitted banks the flexibility to offer varying rates of interest on Non-Resident (External)
(“NRE”) and Non-Resident (Ordinary) (“NRO”) deposit accounts. However, banks are not permitted to offer rates of interest on NRE or NRO deposit
accounts that are higher than those offered on domestic rupee deposit accounts of the same tenor and maturity.

Previously, banks were required to pay interest of 4.0 percent per annum on domestic savings deposits, rupee-denominated NRE Accounts Scheme
and NRO Scheme savings deposits. In respect of savings and time deposits accepted from employees, banks are permitted to pay an additional interest of
1.0 percent over the interest payable on deposits from the public.

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The RBI has prescribed minimum and maximum maturity thresholds for certain types of deposits.

The RBI has permitted banks the flexibility to offer varying rates of interest on domestic term deposits of the same maturity based on the size of these
deposits, subject to the following conditions:
• a single term deposit is of Rs. 10.0 million (increased from Rs. 1.5 million with effect from April 1, 2013) and above; and
• interest on deposits is paid in accordance with the schedule of interest rates disclosed in advance by the bank and not pursuant to negotiation
between the depositor and the bank.

In April 2015, the RBI has permitted banks to offer differential interest rates based on whether the term deposits are with or without premature
withdrawal facility, subject to the following guidelines:
• All term deposits of individuals (held singly or jointly) of Rs. 1.5 million and below should, necessarily, have premature withdrawal facility.
• For all term deposits other than mentioned above, banks can offer deposits without the option of premature withdrawal as well. However,
banks that offer such term deposits should ensure that the customers are given the option to choose between term deposits either with or
without premature withdrawal facility.
• Banks should disclose in advance the schedule of interest rates payable on deposits i.e., all deposits mobilized by banks should be strictly in
conformity with the published schedule.
• The banks should have a board approved policy with regard to interest rates on deposits including deposits with differential rates of interest
and ensure that the interest rates offered are reasonable, consistent, transparent and available for supervisory review/scrutiny as and when
required.

To achieve greater financial inclusion, banks have been advised by the RBI to offer a basic savings bank deposit account without any requirement of
minimum balance and without carrying a charge for the stipulated basic minimum services that would make such accounts available as a normal banking
service to all.

On March 3, 2016, the RBI issued the Master Direction on Interest Rates on Deposits. The master direction is applicable to all Scheduled
Commercial Banks accepting deposits in rupee and foreign currency. This master direction consolidates instructions on rules and regulations framed by the
RBI under various acts including banking issues and foreign exchange transactions.

On July 6, 2017, the RBI released guidelines titled “Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking
Transactions”, for customer protection by limiting the liability of customers in unauthorized electronic banking transactions. Under these guidelines, banks
have been directed to (i) put in place appropriate internal control systems and procedures to ensure safety and security of electronic banking transactions
carried out by customers; and (ii) facilitate ease of reporting and monitoring of unauthorized transactions by customers to banks. Further, indicators have
been identified by the RBI to banks on situations where liability may or may not be accorded to the customers in case of unauthorized transactions, and the
limits on and timelines for such liability of customers for third-party breaches. On January 4, 2019, these guidelines have been extended to apply to
non-bank prepaid payment instruments issuers.

FCNR (B) Deposits

The RBI has granted general permission to non-resident Indians and Persons of Indian Origin (“PIOs”) to open Foreign Currency Non-resident
(Bank) (“FCNR(B)”) accounts with authorized Indian banks. These FCNR(B) accounts can be funded by: (i) interest accruing on the account; (ii) interest
on investment; (iii) maturity proceeds if such investments were made from the relevant FCNR(B) account; (iv) transferring funds from other
NRE/FCNR(B) accounts; or (v) any other funds which are repatriable under the prevailing RBI regulations. The RBI permits FCNR(B) deposit holders to
avail credit facilities (both offshore and onshore) and offer their FCNR(B) deposits as collateral for such facilities, subject to certain terms and conditions.

As an accelerated measure to increase foreign currency flows into the country, the RBI had, in September 2013, introduced a United States dollar-
rupee swap window for fresh FCNR(B) dollar funds, mobilized for a minimum tenor of three years and more. Under the swap arrangement, a bank could
sell United States dollars in multiples of US$ 1 million to RBI and simultaneously agree to buy the same amount of United States dollars at the end of the
swap period. The swap was undertaken at a fixed rate of 3.5 percent per annum. The swap window was open till November 30, 2013.

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In August 2013, the RBI exempted the FCNR(B)/NRE deposits raised by banks during a specified period having maturity of three years and above
from maintenance of CRR and SLR. The RBI also permitted exclusion of loans made in India against these FCNR(B)/NRE deposits from the ANBC
computation for priority sector lending targets. The exemption granted on incremental FCNR(B)/NRE deposits from maintenance of CRR/SLR was
withdrawn with effect from the fortnight beginning March 8, 2014.

Deposit Insurance
Demand and time deposits of up to Rs. 100,000 accepted by scheduled commercial banks in India have to be mandatorily insured with the Deposit
Insurance and Credit Guarantee Corporation, a wholly owned subsidiary of the RBI. Banks are required to pay the insurance premium to the Deposit
Insurance and Credit Guarantee Corporation on a semi-annual basis. The cost of the insurance premium cannot be passed on to the customer.

Demonetization Measures
On November 8, 2016, the Government of India announced its decision for existing bank notes of Rs. 500 and Rs. 1000 denominations of the then
existing series issued by the RBI to no longer be valid. Citizens were to return all such bank notes to banks as they could no longer be used for transactions
or exchange purposes with effect from November 9, 2016. New bank notes of denominations of Rs. 500 and Rs. 2000 were introduced to replace the old
notes. Limits for the exchange of demonetized notes and withdrawal of new notes were specified which were subsequently lifted.

Regulations Relating to Knowing the Customer and Anti-Money Laundering

The RBI has issued several guidelines on customer identification and monitoring of transactions. Banks have been advised to put in place systems and
procedures to control financial frauds, identify money laundering and suspicious activities, and monitor high value cash transactions. The RBI has also
issued guidelines from time to time advising banks to be vigilant while opening accounts for new customers to prevent misuse of the banking system for
perpetration of frauds.

Banks have been advised to ensure that a proper policy framework on KYC and AML measures duly approved by the board of directors or regulated
entities (as specified in the guidelines) or any committee of the board of directors, is formulated and implemented. This framework is required to, inter alia,
include procedures/process in relation to (a) customer acceptance policy; (b) customer identification procedures; (c) monitoring of transactions; and (d) risk
management.

RBI guidelines require that a profile of the customers should be prepared based on risk categorization. Banks have been advised to apply enhanced
due diligence for high-risk customers. The guidelines provide that banks should undertake customer identification procedures while establishing a banking
relationship or carrying out a financial transaction or when the Bank has a doubt about the authenticity or the adequacy of the previously obtained customer
identification data. Banks must obtain sufficient information necessary to establish the identity of each new customer and the purpose of the intended
banking relationship. The guidelines also provide that banks should monitor transactions depending on the account’s risk sensitivity. Prevention of Money
Laundering Rules, 2005 require every banking company, and financial institution, as the case may be, to identify the beneficial owner and take all
reasonable steps to verify his identity. The term “beneficial owner” has been defined as the natural person who ultimately owns or controls a client and/or
the person on whose behalf the transaction is being conducted, including a person who exercises ultimate effective control over a judicial person. The
procedure for identification of the beneficial owner has been specified by the Government of India in the Prevention of Money Laundering Rules, 2005 and
the regulations prescribed by the RBI from time to time.

The KYC procedures for opening accounts have been simplified for “small accounts” in order to ensure that the implementation of the KYC
guidelines do not result in the denial of the banking services to those who are financially or socially disadvantaged. A “small account” is defined as a
savings account in a banking company where (i) the aggregate of all credits in a financial year does not exceed Rs. 0.1 million; (ii) the aggregate of all
withdrawals and transfers in a month does not exceed Rs. 0.01 million; and (iii) the balance at any point of time does not exceed Rs. 0.05 million.

In addition to keeping customer information confidential, banks must ensure that only information relevant to the perceived risk is collected and that
the same is not intrusive in nature. Apart from addressing this concern the guidelines set out in detail the framework to be adopted by banks as regards their
customer dealings and are directed towards prevention of financial frauds and money laundering transactions.

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In a bid to prevent money laundering activities, the Government enacted the Prevention of Money Laundering Act, 2002 (the “PML Act”) which
came into effect from July 1, 2005. The PML Act seeks to prevent money laundering and to provide for confiscation of property derived from, or involved
in, money laundering and for incidental matters or matters connected therewith.

All the instructions/guidelines issued to banks on KYC norms, AML standards and obligations of the banks under the PML Act have been
consolidated in the Know Your Customer Directions, 2016, issued by the RBI, as updated from time to time. Separate guidelines were also issued by the
RBI on July 20, 2017, on detection, reporting, monitoring and impounding of counterfeit notes by banks in India.

The PML Act and the rules relating thereto require that banking companies, financial institutions and intermediaries (together, Institutions) to
maintain a comprehensive record of all their transactions, including the nature and value of each transaction. Further, it mandates verification of the identity
of all their clients and also requires the Institutions to maintain records of their respective clients. These details are to be provided to the authority
established by the PML Act, who is empowered to order confiscation of property where the authority is of the opinion that a crime as recognized under the
PML Act has been committed. In addition, the applicable exchange control regulations prescribe reporting mechanisms for transactions in foreign exchange
and require authorized dealers to report identified suspicious transactions to the RBI.

Banks are advised to develop suitable mechanisms through an appropriate policy framework for enhanced monitoring of accounts suspected of
having terrorist links, identification of the transactions carried out in these accounts and suitable reporting to the Director, Financial Intelligence Unit (India)
(the “FIU”). Banks are required to report to the FIU:
(a) all cash transactions with a value of more than Rs. 1 million or an equivalent in foreign currency;
(b) all series of cash transactions integrally connected to each other which have been valued below Rs. 1 million or an equivalent in foreign
currency where such series of transactions have taken place within a month and the aggregate value of such transactions exceeds
Rs. 1 million;
(c) all transactions involving receipts by non-profit organizations with a value of more than Rs. 1 million or an equivalent in foreign currency;
(d) all cash transactions in which forged or counterfeit currency notes or bank notes have been used and where any forgery of a valuable security
or a document has taken place facilitating the transaction; and
(e) all other suspicious transactions whether or not made in cash and by such other ways as mentioned in the Rules.

Legal Reserve Requirements

Cash Reserve Ratio
Each bank is required to maintain a specific percentage of its net demand and time liabilities by way of a balance in a current account with the RBI.
This is to maintain the solvency of the banking system. The amendments made to the Reserve Bank of India Act, 1934 and the Banking Regulation Act
during fiscal 2007 enhanced the operational flexibility in monetary management of the RBI. The RBI (Amendment) Act, 2006 came into force on April 1,
2007. Section 3 of this Act removed the floor and the ceiling rates on CRR and no interest was payable on the CRR balances of banks with effect from
March 31, 2007. Scheduled commercial banks are exempted from maintaining CRR on the following liabilities:
(a) liabilities to the banking system in India as computed under clause (d) of the explanation to section 42(1) of the Reserve Bank of India Act,
1934;
(b) credit balances in Asian Clearing Union (US$) Accounts; and
(c) demand and time liabilities in respect of the banks Offshore Banking Units.

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The CRR requirement as of March 31, 2019, was 4.0 percent of the prescribed net demand and time liabilities of the Bank. In order to address the
volatility in rupee exchange rates in early 2013, the RBI in July 2013 increased the requirement of minimum daily CRR balance maintenance to
99.0 percent of the requirement with effect from the first day of the fortnight beginning July 27, 2013. In September 2013, the RBI reduced the minimum
daily maintenance of the CRR from 99.0 percent of the requirement to 95.0 percent. In April 2016, the RBI further reduced this requirement to 90.0 percent,
with effect from the fortnight beginning April 16, 2016.

In November 2016, the government of India undertook demonetization of high denomination notes of Rs. 500 and Rs. 1000. On November 26, 2016,
on a review of the liquidity conditions after the withdrawal of legal tender status of Rs. 500 and Rs.1000 denominations of bank notes, the RBI directed all
scheduled commercial banks to maintain an incremental cash reserve ratio (CRR) of 100.0 percent on the increase in their net demand and time liabilities
(NDTL) between September 16, 2016 and November 11, 2016. This requirement was withdrawn by the RBI effective from the fortnight beginning
December 10, 2016.

Statutory Liquidity Ratio

In order to maintain liquidity in the banking system, in addition to the CRR, each bank is required to maintain a specified percentage of its net
demand and time liabilities by way of liquid assets such as cash, gold or approved securities, such as Government of India and State Government Securities.
The percentage of this ratio is fixed by the RBI from time to time and is currently 18.75 percent. The RBI master circular on the Statutory Liquidity Ratio
specifies certain liabilities which will not be included in the calculation of the Statutory Liquidity Ratio.

Revisions in Constitution of Bank Assets

The capital regulations with respect to Liquidity Standards under the Basel III framework (LCR, Liquidity Risk Monitoring Tools and LCR
Disclosure Standards) were revised by the RBI by way of a circular dated August 2, 2017, to re-define the “Level 1” of bank assets as comprising of the
following:
i. Cash including cash reserves in excess of required CRR.
ii. For banks incorporated in India,
• Reserves held with foreign Central Banks in excess of the reserve requirement, where a foreign sovereign has been assigned a
0 percent risk weight as per rating by an international rating agency.
• Reserves held with foreign Central Banks in excess of the reserve requirement, to the extent these balances cover the Bank’s
stressed net cash outflows in that specific currency, in cases where a foreign sovereign has been assigned a non-0 percent risk
weight as per rating by an international rating agency, but a 0 percent risk weight has been assigned at national discretion
under Basel II Framework.
iii. Government securities in excess of the minimum SLR requirement.
iv. Within the mandatory SLR requirement, Government securities to the extent allowed by the RBI, under Marginal Standing Facility (MSF).
v. Marketable securities issued or guaranteed by foreign sovereigns satisfying all the following conditions:
(a) assigned a 0 percent risk weight under the Basel II standardized approach for credit risk;
(b) traded in large, deep and active repo or cash markets characterized by a low level of concentration and proven record as a reliable
source of liquidity in the markets (repo or sale), even during stressed market conditions; and
(c) not issued by a bank/financial institution/NBFC or any of its affiliated entities.

The LCR requirement has been binding on all banks since January 1, 2015. The current prescribed LCR level since January 1, 2018, is 90.0 percent
and will be at the prescribed level of 100.0 percent by January 1, 2019.

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Net Stable Funding Ratio

Net stable funding ratio (“NSFR”) is a global regulatory standard under the Basel III framework. The draft guidelines on NSFR were issued by the
RBI by its circular dated May 28, 2015. The RBI has published final guidelines on NSFR on May 17, 2018, which will be implemented from April 1, 2020,
from which date they will be binding on banks. Until then, banks will have to comply with Basel III on a “best efforts” basis.

Regulations on Asset Liability Management

Since 1999, the RBI has issued several guidelines relating to asset-liability management (“ALM”) in banks in India. The RBI guidelines cover, inter
alia, the interest rate risk and liquidity risk measurement and reporting framework, including establishing prudential limits. The guidelines require that gap
statements for liquidity and interest rate risk are prepared by scheduling all assets and liabilities according to the stated and anticipated re-pricing date or
maturity date. The RBI has advised banks to actively monitor the difference in the amount of assets and liabilities maturing or being re-priced in a particular
period and place internal prudential limits on the gaps in each time period, as a risk control mechanism. Additionally, the RBI has advised banks to manage
their asset-liability liquidity structure within negative gap limits for one day, 2-7 days, 8-14 days and 15-28 days set at 5.0 percent, 10.0 percent,
15.0 percent and 20.0 percent, respectively, of the cumulative cash outflows in the respective time buckets in order to recognize the cumulative impact on
liquidity. In respect of other time periods, the RBI has directed banks to lay down internal standards in respect of liquidity gaps. In order to recognize the
cumulative impact on liquidity, banks are also advised to prepare the statement of structural liquidity on a daily basis and also undertake dynamic liquidity
management. Banks are required to submit the liquidity statements periodically to RBI, as specified in these guidelines.

The RBI’s Guidelines on Banks’ Asset Liability Management Framework—Interest Rate Risk issued in November 2010 mandate banks in India to
evaluate interest rate risk using both methods, i.e., TGA and Duration Gap Analysis (“DGA”). Banks are required to submit the TGA and DGA results from
time to time to the RBI as mentioned in the guidelines.

Further, RBI guidelines on stress testing issued in 2007 have reinforced stress testing as an integral part of a bank’s risk management process, the
results of which are used to evaluate the potential vulnerability to some unlikely but plausible events or movements in financial variables that affect both
interest rate risk and liquidity risk in the Bank. In December 2013, the RBI specified the minimum level of stress testing to be carried out by all banks.

In November 2012, the RBI issued enhanced guidelines on liquidity risk management by banks. These guidelines consolidate various instructions on
liquidity risk management that the RBI had issued from time to time, and where appropriate, harmonize and enhance these instructions in line with the
principles for sound liquidity risk management and supervision issued by the BCBS. The RBI’s guidelines require banks to establish a sound process for
identifying, measuring, monitoring and controlling liquidity risk, including a robust framework for comprehensively projecting cash flows arising from
assets, liabilities and off-balance sheet items over an appropriate time horizon. The key items covered under these guidelines include: (i) governance of
liquidity risk management including liquidity risk management policy, strategies and practices and liquidity risk tolerance; (ii) management of liquidity risk,
including identification, measurement and monitoring of liquidity risk; (iii) collateral position management; (iv) intra-day liquidity position management;
and (v) stress testing.

In June 2014, the RBI issued guidelines in relation to liquidity coverage ratio (“LCR”), liquidity risk monitoring tools and LCR disclosure standards
pursuant to the publication of the “Basel III: The Liquidity Coverage Ratio” and liquidity risk monitoring tools in January 2013 and the Liquidity Coverage
Ratio Disclosure Standards in January 2014 by the BCBS. The objective of the LCR standard is to ensure that a bank maintains an adequate level of
unencumbered high quality liquid assets which could be converted into cash to meet its liquidity needs for a 30-calendar day time horizon under a
significantly severe liquidity stress scenario. The LCR requirement of 100.0 percent is being implemented in a phased manner over a period of four years,
with a minimum requirement of 60.0 percent effective January 1, 2015.

Foreign Currency Dealership

The RBI has granted us a full-fledged Authorized Dealers’ License to deal in foreign exchange through our designated banking outlets. Under this
license, we have been granted permission to: engage in foreign exchange transactions in all currencies; open and maintain foreign currency accounts abroad;
raise foreign currency and rupee-denominated deposits from non-resident Indians; grant foreign currency loans to on-shore and off-shore corporations; open
documentary credits; grant import and export loans; handle collection of bills and funds transfer services; issue foreign currency guarantees; and enter into
derivative transactions and risk management activities that are incidental to our normal functions authorized under our organizational documents and as
permitted under the provisions of the Banking Regulation Act.

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Our foreign exchange operations are subject to the guidelines contained in the Foreign Exchange Management Act, 1999 (Foreign Exchange
Management Act). As an authorized dealer, we are, as required, enrolled as a member of the Foreign Exchange Dealers Association of India, which
prescribes the rules relating to the foreign exchange business in India.

The RBI from time to time has simplified the reporting requirements for holdings of and dealings in all foreign currencies by authorized dealers like
the Bank; the last such rationalization was made by the RBI by way of a circular dated August 10, 2017.

Simplified hedging facility guidelines were issued by the RBI by way of a circular dated November 9, 2017, to simplify the process for hedging
exchange rate risk by reducing documentation requirements, avoiding prescriptive stipulations regarding products, purpose and hedging flexibility, and to
encourage a more dynamic and efficient hedging culture. These guidelines stipulate operational mechanism and guidelines for resident and non-resident
entities, other than individuals, for hedging exchange rate risk on transactions, contracted or anticipated, with respect to any Over the Counter (“OTC”)
derivative or Exchange Traded Currency Derivative (ETCD) permitted under the Foreign Exchange Management Act, 1999 (“FEMA”). Additionally,
different facilities have been provided for hedging trade exposures (i.e., currency risks arising out of genuine trade transactions involving exports from and
imports to India), invoiced in Indian Rupees in India, by way of the RBI Circular dated October 12, 2017.

We are required to determine our limits on open positions and maturity gaps in accordance with RBI guidelines and within limits approved by the
RBI. Further, we are permitted to hedge foreign currency loan exposures of Indian corporations in the form of interest rate swaps, currency swaps and
forward rate agreements, subject to certain conditions.

Setting Up Wholly Owned Subsidiaries by Foreign Banks

In November 2013, the RBI released its framework for establishing wholly owned subsidiaries of foreign banks in India, which aims to tighten
regulatory control and encourage foreign banks to convert their existing banking outlets into wholly owned subsidiaries.

Key features of the framework include:

• requiring certain foreign banks, including banks with complex structures and banks belonging to jurisdictions which: (i) do not have adequate
disclosure requirements; or (ii) have legislation which give preferential treatment to deposits of the home country in a winding-up proceeding,
to set up a wholly owned subsidiary in order to enter the Indian market;
• permitting foreign banks that do not fall under the above categories to either set up a branch office or a wholly owned subsidiary;
• offering near-national treatment to wholly owned subsidiaries of foreign banks, subject to certain conditions;
• requiring newly incorporated wholly owned subsidiaries to have an initial minimum paid-up voting equity capital of 5 billion rupees. In the
case of existing banking outlets of foreign banks that wish to convert into a wholly owned subsidiary, it must have a minimum net worth of
5 billion rupees;
• requiring at least 50.0 percent of the board of directors of wholly owned subsidiaries to be Indian nationals, non-resident Indians or persons of
Indian origin; and
• mandating that wholly owned subsidiaries comply with the priority sector lending requirements applicable to domestic commercial banks.

Statutes Governing Foreign Exchange and Cross-Border Business Transactions

Foreign exchange and cross-border transactions undertaken by banks are subject to the provisions of the Foreign Exchange Management Act. All
banks are required to monitor the transactions in all non-resident accounts to prevent money laundering. These transactions are governed by the provisions
of the Foreign Exchange Management Act, and the PML Act.

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In terms of the guidelines prescribed by the RBI (last updated on November 9, 2017) (the “Inter-Bank Dealings Guidelines”), overseas foreign
currency borrowings by a bank in India (including overdraft balances in nostro accounts not adjusted within five days) should not exceed 100.0 percent of
its unimpaired Tier I capital or US$ 10 million (or its equivalent), whichever is higher. The aforesaid limit applies to the aggregate amount availed of by all
the offices and banking outlets in India from all their banking outlets and correspondents abroad and includes overseas borrowings in gold for funding
domestic gold loans.

The following borrowings would continue to be outside the above limit:

1. overseas borrowing by banks for the purpose of financing export credit subject to certain conditions prescribed by the RBI;
2. capital funds raised or augmented by the issue of Innovative Perpetual Debt Instruments and Debt Capital Instruments in foreign currency;
3. subordinated debt placed by head offices of foreign banks with their banking outlets in India as Tier II capital; and
4. any other overseas borrowing with the specific approval of the RBI.

Under the Inter-Bank Dealings Guidelines, AD category – I banks are permitted to borrow from international/multilateral FIs without approaching the
RBI on a case-by-case approval. Such FIs shall include: (i) international/multilateral FIs of which the Government is a shareholding member; (ii) FIs which
have been established by more than one government; or (iii) FIs which have shareholding by more than one government and other international
organizations. However, all such borrowings should be for the purpose of general banking business and not for capital augmentation.

Cyber Security Frameworks in Banks

In its circular dated June 2, 2016, the RBI directed banks to formulate a cyber security policy duly approved by their board of directors by
September 30, 2016, to combat cyber threats. This policy is required to be distinct from banks’ broader information technology/information security policy.

The Bank had developed a Cybersecurity Policy and Cybersecurity Framework which is to ensure appropriate cybersecurity practices are followed
across the Bank’s information systems. The Cybersecurity Policy is formally approved by the Bank’s Board.

Special Provisions of the Banking Regulation Act

Prohibited Business
Section 6 of the Banking Regulation Act specifies the business activities in which a bank may engage. Banks are prohibited from engaging in
business activities other than the specified activities.

Reserve Fund
Any bank incorporated in India is required to create a reserve fund to which it must transfer not less than 25.0 percent of the profits of each year
before any dividend is declared. Banks are required to take prior approval from the RBI before appropriating any amount from the reserve fund or any other
free reserves. The Government may, on the recommendation of the RBI, exempt a bank from requirements relating to its reserve fund.

Restrictions on Payment of Dividends

The Banking Regulation Act requires that a bank pay dividends on its shares only after all of its capital expenses (including preliminary expenses,
organization expenses, share selling commissions, brokerage on public offerings, amounts of losses and any other items of expenditure not represented by
tangible assets) have been completely written off. The Government may exempt banks from this provision by issuing a notification on the recommendation
of the RBI.

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Banks that comply with the following prudential requirements are eligible to declare dividends:
• the capital adequacy ratio must be at least 9.0 percent for the preceding two completed years and the accounting year for which the Bank
proposes to declare a dividend;
• net non-performing assets must be less than 7.0 percent of advances. In the event a bank does not meet the above capital adequacy norm, but
has capital adequacy of at least 9.0 percent for the fiscal year for which it proposes to declare a dividend it would be eligible to declare a
dividend if its net non-performing asset ratio is less than 5.0 percent;
• the bank has complied with the provisions of Sections 15 and 17 of the Banking Regulation Act;
• the bank has complied with the prevailing regulations/guidelines issued by the RBI, including creating adequate provisions for the impairment
of assets and staff retirement benefits and the transfer of profits to statutory reserves;
• dividends should be payable out of the current year’s profits; and
• the RBI has not placed any explicit restrictions on the Bank for declarations of dividends.

Banks that comply with the above prudential requirements can pay dividends subject to compliance with the following conditions:
• the dividend payout ratio (calculated as a percentage of “dividends payable in a year” (excluding dividend tax) to “net profit during the year”)
should not exceed 40.0 percent. The RBI has prescribed a matrix of criteria linked to the capital adequacy ratio and the net non-performing
assets ratio in order to ascertain the maximum permissible range of the dividend payout ratio; and
• if the financial statements for which the dividend is declared have any audit qualifications which have an adverse bearing on the profits, the
same should be adjusted while calculating the dividend payout ratio.

In case the profit for the relevant periods includes any extra-ordinary profits/income, the payout ratio shall be computed after excluding such extra-
ordinary items for compliance with the prudential payout ratio.

In addition to the above, the master circular on “Basel III Capital Regulations” as amended and updated from time to time, also regulates the
distribution of dividends by banks. The circular provides that the dividend distribution can be made by a bank only through the current year’s profit. It also
requires the banks to maintain a capital conservation buffer outside the period of stress which can be drawn down if losses are incurred during a stressed
period. One of the ways in which the banks can build the capital conservation buffer is by reducing the dividend payments. In case of shortfall in the
prescribed capital conservation buffer, dividend payment restrictions would be imposed on the banks as per the conditions of the Basel III regulations. The
circular further provides that perpetual non-cumulative preference shares and perpetual debt instruments issued by a bank for inclusion in the additional Tier
I capital of the Bank, may have a dividend stopper arrangement to stop dividend payments on common shares in the event the holders of additional Tier I
instruments are not paid dividend or coupon.

Restriction on Share Capital and Voting Rights

Banks were earlier permitted to issue only ordinary shares. In January 2013, the Banking Regulation Act was amended to, inter alia, permit banks to
also issue preference shares. However, guidelines governing the issuance of preference shares are yet to be issued. The amended Banking Regulation Act
also permits the RBI to increase the cap on the voting rights of a single shareholder of a private bank from the existing cap of 10.0 percent to 26.0 percent in
a phased manner. The RBI has issued the Ownership in Private Sector Banks, Directions, 2016, which state that the voting rights in private sector banks
shall be limited to the level notified by the RBI from time to time and that the current ceiling on voting rights is 15.0 percent.

Restriction on Transfer of Shares

RBI approval is required before a bank can register the transfer of shares to an individual or group which acquires 5.0 percent or more of its total
paid-up capital.

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Regulatory Reporting and Examination Procedures

The RBI is empowered under the Banking Regulation Act to inspect the books of accounts and the other operations of a bank. The RBI monitors
prudential parameters at regular intervals. The findings of these inspections are provided to banks, which are required to comply with the actions
recommended in order to correct any discrepancies in their operations as contained in the inspection findings within a stipulated time frame. Further, banks
are required to keep the inspection report confidential as per the instructions issued by the RBI. To this end and to enable off-site monitoring and
surveillance by the RBI, banks are required to report to the RBI on financial and operating measures such as:
• assets, liabilities and off-balance sheet exposures;
• the risk weighting of these exposures, the capital base and the capital adequacy ratio;
• asset quality;
• concentration of exposures;
• connected and related lending and the profile of ownership, control and management; and
• other prudential parameters.

The RBI also conducts periodic on-site inspections of matters relating to the Bank’s capital, asset quality, management, earnings, liquidity and
systems and controls on an annual basis. We have been subjected to on-site inspection by the RBI at yearly intervals. The inspection report, along with the
report on actions taken by us, has to be placed before our Board of Directors. On approval by our Board, we are required to submit the report on actions
taken by us to the RBI. The RBI also discusses the findings of the inspection with our management team along with members of the Audit Committee of
our Board.

The RBI also conducts on-site supervision of selected banking outlets of banks with respect to their general operations and foreign exchange related
transactions.

The existing supervisory framework has been modified towards establishing a risk-based supervision framework which envisages continuous
monitoring of banks through robust offsite reports to the RBI coupled with need-based on-site inspection. We have been subject to supervision under this
framework with effect from fiscal 2014.

Penalties
The RBI is empowered under the Banking Regulation Act, to impose penalties on banks and their employees in case of infringement of any provision
of the Act. The penalty may be a fixed amount or may be related to the amount involved in any contravention of the regulations. The penalty may also
include imprisonment.

In March 2013, there were certain allegations published in the media against us and other banks in the private sector. We investigated, as a matter of
priority, if any breach of the KYC and AML guidelines specified by the RBI had occurred. The RBI also conducted a scrutiny of our books of accounts,
internal control, compliance systems and processes during March and April 2013. The scrutiny did not reveal any incident of money laundering. However,
the RBI discovered certain irregularities and violations, namely, non-observance of certain safeguards in respect of arrangement of “at par” payment of
checks drawn by cooperative banks, exceptions in periodic review of risk profiling of account holders, non-adherence to KYC rules for walk-in customers
(non-customers) including for sale of third-party products, sale of gold coins for cash in excess of Rs. 50,000 and non-submission of proper information
required by the RBI. Based on its assessment, the RBI imposed on us a monetary penalty of Rs. 45 million in June 2013, which we paid. A press release
dated July 15, 2013, issued by the RBI states that a similar scrutiny was also conducted at the offices of 29 other banks during April 2013. The RBI levied a
penalty of Rs. 495.1 million on 22 of these banks and issued cautionary letters to seven banks.

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Further, in this regard, the FIU, in January 2015, levied a fine on us of Rs. 2.6 million relating to our failure to detect and report attempted suspicious
transactions. We filed an appeal against the order before the appellate tribunal stating that there were only roving enquiries made by the reporters of the
media and there were no instances of any attempted suspicious transactions. Pursuant to the directions of the appellate tribunal, the Bank created a fixed
deposit of Rs. 2.6 million in favor of FIU. In June 2017, the appellate tribunal, dismissed the penalty levied by the FIU and observed that in accordance with
the provisions of the section 13(2)(a) of the PMLA, 2002 a warning was required to be given to the Bank, and that the prescribed matter did not fall within
section 13(2)(d) of the PMLA, 2002 (pursuant to which a monetary penalty can be imposed on failure to comply with certain obligations under the PMLA,
2002) as mentioned by the FIU. The appellate tribunal further ordered that the fixed deposit created by the Bank as per the interim order of the appellate
tribunal be released forthwith. Subsequently, we received a summons on the notice for a hearing from the High Court of Delhi in connection with an appeal
filed with them by FIU-IND challenging the order of the Appellate Tribunal. On May 10, 2018, the High Court granted eight weeks’ time to us to furnish
our response. The matter was heard on December 6, 2018. Meanwhile, the FDR, in the name of FIU, was renewed for a further period of one year. We filed
(i) replies to the Appeal made by FIU and (ii) an application for interim stay on July 11, 2018. The counsel for FIU-IND, however, sought additional time to
file its rejoinder. The court accepted this request and now the matter is listed for further proceedings on August 1, 2019.

During fiscal 2014, the RBI carried out a scrutiny of a corporate borrower’s loan and current accounts maintained with 12 Indian banks, including us.
The RBI issued show cause notices to these banks in March 2014. Based on its assessment, the RBI, in its press release dated July 25, 2014, levied penalties
totaling Rs. 15 million on the 12 Indian banks. The penalty levied on us, which has been paid, was Rs. 0.5 million on the grounds that we failed to exchange
information about the conduct of the corporate borrower’s account with other banks at intervals as prescribed in the RBI guidelines on Lending under
Consortium Arrangement/Multiple Banking Arrangements.

In October 2015, there were media reports about irregularities in advance import remittances in various banks, further to which the RBI had
conducted a scrutiny of the transactions carried out by us. In April 2016, the RBI issued a show cause notice to us to which we submitted our detailed
response. After considering our submissions, the RBI has imposed a penalty of Rs. 20 million on us notified to us through its letter dated July 19, 2016,
which we paid, on account of pendency in receipt of bills of entry relating to advance import remittances made and lapses in adhering to KYC and AML
guidelines in this respect. We have implemented a comprehensive corrective action plan, to strengthen our internal control mechanisms so as to ensure that
such incidents do not recur. See “Risk Factors—We have previously been subject to penalties imposed by the RBI. Any regulatory investigations, fines,
sanctions, and requirements relating to conduct of business and financial crime could negatively affect our business and financial results, or cause serious
reputational harm”.

By way of a circular dated October 12, 2017, the RBI specifically levied penal interest for delayed reporting/wrong reporting/non-reporting of
currency chest transactions and inclusion of ineligible amounts in currency chest balances. The intention behind the levy of penal interest is to inculcate
discipline among banks so as to ensure prompt/correct reporting, and so that pleas by banks for waiver of penal interest on grounds that
delayed/wrong/non-reporting does not result in utilization of RBI’s funds or shortfall in the maintenance of CRR or SLR. On similar lines, by way of an
additional circular dated October 12, 2017, the RBI revised the scheme of penalties for banking outlets based on performance in rendering customer service
to the members of public, to ensure that all banking outlets provide better customer service to members of public with regard to exchange of notes and
coins.

In its order dated February 4, 2019, the RBI imposed a monetary penalty of Rs. 2.0 million on us for failing to comply with the RBI’s KYC and AML
standards, as set out in their circulars dated November 29, 2004 and May 22, 2008. In its order dated June 13, 2019, the RBI imposed a monetary penalty of
Rs. 10 million on us for failing to comply with the KYC, AML and fraud reporting standards, following an investigation into bills of entry submitted by
certain importers. The penalties were imposed under Section 47A(1)(c) and Section 46(4)(i) of the Banking Regulation Act, 1949. We have since
implemented corrective action to strengthen our internal control mechanisms so as to ensure that such incidents do not repeat themselves. See “Risk Factors
—We have previously been subject to penalties imposed by the RBI. Any regulatory investigations, fines, sanctions, and requirements relating to conduct of
business and financial crime could negatively affect our business and financial results, or cause serious reputational harm”.

Assets to be Maintained in India

Every bank is required to ensure that its assets in India (including import-export bills drawn on/in India and the RBI-approved securities, even if the
bills and the securities are held outside India) are not less than 75 percent of its demand and time liabilities in India.

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Secrecy Obligations
Banks’ obligations relating to maintaining secrecy arise out of regulatory prescription and also common law principles governing the relationship
between them and their customers. Banks cannot disclose any information to third parties except under certain limited and clearly defined circumstances as
detailed in the guidelines issued by the RBI.

Subsidiaries and Other Investments

Banks require the prior permission of the RBI to incorporate a subsidiary. Banks are required to maintain an “arm’s-length” relationship in respect of
their subsidiaries and are prohibited from taking actions such as taking undue advantage in borrowing or lending funds, transferring or selling or buying
securities at rates other than market rates, giving special consideration for securities transactions, overindulgence in supporting or financing subsidiaries and
financing its clients through them when it itself is not able or not permitted to do so. Banks and their subsidiaries have to observe the prudential standards
stipulated by the RBI, from time to time, in respect of their underwriting commitments.

Banks also require the prior specific approval of the RBI to participate in the equity of financial services ventures including stock exchanges and
depositories, notwithstanding the fact that such investments may be within the ceiling prescribed under Section 19(2) of the Banking Regulation Act.
Further, investment by a bank in its subsidiaries, financial services companies or financial institutions should not exceed 10.0 percent of its paid-up capital
and reserves. Investments by banks in companies which are not its subsidiaries and are not financial services companies would be subject to a limit of
10.0 percent of the investee company’s paid up share capital or 10.0 percent of the Bank’s paid up share capital and reserves, whichever is less. Any
investment above this limit will be subject to the RBI approval except as provided otherwise. Equity investments in any non-financial services company
held by (a) a bank; (b) the bank’s subsidiaries, associates or joint ventures or entities directly or indirectly controlled by the bank; and (c) mutual funds
managed by Asset Management Companies controlled by the Bank should in the aggregate not exceed 20.0 percent of the investee company’s paid-up share
capital. Further, a bank’s equity investments in subsidiaries and other entities that are engaged in financial services activities together with equity
investments in entities engaged in non-financial services activities should not exceed 20.0 percent of the Bank’s paid-up share capital and reserves.

Introduction of Legal Entity Identifier for Large Corporate Borrowers

Pursuant to the Statement on Developmental and Regulatory Policies dated November 2, 2017, the RBI decided to introduce the Legal Entity
Identifier (“LEI”) system for all borrowers of banks having total fund based and non-fund based exposure of Rs. 5 crore and above in a phased manner (and
for their parent entity, as well as all subsidiaries and associates). The LEI is a 20-digit unique code to identify parties to financial transactions worldwide.
Borrowers who do not obtain LEI as per the schedule are not to be granted renewal/enhancement of credit facilities. A separate roadmap for borrowers
having exposure between Rs. 5 crore and up to Rs. 50 crore has also been announced to be issued by RBI.

Guidelines for Merger/Amalgamation of Private Sector Banks

The RBI issued detailed guidelines in May 2005 on the merger or amalgamation of private sector banks and for the amalgamation of a NBFC with a
banking company. The guidelines lay down the process for a merger proposal, the determination of swap ratios, disclosures, the stages at which the board of
directors will get involved in the merger process and norms of buying and selling of shares by the promoters before and during the merger process.

In April 2016, the RBI issued the Reserve Bank of India (Amalgamation of Private Sector Banks) Directions, 2016. The new directions are
substantially the same as the 2005 guidelines mentioned above.

Appointment and Remuneration of the Chairman, the Managing Director and Other Directors
Banks require the prior approval of the RBI to appoint their Chairman and Managing Director and any other directors and to fix their remuneration.
The RBI is empowered to remove the appointee on the grounds of public interest or the interest of depositors or to ensure the proper management of the
Bank. Further, the RBI may order meetings of the board of directors of banks to discuss any matter in relation to the Bank, appoint observers to these
meetings and in general may make changes to the management as it may deem necessary and can also order the convening of a general meeting of the
company to elect new directors.

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In January 2012, the RBI issued revised guidelines relating to salary and other remuneration payable to whole time directors, chief executive officers
and other risk takers of new private sector banks. With these guidelines, the RBI aims to achieve effective governance of compensation, alignment of
compensation with prudent risk-taking and require banks to make appropriate disclosures in their financial statements. Banks are required to formulate and
adopt a comprehensive compensation policy in line with the guidelines covering all their employees and conduct annual review thereof. The policy should
cover all aspects of the compensation structure such as fixed pay, perquisites, bonus, variable pay deferrals, guaranteed pay, severance package, stock,
pension plan and gratuity. These guidelines became effective from the fiscal year 2012-2013. The guidelines also state that private sector banks would be
required to obtain regulatory approval for grant of remuneration to whole time directors/chief executive officers in terms of Section 35B of the Banking
Regulation Act, on a case-by-case basis. In June 2015, the RBI issued guidelines for compensation of non-executive directors of private sector banks. The
guidelines required the banks to formulate and adopt a comprehensive compensation policy for the non-executive directors (other than the part-time
non-executive Chairman) in accordance with the Companies Act, 2013. The policy may provide for payment of compensation in the form of profit related
commissions (not exceeding Rs. 1.0 million per annum for each director), sitting fees and reimbursement of expenses for participation in the Board and
other meetings.

Regulations and Guidelines of the SEBI

SEBI was established in 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992 to protect the interests of
public investors in securities and to promote the development of, and to regulate, the Indian securities market including all related matters. We are subject to
SEBI regulations in respect of capital issuances as well as some of our activities, including acting as agent for collecting subscriptions to public offerings of
securities made by other Indian companies, underwriting, custodial, depositary participant, and investment banking and because our equity shares are listed
on Indian stock exchanges. These regulations provide for registering with SEBI and the functions, responsibilities and the code of conduct applicable for
each of these activities.

In June 2017, SEBI constituted a committee under the chairmanship of Mr. Uday Kotak (the “Kotak Committee”), to consult on corporate
governance. The Kotak Committee recommended amendments to regulations in order to better align Indian corporate governance norms with global best
practices. SEBI in its board meeting on March 28, 2018, accepted most of these recommendations.

Foreign Ownership Restriction

Aggregate foreign investment from all sources, in a private sector bank is permitted up to 49.0 percent of the paid up capital under the automatic
route. This limit can be increased up to 74.0 percent of the paid up capital with prior approval from the FIPB. Pursuant to a letter dated February 4, 2015,
FIPB has approved foreign investment in the Bank up to 74.0 percent of its paid up capital. The approval is subject to examination by the RBI for
compounding on the change of foreign shareholding since April 2010. See “Risk Factors – Foreign investment in our shares may be restricted due to
regulations governing aggregate foreign investment in the Bank’s paid-up equity share capital”. On February 16, 2017, the RBI lifted the restriction on the
purchase of the equity shares of the Bank by foreign investors, since the foreign shareholding in the Bank was below the maximum prescribed percentage of
74.0 percent. The RBI notified by press release on February 17, 2017, and by separate letter to us dated February 28, 2017 that the foreign shareholding in
all forms in the Bank crossed the said limit of 74.0 percent. This was due to secondary market purchases of the Bank’s equity shares during this period.
Consequently, the RBI re-imposed the restrictions on the purchase of the Bank’s equity shares by foreign investors. Further, SEBI has also enquired
regarding the measures that the Bank has taken and will take in respect of breaches of the maximum prescribed percentage of foreign shareholding in the
Bank, by its letter dated March 9, 2018. As of March 31, 2018, foreign investment in the Bank, including the shareholdings of HDFC Limited and its
subsidiaries, constituted 72.62 percent of the paid-up capital of the Bank.

On May 24, 2017, the Government announced its approval to phase out of the FIPB. It is proposed that administrative ministries or departments be
allowed to process applications for FDI requiring government approval in consultation with the Department of Industrial Policy and Promotion (“DIPP”),
which will also issue the Standard Operating Procedure (“SOP”) for processing of applications and the decision of the Government under the extant FDI
policy.

The aggregate shareholding by foreign private investors/foreign institutional investors under portfolio investment schemes through stock exchanges
may not exceed 49.0 percent of our paid-up equity share capital and individual shareholding of an FPI/FII must be below 10.0 percent of our paid-up equity
share capital. Further, as per the existing policy of the RBI, any allotment or transfer of shares which will take the aggregate shareholding of an individual
or a group to an equivalent of 5.0 percent or more of our paid-up capital would require the prior acknowledgement of the RBI before we can affect the
allotment or transfer of shares. Foreign banks are permitted to have presence in India either by opening banking outlets or through wholly owned
subsidiaries but not both.

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Moratorium, Reconstruction and Amalgamation of Banks

A bank can apply to the high court for the suspension of its business. The high court, after considering the application of the Bank, may order a
moratorium staying commencement of an action or proceedings against the relevant banking company for a maximum period of six months. During such
period of moratorium, if the RBI is satisfied that it is: (a) in the public interest; or (b) in the interest of the depositors; or (c) in order to secure the proper
management of the Bank; or (d) in the interests of the banking system of the country as a whole, it may prepare a scheme for the reconstruction of the Bank
or amalgamation of the Bank with any other bank. In circumstances entailing reconstruction of the Bank or amalgamation of the Bank with another Bank,
the RBI would invite suggestions and objections on the draft scheme prior to placing the scheme before the Government for its sanction. The Government
may sanction the scheme with or without modifications. The law does not require consent of the shareholders or creditors of such banks.

Special Status of Banks in India

The special status of banks is recognized under various statutes including the Sick Industrial Companies (Special Provisions) Act, 1985 (the “SICA”),
Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (the “DRT Act”) and the SARFAESI Act. As a bank, we are entitled to certain
benefits under the DRT Act which provide for the establishment of Debt Recovery Tribunals for expeditious adjudication and recovery of debts due to any
bank or Public Financial Institution or to a consortium of banks and Public Financial Institutions. Under the DRT Act, the procedures for recovery of debt
have been simplified and indicative time frames have been fixed for speedy disposal of cases and no court or other authority can exercise jurisdiction in
relation to matters covered by this Act, except the higher courts in India in certain circumstances. The SICA provides for reference of “sick” industrial
companies to the Board for Industrial and Financial Reconstruction (the “BIFR”). Under the SICA, other than the board of directors of a company, a
scheduled Bank (where it has an interest in the “sick” industrial company by any financial assistance or obligation, rendered by it or undertaken by it) may
refer the company to the BIFR. The SICA has been repealed by the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (the “SICA Repeal
Act”). The Ministry of Finance has notified the SICA Repeal Act, and section 4(b) of the SICA Repeal Act came into force on December 1, 2016.
Consequently, the SICA stands repealed and the BIFR and Appellate Authority for Industrial and Financial Reconstruction (“AAIFR”) have been dissolved.

The SARFAESI Act focuses on improving the rights and simplifying the procedures for enforcement of security interest of banks and financial
institutions and other specified secured creditors as well as asset reconstruction companies by providing that such secured creditors can take over
management control of a borrower company upon default and/or sell assets without the intervention of courts, in accordance with the provisions of the
SARFAESI Act. It also provides the legal framework for the securitization and reconstruction of financial assets.

The Insolvency and Bankruptcy Code, 2016

Banks, as creditors, will benefit from the Insolvency and Bankruptcy Code, 2016 (the “Insolvency and Bankruptcy Code”), which came into effect on
December 1, 2016. The Insolvency and Bankruptcy Code is a comprehensive piece of legislation that provides for the efficient and timely resolution of
insolvency. It amends 11 laws, including the Companies Act, 2013, the SARFAESI Act and the Recovery of Debts Due to Banks and Financial Institutions
Act, 1993. It provides for insolvency resolution processes for companies and individuals, and requires that such processes be completed within 180 days. As
per the Insolvency and Bankruptcy Code, the insolvency process can end under either of two circumstances: (i) when the creditors decide to evolve a
resolution plan or sell the assets of the debtor; or (ii) when the 180-day time period for negotiations has come to an end. In case a plan cannot be negotiated
during the time limit, the assets of the debtor will be sold to repay the debtor’s outstanding dues. The proceeds from the sale of assets will be distributed
based on an order of priority specified under the Insolvency and Bankruptcy Code.

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On June 13, 2017, the RBI announced the constitution of an Internal Advisory Committee (the “IAC”) to focus on large stressed accounts. The IAC
recommended 12 accounts totaling to approximately 25 percent of the current gross NPAs of the banking system for immediate reference under the
Insolvency and Bankruptcy Code.

The Banking Regulation (Amendment) Act 2017

The Government of India has recently promulgated the Banking Regulation (Amendment) Act, 2017, which is deemed to have come into force on
May 5, 2017. This amendment inserts two new sections in the Banking Regulation Act, 1949. The sections enable the Government to authorize the RBI to
direct banking companies to resolve specific stressed assets by initiating an insolvency resolution process, where required. The RBI has also been
empowered to issue other directions for resolution, and appoint or approve for appointment, authorities or committees to advise banking companies for
stressed asset resolution.

Credit Information Bureau

The Parliament of India has enacted the Credit Information Companies (Regulation) Act, 2005, pursuant to which every credit institution, including a
bank, has to become a member of a credit information bureau and furnish to it such credit information as may be required of the credit institution by the
credit information bureau about persons who enjoy a credit relationship with it. Other credit institutions, credit information bureaus and such other persons
as the RBI specifies may access such disclosed credit information.

Regulations Governing International Banking Outlets and Representative Offices

We have overseas banking outlets in Bahrain, Hong Kong and the Dubai International Financial Centre (“DIFC”). We have one representative office
each in Dubai, UAE, Abu Dhabi, UAE and Nairobi, Kenya. Our branch in Bahrain is regulated by the Central Bank of Bahrain, and has been granted a
license designating it as a wholesale bank branch. The activities that can be carried out from the Bahrain branch are deposit taking, providing credit, dealing
in financial instruments as principal, dealing in financial instruments as agent, managing financial instruments, operating a collective investment
undertaking, arranging deals in financial instruments, advising on financial instruments and issuing/administering means of payment. Our branch in Hong
Kong is a full service branch and is regulated by the Hong Kong Monetary Authority. The branch is permitted to undertake banking business in that
jurisdiction with certain restrictions. In August 2014, we opened a branch in the DIFC to provide financial services covering arrangement of credit or deals
in investments, advising on financial products or credit and arranging custodian services. The activities cater to the requirements of non-resident Indians and
Indian corporates overseas. The branch is regulated by the Dubai Financial Services Authority.

Our representative offices in Dubai and Abu Dhabi, UAE, are regulated by the Central Bank of UAE and our representative office in Nairobi, Kenya,
is regulated by the Central Bank of Kenya.

In June 2017, we opened a branch at the International Financial Service Centre at GIFT City in Gandhinagar, Gujarat, India. This branch is
considered a foreign branch by RBI, and offers products such as trade credits, foreign currency term loans (including external commercial borrowings) and
derivatives to hedge loans.

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EXCHANGE CONTROLS

Restrictions on Conversion of Rupees

There are restrictions on the conversion of rupees into dollars. Before February 29, 1992, the RBI determined the official value of the rupee in
relation to a weighted basket of currencies of India’s major trading partners. In the February 1992 budget, a new dual exchange rate mechanism was
introduced by allowing conversion of 60.0 percent of the foreign exchange received on trade or by current account at a market-determined rate and the
remaining 40.0 percent at the official rate. All importers were, however, required to buy foreign exchange at the market rate, except for certain priority
imports. In March 1993, the exchange rate was unified and allowed to float. In February 1994 and again in August 1994, the RBI announced relaxations in
payment restrictions in the case of a number of transactions. Since August 1994, the Government of India has substantially complied with its obligations
owed to the International Monetary Fund, under which India is committed to refrain from using exchange restrictions on current international transactions
as an instrument in managing the balance of payments. Effective July 1995, the process of current account convertibility was advanced by relaxing
restrictions on foreign exchange for various purposes, such as foreign travel and medical treatment. The Government has also, since 1999, relaxed
restrictions on capital account transactions by resident Indians. For example, the RBI permits persons resident in India to remit monies outside India for any
permissible current or capital account transaction or a combination of both. The limit for such remittances varies: it has been increasing from 2,000 and was
US$ 200,000 per financial year, but was reduced to US$ 75,000 in September 2013 for exchange control purposes. As a result of stability in the foreign
exchange market, this limit was enhanced to US$ 125,000 in June 2014 and, as of June 2015, has been further increased to US$ 250,000 per person per
year.

Restrictions on Sales of the Equity Shares Underlying the ADSs and Repatriation of Sale Proceeds
Under the laws of India, ADSs issued by Indian companies to non-residents are freely transferable outside of India. Similarly, RBI approval is not
required for the sale of equity shares underlying ADSs by a non-resident of India to a person resident in India, subject to reporting requirements and the
applicable pricing norms if the shares are not sold on a recognized Indian exchange. However, RBI guidelines relating to the acquisition by purchase or
otherwise of the shares of a private bank will apply to both resident and non-resident investors where such acquisition results in any person owning or
controlling 5.0 percent or more of the paid up capital of the private bank.

The Ministry of Finance, Government of India, has granted general permission for the transfer of ADRs outside India and also permitted non-resident
holders of ADRs to surrender ADRs in exchange for the underlying shares of the Indian issuer company. Pursuant to the terms of the deposit agreement, an
investor who surrenders ADRs and withdraws shares is permitted to redeposit such shares subject to the total issued ADRs and obtain ADRs at a later time,
subject to compliance with applicable regulations.

Unlisted companies (private or public) that were previously prohibited from issuing ADSs on non-Indian stock exchanges if they were not already
listed on a stock exchange in India were, in October 2013, granted a general permission to list on non-Indian stock exchanges without having to be listed in
India, subject to certain conditions.

In April 2014, the provisions of the Companies Act, 2013 regulating the issuance of ADSs by Indian companies came into force. In May 2014, the
Government of India accepted the recommendations of the M. S. Sahoo Committee, which had drafted a new scheme to regulate ADRs. On October 21,
2014, the Government notified the Depository Receipts Scheme 2014 (“DR Scheme”), which came into force on December 15, 2014. The relevant
provisions of the Companies Act, 2013 and the DR Scheme will only apply to depository receipts (including ADSs) issued after April 1, 2014, and the date
of the notification of the DR Scheme, respectively.

Two-Way Fungibility of ADSs

The RBI permits the re-conversion of shares of Indian companies into ADSs, subject to the following conditions:
• the Indian company has issued ADSs;
• the shares of the Indian company are purchased by a registered stockbroker in India in the name of the depository, on behalf of the
non-resident investor who wishes to convert such shares into ADSs;

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• shares are purchased on a recognized stock exchange;

• the shares are purchased with the permission of the custodian of the ADSs of the Indian company and are deposited with the custodian;
• the number of shares so purchased does not exceed the ADSs converted into underlying shares, and are in compliance with the sectoral caps
applicable under the Foreign Direct Investment regime; and
• the non-resident investor, broker, custodian and the overseas depository comply with the provisions of the Depository Receipt Mechanism and
the guidelines issued in relation thereto from time to time.

The RBI requires the domestic custodian to ensure compliance with RBI guidelines and to file reports with the RBI from time to time. The domestic
custodian is also required to perform, inter alia, the following functions in the context of the two-way fungibility of ADSs as per Indian laws:
• provide a certificate to the RBI and the SEBI stating that the sectoral caps for foreign investment in the relevant company have not been
breached;
• monitor the total number of ADSs that have been converted into underlying shares by non-resident investors;
• liaise with the issuer company to verify that the sectoral caps for foreign direct investment, if any, are not being breached; and
• file a monthly report about the ADS transactions under the two-way fungibility arrangement with the RBI and the SEBI.

An investor who surrenders an ADS and withdraws equity shares may be entitled to redeposit those equity shares in the depositary facility in
exchange for ADSs and the depositary may accept deposits of outstanding equity shares purchased by a non-resident on the local stock exchange and issue
ADSs representing those equity shares. However, in each case, the aggregate number of equity shares re-deposited or deposited by such persons cannot
exceed the number of shares represented by ADSs as have been previously cancelled and not already replaced by further newly issued ADSs. The RBI has
issued a notification, inter alia, permitting Indian companies to sponsor ADS issues against shares held by their shareholders at a price to be determined by
the lead manager. Investors who seek to sell any equity shares in India withdrawn from the depositary facility and to convert the rupee proceeds from the
sale into foreign currency and repatriate the foreign currency from India will, subject to the foregoing, not have to obtain RBI approval for each transaction.

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RESTRICTIONS ON FOREIGN OWNERSHIP OF INDIAN SECURITIES

The Government of India regulates ownership of Indian companies by non-residents. Foreign investment in Indian securities is generally regulated by
the Consolidated Policy on Foreign Direct Investment (the “Consolidated FDI Policy”) issued by the Government of India and the Foreign Exchange
Management Act, 1999 (the “Foreign Exchange Management Act”). The Foreign Exchange Management Act, when read together with the regulations
issued in relation thereto by the RBI, permits transactions involving the inflow or outflow of foreign exchange and empowers the RBI to prohibit or regulate
such transactions.

The Foreign Exchange Management Act has eased restrictions on current account transactions by non-residents. However, the RBI continues to
exercise control over capital account transactions (i.e., those that alter the assets or liabilities, including contingent liabilities, of persons). The RBI has
issued regulations under the Foreign Exchange Management Act to regulate the various kinds of capital account transactions, including certain aspects of
the purchase and issuance of shares of Indian companies. Amendments to the Foreign Exchange Management Act have been issued (the “FEMA
Amendments”) as a part of the Finance Act, 2015, which restrict the role of the RBI to regulating capital account transactions relating to debt only. As a
result of the amendments, the purchase and issuance of shares of Indian companies will be regulated by the Government of India. The effective date of the
FEMA Amendments has not yet been notified. As a result, the Government of India will also have to issue appropriate rules and regulations that will
replace the regulations issued by the RBI in relation to the type of capital account transactions that the Government of India will now regulate in accordance
with the FEMA Amendments.

Further, on November 7, 2017, the RBI notified the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside
India) Regulations, 2017 (the “FEMA Transfer or Issue of Security Regulations 2017”) to regulate the transfer by, or issue of securities to, persons resident
outside India. The FEMA Transfer or Issue of Security Regulations 2017 prescribe that no prior consent and approval is required from the RBI for foreign
direct investment (“FDI”) under an “automatic route” for certain industries within specified sectoral caps. In respect of all industries that do not fall under
the automatic route, and in respect of investments under the automatic route, but in excess of the specified sectoral limits, approval may be required from
the relevant ministry/ministries of the Government and/or the RBI.

Under the current foreign investment rules, the following restrictions are applicable to non-resident ownership:

Foreign Direct Investment

The Government of India has put in place a policy framework on FDI that is embodied in the circular on Consolidated FDI Policy, which is generally
updated every year to include the regulatory changes effected in the interim. The Department of Industrial Policy and Promotion (“DIPP”), Ministry of
Commerce and Industry, Government of India makes policy pronouncements on FDI through press notes/press releases which are notified by the RBI as
amendments to the FEMA Transfer or Issue of Security Regulations 2017. These notifications take effect from the date of issue of the press notes/press
releases, unless specified otherwise therein. The procedural instructions are issued by the RBI vide A.P. (DIR Series) Circulars. The regulatory framework,
over a period of time, thus, consists of acts, regulations, press notes, press releases and clarifications that are consolidated in the circular on Consolidated
FDI Policy from time to time.

The present Consolidated FDI Policy subsumes and supersedes all press notes, press releases, clarifications and circulars issued by the DIPP that were
in force as of August 27, 2017, and reflects the FDI policy as of August 28, 2017. Certain actions, such as those listed below, require government approval
in consultation with the DIPP by way of prior approval from the administrative ministries or departments:
• foreign investments, including a transfer of shares, in excess of specified sectoral caps;
• transfer of control and/or ownership (as a result of a share transfer and/or new share issuance) pursuant to an amalgamation, merger, or
acquisition of an Indian company engaged in an activity having limitations on foreign ownership, currently owned or controlled by resident
Indian citizens and Indian companies, which are owned or controlled by resident Indian citizens to a non-resident entity;
• foreign investments in a non-operating company that does not have any downstream investments for undertaking activities which are under
Government route. Further, as and when such a company commences business or makes downstream investment, it will have to comply with
the relevant sectoral conditions on entry route, conditionalities and caps;

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• foreign investments by an unincorporated entity in certain cases; and

• foreign investment by swap of shares for sectors under the Government approval route.

On May 24, 2017, the Government announced its approval to phase out the Foreign Investment Promotion Board (“FIPB”), which had been set up to
regulate all foreign direct investment into India and whose approval was required for foreign investment in certain sectors, including defense and public
sector banks. The DIPP has also issued the Standard Operating Procedure (“SOP”) for processing of applications and the decision of the Government under
the existing FDI Policy. The SOP provides a list of administrative ministries and departments competent to grant approval (the “Competent Authorities”) in
relation to the corresponding sector and the procedure for obtaining such approval. The abolition of the FIPB and the SOP are both set out in the
Consolidated FDI Policy dated August 28, 2017.

A person residing outside India or any entity incorporated outside India has general permission to purchase shares, convertible debentures or
preference shares of an Indian company subject to certain terms and conditions. Further, a citizen of Bangladesh or Pakistan or any entity incorporated in
Bangladesh or Pakistan may, with the prior approval of the Government, purchase shares, convertible debentures or preference shares of an Indian company
subject to certain prescribed terms and conditions.

Subject to certain exceptions, FDI and investment by non-resident Indians in Indian companies do not require the prior approval of the Government
of India (acting through the concerned ministries or departments, in consultation with the DIPP and the Ministry of Commerce and Industry) or the RBI.
The Government of India has indicated that in all cases where FDI is allowed under the automatic route pursuant to the Consolidated FDI Policy, the RBI
would continue to be the primary agency for the purposes of monitoring and regulating foreign investment. For cases that do require an FDI approval,
including cases approved by the Government in the past, the monitoring and compliance of conditions shall be done by the concerned administrative
ministries and departments. Further, in cases where the approval of the Government of India is obtained, no approval of the RBI is required. In both cases,
the prescribed applicable norms with respect to determining the price at which the shares may be issued by the Indian company to the non-resident investor
would need to be complied with and a declaration in the prescribed form, detailing the foreign investment, must be filed with the RBI once the foreign
investment is made in the Indian company. The foregoing description applies only to an issuance of shares by, and not to a transfer of shares of, Indian
companies.

The Government has set up the Foreign Investment Implementation Authority (the “FIIA”), in the Ministry of Commerce and Industry. The FIIA has
been mandated to: (i) translate FDI approvals into implementation; (ii) provide a proactive one-stop after-care service to foreign investors by helping them
obtain necessary approvals; (iii) sort out operational problems; and (iv) meet with various government agencies to find solutions to foreign investment
problems and maximize opportunities through a cooperative approach.

In May 2016, the RBI issued the Reserve Bank of India (Ownership in Private Sector Banks) Directions, 2016. These guidelines prescribe
requirements regarding shareholding and voting rights in relation to all private sector banks licensed by the RBI to operate in India. In relation to foreign
investment in private sector banks in India, the guidelines state that the foreign investment limits and sub-limits and also computation of foreign investment
in private sector banks shall be as specified in the Consolidated FDI Policy and the Foreign Exchange Management Act, and regulations made in relation
thereto, as amended from time to time. As per the Consolidated FDI Policy dated August 28, 2017 issued by the Government of India, the following
restrictions are applicable to foreign ownership in the Bank:
• Foreign investors may own up to 74 percent of the equity shares of a private sector Indian banking company subject to compliance with
guidelines issued by the RBI from time to time. FDI up to 49 percent is permitted under the automatic route and FDI above 49 percent and up
to 74 percent requires prior approval of the Competent Authorities. It includes FDI, ADSs, Global Depositary Receipts and investments by
foreign portfolio investors (“FPIs”) under the foreign portfolio investment scheme and also by non-resident Indians. In addition, it
encompasses shares acquired by subscription in private placements and public offerings and acquisitions of shares from existing shareholders.
Aggregate foreign investment in the Bank from all sources is allowed up to a maximum of 74 percent of the paid-up capital of the Bank. At
least 26 percent of the paid-up capital would have to be held by Indian residents, except in the case of a wholly-owned subsidiary of a foreign
bank.

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• An FII/FPI may invest in the capital of an Indian banking company in the private sector under the portfolio investment scheme which limits
the individual holding of an FII/FPI below 10 percent of the capital of the Indian banking company. The aggregate limit for FII/FPI
investment is limited to 24 percent of the capital of the Indian banking company. Subject to a resolution of the board of directors, a special
resolution of the shareholders and prior notification to the RBI, this limit may be raised to 74 percent of the total paid-up capital of a private
sector banking company. No single non-resident Indian may own more than 5 percent of the total paid-up capital of a private sector banking
company and the aggregate limit cannot exceed 10 percent of the total paid-up capital. However, non-resident Indians’ holdings can be
allowed up to 24 percent of the total paid-up capital, provided the banking company passes a special resolution of the shareholders to that
effect and gives prior notification to the RBI. In addition, overseas corporate bodies (i.e., entities in which non-resident Indians hold at least
60 percent) are not permitted to invest under the portfolio investment scheme though they may continue to hold investments that have already
been made under the portfolio investment scheme until such time as these investments are sold on the stock exchange. The existing individual
and aggregate investment limits for an FII or sub-account (being deemed FPIs) in the Bank is 10.0 percent and 74.0 percent of the total
paid-up equity share capital of the Bank, respectively.

FPI Regulations
The Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014 (the “FPI Regulations”) have replaced the Securities and
Exchange Board of India (Foreign Institutional Investors) Regulations, 1995 (the “FII Regulations”) and the regime for investments by qualified foreign
investors (“QFIs”). The FPI Regulations were notified on January 7, 2014, and came into effect on June 1, 2014. In terms of the FPI Regulations, an FII
who holds a valid certificate of registration from the SEBI shall be deemed to be a registered FPI until the expiry of the block of three years for which fees
have been paid as per the FII Regulations. An FII shall not be eligible to invest as an FII after registering as an FPI under the FPI Regulations.

Further, a QFI could continue to buy, sell or otherwise deal in securities until May 31, 2015, or until the QFI obtained a certificate of registration as
FPI, whichever occurred earlier.

The FPI Regulations specify that the shares purchased by a single FPI or an investor group (which means the same set of ultimate beneficial person(s)
investing through multiple entities) must be below 10 percent of the issued capital of a company. All existing investments by FIIs/QFIs/sub-accounts are
grandfathered, i.e., if an FPI already holds 10.0 percent of the issued capital of a company, it is not required to divest its existing holdings to comply with
the stipulation to hold “below 10.0 percent”.

Under the FPI Regulations, an FPI may issue, subscribe to or otherwise deal in offshore derivative instruments (“ODIs”) only if such ODIs are issued
(i) to persons that are regulated by an appropriate foreign regulatory authority; and (ii) after compliance with applicable “know your client” norms.
However, unregulated broad-based funds, which are classified as Category II FPIs by virtue of their investment manager being appropriately regulated
cannot issue, subscribe to or otherwise deal in ODIs, directly or indirectly. Further, no Category III FPI can issue, subscribe to or otherwise deal in ODIs,
directly or indirectly. Any ODI issued under the FII Regulations before commencement of the FPI Regulations is deemed to have been issued under the FPI
Regulations. The ODIs cannot be issued or transferred to persons who are not eligible to be registered as an FPI under the FPI Regulations. Further, any
transfer of an ODI requires prior consent of the FPI which has issued the ODI.

In June 2016, the SEBI directed all the issuers of ODIs to identify and verify the beneficial owners in the subscriber entities who hold in excess of
25 percent, in the case of a company, and 15 percent, in the case of partnership firms, trusts and unincorporated bodies. ODI issuers are also required to
identify and verify the person(s) who control the operations when no beneficial owner is identified based on the materiality threshold. Prescribed documents
for verification of the ODI subscribers and the beneficial owners are required to be submitted by the ODI issuers, and the ODI issuers are also required to
file suspicious transaction reports in relation to the ODIs issued by it, if any, with the Indian Financial Intelligence Unit. The new guidelines came into
effect on July 1, 2016.

Investors in ADSs do not need to seek the specific approval from the Government of India to purchase, hold or dispose of their ADSs.
Notwithstanding the foregoing, if a FII, a FPI, non-resident Indian or overseas corporate body were to withdraw its equity shares from the ADS program, its
investment in the equity shares would be subject to the general restrictions on foreign ownership.

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Issue of Securities Through the Depository Receipt Mechanism

Issue of securities through the depository receipt mechanism by Indian companies is governed by the Companies Act, the Companies (Issue of Global
Depository Receipts) Rules, 2014 (the “Depository Receipts Rules”) and the Depository Receipts Scheme, 2014 (the “DR Scheme”).

The Government of India notified the DR Scheme on October 21, 2014, which came into force on December 15, 2014. Consequently, the Issue of
Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 has been repealed except to the extent
relating to foreign currency convertible bonds.

Under the DR Scheme, an Indian company, listed or unlisted, private or public, is permitted to issue securities, including equity shares, through the
depository receipt mechanism if such company has not been specifically prohibited from accessing capital markets or dealing in securities. Permissible
securities that can be issued by an Indian company through the depository receipt mechanism are “securities” as defined under the Securities Contracts
(Regulation) Act, 1956, which includes, inter alia, shares, bonds, derivatives and units of mutual funds, and similar instruments issued by private
companies, provided that such securities are in dematerialized form.

An Indian company can issue securities to a foreign depository for the purpose of issuing depository receipts through any mode permissible for the
issue of such securities to other investors. The foreign depository can issue depository receipts by way of a public offering or private placement or in any
other manner prevalent in the permissible jurisdiction. A “permissible jurisdiction” is defined as a foreign jurisdiction which is a member of the Financial
Action Task Force on Money Laundering and whose securities market regulator is a member of the International Organization of Securities Commissions.

In terms of the DR Scheme, securities can be issued through the depository receipt mechanism up to such a limit that the aggregate underlying
securities issued to foreign depositories for issuance of depository receipts along with securities already held by persons resident outside India does not
exceed the applicable foreign investment limits prescribed by regulations framed under the Foreign Exchange Management Act. The depository receipts
and the underlying securities may be converted into each other subject to the applicable foreign investment limit. It should be noted that the RBI guidelines
relating to the acquisition by purchase or otherwise of shares of a private bank will apply to both resident and non-resident investors where such acquisition
results in any person owning or controlling 5.0 percent or more of the paid-up capital of the private bank.

The DR Scheme provides that underlying securities shall not be issued to a foreign depository for issuance of depository receipts at a price which is
less than the price applicable to a corresponding mode of issuance to domestic investors.

In terms of the DR Scheme, the foreign depository is entitled to exercise voting rights, if any, associated with the underlying securities whether
pursuant to voting instructions from the holder of depository receipts or otherwise. Further, a holder of depository receipts issued against underlying equity
shares shall have the same obligations as if it is the holder of the equity shares if it has the right to issue voting instruction.

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ADDITIONAL INFORMATION

It is possible to read and copy documents referred to in this annual report on Form 20-F that have been filed with the SEC at the SEC’s public
reference room located at 100 F Street NE, Washington, DC 20549. The SEC filings are also available to the public from commercial document retrieval
services and at the internet website maintained by the SEC at www.sec.gov. The internet website maintained by the Bank is www.hdfcbank.com. No
material on the Bank’s website forms any part of, or is incorporated by reference into, this annual report on Form 20-F. References herein to the Bank’s
website shall not be deemed to cause such incorporation.

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of HDFC Bank Limited (the “Bank”) is responsible for establishing and maintaining adequate internal control over financial
reporting. The Bank’s internal control system was designed to provide reasonable assurance to the Bank’s management, its Audit Committee and Board of
Directors regarding the preparation and fair presentation of published financial statements.

There are inherent limitations to the effectiveness of any internal control or system of control, however well-designed, including the possibility of
human error and the possible circumvention or overriding of such controls or systems. Moreover, because of changing conditions, the reliability of internal
controls may vary over time. As a result, even effective internal controls can provide no more than reasonable assurance with respect to the accuracy and
completeness of financial statements and their process of preparation.

The Bank management assessed the effectiveness of the Bank’s internal control over financial reporting as of March 31, 2019. In making this
assessment, it has used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—
Integrated Framework (2013). Based on those criteria and our assessment we believe that, as of March 31, 2019, the Bank’s internal control over financial
reporting was effective.

The Bank’s independent public accountant, KPMG, has issued an audit report on the Bank’s internal control over financial reporting.

HDFC BANK LIMITED

HDFC Bank House,
Senapati Bapat Marg,
Lower Parel,
Mumbai 400 013, India

July 31, 2019

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

HDFC Bank Limited

Opinion on Internal Control Over Financial Reporting

We have audited HDFC Bank Limited and subsidiaries’ (the Company) internal control over financial reporting as of March 31, 2019, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our
opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2019, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated
balance sheets of the Company as of March 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, shareholders’ equity,
and cash flows for each of the years in the three-year period ended March 31, 2019, and the related notes (collectively, the consolidated financial
statements), and our report dated July 31, 2019 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management’s Report On Internal Control Over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

/s/ KPMG

Mumbai, India
July 31, 2019

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INDEX TO FINANCIAL STATEMENTS

Page
Consolidated Financial Statements of HDFC Bank Limited and its Subsidiaries:
Report of independent registered public accounting firm F-2
Consolidated balance sheets as of March 31, 2018 and 2019 F-3
Consolidated statements of income for the years ended March 31, 2017, 2018 and 2019 F-4
Consolidated statements of comprehensive income for the years ended March 31, 2017, 2018 and 2019 F-6
Consolidated statements of cash flows for the years ended March 31, 2017, 2018 and 2019 F-7
Consolidated statements of shareholders’ equity for the years ended March 31, 2017, 2018 and 2019 F-9
Notes to consolidated financial statements F-11

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

HDFC Bank Limited

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of HDFC Bank Limited and subsidiaries (the Company) as of March 31, 2019 and 2018,
the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year period
ended March 31, 2019, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company as of March 31, 2019 and 2018, and the results of its operations and its cash
flows for each of the years in the three-year period ended March 31, 2019, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s
internal control over financial reporting as of March 31, 2019, based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission, and our report dated July 31, 2019 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included
performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

The accompanying consolidated financial statements as of and for the year ended March 31, 2019 have been translated into United States dollars solely for
the convenience of the reader. We have audited the translation and, in our opinion, such financial statements expressed in Indian rupee have been translated
into United States dollars on the basis set forth in Note 2(y) to the consolidated financial statements.

/s/ KPMG

We have served as the Company’s auditor since 2015.

Mumbai, India
July 31, 2019

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of
March 31, 2018 March 31, 2019 March 31, 2019
(In millions, except number of shares)
ASSETS:
Cash and due from banks, and restricted cash Rs. 574,151.0 Rs. 734,872.6 US$ 10,625.7
Investments held for trading, at fair value 167,513.9 265,516.1 3,839.2
Investments available for sale debt securities, at fair value [includes
restricted investments of Rs. 1,354,027.6 and
Rs.1,634,673.3 (US$ 23,636.1), as of March 31, 2018 and March 31, 2019,
respectively] 2,221,443.3 2,633,348.4 38,076.2
Securities purchased under agreements to resell 650,018.6 76,213.5 1,102.0
Loans [net of allowance of Rs. 112,507.2 and Rs. 148,232.0 (US$ 2,143.4), as
of March 31, 2018 and March 31, 2019, respectively] 7,263,671.8 8,963,232.6 129,601.3
Accrued interest receivable 77,894.7 93,031.7 1,345.2
Property and equipment, net 38,968.1 43,187.8 624.5
Intangible assets, net 1.0 — —
Goodwill 74,937.9 74,937.9 1,083.5
Other assets 298,708.5 395,733.0 5,722.1
Total assets Rs. 11,367,308.8 Rs. 13,280,073.6 US$ 192,019.7

LIABILITIES AND SHAREHOLDERS’ EQUITY:

Liabilities:
Interest-bearing deposits Rs. 6,693,649.3 Rs. 7,804,717.5 US$ 112,850.2
Non-interest-bearing deposits 1,190,102.2 1,420,309.4 20,536.6
Total deposits 7,883,751.5 9,225,026.9 133,386.8
Securities sold under repurchase agreements 138,000.0 174,000.0 2,515.9
Short-term borrowings 779,201.7 654,058.0 9,457.2
Accrued interest payable 65,514.4 79,372.5 1,147.7
Long-term debt 932,906.3 1,044,553.0 15,103.4
Accrued expenses and other liabilities 391,441.6 467,438.6 6,758.8
Total liabilities Rs. 10,190,815.5 Rs. 11,644,449.0 US$ 168,369.8

Commitments and contingencies (see note 27)

Shareholders’ equity:
Equity shares: par value—Rs. 2.0 each; authorized 3,250,000,000 shares and
3,250,000,000 shares; issued and outstanding 2,595,090,267 shares and
2,723,306,610 shares, as of March 31, 2018 and March 31, 2019,
respectively Rs. 5,190.2 Rs. 5,446.6 US$ 78.8
Additional paid-in capital 476,570.4 739,763.6 10,696.4
Retained earnings 462,876.2 587,235.2 8,491.0
Statutory reserve 233,323.5 288,321.1 4,168.9
Accumulated other comprehensive income (loss) (3,796.7) 11,808.8 170.7
Total HDFC Bank Limited shareholders’ equity 1,174,163.6 1,632,575.3 23,605.8
Noncontrolling interest in subsidiaries 2,329.7 3,049.3 44.1
Total shareholders’ equity 1,176,493.3 1,635,624.6 23,649.9
Total liabilities and shareholders’ equity Rs. 11,367,308.8 Rs. 13,280,073.6 US$ 192,019.7

Effective April 1, 2018, the Bank adopted ASU 2016-01 retrospectively and accordingly, prior period amounts were reclassified. For additional information,
refer to note 2(w)(ii).

See accompanying notes to consolidated financial statements

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Fiscal years ended March 31,

2017 2018 2019 2019
(In millions, except share and per share amounts)
Interest and dividend revenue:
Loans Rs. 552,686.8 Rs. 667,458.7 Rs. 827,683.0 US$ 11,967.7
Trading securities 5,041.8 4,049.1 8,892.9 128.6
Available for sale debt securities 154,618.6 158,209.2 190,992.5 2,761.6
Other 13,207.1 13,748.3 14,146.5 204.5
Total interest and dividend revenue 725,554.3 843,465.3 1,041,714.9 15,062.4
Interest expense:
Deposits 308,078.3 326,717.8 410,026.4 5,928.7
Short-term borrowings 21,821.9 26,004.4 39,054.3 564.7
Long-term debt 43,781.1 67,297.5 85,081.1 1,230.2
Other 77.4 295.0 47.5 0.7
Total interest expense 373,758.7 420,314.7 534,209.3 7,724.3
Net interest revenue 351,795.6 423,150.6 507,505.6 7,338.1
Provision for credit losses 37,951.4 59,397.8 72,279.3 1,045.1
Net interest revenue after provision for credit losses 313,844.2 363,752.8 435,226.3 6,293.0
Non-interest revenue, net:
Fees and commissions 94,120.3 120,060.9 134,155.2 1,939.8
Trading securities gain/(loss), net 467.2 (63.4) 1,028.4 14.9
Realized gain/(loss) on sales of available for sale
debt securities, net 9,606.2 10,853.2 2,596.0 37.5
Other than temporary impairment losses on
available for sale debt securities (13.4) (149.1) (1,081.0) (15.6)
Foreign exchange transactions 11,282.7 6,209.5 1,917.8 27.7
Derivatives gain/(loss), net (5,738.5) 6,742.6 12,409.1 179.4
Other, net 601.6 953.3 9,096.7 131.5
Total non-interest revenue, net 110,326.1 144,607.0 160,122.2 2,315.2
Total revenue, net 424,170.3 508,359.8 595,348.5 8,608.2
Non-interest expense:
Salaries and staff benefits 92,663.0 98,483.7 104,652.6 1,513.2
Premises and equipment 28,024.2 29,816.9 29,527.7 426.9
Depreciation and amortization 8,876.9 9,678.9 12,247.8 177.1
Administrative and other 74,637.7 93,272.9 108,960.4 1,575.5
Amortization of intangible assets 3.0 1.0 1.0 —
Total non-interest expense 204,204.8 231,253.4 255,389.5 3,692.7
Income before income tax expense 219,965.5 277,106.4 339,959.0 4,915.5
Income tax expense 79,224.9 98,272.5 119,393.5 1,726.3
Net income before noncontrolling interest Rs. 140,740.6 Rs. 178,833.9 Rs. 220,565.5 US$ 3,189.2
Less: Net income attributable to shareholders of
noncontrolling interest 210.8 319 461.7 6.7
Net income attributable to HDFC Bank Limited Rs. 140,529.8 Rs. 178,514.9 Rs. 220,103.8 US$ 3,182.5

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CONSOLIDATED STATEMENTS OF INCOME—(Continued)
Fiscal years ended March 31,
2017 2018 2019 2019
(In millions, except share and per share amounts)
Per share information:
Earnings per equity share—basic Rs. 55.23 Rs. 69.18 Rs. 82.13 US$ 1.19
Earnings per equity share—diluted Rs. 54.57 Rs. 68.29 Rs. 81.31 US$ 1.18
Per ADS information (where 1 ADS represents 3 shares):
Earnings per ADS—basic Rs. 165.69 Rs. 207.54 Rs. 246.39 US$ 3.57
Earnings per ADS—diluted Rs. 163.71 Rs. 204.87 Rs. 243.93 US$ 3.54
Dividends declared per equity share Rs. 11.0 Rs 13.0 Rs 15.0 US$ 0.2

Effective April 1, 2018, the Bank adopted ASU 2017-07 retrospectively and accordingly, prior period amounts were revised. For additional information,
refer to note 2(w)(viii) and note 23

See accompanying notes to consolidated financial statements

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Fiscal years ended March 31,

2017 2018 2019 2019
(In millions)
Net income before noncontrolling interest Rs. 140,740.6 Rs. 178,833.9 Rs. 220,565.5 US$ 3,189.2
Other comprehensive income, net of tax:
Foreign currency translation adjustment:
Net unrealized gain (loss) arising during
the period [net of tax Rs. 110.6,
Rs. (39.6) and Rs. (356.6), as of
March 31, 2017, March 31, 2018 and
March 31, 2019, respectively] (209.2) 72.1 663.9 9.6
Available for sale debt securities:
Net unrealized gain (loss) arising during the
period [net of tax Rs. (9,478.8), Rs. 11,319.5
and Rs. (9,187.8), as of March 31, 2017,
March 31, 2018 and March 31, 2019,
respectively] 17,910.7 (21,445.3) 17,105.1 247.3
Reclassification adjustment for net (gain) loss
included in net income [net of tax Rs.
1,685.7, Rs. 4,541.5 and Rs. 1,018.1, as of
March 31, 2017, March 31, 2018 and
March 31, 2019, respectively] (3,185.2) (8,455.1) (1,895.5) (27.4)
Other comprehensive income, net of tax 14,516.3 (29,828.3) 15,873.5 229.5
Total comprehensive income 155,256.9 149,005.6 236,439.0 3,418.7
Less: Comprehensive income attributable to shareholders
of noncontrolling interest 210.8 319.0 461.7 6.7
Comprehensive income attributable to HDFC Bank
Limited Rs. 155,046.1 Rs. 148,686.6 Rs. 235,977.3 US$ 3,412.0

See accompanying notes to consolidated financial statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

Fiscal years ended March 31,

2017 2018 2019 2019
(In millions)
Cash flows from operating activities:
Net income before noncontrolling interest Rs. 140,740.6 Rs. 178,833.9 Rs. 220,565.5 US$ 3,189.2
Adjustment to reconcile net income to net cash provided by operating
activities
Provision for credit losses 37,951.4 59,397.8 72,279.3 1,045.1
Depreciation and amortization 8,876.9 9,678.9 12,247.8 177.1
Amortization of intangible assets 3.0 1.0 1.0 —
Amortization of deferred customer acquisition costs and fees 7,913.8 9,246.2 10,423.1 150.7
Amortization of premium (discount) on investments 2,609.8 3,599.4 4,532.1 65.5
Other than temporary impairment losses on available for sale
debt securities 13.4 149.1 1,081.0 15.6
Deferred tax benefit (5,048.6) (10,403.5) (8,129.4) (117.6)
Other gains, net — — (6,717.5) (97.1)
Share-based compensation expense 8,203.2 6,594.6 5,343.3 77.3
Net realized (gain) loss on sale of available for sale debt
securities (9,606.2) (10,853.2) (2,596.0) (37.5)
(Gain) loss on disposal of property and equipment, net 14.8 (64.5) (64.8) (0.9)
Unrealized exchange (gain) loss 407.9 1,719.5 574.6 8.3
Net change in:
Investments held for trading 35,241.8 (131,816.3) (96,555.7) (1,396.1)
Accrued interest receivable (9,083.4) (10,527.8) (15,060.3) (217.8)
Other assets (65,542.3) 90,525.6 (112,726.3) (1,629.9)
Accrued interest payable 3,286.3 20,997.1 13,775.0 199.2
Accrued expense and other liabilities 223,289.8 (122,803.6) 84,299.5 1,218.9
Net cash provided by operating activities 379,272.2 94,274.2 183,272.2 2,650.0
Cash flows from investing activities:
Term placements 17,830.3 (8,806.4) 24,447.4 353.5
Activity in available for sale debt securities:
Purchases (2,890,096.8) (1,518,100.1) (1,781,754.9) (25,762.8)
Proceeds from sales 412,536.2 197,206.3 453,778.9 6,561.3
Maturities, prepayments and calls 2,274,701.2 1,171,299.5 937,072.0 13,549.3
Net change in repurchase agreements and reverse repurchase
agreements (355,040.1) (462,018.6) 609,805.1 8,817.3
Loans purchased (128,490.2) (55,216.0) (240,356.2) (3,475.4)
Repayments on loans purchased 59,803.7 76,993.2 89,713.3 1,297.2
Increase in loans originated, net of principal collections (956,914.2) (1,440,601.9) (1,610,724.3) (23,289.8)
Additions to property and equipment (12,628.5) (9,181.5) (16,355.0) (236.5)
Proceeds from sale or disposal of property and equipment 94.3 95.1 212.3 3.1
Activity in equity securities, net — 4.7 (2,821.4) (40.8)
Net cash used in investing activities (1,578,204.1) (2,048,325.7) (1,536,982.8) (22,223.6)

See accompanying notes to consolidated financial statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)
Fiscal years ended March 31,
2017 2018 2019 2019
(In millions)
Cash flows from financing activities:
Net increase in deposits 979,662.7 1,447,097.0 1,331,850.9 19,257.5
Net increase (decrease) in short-term borrowings 68,703.2 456,558.6 (127,707.1) (1,846.5)
Purchase of subsidiary shares from noncontrolling interest — (143.3) — —
Proceeds from issue of shares by a subsidiary to noncontrolling
interests 301.9 366.5 459.8 6.6
Proceeds from issuance of long-term debt 335,048.9 425,517.1 320,093.6 4,628.3
Repayment of long-term debt (123,074.3) (225,150.2) (224,084.5) (3,240.1)
Proceeds from issuance of equity shares for options exercised 22,615.1 27,259.1 22,008.2 318.2
Proceeds from issuance of equity shares (net of issuance cost) — — 235,896.2 3,410.9
Payment of dividends and dividend tax (29,280.9) (34,490.3) (41,015.2) (593.0)
Net cash provided by financing activities 1,253,976.6 2,097,014.5 1,517,501.9 21,941.9
Effect of exchange rate changes on cash and due from banks, and
restricted cash (2,007.8) 479.4 (3,069.7) (44.4)
Net change in cash and due from banks, and restricted cash 53,036.9 143,442.4 160,721.6 2,323.9
Cash and due from banks, and restricted cash, beginning of year 377,671.7 430,708.6 574,151.0 8,301.8
Cash and due from banks, and restricted cash, end of year Rs. 430,708.6 Rs. 574,151.0 Rs. 734,872.6 US$ 10,625.7

Supplementary cash flow information:

Interest paid Rs. 370,455.4 Rs. 399,287.9 Rs. 520,351.2 US$ 7,523.9
Income taxes paid, net of refunds Rs. 76,849.6 Rs. 100,089.3 Rs. 119,365.0 US$ 1,725.9
Non-cash investment activities
Payable for purchase of property and equipment Rs. 537.8 Rs. 1,064.5 Rs. 1,323.7 US$ 19.1

See accompanying notes to consolidated financial statements

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Total HDFC
Accumulated Bank
Number of Equity Additional Other Limited Total
Equity Share Paid In Retained Statutory Comprehensive Shareholders’ Noncontrolling Shareholders’
Shares Capital Capital Earnings Reserve* Income (loss) Equity interest Equity
(In millions, except for equity shares)
Balance at March 31, 2016 2,528,186,517 Rs. 5,056.4 Rs. 412,264.5 Rs. 290,542.4 Rs. 149,931.6 Rs. 11,515.3 Rs. 869,310.2 Rs. 1,485.0 Rs. 870,795.2
Shares issued upon exercise of options 34,359,200 68.7 22,546.4 22,615.1 22,615.1
Share-based compensation 8,203.2 8,203.2 8,203.2
Dividends, including dividend tax (29,280.9) (29,280.9) (29,280.9)
Change in ownership interest in
subsidiary (292.3) 452.2 159.9 (150.2) 9.7
Shares issued to noncontrolling
interest — 301.9 301.9
Transfer to statutory reserve (37,771.6) 37,771.6 — —
Net income 140,529.8 140,529.8 210.8 140,740.6
Net change in accumulated other
comprehensive income 14,516.3 14,516.3 14,516.3
Balance at March 31, 2017 2,562,545,717 Rs. 5,125.1 Rs. 442,721.8 Rs. 364,471.9 Rs. 187,703.2 Rs. 26,031.6 Rs. 1,026,053.6 Rs. 1,847.5 Rs. 1,027,901.1

Total HDFC
Accumulated Bank
Number of Equity Additional Other Limited Total
Equity Share Paid In Retained Statutory Comprehensive Shareholders’ Noncontrolling Shareholders’
Shares Capital Capital Earnings Reserve* Income (loss) Equity interest Equity
(In millions, except for equity shares)
Balance at March 31, 2017 2,562,545,717 Rs. 5,125.1 Rs. 442,721.8 Rs. 364,471.9 Rs. 187,703.2 Rs. 26,031.6 Rs. 1,026,053.6 Rs. 1,847.5 Rs. 1,027,901.1
Shares issued upon exercise of options 32,544,550 65.1 27,194.0 27,259.1 27,259.1
Share-based compensation 6,594.6 6,594.6 6,594.6
Dividends, including dividend tax (34,490.3) (34,490.3) (34,490.3)
Change in ownership interest in
subsidiary 60.0 60.0 (203.3) (143.3)
Shares issued to noncontrolling
interest — 366.5 366.5
Transfer to statutory reserve (45,620.3) 45,620.3 — —
Net income 178,514.9 178,514.9 319.0 178,833.9
Net change in accumulated other
comprehensive income (29,828.3) (29,828.3) (29,828.3)
Balance at March 31, 2018 2,595,090,267 Rs. 5,190.2 Rs. 476,570.4 Rs. 462,876.2 Rs. 233,323.5 Rs. (3,796.7) Rs. 1,174,163.6 Rs. 2,329.7 Rs. 1,176,493.3

See accompanying notes to consolidated financial statements

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY—(Continued)
Total HDFC
Accumulated Bank
Number of Equity Additional Other Limited Total
Equity Share Paid In Retained Statutory Comprehensive Shareholders’ Noncontrolling Shareholders’
Shares Capital Capital Earnings Reserve* Income (loss) Equity interest Equity
(In millions, except for equity shares)
Balance at March 31, 2018 2,595,090,267 Rs. 5,190.2 Rs. 476,570.4 Rs. 462,876.2 Rs. 233,323.5 Rs. (3,796.7) Rs. 1,174,163.6 Rs. 2,329.7 Rs. 1,176,493.3
Adoption of accounting
standard (1) 268.0 (268.0) — —
Shares issued in public
offering (net of issuance
cost of Rs. 1,262.9 million) 104,444,039 208.9 235,687.3 235,896.2 235,896.2
Shares issued upon exercise of
options 23,772,304 47.5 21,960.7 22,008.2 22,008.2
Share-based compensation 5,343.3 5,343.3 5,343.3
Dividends, including dividend
tax (41,015.2) (41,015.2) (41,015.2)
Change in ownership interest
in subsidiary 201.9 201.9 (201.9) —
Shares issued to
noncontrolling interest — 459.8 459.8
Transfer to statutory reserve (54,997.6) 54,997.6 — —
Net income 220,103.8 220,103.8 461.7 220,565.5
Net change in accumulated
other comprehensive income 15,873.5 15,873.5 15,873.5
Balance at March 31, 2019 2,723,306,610 Rs. 5,446.6 Rs. 739,763.6 Rs. 587,235.2 Rs. 288,321.1 Rs. 11,808.8 Rs. 1,632,575.3 Rs. 3,049.3 Rs. 1,635,624.6
Balance at March 31, 2019 2,723,306,610 US$ 78.8 US$ 10,696.4 US$ 8,491.0 US$ 4,168.9 US$ 170.7 US$ 23,605.8 US$ 44.1 US$ 23,649.9

* Under local regulations, the Bank is required to transfer 25% of its profit after tax (per Indian GAAP) to a non-distributable statutory reserve and to meet certain other conditions in order
to pay dividends without prior RBI approval.
(1) Effective April 1, 2018, the Bank adopted ASU 2016-01 “Financial Instruments—Overall (Subtopic 825-10)”. For additional information, refer to note 2(w)(ii) and note 19

See accompanying notes to consolidated financial statements

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Bank overview
HDFC Bank Limited (the “Bank”) was incorporated in August 1994 with its registered office in Mumbai, India. The Bank is a banking company
governed by India’s Banking Regulation Act, 1949. The Bank’s shares are listed on the BSE Limited (formerly known as Bombay Stock Exchange Limited)
and The National Stock Exchange of India Ltd. Its American Depositary Shares (ADS) are listed on the New York Stock Exchange. Global Depositary
Receipts (GDR) which were listed on the Luxembourg Stock Exchange have since been delisted effective July 15, 2019.

The Bank’s largest shareholder is Housing Development Finance Corporation Limited (“HDFC Limited”), which, along with its subsidiaries, owns
20.9% and 21.4% of the Bank’s equity as of March 31, 2018 and March 31, 2019, respectively. The remainder of the Bank’s equity is widely held by the
public and by foreign and Indian institutional investors.

On July 17, 2018, the Bank made a preferential allotment of 39,096,817 equity shares to Housing Development Finance Corporation Limited at an
issue price of Rs. 2,174.09 per equity share. On August 2, 2018, the Bank issued 17,500,000 American Depositary Shares (ADSs) representing 52,500,000
equity shares at a price of US$ 104.00 per ADS. The Bank also allotted 12,847,222 equity shares pursuant to a qualified institutional placement (QIP)
offering at a price of Rs. 2,160.0 per equity shares. The total number of shares issued pursuant to exercise of stock options during the period is 23,772,304
shares.

The Bank’s principal business activities are retail banking, wholesale banking and treasury services. The Bank’s retail banking division provides a
variety of deposit products as well as loans, credit cards, debit cards, third-party mutual funds and insurance, investment advisory services, depositary
services, trade finance, foreign exchange and derivative services and sale of gold bars. Through its wholesale banking operations, the Bank provides loans,
deposit products, documentary credits, guarantees, bullion trading, foreign exchange, and derivative products. It also provides cash management services,
clearing and settlement services for stock exchanges, tax and other collections for the government, custody services for mutual funds and correspondent
banking services. The Bank’s treasury group manages its debt securities and money market operations and its foreign exchange and derivative products.

2. Summary of significant accounting policies

a. Principles of consolidation
The consolidated financial statements include the accounts of HDFC Bank Limited and its subsidiaries. The Bank consolidates subsidiaries in which,
directly or indirectly, it holds more than 50% of the voting rights and/or has control. Entities where the Bank holds 20% to 50% of the voting rights and/or
has the ability to exercise significant influence are accounted for under the equity method. These investments are included in other assets and the Bank’s
proportionate share of income or loss is included in Non-interest revenue, other. The Bank consolidates Variable Interest Entities (VIEs) where the Bank is
determined to be the primary beneficiary (see note 2j). All significant inter-company balances and transactions are eliminated on consolidation.

b. Basis of presentation
These financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“US
GAAP”). US GAAP differs in certain material respects from accounting principles generally accepted in India, the requirements of India’s Banking
Regulation Act 1949 and related regulations issued by the Reserve Bank of India (“RBI”) (collectively “Indian GAAP”), which form the basis of the
statutory general purpose financial statements of the Bank in India. Principal differences, insofar as they relate to the Bank, include: determination of the
allowance for credit losses, classification and valuation of investments, accounting for deferred taxes, stock-based compensation, loan origination fees,
derivative financial instruments, business combination and the presentation format and disclosures of the financial statements and related notes.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

c. Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of these financial statements and the reported
amounts of revenues and expenses for the years presented. Actual results could differ from these estimates. Material estimates included in these financial
statements that are susceptible to change include the allowance for credit losses, the valuation of unquoted investments, other than temporary impairment,
valuation of derivatives, stock-based compensation, unrecognized tax benefits and impairment assessment of goodwill.

d. Cash and due from banks, and restricted cash

Cash and due from banks comprise of cash and deposit with banks that have original maturities of 90 days or less. The Bank has captioned cash and
cash equivalent as “cash and due from banks, and restricted cash” on the consolidated balance sheets. Cash and due from banks includes restricted cash (see
note 3).

e. Customer acquisition costs

Customer acquisition costs principally consist of commissions paid to third party referral agents who source retail loans and such costs are deferred
and amortized as a yield adjustment over the life of the loans. Advertising and marketing expenses incurred to solicit new business are expensed as
incurred.

f. Investments in securities
Investments consist of securities purchased as part of the Bank’s treasury operations, such as government securities and other debt securities, and
investments purchased as part of the Bank’s wholesale banking operations, such as credit substitute securities issued by the Bank’s wholesale banking
customers.

Credit substitute securities typically consist of commercial paper and short-term debentures issued by the same customers with whom the Bank has a
lending relationship in its wholesale banking business. Investment decisions for credit substitute securities are subject to the same credit approval processes
as for loans, and the Bank bears the same customer credit risk as it does for loans extended to those customers. Additionally, the yield and maturity terms
are generally directly negotiated by the Bank with the issuer. As the Bank’s exposures to such securities are similar to its exposures on its loan portfolio,
additional disclosures have been provided on impairment status in note 7 and on concentrations of credit risk in note 11.

All other securities including mortgage and asset-backed securities are actively managed as part of the Bank’s treasury operations. The issuers of such
securities are either government, public financial institutions or private issuers. These investments are typically purchased from the market, and debt
securities are generally publicly rated.

Securities that are held principally for resale in the near term are classified as held for trading (“HFT”) and are carried at fair value, with changes in
fair value recorded in net income.

Debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity (“HTM”) and are carried at
amortized cost.

All debt securities that are not classified as HTM or HFT are classified as available for sale debt securities (“AFS”) and are carried at fair value.
Unrealized gains and losses on such securities, net of applicable taxes, are reported in accumulated other comprehensive income (loss), a separate
component of shareholders’ equity.

Up to March 31, 2018, equity securities with readily determinable fair values that were not classified as HFT were classified as available for sale and
were carried at fair value. Unrealized gains and losses on such securities, net of applicable taxes, were reported in accumulated other comprehensive income
(loss), a separate component of shareholders’ equity. Dividend income on such securities was included in Interest and dividend revenue- available for sale
debt securities. Non-marketable equity securities were carried at cost.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Bank adopted ASU 2016-01 and ASU 2018-03 with effect from April 1, 2018. The available-for-sale category was eliminated for equity
securities which were reclassified to other assets. This resulted in a cumulative catch-up reclassification from AOCI to retained earnings (see note 2 (w)(ii)
and note 14). Marketable securities are measured at fair value, change in fair value recorded in earnings. Non- marketable equity securities under the
measurement alternative are carried at cost plus or minus changes resulting from observable price changes in orderly transactions for the identical or a
similar investment of the same issuer and impairment, if any. The Bank’s review for impairment for equity method, cost method and measurement
alternative securities typically includes an analysis of the facts and circumstances of each security, the intent or requirement to sell the security, and the
expectations of cash flows.

Fair values are based on market quotations where a market quotation is available or otherwise based on present values at current interest rates for
such investments.

Transfers between categories are recorded at fair value on the date of the transfer.

g. Impairment of debt securities

Declines in the fair values of held to maturity and available for sale debt securities below their carrying value that are other than temporary are
reflected in net income as other than temporary impairment losses, based on management’s best estimate of the fair value of the investment. The Bank
conducts a review each year to identify other than temporary declines based on an evaluation of all significant factors. The Bank’s review of impairment
generally entails identification and evaluation of investments that have indications of possible impairment, analysis of evidential matter, including an
evaluation of factors or triggers that would or could cause individual investments to have other than temporary impairment and documentation of the results
of these analysis, as required under business policies. Estimates of any declines in the fair values of credit substitute securities that are other than temporary
are measured on a case-by-case basis together with loans to those customers. The Bank does not recognize an impairment for debt securities if the cause of
the decline is related solely to interest rate increase and the Bank does not intend to sell the security and it is not more likely than not that the Bank will be
required to sell the security before recovery of its amortized cost basis.

h. Loans
The Bank grants retail and wholesale loans to customers.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding unpaid
principal balances adjusted for an allowance for credit losses. Loan origination fees and certain direct origination costs are generally deferred and
recognized as adjustments to net income over the lives of the related loans.

Interest is accrued on the unpaid principal balance and is included in interest income. Loans are generally placed on “non-accrual” status when
interest or principal payments are past due for a specified period, at which time no further interest is accrued and overdue interest is written off against
interest income. Interest income and principal payments on loans placed on non-accrual status is recognized when received. Loans are returned to accrual
status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured. Loans are generally placed
on “non-accrual” status when interest or principal payments are three months past due or if they are considered impaired when, based on current
information and events, it is probable that the Bank will be unable to collect scheduled payments of principal or interest when due according to the
contractual terms of the loan agreement.

i. Allowance for credit losses

The Bank provides an allowance for credit losses based on management’s best estimate of losses inherent in the loan portfolio which includes
troubled debt restructuring. The allowance for credit losses consists of allowances for retail loans and wholesale loans.

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Retail
The Bank’s retail loan loss allowance consists of specific allowance and allowance for loans collectively evaluated for impairment (termed as
“unallocated allowance”).

The Bank establishes a specific allowance on the retail loan portfolio based on factors such as the nature of the product, delinquency levels or the
number of days the loan is past due and the nature of the security available. Additionally, the Bank monitors loan to value ratios for loan against securities.
The loans are charged off against allowances typically when the account becomes 180 to 1,083 days past due depending on the type of loan. The defined
delinquency levels at which major loan types are charged off are 180 days past due for personal loans, credit card receivables, auto loans, commercial
vehicle and construction equipment finance, 720 days past due for housing loans and on a customer by customer basis in respect of retail business banking
when management believes that any future cash flows from these loans are remote including realization of collateral, if applicable, and where any
restructuring or any other settlement arrangements are not feasible.

The Bank also records unallocated allowances for its retail loans by product type. The Bank’s retail loan portfolio is comprised of groups of large
numbers of small value homogeneous loans. The Bank establishes an unallocated allowance for loans in each product group based on its estimate of the
overall portfolio quality, asset growth, economic conditions and other risk factors. The Bank estimates its unallocated allowance for retail loans based on an
internal credit slippage matrix, which measures the Bank’s historic losses for its standard loan portfolio. Subsequent recoveries, if any, against write-off
cases, are adjusted to provision for credit losses in the consolidated statement of income.

Wholesale
The allowance for wholesale loans consists of specific and unallocated components. The allowance for such credit losses is evaluated on a regular
basis by management and is based upon management’s view of the probability of recovery of loans in light of historical experience, the nature and volume
of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, factors affecting the
industry which the loan exposure relates to and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available. Loans are charged off against the allowance when management believes that the
loan balance may not be recovered. Subsequent recoveries, if any, against write-off cases, are adjusted to provision for credit losses in the consolidated
statement of income.

The Bank grades its wholesale loan accounts considering both qualitative and quantitative criteria. Wholesale loans are considered impaired when,
based on current information and events, it is probable that the Bank will be unable to collect scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, the
financial condition of the borrower, the value of collateral held, and the probability of collecting scheduled principal and interest payments when due.

The Bank establishes specific allowances for each impaired wholesale loan customer, in the aggregate, for all facilities, including term loans, cash
credits, bills discounted and lease finance, based on either the present value of expected future cash flows discounted at the loan’s effective interest rate or
the net realizable value of the collateral if the loan is collateral dependent. Collateral values are generally based on appraisals from internal and external
valuation sources.

Wholesale loans that experience insignificant payment delays and payment shortfalls are generally not classified as impaired but are placed on a
surveillance watch list and closely monitored for deterioration. Management determines the significance of payment delays and payment shortfalls on a
case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons
for the delay, the borrower’s prior payment record, market information, and the amount of the shortfall in relation to the principal and interest owed. These
factors are considered by the Bank for selection of loans for credit reviews and assessment of impairment.

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The Bank has also established an unallocated allowance for wholesale standard loans based on the overall portfolio quality, asset growth, economic
conditions and other risk factors. The Bank estimates its wholesale unallocated allowance based on an internal credit slippage matrix, which measures the
Bank’s historic losses for its standard loan portfolio.

j. Sales/transfer of receivables
The Bank enters into assignment transactions, which are similar to asset-backed securitization transactions through the special purpose entities (SPEs)
route, except that such portfolios of receivables are assigned directly to the purchaser and are not represented by pass-through certificates. The Bank also
sells finance receivables to SPEs, formerly qualifying special purpose entities (QSPEs) in securitization transactions. Recourse is in the form of the Bank’s
investment in subordinated securities issued by these SPEs, cash collateral and other credit and liquidity enhancements. The receivables are derecognized in
the balance sheet when they are sold and consideration has been received by the Bank. Sales and transfers that do not meet the criteria for surrender of
control are accounted for as secured borrowings.

The Bank first makes a determination as to whether the securitization entity would be consolidated. Second, it determines whether the transfer of
financial assets is considered a sale. Furthermore, former qualifying special purpose entities (QSPEs) are now considered VIEs and are no longer exempt
from consolidation. The Bank consolidates VIEs when it has both: (1) power to direct activities of the VIE that most significantly impact the entity’s
economic performance and (2) an obligation to absorb losses or right to receive benefits from the entity that could potentially be significant to the VIE. The
scope conditions examined include whether the entities’ equity investment at risk is insufficient to finance the activities without subordinated financial
support and whether the holders of equity lack the characteristics of a financial interest. A controlling financial interest includes characteristics such as
ability to make decisions through voting or similar rights, unlimited obligation to absorb the entities expected losses, and unlimited rights to receive the
entities expected residual returns.

Gains or losses from the sale of receivables are recognized in the income statement in the period the sale occurs based on the relative fair value of the
portion sold and the portion allocated to retained interests, and are reported net of the estimated cost of servicing by the Bank.

Fair values are determined based on the present value of expected future cash flows, using best estimates for key assumptions, such as prepayment
and discount rates, commensurate with the risk involved.

k. Property and equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation is provided over the estimated useful lives of fixed assets on a
straight-line basis at the following rates:

Type of Asset Rate of depreciation

Premises 1.63%
Software and systems 20.00%
Equipment and furniture 10.00%-33.33%

For assets purchased and sold during the year, depreciation is provided on a pro rata basis by the Bank and capital advances are included in other
assets.

l. Impairment or disposal of tangible long-lived assets

Whenever events or circumstances indicate that the carrying amount of tangible long lived assets may not be recoverable, the Bank subjects such long
lived assets to a test of recoverability based on the undiscounted cash flows from use or disposition of the asset. Such events or circumstances would
include changes in the market, technology obsolescence, adverse changes in profitability or regulation. If the asset is impaired, the Bank recognizes an
impairment loss estimated as the difference between the carrying value and the net realizable value.

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m. Income tax
Income tax expense/benefit consists of the current tax expense and the net change in deferred tax assets or liabilities during the year.

Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying values of assets and liabilities for
financial reporting purposes and their respective tax bases, and for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a
valuation allowance to the amount that is more likely than not to be realized based on management’s judgment. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the years in which the deferred tax assets or liabilities are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the income statement in the period of enactment of the
change.

Income tax benefits are recognized and measured based upon a two-step model: 1) a tax position must be more-likely-than-not to be sustained based
on its technical merits in order to be recognized, and 2) the benefit is measured as the largest amount of that position that is greater than 50 percent likely of
being realized upon settlement. The difference between the benefit recognized for a position in accordance with this model and the tax benefit claimed on a
tax return is referred to as an unrecognized tax benefit. The Bank’s policy is to include interest income, interest expense and penalties on overpayments and
underpayment of income taxes within income tax expense in the consolidated statement of income. Interest income on overpayments of income taxes is
recognized when the related matter is resolved.

The Bank accounts for dividend distribution tax in equity in the year in which a dividend is declared.

n. Revenue recognition
Interest income from loans and from investments is recognized on an accrual basis using effective interest method when earned except in respect of
loans or investments placed on non-accrual status, where it is recognized when received.

Fees and commissions from guarantees issued are amortized over the contractual period of the commitment.

Dividends from investments are recognized when declared.

Realized gains and losses on sale of securities are recorded on the trade date and are determined using the weighted average cost method.

Other fees and income are recognized when earned, which is when the service that results in the income has been provided. The Bank amortizes
annual fees on credit cards over the contractual period of the fees.

o. Foreign currency transactions

The Bank’s functional currency is the Indian Rupee, except for the Bank’s foreign branches. Foreign currency transactions are recorded at the
exchange rate prevailing on the date of the transaction. Foreign currency denominated monetary assets and liabilities are converted into respective
functional currency using exchange rates prevailing on the balance sheet dates. Gains and losses arising on conversion of foreign currency denominated
monetary assets and liabilities and on foreign currency transactions are included in the determination of net income under foreign exchange transactions.

For the foreign branches, the assets, liabilities and operations are translated, for consolidation purposes, from functional currency of the foreign
branch to the Indian Rupee reporting currency at period-end rates for assets and liabilities and at average rates for operations. The resulting unrealized gains
or losses are reported as a component of accumulated other comprehensive income (OCI).

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p. Stock-based compensation
The fair value of stock-based compensation is estimated on the date of each grant based on a binomial model. For further information, see note 22.

q. Debt issuance costs

Issuance costs of long-term debt are amortized over the tenure of the debt.

r. Earnings per share

Basic earnings per equity share have been computed by dividing net income by the weighted average number of equity shares outstanding for the
period. Diluted earnings per equity share has been computed using the weighted average number of equity shares and dilutive potential equity shares
outstanding during the period, using the treasury stock method, except where the result would be anti-dilutive. The Bank also reports basic and diluted
earnings per ADS, where each ADS represents three equity shares. Earnings per ADS have been computed as earnings per equity share multiplied by the
number of equity shares per ADS. A reconciliation of the number of shares used in computing earnings per share has been provided in note 29.

s. Segment information
The Bank operates in three reportable segments, namely retail banking, wholesale banking and treasury services. Segment-wise information has been
provided in note 26.

t. Derivative financial instruments

The Bank recognizes all derivative instruments, including certain derivative instruments embedded in other contracts, as assets or liabilities in the
balance sheet and measures them at fair value. The Bank has not designated any derivatives as hedges. As such, all changes in fair value of derivative
instruments are recognized in net income under derivative gain/(loss) in the period of change.

The Bank enters into forward exchange contracts, currency swaps and currency options with its customers and typically transfers such customer
exposures in the inter-bank foreign exchange markets. The Bank also enters into such instruments to cover its own foreign exchange exposures. All such
instruments are carried at fair value, determined based on market quotations or market-based inputs.

The Bank enters into interest rate swaps for its own account. The Bank also enters into interest rate currency swaps and cross currency interest rate
swaps with its customers and typically offsets these risks in the inter-bank market. Such contracts are carried on the balance sheet at fair value, or priced
using market determined yield curves.

u. Business combination
The Bank accounts for acquired businesses using the purchase method of accounting which requires that the assets acquired and liabilities assumed be
recorded at the date of acquisition at their respective fair values. The application of the purchase method requires certain estimates and assumptions,
especially concerning the determination of the fair values of the acquired intangible and tangible assets, as well as the liabilities assumed at the date of the
acquisition. The judgments made in the context of the purchase price allocation can materially impact the Bank’s future results of operations. The valuations
are based on information available at the acquisition date. Purchase consideration in excess of bank’s interest and the acquiree’s net fair value of identifiable
assets and liabilities is recognized as goodwill.

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v. Goodwill and other intangibles

Under applicable accounting guidance, goodwill is reviewed at the reporting unit level for potential impairment at least on an annual basis at the end
of the reporting period, or more frequently if events or circumstances indicate a potential impairment. This analysis is a two-step process. The first step of
the goodwill impairment test compares the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit
exceeds its carrying amount, then the goodwill of the reporting unit is considered not impaired; however, if the carrying amount of the reporting unit
exceeds its fair value, the second step is to be performed. The second step involves calculating an implied fair value of goodwill for each reporting unit for
which the first step indicated possible impairment. The implied fair value of goodwill is determined in the same manner as the amount of goodwill
recognized in a business combination, which is the excess of the fair value of the reporting unit, as determined in the first step, over the aggregate fair
values of the individual assets, liabilities and identifiable intangibles as if the reporting unit was being acquired in a business combination. The adjustments
to measure the assets, liabilities and intangibles at fair value are for the purpose of measuring the implied fair value of goodwill and such adjustments are
not reflected in the consolidated balance sheet. If the implied fair value of goodwill exceeds the goodwill assigned to the reporting unit, there is no
impairment. If the goodwill assigned to a reporting unit exceeds the implied fair value of the goodwill, an impairment charge is recorded for the excess. An
impairment loss recognized cannot exceed the amount of goodwill assigned to a reporting unit, and the loss establishes a new basis in the goodwill.
Subsequent reversal of goodwill impairment losses is not permitted.

Intangible assets consist of branch network representing contractual and non-contractual customer relationships, customer list, core deposit intangible
and favorable leases. These are amortized over their estimated useful lives. Amortization of intangible assets is computed in a manner that best reflects the
economic benefits of the intangible assets as follows:

Useful lives Amortization

(years) method
Branch network 6 Straight-line
Customer lists 2 Straight-line
Core deposit 5 Straight-line
Favorable leases 1 to 15 Straight-line

w. Recently adopted accounting standards

i. In May 2014, the FASB issued ASU No. 2014-09 “Revenue from Contracts with Customers (Topic 606)”. This update modifies the principles for
revenue recognition in transactions involving contracts with customers. On March 17, 2016, the FASB issued Accounting Standards Update No. 2016-08,
“Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”, that clarifies how to
apply revenue recognition guidance related to whether an entity is a principal or an agent. In April 2016, the FASB issued ASU 2016-10, “Revenue from
Contracts with Customers (Topic 606)”. This update clarifies in regard to identifying performance obligations and licensing. In May 2016, the FASB issued
ASU 2016-12, “Revenue from Contracts with Customers (Topic 606)”. The updates require that revenue from contracts with customers is to be recognized
upon transfer of goods and services at the amount of consideration expected to be recognized and transfer of nonfinancial assets, unless those contracts are
within the scope of other guidance. The ASU also clarifies the guidance related to reporting gross revenue as a principal versus net revenue as an agent. The
ASU also requires new qualitative and quantitative disclosures, including disaggregation of revenues and descriptions of performance obligations. The
guidance replaces most existing revenue recognition guidance in GAAP, the update is not applicable to financial instruments and accordingly does not
impact materially the Bank’s revenues including Net interest revenue, loan fees and mark-to-market accounting. This guidance was adopted retrospectively
with effect from April 1, 2018. Adoption of the guidance did not result in any material changes in the timing of revenue recognition.

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ii. In January 2016, the FASB issued ASU 2016-01 “Financial Instruments—Overall (Subtopic 825-10)”. The update requires all equity investments
to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of
accounting or those that result in consolidation of the investee). However, an entity may choose to measure equity investments that do not have readily
determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the
identical or a similar investment of the same issuer. The amendments also require an entity to present separately in other comprehensive income the portion
of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the
liability at fair value in accordance with the fair value option for financial instruments. The amendments also require separate presentation of financial
assets and financial liabilities by measurement category and form of financial asset. In February 2018, the FASB issued ASU 2018-03, Technical
Corrections and Improvements to Financial Instruments-Overall (Subtopic 825-10), to clarify certain provisions in ASU 2016-01. Effective April 1, 2018,
the Bank adopted ASU 2016-01 and ASU 2018-03 retrospectively. The available-for-sale category was eliminated for equity securities which were
reclassified to other assets with carrying value amounting to Rs. 1,267.7 million. The impact of adopting the change to AFS securities resulted in a
cumulative catch-up reclassification from AOCI to retained earnings of an accumulated after-tax gain of Rs. 268.0 million (gross of tax Rs. 412.0 million)
as at April 1, 2018.

iii. In March 2016, the FASB issued ASU 2016-04 “Liabilities—Extinguishments of Liabilities (Subtopic 405-20): Recognition of Breakage for
Certain Prepaid Stored-Value Products”. The update addresses the current and potential future diversity in practice related to de-recognition of a prepaid
stored-value product liability that may be unused wholly or partially for an indefinite time period. The update modifies the accounting for certain prepaid
card products to require the recognition of breakage. Breakage represents the estimated amount that will not be redeemed by the cardholder for goods or
services. The amendments in this update are to be applied either using a modified retrospective transition method by means of a cumulative-effect
adjustment to retained earnings as of the beginning of the fiscal year in which the guidance is effective or retrospectively to each period presented. The
Bank adopted the provisions of ASU 2016-04 effective April 1, 2018. The adoption of this guidance did not have a material impact on the Bank’s
consolidated financial position or results of operations or disclosures.

iv. In August 2016, the FASB issued ASU 2016-15 “Statement of Cash Flows (Topic 230)”. This is intended to reduce the diversity in practice around
how certain transactions are classified within the statement of cash flows. The Bank adopted the guidance from April 1, 2018. The adoption of this guidance
did not have a material impact on the Bank’s consolidated financial position or results of operations or disclosures.

v. In October 2016, the FASB issued ASU 2016-16 “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”. In
accordance with this guidance, an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the
transfer occurs. The Bank adopted the guidance from April 1, 2018. The adoption of this guidance did not have a material impact on the Bank’s
consolidated financial position or results of operations or disclosures.

vi. In November 2016, the FASB issued ASU 2016-18 “Statement of Cash Flows (Topic 230)—Restricted Cash”. The amendments in this update
require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as
restricted cash or restricted cash equivalents. The adoption of this guidance did not have a material impact on the Bank’s consolidated statements of cash
flows.

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vii. In January 2017, the FASB issued ASU No. 2017-01 “Business Combinations (Topic 805)—Clarifying the Definition of a Business”. The
amendment in this update narrows the definition of a business by introducing a quantitative screen as the first step, such that if substantially all of the fair
value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets, the set of transferred assets and
activities is not a business. If the first step is not met, then an entity needs to evaluate whether the set meets the requirement that a business include, at a
minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The Bank adopted the guidance from
April 1, 2018. The adoption of this guidance did not have a material impact on the Bank’s consolidated financial position or results of operations or
disclosures.

viii. In March 2017, the FASB issued ASU 2017-07 “Compensation—Retirement Benefits (Topic 715)—Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost”. The amendment in this update changes the income statement presentation of net benefit
expense and requires restating the Company’s financial statements for each of the earlier periods presented in annual and interim financial statements. The
amendment requires that only the service cost component of net benefit expense be included in the Compensation and benefits line on the income statement.
The other components of net benefit expense are required to be presented outside of the Compensation and benefits line. Since both of these income
statement line items are part of Non-interest expense, total Non-interest expense and Net income will not change. This change in presentation did not have a
material effect on Salaries and staff benefits expense and Administrative and other expense and is applied retrospectively for the periods presented. The
other components of net benefit expense is included in Administrative and other expense. The new standard also changes the components of net benefit
expense that are eligible for capitalization when employee costs are capitalized in connection with various activities, such as internally developed software,
construction-in-progress, and loan origination costs. Prospectively from April 1, 2018, only the service cost component of net benefit expense may be
capitalized. The adoption of this guidance did not have a material impact on the Bank’s consolidated financial position or results of operations or
disclosures. (see note 23)

ix. In May 2017, the FASB issued ASU 2017-09 “Compensation—Stock Compensation (Topic 718)—Scope of Modification Accounting.” The
amendment in this update clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under
ASU 2017-09, an entity will not apply modification accounting to a share-based payment award if all of the following are the same immediately before and
after the change: (i) the award’s fair value, (ii) the award’s vesting conditions and (iii) the award’s classification as an equity or liability instrument. The
Bank adopted the provisions of ASU 2016-09 effective April 1, 2018. The adoption of this guidance did not have a material impact on the Bank’s
consolidated financial position or results of operations or disclosures.
x. In August 2017, the FASB issued ASU No. 2017-12 “Derivatives and Hedging (Topic 815)—Targeted Improvements to Accounting for Hedging
Activities”. The amendment in the update better aligns the accounting and reporting of hedging relationships with the economics of risk management
activities. ASU 2017-12 provides administrative reliefs to simplify the application of hedge accounting. The Bank adopted the guidance from April 1, 2018.
The adoption of this guidance did not have a material impact on the Bank’s consolidated financial position or results of operations or disclosures.

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x. Recently issued accounting pronouncements not yet effective

In February 2016, the FASB issued ASU 2016-02 “Leases (Topic 842)”. The update generally requires recognition of lease assets and lease liabilities
on the balance sheet and disclosure of key information about leasing arrangements. In particular, the guidance requires a lessee, of operating or finance
leases, to recognize on the balance sheet a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the
lease term. However, for leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets
and lease liabilities. Previously, a lessee was not required to recognize lease assets and lease liabilities arising from operating leases. Lessor accounting is
largely unchanged. Expanded disclosures about the nature and terms of lease agreements will be required prospectively. The guidance will be effective for
the interim and annual reporting periods beginning after December 15, 2018 and early adoption is permitted. The Bank does not plan to early adopt the
ASU. The Bank expects to adopt the guidance in fiscal 2020. In July 2018, the FASB issued ASU 2018-11 “Leases (Topic 842)—Targeted improvements”
which permits the update to be adopted using a modified cumulative effect approach wherein the guidance is applied only to existing contracts as of the date
of initial application, and to new contracts transacted after that date, or a cumulative-effect adjustment to retained earnings at the effective date without
revising prior comparative periods. The Bank expects to recognize lease liabilities and corresponding assets at their present value predominantly related to
all of the Rs. 85.9 billion of future minimum lease payments required under operating leases as disclosed in note 27. The effect of the adoption will depend
on the lease portfolio at the time of transition.

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In June 2016, the FASB issued ASU 2016-13 “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments”. The ASU introduces a new accounting model, the Current Expected Credit Losses model (CECL), which requires earlier recognition of credit
losses, while also providing transparency about credit risk. The CECL model utilizes a lifetime “expected credit loss” measurement objective for the
recognition of credit losses for loans, held to maturity securities and other receivables at the time the financial asset is originated or acquired. The expected
credit losses is required to be adjusted each period for changes in expected lifetime credit losses. The update requires use of judgment in determining the
relevant information and estimation methods that are appropriate for measurement of expected credit losses which is to be based on relevant information
about past events, historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. In
regard to Available-for-Sale Debt Securities, the credit losses is required to be recorded through an allowance and the ASU limits the amount of the
allowance for credit losses to the amount by which fair value is below amortized cost. While the update changes the measurement of the allowance for
credit losses, it does not change the Bank’s credit risk of its loan portfolios. The amendments in the ASU are effective for fiscal years beginning after
December 15, 2019, including interim periods within those fiscal years. While early adoption is permitted beginning fiscal 2020, the Bank does not expect
to elect that option. The Bank expects to adopt the guidance in fiscal 2021. The amendments represent a significant departure from the existing GAAP. The
credit loss estimation models and processes to be used in implementing the update are under design and development. The Bank has been assessing the key
differences and gaps between its current allowance methodologies and models with those it is considering to use upon adoption. The allowance
methodologies and model to be adopted will be validated and tested, which is expected to be completed by fiscal 2020. The Bank expects the update will
result in an increase in the allowance for credit losses given the change to estimated losses over the contractual life adjusted for expected prepayments with
an anticipated material impact from longer duration portfolios, as well as the addition of an allowance for debt securities. At the date of adoption, this may
have a resulting negative adjustment to retained earnings. The ultimate impact will be dependent on the characteristics of the Bank’s portfolio at date of
adoption as well as the macroeconomic conditions and forecasts as of that date. At this point in implementation the Bank is not able to provide a more
precise estimate of the impact. In November 2018, the FASB issued ASU 2018-19 to clarify that receivables arising from operating leases are not within the
scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases are be accounted for in accordance with Topic 842, Leases.

In January 2017, the FASB issued ASU No. 2017-04 “Intangibles-Goodwill and Other (Topic 350)—Simplifying the Test for Goodwill Impairment”.
The amendment in this update simplifies the subsequent measurement of goodwill impairment by eliminating the requirement to calculate the implied fair
value of goodwill (i.e., the current Step 2 of the goodwill impairment test) to measure a goodwill impairment charge. The impairment test is simply the
comparison of the fair value of a reporting unit with its carrying amount (the current Step 1), with the impairment charge being the deficit in fair value but
not exceeding the total amount of goodwill allocated to that reporting unit. The simplified one-step impairment test applies to all reporting units (including
those with zero or negative carrying amounts). The amendments in the ASU are effective for fiscal years beginning after December 15, 2019, including
interim periods within those fiscal years. The Bank expects to adopt the guidance in fiscal 2021. Early adoption is permitted for interim and annual goodwill
impairment testing dates after January 1, 2017. The adoption of this guidance is not expected to have a material impact on the Bank’s consolidated financial
position or results of operations or disclosures.

In March 2017, the FASB issued ASU 2017-08 “Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20)—Premium Amortization on
Purchased Callable Debt Securities”. This update amends the amortization period for certain purchased callable debt securities held at a premium. The
update requires entities to amortize premiums on debt securities by the first call date when the securities have fixed and determinable call dates and prices.
ASU 2017-08 does not change the accounting for discounts, which continue to be recognized over the contractual life of a security. The amendments in the
ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted,
including adoption in an interim period, but such adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.
Adoption of the ASU is on a modified retrospective basis through a cumulative effect adjustment to retained earnings as of the beginning of the year of
adoption. The Bank expects to adopt the guidance in fiscal 2020. The impact of this ASU

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is not expected to be material. In June 2018, the FASB issued ASU No. 2018-07 “Compensation—Stock Compensation (Topic 718): Improvements to
Nonemployee Share-Based Payment Accounting”. This update simplifies the accounting for share-based payment transactions for acquiring goods and
services from nonemployees, applying some of the same requirements as employee share-based payment transactions. The ASU will not affect the
accounting for share-based payment awards to nonemployee directors, which will continue to be treated as employee share-based transactions under the
current standards. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early
adoption is permitted. The requirements of the ASU will be adopted through a cumulative-effect adjustment to retained earnings as of the beginning of the
fiscal year of adoption. The bank expects to adopt the guidance in fiscal 2020. The adoption of this guidance is not expected to have a material impact on
the Bank’s consolidated financial position or results of operations or disclosures, as it is not the Bank’s practice to issue stock-based awards to pay for goods
and services from nonemployees.

In August 2018, the FASB issued ASU No. 2018-13 “Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure
Requirements for Fair Value Measurement”. The amendments modify certain disclosure requirements for fair value measurements. Entities are required to
disclose and describe the range and weighted-average of significant observable inputs used to develop Level 3 fair value measurements prospectively. The
amendments in the ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption
is permitted. The bank expects to adopt the guidance in fiscal 2021. The adoption of this guidance is not expected to have a material impact on the Bank’s
consolidated financial position or results of operations.

In August 2018, the FASB issued ASU No. 2018-15 “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s
Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”. The update aligns the requirements for
capitalizing implementation costs incurred to develop or obtain internal-use software, regardless of whether they convey a license to the hosted software.
The accounting for the service element of a hosting arrangement that is a service contract is not affected by this ASU. The amendments are effective for
public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. An entity has the option to apply
amendments in the ASU either retrospectively or prospectively to all implementation costs incurred after the date of adoption. Early adoption is permitted.
The bank expects to adopt the guidance in fiscal 2021. The adoption of this guidance is not expected to have a material impact on the Bank’s consolidated
financial position or results of operations.

y. Convenience translation
The accompanying financial statements have been expressed in Indian Rupees (“Rs.”), the Bank’s functional currency. For the convenience of the
reader, the financial statements as of and for the fiscal year ended March 31, 2019 have been translated into U.S. dollars at U.S.$1.00 = Rs. 69.16 as
published by the Federal Reserve Board of New York on March 29, 2019. Such translation should not be construed as a representation that the rupee
amounts have been or could be converted into United States dollars at that or any other rate, or at all.

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3. Cash and due from banks, and restricted cash

The Bank is required to maintain a specific percentage of its demand and time liabilities by way of a balance in a current account with the RBI. This
is to maintain the solvency of the banking system. The cash reserve ratio has to be maintained on an average basis for a two-week period and should not fall
below 95% of the required cash reserve ratio on any particular day. Non-maintenance of the requisite balance is subject to levy of penalty. The Bank has
classified the cash reserve maintained with the RBI as restricted cash or restricted cash equivalents (restricted cash).

The cash and due from banks, and restricted cash consist of restricted cash of Rs. 314,463.4 million and Rs.383,503.0 million (US$ 5,545.2 million)
as at March 31, 2018 and March 31, 2019, respectively.

4. Investments, held for trading

The portfolio of trading securities as of March 31, 2018 and March 31, 2019 was as follows:

As of March 31, 2018

Gross Unrealized Gross Unrealized
Amortized Cost Gains Losses Fair Value
(In millions)
Government of India securities Rs. 25,962.2 Rs. 19.0 Rs. 8.0 Rs. 25,973.2
Other corporate/financial institution securities 49,982.3 62.8 0.4 50,044.7
Total debt securities Rs. 75,944.5 Rs. 81.8 Rs. 8.4 Rs. 76,017.9
Other securities (including mutual fund units) 91,488.6 7.4 — 91,496.0
Total Rs. 167,433.1 Rs. 89.2 Rs. 8.4 Rs. 167,513.9

As of March 31, 2019

Gross Unrealized Gross Unrealized
Amortized Cost Gains Losses Fair Value
(In millions)
Government of India securities Rs. 134,084.9 Rs. 163.2 Rs. 0.1 Rs. 134,248.0
Other corporate/financial institution securities 33,990.6 15.8 1.1 34,005.3
Total debt securities Rs. 168,075.5 Rs. 179.0 Rs. 1.2 Rs. 168,253.3
Other securities (including mutual fund units) 96,935.6 327.2 — 97,262.8
Total Rs. 265,011.1 Rs. 506.2 Rs. 1.2 Rs. 265,516.1
Total US$ 3,831.9 US$ 7.3 US$ — US$ 3,839.2

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5. Investments, available for sale debt securities

The portfolio of available for sale debt securities as of March 31, 2018 and March 31, 2019 was as follows:
As of March 31, 2018
Gross Unrealized Gross Unrealized
Amortized Cost Gains Losses Fair Value
(In millions)
Government of India securities Rs. 1,748,761.0 Rs. 9,169.5 Rs. 16,843.9 Rs. 1,741,086.6
State government securities 123,426.9 2,349.7 729.0 125,047.6
Government securities outside India 4,223.8 — 6.8 4,217.0
Credit substitutes (see note 7) 325,159.3 495.3 1,623.1 324,031.5
Other corporate/financial institution bonds 8,226.0 0.1 59.0 8,167.1
Debt securities, other than asset and mortgage-
backed securities 2,209,797.0 12,014.6 19,261.8 2,202,549.8
Mortgage-backed securities 82.2 2.8 0.1 84.9
Asset-backed securities 18,966.5 62.9 358.7 18,670.7
Other securities (including mutual fund units) (1) 137.6 0.3 — 137.9
Total Rs. 2,228,983.3 Rs. 12,080.6 Rs. 19,620.6 Rs. 2,221,443.3
Securities with gross unrealized losses Rs. 1,174,742.9
Securities with gross unrealized gains 1,046,700.4
Rs. 2,221,443.3

As of March 31, 2019

Gross Unrealized Gross Unrealized
Amortized Cost Gains Losses Fair Value
(In millions)
Government of India securities Rs. 2,147,934.6 Rs. 21,881.4 Rs. 9,834.9 Rs. 2,159,981.1
State government securities 144,633.7 4,864.6 475.7 149,022.6
Government securities outside India 7,201.6 3.3 — 7,204.9
Credit substitutes (see note 7) 273,550.7 899.9 1,563.8 272,886.8
Other corporate/financial institution bonds 3,925.0 30.9 6.3 3,949.6
Debt securities, other than asset and mortgage-
backed securities 2,577,245.6 27,680.1 11,880.7 2,593,045.0
Mortgage-backed securities 56.3 1.0 0.4 56.9
Asset-backed securities 38,827.1 165.0 122.2 38,869.9
Other securities (including mutual fund units) (1) 1,376.3 0.3 — 1,376.6
Total Rs. 2,617,505.3 Rs. 27,846.4 Rs. 12,003.3 Rs. 2,633,348.4
Total US$ 37,847.2 US$ 402.6 US$ 173.6 US$ 38,076.2
Securities with gross unrealized losses Rs. 799,718.5
Securities with gross unrealized gains 1,833,629.9
Rs. 2,633,348.4
US$ 38,076.2

(1) The Bank adopted ASU 2016-01 and ASU 2018-03 as of April 1, 2018, resulting in a cumulative effect adjustment from AOCI to retained earnings for
net unrealized gains on marketable equity securities AFS. The available-for sale category was eliminated for equity securities amortized cost Rs.
855.6 million and carrying value Rs. 1,267.7 million effective April 1, 2018. See note 2 (w)(ii) and note 14 to the Consolidated Financial Statements
for additional details.

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AFS investments of Rs. 1,866,134.2 million and Rs. 2,309,003.7 million (US$ 33,386.4 million) as of March 31, 2018 and March 31, 2019,
respectively, are eligible towards the Bank’s statutory liquidity reserve requirements. These balances are subject to withdrawal and usage restrictions
towards the reserve requirements, but may be freely traded by the Bank. Of these investments, Rs. 1,354,027.6 million as of March 31, 2018 and Rs.
1,634,673.3 million (US$ 23,636.1 million) as of March 31, 2019, were kept as margins for clearing, collateral borrowing and lending obligation (CBLO)
and real time gross settlement (RTGS), with the Reserve Bank of India and other financial institutions.

The Bank evaluated the impaired investments and has fully recognized an expense of Rs. 13.4 million, Rs. 149.1 million and Rs. 1,081.0 million
(USD 15.6 million) as other than temporary impairment in fiscal year 2017, 2018 and 2019, respectively, because the Bank intends to sell the securities
before recovery of their amortized cost. The Bank is of the opinion that the other unrealized losses on its investments in debt securities as of March 31, 2019
are temporary in nature. As of March 31, 2018 and March 31, 2019, the Bank did not hold any debt securities with credit losses for which a portion of
other-than-temporary impairment was recognized in other comprehensive income.

The gross unrealized losses and fair value of available for sale debt securities at March 31, 2018 was as follows:

As of March 31, 2018

Less Than 12 Months 12 Months or Greater Total
Unrealized Unrealized Unrealized
Fair Value Losses Fair Value Losses Fair Value Losses
(In millions)
Government of India securities Rs.540,941.5 Rs.8,852.9 Rs.342,621.5 Rs.7,991.0 Rs.883,563.0 Rs.16,843.9
State government securities 31,940.1 729.0 — — 31,940.1 729.0
Government securities outside India 4,217.0 6.8 — — 4,217.0 6.8
Credit substitutes (see note 7) 159,026.1 1,002.8 73,734.9 620.3 232,761.0 1,623.1
Other corporate/financial institution bonds 4,057.2 51.8 4,109.6 7.2 8,166.8 59.0
Debt securities, other than asset and mortgage-
backed securities 740,181.9 10,643.3 420,466.0 8,618.5 1,160,647.9 19,261.8
Mortgage-backed securities 57.0 0.1 — — 57.0 0.1
Asset-backed securities 8,331.9 213.1 5,706.1 145.6 14,038.0 358.7
Other securities (including mutual fund units) — — — — — —
Total Rs.748,570.8 Rs.10,856.5 Rs.426,172.1 Rs.8,764.1 Rs.1,174,742.9 Rs.19,620.6

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The gross unrealized losses and fair value of available for sale debt securities at March 31, 2019 was as follows:

As of March 31, 2019

Less Than 12 Months 12 Months or Greater Total
Unrealized Unrealized Unrealized
Fair Value Losses Fair Value Losses Fair Value Losses
(In millions)
Government of India securities Rs. — Rs. — Rs. 568,759.0 Rs. 9,834.9 Rs. 568,759.0 Rs. 9,834.9
State government securities — — 27,415.5 475.7 27,415.5 475.7
Government securities outside India — — — — — —
Credit substitutes (see note 7) 17,996.3 88.1 165,700.5 1,475.7 183,696.8 1,563.8
Other corporate/financial institution bonds — — 2,117.6 6.3 2,117.6 6.3
Debt securities, other than asset and
mortgage-backed securities 17,996.3 88.1 763,992.6 11,792.6 781,988.9 11,880.7
Mortgage-backed securities — — 45.7 0.4 45.7 0.4
Assetbacked securities 14,191.2 48.9 3,492.7 73.3 17,683.9 122.2
Other securities (including mutual fund
units) — — — — — —
Total Rs. 32,187.5 Rs. 137.0 Rs. 767,531.0 Rs. 11,866.3 Rs. 799,718.5 Rs. 12,003.3
Total US$ 465.4 US$ 2.0 US$ 11,097.9 US$ 171.6 US$ 11,563.3 US$ 173.6

The contractual residual maturity of available for sale debt securities other than asset and mortgage-backed securities as of March 31, 2019 is set out
below:

As of March 31, 2019

Amortized Cost Fair Value Fair Value
(In millions)
Within one year Rs. 767,752.7 Rs. 769,080.4 US$ 11,120.3
Over one year through five years 547,095.3 554,493.3 8,017.5
Over five years through ten years 862,305.7 868,843.0 12,562.8
Over ten years 400,091.9 400,628.3 5,792.8
Total Rs.2,577,245.6 Rs.2,593,045.0 US$ 37,493.4

The contractual residual maturity of available for sale mortgage-backed and asset-backed debt securities as of March 31, 2019 is set out below:

As of March 31, 2019

Amortized Cost Fair Value Fair Value
(In millions)
Within one year Rs. 19,027.9 Rs. 19,015.0 US$ 274.9
Over one year through five years 19,812.5 19,836.4 286.8
Over five years through ten years 13.2 13.0 0.2
Over ten years 29.8 62.4 0.9
Total Rs. 38,883.4 Rs. 38,926.8 US$ 562.8

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Gross realized gains and gross realized losses from sale of available for sale debt securities and dividends and interest on such securities are set out
below:

Fiscal year ended March 31,

2017 2018 2019 2019
(In millions)
Gross realized gains on sale Rs. 10,108.2 Rs. 11,433.8 Rs. 3,788.1 US$ 54.8
Gross realized losses on sale (502.0) (580.6) (1,192.1) (17.3)
Realized gains (losses), net 9,606.2 10,853.2 2,596.0 37.5
Dividends and interest 154,618.6 158,209.2 190,992.5 2,761.6
Total Rs.164,224.8 Rs.169,062.4 Rs.193,588.5 US$2,799.1

6. Investments, held to maturity

There were no HTM securities as of March 31, 2018 and March 31, 2019.

7. Credit substitutes
Credit substitutes consist of securities that the Bank invests in as part of an overall extension of credit to certain customers. Such securities share
many of the risk and reward characteristics of loans and are managed by the Bank together with other credit facilities extended to the same customers. The
fair values of credit substitutes by type of instrument as of March 31, 2018 and March 31, 2019 were as follows:

As of March 31,
2018 2019
Amortized Cost Fair Value Amortized Cost Fair Value
(In millions)
Available for sale credit substitute debt
securities:
Debentures Rs.290,893.5 Rs.289,782.9 Rs. 247,869.1 Rs. 247,152.5
Commercial paper 34,265.8 34,248.6 25,681.6 25,734.3
Total Rs.325,159.3 Rs.324,031.5 Rs. 273,550.7 Rs. 272,886.8
US$ 3,955.3 US$ 3,945.8

The fair values of credit substitutes by the Bank’s internal credit quality indicators and amounts provided for other than temporary impairments is as
follows:

As of March 31,
2018 2019 2019
(In millions)
Pass Rs. 324,031.5 Rs. 272,886.8 US$ 3,945.8
Impaired—gross balance — — —
Less: amounts provided for other than temporary
impairments — — —
Impaired credit substitutes, net — — —
Total credit substitutes, net Rs. 324,031.5 Rs. 272,886.8 US$ 3,945.8

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Impaired credit substitutes:

As of March 31,
2018 2019 2019
(In millions)
Gross impaired credit substitutes Rs — Rs — US$ —
Gross impaired credit substitutes by industry Rs. — Rs. — US$ —
Average impaired credit substitutes Rs. — Rs. — US$ —
Interest income recognized on impaired credit substitutes Rs. — Rs. — US$ —

As of March 31, 2019, the Bank has no additional funds committed to borrowers whose credit substitutes were impaired.

8. Repurchase and resell agreements

Securities sold under agreements to repurchase (“repos”) and securities purchased under agreements to resell (“reverse repos”) generally do not
constitute a sale for accounting purposes of the underlying securities, and so are treated as collateralized transactions. There were no such transactions
accounted for as sales during the years ended March 31, 2017, March 31, 2018 and March 31, 2019. Interest paid or received on all repo and reverse repo
transactions is recorded in Interest expense or Interest revenue at the contractually specified rate.

a. Securities purchased under agreements to resell

Securities purchased under agreements to resell are classified separately from investments and generally mature within 14 days of the transaction
date. Such resell transactions are recorded at the amount of cash advanced on the transaction. Resell transactions outstanding as of March 31, 2018 and
March 31, 2019 were Rs. 650,018.6 million and Rs. 76,213.5 million (US$ 1,102.0 million), respectively.

b. Securities sold under repurchase agreements

Securities sold under agreements to repurchase are classified separately under liabilities and generally mature within 14 days of the transaction date.
Such repurchase transactions are recorded at the amount of cash received on the transaction. Repurchase transactions outstanding as of March 31, 2018 and
March 31, 2019 were Rs. 138,000.0 and Rs. 174,000.0 million (US$ 2,515.9 million), respectively. The Government of India securities are pledged as
collateral.

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9. Loans
Loan balances include Rs. 665,906.2 million and Rs. 780,869.5 million (US$ 11,290.8 million) as of March 31, 2018 and March 31, 2019,
respectively, which have been provided as collateral for borrowings and are therefore restricted.

Loans by facility as of March 31, 2018 and March 31, 2019 were as follows:

As of March 31,
2018 2019 2019
(In millions)
Retail loans:
Auto loans Rs. 885,234.7 Rs. 951,744.2 US$ 13,761.5
Personal loans/Credit cards 1,187,127.1 1,538,107.4 22,239.8
Retail business banking 1,305,219.8 1,478,317.8 21,375.3
Commercial vehicle and construction equipment
finance 595,813.6 746,288.0 10,790.7
Housing loans 362,718.1 513,771.6 7,428.7
Other retail loans 877,251.3 1,009,674.6 14,599.1
Subtotal Rs.5,213,364.6 Rs.6,237,903.6 US$ 90,195.1
Wholesale loans Rs.2,162,814.4 Rs.2,873,561.0 US$ 41,549.6
Gross loans 7,376,179.0 9,111,464.6 131,744.7
Less: Allowance for credit losses 112,507.2 148,232.0 2,143.4
Total Rs.7,263,671.8 Rs.8,963,232.6 US$129,601.3

The maturity of gross loans as of March 31, 2019 is set out below:

As of March 31, 2019

Wholesale loans Retail loans Total
(In millions)
Maturity profile of loans:
Within one year Rs. 1,537,701.3 Rs. 1,911,646.9 Rs. 3,449,348.2
Over one year through five years 899,447.4 3,912,771.8 4,812,219.2
Over five years 436,412.3 413,484.9 849,897.2
Total gross loans Rs. 2,873,561.0 Rs. 6,237,903.6 Rs. 9,111,464.6
Total gross loans US$ 41,549.6 US$ 90,195.1 US$ 131,744.7

Gross loans analyzed by performance are as follows:

As of March 31,
2018 2019 2019
(In millions)
Performing Rs.7,267,461.7 Rs.8,971,042.1 US$129,714.3
Impaired 108,717.3 140,422.5 2,030.4
Total gross loans Rs.7,376,179.0 Rs. 9,111,464.6 US$131,744.7

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The following table provides details of age analysis of loans as of March 31, 2018 and March 31, 2019.

As of March 31, 2018

Impaired /
91 days or
31-90 days more past
past due due Current 1,2 Total
(In millions)
Retail Loans
Auto loans Rs. 4,384.5 Rs. 8,634.5 Rs. 872,215.7 Rs. 885,234.7
Personal loans/Credit card 8,179.1 10,150.9 1,168,797.1 1,187,127.1
Retail business banking 10,522.0 25,547.2 1,269,150.6 1,305,219.8
Commercial vehicle and construction
equipment finance 7,324.9 6,968.1 581,520.6 595,813.6
Housing loans 25.9 1,899.5 360,792.7 362,718.1
Other retail 8,716.0 22,704.3 845,831.0 877,251.3
Wholesale loans 308.6 32,812.8 2,129,693.0 2,162,814.4
Total Rs. 39,461.0 Rs. 108,717.3 Rs. 7,228,000.7 Rs. 7,376,179.0

1) Loans up to 30 days past due are considered current

2) Includes crop related agricultural loans with days past due less than 366 as they are not considered as impaired Rs. 31.5 billion.

As of March 31, 2019

Impaired /
91 days or
31-90 days more past
past due due Current 1,2 Total
(In millions)
Retail Loans
Auto loans Rs. 4,807.0 Rs. 13,606.7 Rs. 933,330.5 Rs. 951,744.2
Personal loans/Credit card 11,520.2 15,781.5 1,510,805.7 1,538,107.4
Retail business banking 9,087.9 29,945.0 1,439,284.9 1,478,317.8
Commercial vehicle and construction
equipment finance 9,225.0 11,254.9 725,808.1 746,288.0
Housing loans 23.6 2,157.1 511,590.9 513,771.6
Other retail 9,480.1 29,523.6 970,670.9 1,009,674.6
Wholesale loans 202.9 38,153.7 2,835,204.4 2,873,561.0
Total Rs. 44,346.7 Rs. 140,422.5 Rs. 8,926,695.4 Rs. 9,111,464.6
Total US$ 641.2 US$ 2,030.4 US$ 129,073.1 US$ 131,744.7

1) Loans up to 30 days past due are considered current

2) Includes crop related agricultural loans with days past due less than 366 as they are not considered as impaired Rs. 34.0 billion.

The Bank has a credit risk mitigating/monitoring mechanism which is comprised of target market definitions, credit approval process, post-
disbursement monitoring and remedial management procedures.

For wholesale credit risk in addition to the credit approval process the Bank has an approved framework for the review and approval of credit ratings.
Credit Policies and Procedures articulate credit risk strategy and thereby the approach for credit origination, approval and maintenance. The Credit Policies
generally address such areas as target markets, portfolio mix, prudential exposure ceilings, concentration limits, price and non-price terms, structure of
limits, approval authorities, exception reporting system, prudential accounting and provisioning norms. These are reviewed in detail at annual or more
frequent intervals. To ensure adequate diversification of risk, concentration limits have been set up in terms of borrower/business group, industry and risk
grading.

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For retail credit, the policy and approval processes are designed for the fact that the Bank has high volumes of relatively homogeneous, small value
transactions in retail loans. There are product programs for each of these products, which define the target markets, credit philosophy and process, detailed
underwriting criteria for evaluating individual credits, exception reporting systems and individual loan exposure caps. The quantitative parameters
considered include income, residence stability, the nature of the employment/business, while the qualitative parameters include accessibility, contractibility
and profile. The credit policies/product programs are based on a statistical analysis of the Bank’s experience and industry data, in combination with the
judgment of the Bank’s senior officers. The Bank mines data on its borrower account behavior as well as static data regularly to monitor the portfolio
performance of each product segment and use these as inputs in revising the Bank’s product programs, target market definitions and credit assessment
criteria to meet the Bank’s twin objectives of combining volume growth and maintenance of asset quality.

As an integral part of the credit process, the Bank has a credit rating model appropriate to its wholesale and retail credit segments. The Bank monitors
credit quality within its segments based on primary credit quality indicators. This internal grading is updated at least annually.

The amount of purchased financing receivable outstanding as of March 31, 2018 and March 31, 2019 is Rs. 364,113.0 and Rs. 514,756.0,
respectively.

Retail Loans
Credit quality indicator based on payment activity as of March 31, 2018 and as of March 31, 2019 is given below:

As of March 31, 2018

Commercial
vehicle and
Construction
Personal loans/ Retail business equipment
Auto loans Credit card banking finance Housing loans Other retail Total
(In millions)
Performing Rs. 876,600.2 Rs. 1,176,976.2 Rs. 1,279,672.6 Rs. 588,845.5 Rs. 360,818.6 Rs. 854,547.0 Rs. 5,137,460.1
Impaired 8,634.5 10,150.9 25,547.2 6,968.1 1,899.5 22,704.3 75,904.5
Total Rs. 885,234.7 Rs. 1,187,127.1 Rs. 1,305,219.8 Rs. 595,813.6 Rs. 362,718.1 Rs. 877,251.3 Rs. 5,213,364.6

As of March 31, 2019

Commercial
vehicle and
Construction
Personal loans/ Retail business equipment
Auto loans Credit card banking finance Housing loans Other retail Total
(In millions)
Performing Rs. 938,137.5 Rs. 1,522,325.9 Rs. 1,448,372.8 Rs. 735,033.1 Rs. 511,614.5 Rs. 980,151.0 Rs. 6,135,634.8
Impaired 13,606.7 15,781.5 29,945.0 11,254.9 2,157.1 29,523.6 102,268.8
Total Rs. 951,744.2 Rs. 1,538,107.4 Rs. 1,478,317.8 Rs. 746,288.0 Rs. 513,771.6 Rs. 1,009,674.6 Rs. 6,237,903.6
Total US$ 13,761.5 US$ 22,239.8 US$ 21,375.3 US$ 10,790.7 US$ 7,428.7 US$ 14,599.1 US$ 90,195.1

Wholesale Loans
The Bank has in place a process of grading each borrower according to its financial health and the performance of its business and each borrower is
graded as pass/labeled/impaired. Wholesale loans that are not impaired are disclosed as pass or labeled and considered to be performing. Labeled loans are
those with evidence of weakness where such exposures indicate deteriorating trends which if not corrected could adversely impact repayment of the
obligations. The Bank’s model assesses the overall risk over four major categories – industry risk, business risk, management risk and financial risk. The
inputs in each of the categories are combined to provide an aggregate numerical rating, which is a function of the aggregate weighted scores based on the
assessment under each of these four risk categories.

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As of March 31,
2018 2019 2019
(In millions)
Credit quality indicators-Internally assigned grade and
payment activity
Pass Rs. 2,116,499.3 Rs. 2,834,466.7 US$ 40,984.2
Labeled 13,502.3 940.6 13.7
Impaired 32,812.8 38,153.7 551.7
Total Rs. 2,162,814.4 Rs. 2,873,561.0 US$ 41,549.6

Impaired loans are those for which the Bank believes that it is probable that it will not collect all amounts due according to the original contractual
terms of the loans and includes troubled debt restructuring. The following table provides details of impaired loans as of March 31, 2018 and March 31,
2019.

As of March 31, 2018

Unpaid Related
Recorded principal specific Average recorded Finance receivable
investments balance allowance investments on non-accrual status
(In millions)
Retail Loans
Auto loans Rs. 8,634.5 Rs. 8,634.5 Rs. 3,682.2 Rs. 7,370.1 Rs. 8,634.5
Personal loans/Credit card 10,150.9 10,150.9 6,182.6 8,309.2 10,150.9
Retail business banking 25,547.2 25,547.2 18,709.4 23,303.7 25,547.2
Commercial vehicle and construction equipment
finance 6,968.1 6,968.1 4,806.1 6,527.4 6,968.1
Housing loans 1,899.5 1,899.5 974.4 1,788.9 1,899.5
Other retail 22,704.3 22,704.3 12,922.8 17,005.2 22,704.3
Wholesale loans 32,812.8 32,812.8 15,323.0 31,544.3 32,812.8
Total Rs. 108,717.3 Rs. 108,717.3 Rs. 62,600.5 Rs. 95,848.8 Rs. 108,717.3

As of March 31, 2019

Unpaid Related
Recorded principal specific Average recorded Finance receivable
investments balance allowance investments on non-accrual status
(In millions)
Retail Loans
Auto loans Rs. 13,606.7 Rs. 13,606.7 Rs. 6,169.0 Rs. 11,120.6 Rs. 13,606.7
Personal loans/Credit card 15,781.5 15,781.5 9,694.0 12,966.2 15,781.5
Retail business banking 29,945.0 29,945.0 21,595.3 27,746.1 29,945.0
Commercial vehicle and construction
equipment finance 11,254.9 11,254.9 6,544.8 9,111.5 11,254.9
Housing loans 2,157.1 2,157.1 1,105.2 2,028.3 2,157.1
Other retail 29,523.6 29,523.6 20,441.5 26,114.0 29,523.6
Wholesale loans 38,153.7 38,153.7 20,233.2 35,483.3 38,153.7
Total Rs. 140,422.5 Rs. 140,422.5 Rs. 85,783.0 Rs. 124,570.0 Rs. 140,422.5
Total US$ 2,030.4 US$ 2,030.4 US$ 1,240.4 US$ 1,801.2 US$ 2,030.4

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Impaired loans by industry as of March 31, 2018 and March 31, 2019 are as follows:

As of March 31, 2018

(In millions)
Gross impaired loans by industry:
—Wholesale Trade- Non Industrial Rs. 15,239.0
—Consumer Loans 15,236.4
—Agriculture Production—Food 12,227.0
—Food and Beverage 7,007.4
—Retail Trade 6,279.0
—Agri-Allied 6,184.0
—Others (none greater than 5% of impaired loans) 46,544.5
Total Rs. 108,717.3

As of March 31, 2019

(In millions)
Gross impaired loans by industry:
— Consumer Loans Rs. 22,513.7 US$ 325.5
— Agriculture Production—Food 18,915.0 273.5
—Wholesale Trade- Non Industrial 15,856.7 229.3
—Food and Beverage 8,577.3 124.0
—Retail Trade 7,767.0 112.3
—Others (none greater than 5% of impaired loans) 66,792.8 965.8
Total Rs. 140,422.5 US$2,030.4

Summary information relating to impaired loans during the fiscal year ended March 31, 2017, March 31, 2018 and March 31, 2019 is as follows:

Fiscal year ended March 31,

2017 2018 2019 2019
(In millions)
Average impaired loans, net of allowance Rs. 29,612.1 Rs. 41,683.2 Rs. 50,378.2 US$728.4
Interest income recognized on impaired loans Rs. 3,472.7 Rs. 7,433.7 Rs. 6,994.7 US$101.1

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Allowances for credit losses as of March 31, 2017 are as follows:

As of March 31, 2017

Specific Unallocated
Retail
Commercial
vehicle and
Personal Retail Construction
Loans/ business equipment Housing Other
Auto loans Credit card banking finance loans retail Wholesale Retail Wholesale Total
(In millions)
Allowance for credit losses,
beginning of the period Rs. 2,101.1 Rs. 2,638.6 Rs. 10,617.5 Rs. 3,876.7 Rs. 410.4 Rs. 3,950.4 Rs. 7,413.4 Rs. 22,548.6 Rs. 3,803.4 Rs. 57,360.1
Write-offs (5,155.0) (11,639.3) (1,453.4) (3,227.4) (32.9) (2,793.5) (2,261.7) — — (26,563.2)
Net allowance for credit losses* 5,846.8 13,040.7 6,114.3 3,749.2 361.8 5,610.6 6,561.8 5,562.0 852.8 47,700.0
Allowance for credit losses, end
of the period Rs. 2,792.9 Rs. 4,040.0 Rs. 15,278.4 Rs. 4,398.5 Rs. 739.3 Rs. 6,767.5 Rs. 11,713.5 Rs. 28,110.6 Rs. 4,656.2 Rs. 78,496.9
Allowance for credit losses:
Allowance individually evaluated
for impairment Rs. — Rs. — Rs. — Rs. — Rs. — Rs. — Rs. 11,713.5 Rs. — Rs. — Rs. 11,713.5
Allowance collectively evaluated
for impairment 2,792.9 4,040.0 15,278.4 4,398.5 739.3 6,767.5 — 28,110.6 4,656.2 66,783.4
Loans:
Loans individually
evaluated for impairment — — — — — — 30,275.7 — — 30,275.7
Loans collectively evaluated
for impairment 6,105.6 6,467.4 21,060.1 6,086.6 1,678.2 11,306.1 — 3,996,257.3 1,909,672.7 5,958,634.0

* Net allowances for credit losses charged to expense does not include the recoveries against write-off cases amounting to Rs 9,748.6 million. Recoveries
from Retail loans is Rs. 8,943.7 million and from Wholesale loans is Rs. 804.9 million.

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Allowance for credit losses as of March 31, 2018 are as follows:

As of March 31, 2018

Specific Unallocated
Retail
Commercial
vehicle and
Personal Retail Construction
Loans/ business equipment Housing Other
Auto loans Credit card banking finance loans retail Wholesale Retail Wholesale Total
(In millions)
Allowance for credit losses, beginning
of the period Rs. 2,792.9 Rs. 4,040.0 Rs. 15,278.4 Rs. 4,398.5 Rs. 739.3 Rs. 6,767.5 Rs. 11,713.5 Rs. 28,110.6 Rs. 4,656.2 Rs. 78,496.9
Write-offs (6,826.4) (16,714.3) (5,730.0) (3,644.0) (61.5) (4,557.4) (444.7) — — (37,978.3)
Net allowance for credit losses* 7,715.7 18,856.9 9,161.0 4,051.6 296.6 10,712.7 4,054.2 14,036.8 3,103.1 71,988.6
Allowance for credit losses, end of the
period Rs. 3,682.2 Rs. 6,182.6 Rs. 18,709.4 Rs. 4,806.1 Rs. 974.4 Rs. 12,922.8 Rs. 15,323.0 Rs. 42,147.4 Rs. 7,759.3 Rs. 112,507.2
Allowance for credit losses:
Allowance individually evaluated for
impairment Rs. — Rs. — Rs. — Rs. — Rs. — Rs. — Rs. 15,323.0 Rs. — Rs. — Rs. 15,323.0
Allowance collectively evaluated for
impairment 3,682.2 6,182.6 18,709.4 4,806.1 974.4 12,922.8 — 42,147.4 7,759.3 97,184.2
Loans:
Loans individually evaluated for
impairment — — — — — — 32,812.8 — — 32,812.8
Loans collectively evaluated for
impairment 8,634.5 10,150.9 25,547.2 6,968.1 1,899.5 22,704.3 — 5,137,460.1 2,130,001.6 7,343,366.2

* Net allowances for credit losses charged to expense does not include the recoveries against write-off cases amounting to Rs 12,590.8 million. Recoveries
from Retail loans is Rs. 12,254.3 million and from Wholesale loans is Rs. 336.5 million.

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Allowances for credit losses as of March 31, 2019 are as follows:

As of March 31, 2019

Specific Unallocated
Retail
Commercial
vehicle and
Personal Retail Construction
Loans/ business equipment Housing Other
Auto loans Credit card banking finance loans retail Wholesale Retail Wholesale Total Total
(In millions)
Allowance for
credit losses,
beginning of the
period Rs. 3,682.2 Rs. 6,182.6 Rs. 18,709.4 Rs. 4,806.1 Rs. 974.4 Rs. 12,922.8 Rs. 15,323.0 Rs. 42,147.4 Rs. 7,759.3 Rs. 112,507.2 US$ 1,626.8
Write-offs (9,155.3) (25,197.0) (6,665.5) (4,812.8) (93.3) (5,652.0) (1,755.7) — — (53,331.6) (771.1)
Net allowance for
credit losses* 11,642.1 28,708.4 9,551.4 6,551.5 224.1 13,170.7 6,665.9 10,793.7 1,748.6 89,056.4 1,287.7
Allowance for
credit losses, end
of the period Rs. 6,169.0 Rs. 9,694.0 Rs. 21,595.3 Rs. 6,544.8 Rs. 1,105.2 Rs. 20,441.5 Rs. 20,233.2 Rs. 52,941.1 Rs. 9,507.9 Rs. 148,232.0 US$ 2,143.4
Allowance for
credit losses:
Allowance
individually
evaluated for
impairment Rs. — Rs. — Rs. — Rs. — Rs. — Rs. — Rs. 20,233.2 Rs. — Rs. — Rs. 20,233.2 US$ 292.6
Allowance
collectively
evaluated for
impairment 6,169.0 9,694.0 21,595.3 6,544.8 1,105.2 20,441.5 — 52,941.1 9,507.9 127,998.8 1,850.8
Loans:
Loans
individually
evaluated
for
impairment — — — — — — 38,153.7 — — 38,153.7 551.7
Loans
collectively
evaluated
for
impairment 13,606.7 15,781.5 29,945.0 11,254.9 2,157.1 29,523.6 — 6,135,634.8 2,835,407.3 9,073,310.9 131,193.0

* Net allowances for credit losses charged to expense does not include the recoveries against write-off cases amounting to Rs 16,777.1 million (US$ 242.6
million). Recoveries from Retail loans is Rs. 16,590.9 million and from wholesale loans is Rs. 186.2 million.

The unallocated allowance is assessed at each period end and the increase/(decrease), as the case may be is recorded in the income statement under
allowances for credit losses. There is no transfer of amounts to or from the unallocated category to the specific category.

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Troubled debt restructuring (TDR)

When the Bank grants a concession, for economic or legal reasons related to a borrower’s financial difficulties, for other than an insignificant period
of time, the related loan is classified as a TDR. Concessions could include a reduction in the interest rate below current market rates, payment extensions,
forgiveness of principal, forbearance or other actions intended to maximize collection. Loans, for which the terms have been modified, and for which the
borrower is experiencing financial difficulties, are considered TDRs. On restructuring, the loans are re-measured to reflect the impact, if any, on projected
cash flows resulting from the modified terms. Modification may have little or no impact on the allowance established for the loan if there was no
forgiveness of the principal and the interest was not decreased. A charge off may be recorded at the time of restructuring if a portion of the loan is deemed
to be uncollectible.

The following table summarizes the Bank’s TDR modifications during the fiscal year ended March 31, 2018 and March 31, 2019 presented by
primary modification type and includes the financial effects of these modifications.
Fiscal year ended March 31, 2018
TDRs involving TDRs involving
changes in the TDRs involving changes in the
amount of changes in the amount of both Balance of
Carrying principal amount of interest principal and principal Net P&L
value payments (1) payments (2) interest payments forgiven impact (3)
(In millions)
Retail Loans:
Retail business banking Rs. — Rs. — Rs. — Rs. — Rs. — Rs. —
Commercial vehicle and construction
equipment finance — — — — — —
Wholesale loans — — — — — —
Total (4) Rs. — Rs. — Rs. — Rs. — Rs. — Rs. —

(1) TDRs involving changes in the amount of principal payment may include principal forgiveness or deferral of periodic and/or final principal payments.
(2) TDRs involving changes in the amount of interest payments may involve a reduction in interest rate.
(3) Balances reflect charge-offs and/or allowance for credit losses and/or income not recognized/deferred.
(4) TDR modification during the year ended March 31, 2018 comprised of nil case.
Fiscal year ended March 31, 2019
TDRs involving TDRs involving
changes in the TDRs involving changes in the
amount of changes in the amount of both Balance of
Carrying principal amount of interest principal and principal Net P&L
value payments (1) payments (2) interest payments forgiven impact (3)
(In millions)
Retail Loans:
Retail business banking Rs. 17.9 Rs. — Rs. 17.9 Rs. — Rs. — Rs. 4.5
Commercial vehicle and construction
equipment finance — — — — — —
Wholesale loans — — — — — —
Total (4) Rs. 17.9 Rs. — Rs. 17.9 Rs. — Rs. — Rs. 4.5
Total (4) US$ 0.3 US$ — US$ 0.3 US$ — US$ — US$ 0.1

(1) TDRs involving changes in the amount of principal payment may include principal forgiveness or deferral of periodic and/or final principal payments.
(2) TDRs involving changes in the amount of interest payments may involve a reduction in interest rate.
(3) Balances reflect charge-offs and/or allowance for credit losses and/or income not recognized/deferred.
(4) TDR modification during the year ended March 31, 2019 comprised of one case.

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The table below summarizes TDRs that have defaulted in the current period within 12 months of their modification date. The defaulted TDRs are
based on a payment default definition of 90 days past due.

As of March 31, 2019

recorded investments
(In millions)
Retail loans:
Retail business banking Rs. —
Commercial vehicle and construction equipment finance —
Wholesale loans —
Total Rs. —
Total US$ —

Interest on loans by facility are as follows:

Fiscal year ended March 31,

2017 2018 2019 2019
(In millions)
Wholesale loans Rs. 134,543.1 Rs. 152,124.6 Rs. 199,928.0 US$ 2,890.8
Retail loans 418,143.7 515,334.1 627,755.0 9,076.9
Total Rs. 552,686.8 Rs. 667,458.7 Rs. 827,683.0 US$ 11,967.7

10. Sales/transfer of receivables

The following table summarizes the cash flows received during the years ended March 31, 2017, March 31, 2018 and March 31, 2019 from customers
and paid to SPEs/transferees on securitized/ transferred performing loans:

Fiscal year ended March 31,

2017 2018 2019 2019
(In millions)
Cash flow information
Collections against securitized receivables/transfers Rs. 471.1 Rs. 303.9 Rs. 233.5 US$ 3.4
Payments made 444.7 301.8 237.7 3.4
Cash flows on retained interests Rs. 26.6 Rs. 3.8 Rs. 2.1 US$—

Other key disclosures are as follows:

As of March 31,
2018 2019 2019
(In millions)
Transferred receivables with continuing involvement Rs. 575.4 Rs. 398.4 US$5.8
Delinquencies 230.7 253.8 3.7
Credit losses 212.3 242.0 3.5
Retained interest in sold receivables 22.8 15.9 0.2

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The table below outlines the economic assumptions and the sensitivity of the estimated fair value of retained interests in finance receivables as of
March 31, 2018 and March 31, 2019 to immediate 10% and 20% changes in those assumptions:

As of March 31,
2018 2019 2019
(In millions)
Fair value of retained interests
Annual prepayment rate:
Impact of 10% adverse change Rs. 2.4 Rs. 1.7 US$—
Impact of 20% adverse change 4.6 3.3 —
Expected credit losses:
Impact of 10% adverse change 3.1 2.3 —
Impact of 20% adverse change 6.2 4.5 0.1

Weighted average life in years of the securitized receivables is not subject to change, except in the case of a change in the prepayment rate
assumption. Consequently, the above sensitivity analysis does not include the impact on the estimated fair values of the retained interests due to an adverse
change in the weighted average life in years and the discount rate.

These sensitivities are hypothetical and should be used with appropriate caution. A 10% change in the assumptions may not result in lineally
proportionate changes in the fair values of retained interests. Adverse changes assumed in the above analysis and the resultant change in the fair values of
retained interests are calculated independent of each other. In reality, any change in one factor may cause a change in the other factors.

11. Concentrations of credit risk

Concentrations of credit risk exist when changes in economic, industry or geographic factors similarly affect groups of counterparties whose
aggregate credit exposure is material in relation to the Bank’s total credit exposure. The Bank manages its credit risk collectively for its loan portfolio and
credit substitute securities as these instruments are invested in as part of an overall lending program for corporate customers; accordingly, information on
concentrations of credit risk has been provided for these exposures together.

In the case of wholesale loans, while the Bank generally lends on a cash-flow basis, it also requires collateral which consists of liens on inventory,
receivables and other current assets, and in some cases, charges on fixed assets, such as property, movable assets (such as vehicles) and financial assets
(such as marketable securities) from a large number of the Bank’s borrowers. The Bank’s retail loans are generally secured by a charge on the asset financed
(vehicle loans, property loans and loans against gold and securities). Retail business banking loans are secured with current assets as well as immovable
property and fixed assets in some cases. However, collateral securing each individual loan may not be adequate in relation to the value of the loan. If the
customer fails to pay, the Bank would, as applicable, liquidate collateral and/or set off accounts. The maximum estimated loss that would be incurred under
severe, hypothetical circumstances, for which the Bank believes the possibility is extremely remote, such as where the value of the Bank’s interests and any
associated collateral declines to zero, without any consideration of recovery or offset is determined as the carrying values of the instruments as given in the
below table.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Bank’s portfolio of loans, credit substitute securities and non-funded exposure (including derivatives) is broadly diversified along industry and
product lines, and as of March 31, 2018 and March 31, 2019 the exposures are as set forth below.

As of March 31, 2018

Fair Values Of Non-funded
Category Gross loans Credit Substitutes exposure Total %
(In millions, except percentages)
Consumer Loans Rs. 1,948,328.2 Rs. — Rs. 665.4 Rs. 1,948,993.6 22.7
Retail trade 385,217.8 1,181.4 13,091.9 399,491.1 4.6
NBFC/Financial Intermediaries 231,249.9 110,494.4 6,888.5 348,632.8 4.1
Automobile & Auto Ancillary 299,680.3 13,105.7 30,876.7 343,662.7 4.0
Consumer Services 308,333.2 3,461.5 14,077.5 325,872.2 3.8
Agriculture Production — Food 318,643.5 497.9 614.9 319,756.3 3.7
Road Transportation 310,740.7 — 5,247.2 315,987.9 3.7
Real Estate & Property Services 233,700.5 1,982.5 27,280.7 262,963.7 3.1
Engineering 133,216.6 2,470.7 99,933.4 235,620.7 2.7
Power 159,239.8 34,738.6 36,017.7 229,996.1 2.7
Food & Beverage 210,780.7 586.8 14,210.0 225,577.5 2.6
Business Services 207,868.8 946.6 7,738.7 216,554.1 2.5
Agriculture Production — Non Food 199,451.2 — 9.0 199,460.2 2.3
Wholesale Trade — Non Industrial 180,841.8 2,239.4 11,945.7 195,026.9 2.3
Wholesale Trade — Industrial 167,253.4 103.9 27,470.1 194,827.4 2.3
Textiles & Garments 159,873.4 4,602.7 20,496.0 184,972.1 2.2
Infrastructure Development 109,841.9 9,762.5 55,773.0 175,377.4 2.0
Telecom 125,842.1 21,629.8 27,802.9 175,274.8 2.0
Iron & Steel 135,431.1 2,583.1 36,184.6 174,198.8 2.0
Housing Finance Companies 110,961.6 60,818.6 585.2 172,365.4 2.0
Others (none greater than 2%) 1,439,682.5 52,825.4 460,885.5 1,953,393.4 22.7
Total Rs. 7,376,179.0 Rs. 324,031.5 Rs. 897,794.6 Rs. 8,598,005.1 100.0

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

As of March 31, 2019
Fair Values Of Non-funded
Category Gross loans Credit Substitutes exposure Total Total %
(In millions, except percentages)
Consumer Loans Rs. 2,477,945.6 Rs. — Rs. 1,552.1 Rs. 2,479,497.7 US$ 35,851.6 23.5
Retail trade 445,757.8 1,170.7 15,051.6 461,980.1 6,679.9 4.4
NBFC/Financial Intermediaries 311,477.1 98,274.0 13,203.1 422,954.2 6,115.6 4.0
Automobile & Auto Ancillary 352,979.1 10,413.9 32,546.7 395,939.7 5,725.0 3.8
Road Transportation 376,547.1 — 9,808.2 386,355.3 5,586.4 3.7
Consumer Services 354,060.4 3,957.3 13,757.6 371,775.3 5,375.6 3.5
Agriculture Production — Food 330,092.5 — 728.8 330,821.3 4,783.4 3.1
Power 251,169.4 37,188.7 39,998.4 328,356.5 4,747.8 3.1
Telecom 246,272.4 21,288.6 26,245.9 293,806.9 4,248.2 2.8
Real Estate & Property Services 257,056.8 1,978.8 33,482.7 292,518.3 4,229.6 2.8
Engineering 159,462.7 1,557.3 120,816.0 281,836.0 4,075.1 2.7
Food & Beverage 233,798.9 — 15,325.7 249,124.6 3,602.1 2.4
Business Services 236,853.7 249.2 11,318.3 248,421.2 3,592.0 2.4
Iron & Steel 195,488.6 5,514.4 44,149.5 245,152.5 3,544.7 2.3
Coal & Petroleum Products 92,504.7 705.0 150,857.5 244,067.2 3,529.0 2.3
Wholesale Trade — Industrial 192,708.4 67.8 29,835.7 222,611.9 3,218.8 2.1
Textiles & Garments 187,527.5 4,436.1 26,803.8 218,767.4 3,163.2 2.1
Infrastructure Development 128,273.5 9,035.5 79,596.8 216,905.8 3,136.3 2.1
Wholesale Trade — Non Industrial 200,089.4 248.3 12,218.2 212,555.9 3,073.4 2.0
Others (none greater than 2%) 2,081,399.0 76,801.2 470,669.6 2,628,869.8 38,011.4 24.9
Total Rs. 9,111,464.6 Rs. 272,886.8 Rs. 1,147,966.2 Rs. 10,532,317.6 US$152,289.1 100.0

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Bank’s ten largest exposures as of March 31, 2018 and March 31, 2019, based on the higher of the outstanding balance or the limit on loans,
investments (including credit substitutes) and non-funded exposures (including derivatives), are as follows:

As of March 31, 2018

Funded Non-Funded Total
Exposure Exposure Exposure
(In millions)
Borrower 1 Rs. 11,615.0 Rs. 79,373.2 Rs. 90,988.2
Borrower 2 80,006.2 87.1 80,093.3
Borrower 3 27,567.3 48,406.0 75,973.3
Borrower 4 59,631.9 13,790.6 73,422.5
Borrower 5 70,012.7 — 70,012.7
Borrower 6 34,673.6 22,396.4 57,070.0
Borrower 7 13,054.6 43,324.0 56,378.6
Borrower 8 6,001.5 48,749.4 54,750.9
Borrower 9 44,367.1 3,300.0 47,667.1
Borrower 10 45,000.0 — 45,000.0

As of March 31, 2019

Funded Non-Funded Total Total
Exposure Exposure Exposure Exposure
(In millions)
Borrower 1 Rs. 146,141.2 Rs. 6,457.1 Rs. 152,598.3 US$ 2,206.5
Borrower 2 27,488.9 115,089.5 142,578.4 2,061.6
Borrower 3 120,004.3 312.8 120,317.1 1,739.7
Borrower 4 92,271.4 1,200.0 93,471.4 1,351.5
Borrower 5 80,008.5 32.6 80,041.1 1,157.3
Borrower 6 57,604.0 14,843.9 72,447.9 1,047.5
Borrower 7 32,948.9 34,806.0 67,754.9 979.7
Borrower 8 51,283.8 15,163.0 66,446.8 960.8
Borrower 9 43,602.4 22,513.2 66,115.6 956.0
Borrower 10 30,559.1 26,347.9 56,907.0 822.8

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

12. Property and equipment

Property and equipment by asset category is as follows:

As of March 31,
2018 2019 2019
(In millions)
Land and premises Rs. 17,992.1 Rs. 18,836.5 US$ 272.4
Software and systems 24,554.4 29,855.2 431.7
Equipment and furniture 64,927.1 73,601.8 1,064.2
Property and equipment, at cost 107,473.6 122,293.5 1,768.3
Less: Accumulated depreciation 68,505.5 79,105.7 1,143.8
Property and equipment, net Rs. 38,968.1 Rs. 43,187.8 US$ 624.5

Depreciation and amortization charged for the years ended March 31, 2017, March 31,2018 and March 31, 2019 was Rs. 8,876.9 million, Rs.
9,678.9 million and Rs. 12,247.8 million (US$ 177.1 million), respectively.

13. Goodwill and other intangible assets

Goodwill arising from a business combination is tested at least on an annual basis for impairment. There were no changes in the carrying amount of
goodwill of Rs. 74,937.9 million (US$ 1,083.5 million) for the fiscal year ended March 31, 2018 and the year ended March 31, 2019. The entire amount of
goodwill was allocated to the retail business. The table below presents the gross carrying amount, accumulated amortization and net carrying amount, in
total and by class of intangible assets as of March 31, 2018 and March 31, 2019:

As of March 31, 2018 As of March 31, 2019

Gross Net Gross Net Net
carrying Accumulated carrying carrying Accumulated carrying carrying
amount amortization amount amount amortization amount amount
(In millions)
Branch network Rs. 8,335.0 Rs. 8,335.0 Rs. — Rs. 8,335.0 Rs. 8,335.0 Rs. — US$ —
Customer list 2,710.0 2,710.0 — 2,710.0 2,710.0 — —
Core deposit 4,414.0 4,414.0 — 4,414.0 4,414.0 — —
Favorable leases 543.0 542.0 1.0 543.0 543.0 — —
Total Rs. 16,002.0 Rs. 16,001.0 Rs. 1.0 Rs. 16,002.0 Rs. 16,002.0 Rs. — US$ —

The aggregate amortization charged for the years ended March 31, 2017, March 31, 2018 and March 31, 2019 was Rs. 3.0 million, Rs. 1.0 million
and Rs. 1.0 million, respectively.

The estimated amortization expense for intangible assets for each of the five succeeding twelve months period is nil.

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14. Other assets

Other assets include the following:

As of March 31,
2018 2019 2019
(In millions)
Security deposits for leased property Rs. 5,004.1 Rs. 5,112.9 US$ 73.9
Sundry accounts receivable 23,216.1 49,465.6 715.2
Advance income tax (net of current tax expense) 17,988.3 18,785.7 271.6
Advances 5,510.2 4,213.1 60.9
Prepaid expenses 897.0 1,356.7 19.6
Deposits/Margins paid 5,815.1 8,319.8 120.3
Derivatives (refer to note 24) 50,836.3 132,524.1 1,916.2
Term placements 139,875.9 115,428.4 1,669.0
Others* 49,565.5 60,526.7 875.4
Total Rs. 298,708.5 Rs. 395,733.0 US$ 5,722.1

* Effective April 1, 2018, the Bank adopted ASU 2016-01(See note 2(w)(ii) to the Consolidated Financial Statements for additional details). The equity
securities that were previously reported as AFS securities were reclassified to other assets with carrying value amounting to Rs. 1,267.7 million. Others
include equity securities with carrying value amounting to Rs. 1,267.7 million and Rs. 11,483.4 million as at March 31, 2018 and March 31, 2019,
respectively. Equity securities include non-marketable equity securities carried at cost Rs. 708.4 million and Rs. 459.4 million as at March 31, 2018 and
March 31, 2019, respectively. Unrealised gain recognized in non-interest revenue–other, net Rs 6,717.5 million for the fiscal year ended March 31, 2019.

15. Deposits
Deposits include demand deposits, which are non-interest-bearing, and savings and time deposits, which are interest-bearing. Deposits as of
March 31, 2018 and March 31, 2019 were as follows:

As of March 31,
2018 2019 2019
(In millions)
Interest-bearing:
Savings deposits Rs.2,237,968.7 Rs.2,487,001.6 US$ 35,960.1
Time deposits 4,455,680.6 5,317,715.9 76,890.1
Total interest-bearing deposits 6,693,649.3 7,804,717.5 112,850.2
Non-interest-bearing deposits 1,190,102.2 1,420,309.4 20,536.6
Total Rs.7,883,751.5 Rs.9,225,026.9 US$133,386.8

As of March 31, 2018 and March 31, 2019, time deposits of Rs. 3,904,998.5 million and Rs. 4,570,771.1 million, respectively, had a residual maturity
of one year or less. The remaining deposits mature between one and ten years.

As of March 31, 2018 and March 31, 2019, time deposits in excess of Rs. 0.1 million aggregated Rs. 4,282,026.0 million and Rs. 5,145,912.9 million,
respectively.

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As of March 31, 2019, the scheduled maturities for total time deposits were as follows:

As of March 31, 2019

(In millions)
Due to mature in the fiscal year ending March 31:
2020 Rs.4,570,771.1 US$66,089.8
2021 469,740.1 6,792.1
2022 162,234.4 2,345.8
2023 35,359.5 511.3
2024 58,237.5 842.1
Thereafter 21,373.3 309.0
Total Rs.5,317,715.9 US$76,890.1

16. Short-term borrowings

Short-term borrowings are mainly comprised of money market borrowings which are unsecured and are utilized by the Bank for its treasury
operations. Short-term borrowings as of March 31, 2018 and March 31, 2019 comprised of the following:

As of March 31,
2018 2019 2019
(In millions)
Borrowed in the call market Rs. 28,585.7 Rs. 9,155.9 US$ 132.4
Term borrowings from institutions/banks 391,950.0 363,921.2 5,262.0
Foreign currency borrowings 307,066.6 280,980.9 4,062.8
Bills rediscounted 51,599.4 — —
Total Rs.779,201.7 Rs.654,058.0 US$ 9,457.2
Total borrowings outstanding:
Maximum amount outstanding Rs.865,997.0 Rs.957,026.5 US$13,837.9
Average amount outstanding Rs.512,626.7 Rs.705,161.6 US$10,196.1
Weighted average interest rate 4.9% 5.3% 5.3%

17. Long-term debt

Long-term debt as of March 31, 2018 and March 31, 2019 comprised of the following:

As of March 31,
2018 2019 2019
(In millions)
Subordinated debt Rs.231,070.0 Rs. 211,320.0 US$ 3,055.5
Others 701,885.6 833,265.2 12,048.4
Less: Debt issuance cost (49.3) (32.2) (0.5)
Total Rs.932,906.3 Rs.1,044,553.0 US$15,103.4

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The below table presents the balance of long-term debt as of March 31, 2018 and March 31, 2019 and the related contractual rates and maturity dates:

As of,
March 31, 2018 March 31, 2019
Maturity / Maturity /
Call dates Stated interest rates Total Call dates Stated interest rates Total Total
(In millions)
Subordinated debt
Subordinated debt (other than perpetual
debt) 2019-2028 7.56% to 10.85% Rs. 151,063.5 2021-2029 7.56% to 10.20% Rs. 128,315.8 US$ 1,855.3
Perpetual debt 2023 8.85% 79,997.3 2023-2029 8.85% to 9.40% 82,997.9 1,200.1
Others*
Variable rate—(1) 2020-2022 2.68% to 3.25% 32,227.2 2020-2022 3.30% to 3.88% 36,288.8 524.7
Variable rate—(2) 2019-2023 7.64% to 10.05% 108,196.7 2020-2024 8.25% to 10.05% 116,615.2 1,686.2
Fixed rate—(1) 2019-2027 6.90% to 10.35% 561,421.6 2020-2029 4.60% to 9.56% 680,335.3 9,837.1
Total Rs. 932,906.3 Rs.1,044,553.0 US$15,103.4

* Variable rate (1) represent foreign currency debt. Variable rate debt is typically indexed to LIBOR, T-bill rates, Marginal cost of funds based lending
rates (MCLR), among others.

The scheduled maturities of long-term debt are set out below:

As of March 31, 2019

(In millions)
Due in the twelve months ending March 31:
2020 Rs. 261,201.6 US$ 3,776.8
2021 153,384.5 2,217.8
2022 114,697.8 1,658.4
2023 79,464.2 1,149.0
2024 23,050.0 333.3
Thereafter 329,757.0 4,768.0
Total (1) Rs. 961,555.1 US$ 13,903.3

(1) The scheduled maturities of long-term debt do not include perpetual bonds of Rs. 82,997.9 million (net of debt issuance cost).

During the fiscal year ended March 31, 2019 the Bank issued subordinated debt amounting to Rs. 6,000.0 million (previous period Rs. 20,000.0
million) and perpetual debt amounting to Rs. 3,000.0 million (previous period Rs. 80,000.0 million). During the fiscal year ended March 31, 2019 the Bank
also raised other long-term debt amounting to Rs. 311,093.6 million (previous period Rs. 325,517.1 million).

As of March 31, 2018 and March 31, 2019, other long-term debt includes foreign currency borrowings from other banks aggregating to
Rs. 32,260.9 million and Rs. 36,305.9 million, respectively, and functional currency borrowings aggregating to Rs. 669,624.7 million and Rs.
796,959.3 million, respectively.

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18. Accrued expenses and other liabilities

Accrued expenses and other liabilities include the amounts set forth below:

As of March 31,
2018 2019 2019
(In millions)
Bills payable Rs. 82,217.8 Rs. 70,404.0 US$ 1,018.0
Remittances in transit 35,308.9 41,721.1 603.3
Accrued expenses 52,643.5 57,816.9 836.0
Accounts payable 106,510.1 88,212.9 1,275.5
Derivatives (refer to note 24) 56,124.7 128,449.0 1,857.3
Others 58,636.6 80,834.7 1,168.7
Total Rs.391,441.6 Rs.467,438.6 US$ 6,758.8

The Bank amortizes annual fees on credit cards over the contractual period of the fees. The unamortized annual fees as of March 31, 2018 and
March 31, 2019 was Rs. 351.2 million and Rs. 538.8 million (US$ 7.8 million), respectively.

19. Accumulated other comprehensive income

The below table presents the changes in accumulated other comprehensive income (OCI) after income tax for the years ended March 31, 2018 and
March 31, 2019.

Available for Foreign currency

sale securities translation reserve Total
(In millions)
Balance, March 31, 2017 Rs. 25,433.1 Rs. 598.5 Rs. 26,031.6
Net unrealized gain/(loss) arising during the period (21,445.3) 72.1 (21,373.2)
Amounts reclassified to income (8,455.1) — (8,455.1)
Balance, March 31, 2018 Rs. (4,467.3) Rs. 670.6 Rs. (3,796.7)

Balance, March 31, 2018 Rs. (4,467.3) Rs. 670.6 Rs. (3,796.7)
Adjustment to Other Comprehensive Income (loss) (268.0) — (268.0)
Net unrealized gain/(loss) arising during the period 17,105.1 663.9 17,769.0
Amounts reclassified to income (1,895.5) — (1,895.5)
Balance, March 31, 2019 Rs. 10,474.3 Rs. 1,334.5 Rs. 11,808.8
Balance, March 31, 2019 US$ 151.5 US$ 19.2 US$ 170.7

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The below table presents the reclassification out of accumulated other comprehensive income (OCI) by income line item and the related income tax
effect for periods ended March 31, 2018 and March 31, 2019.

As of March 31,
2018 2019 2019
(In millions)
Available for sale debt securities:
Realized (gain)/loss on sales of available for sale debt
securities, net Rs. (13,145.7) Rs. (3,994.6) US$ (57.8)
Other than temporary impairment losses on available for
sale debt securities 149.1 1,081.0 15.6
Total before income tax Rs. (12,996.6) Rs. (2,913.6) US$ (42.2)
Income tax 4,541.5 1,018.1 14.7
Net of income tax Rs. (8,455.1) Rs. (1,895.5) US$ (27.5)

20. Non-interest revenue

Revenue Recognition
Deposit related fees
Deposit-related fees consist of fees earned on consumer deposit activities and are generally recognized when the transaction occurs or as the service is
performed. Consumer fees are earned on consumer deposit accounts for account maintenance and various transaction-based services, such as ATM
transactions, wire transfer activities, check and money order processing, standing instruction processing, cash management services, etc.

Lending related fees

Lending-related fees generally represent transactional fees earned from certain loan related services, guarantees and letters of credit (LCs).

Third-party products related fees

Third-party products related fees consist of fees earned from distribution of third party products such as insurance and mutual funds.

Payments and cards business fees

Payments and cards business fees includes fees earned from merchant acquiring business and on Credit, Debit, Prepaidor Forex cards, among others.
Cards business income includes annual and renewal fees, late and over-limit fees, currency conversion fees, as well as fees earned from interchange, cash
advances and other miscellaneous transactions fees. Interchange fees are recognized upon settlement of the credit and debit card payment transactions and
are generally determined on a percentage basis for credit and debit cards based on the corresponding payment network’s rates. Substantially all cards
business related fees are recognized at the transaction date, except for certain time-based fees such as annual fees, which are recognized over twelve
months. Payments business fees includes fees earned from merchants net of interchange expenses paid to issuing banks, rentals from point of sale machines,
merchant service charges.

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The table below presents the non-interest revenue disaggregated by revenue source for the fiscal years ended March 31, 2018 and March 31, 2019.

Fiscal years ended March 31,

2017 2018 2019 2019
(In millions)
Deposit related fees Rs.20,407.5 Rs. 22,424.9 Rs. 25,383.0 US$ 367.0
Lending related fees 26,705.4 31,791.6 30,176.2 436.3
Third-party products related fees 13,813.1 20,908.1 22,000.4 318.1
Payments and cards business fees 25,115.2 34,551.4 47,012.4 679.8
Others 8,079.1 10,384.9 9,583.2 138.6
Fees and commissions Rs.94,120.3 Rs.120,060.9 Rs.134,155.2 US$1,939.8

The table below presents the non-interest revenue disaggregated by revenue source for the fiscal years ended March 31, 2017, March 31, 2018 and
March 31, 2019.

Fiscal year ended March 31,

2017 2018 2019 2019
(In millions)
Retail Banking Rs.86,237.9 Rs. 110,927.2 Rs.123,070.6 US$1,779.5
Wholesale Banking 7,695.8 8,985.0 10,839.6 156.7
Treasury Services 186.6 148.7 245.0 3.6
Fees and commissions Rs.94,120.3 Rs.120,060.9 Rs.134,155.2 US$1,939.8

21. Income taxes

Income tax expense is comprised of the following:

Fiscal year ended March 31,

2017 2018 2019 2019
(In millions)
Current tax expense Rs.84,273.5 Rs.108,676.0 Rs.128,050.2 US$1,851.5
Deferred tax (benefit) expense (5,048.6) (10,403.5) (8,129.4) (117.6)
Interest on income tax refund — — (527.3) (7.6)
Income tax expense Rs.79,224.9 Rs. 98,272.5 Rs. 119,393.5 US$1,726.3

Income before income tax expense and income tax expense are substantially all from India.

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The following is the reconciliation of income taxes at the Indian statutory income tax rate to income tax expense as reported:

Fiscal year ended March 31,

2017 2018 2019 2019
(In millions)
Income before income tax expense Rs.219,965.5 Rs.277,106.4 Rs.339,959.0 US$4,915.5
Statutory income tax rate 34.61% 34.61% 34.94% 34.94%
Expected income tax expense 76,125.7 95,901.0 118,795.3 1,717.7
Adjustments to reconcile expected income tax to actual
tax expense
Interest on income tax refund — — (343.0) (5.0)
Stock-based compensation 2,839.0 2,282.3 1,867.2 27.0
Income exempt from taxes (997.2) (524.8) (1,422.8) (20.6)
Effect of change in statutory tax rate — (209.2) — —
Other, net 1,257.4 823.2 496.8 7.2
Income tax expense Rs. 79,224.9 Rs. 98,272.5 Rs. 119,393.5 US$1,726.3

The tax effects of significant temporary differences are as follows:

As of March 31,
2018 2019 2019
(In millions)
Tax effect of:
Deductible temporary differences:
Allowance for loan losses Rs.30,732.5 Rs.39,604.8 US$572.7
Unrealized loss on available for sale debt securities 2,491.2 — —
Property and equipment — 383.8 5.5
Derivatives 309.8 289.1 4.2
Employee benefits 1,905.5 2,063.1 29.8
Others* 4,718.5 5,511.9 79.7
Deferred tax asset 40,157.5 47,852.7 691.9
Taxable temporary differences:
Property and equipment 434.0 — —
Loan origination cost and fees 4,957.9 5,606.3 81.1
Investments, others 479.2 2,677.0 38.7
Unrealized gain on available for sale debt securities — 5,680.2 82.1
Intangible assets 0.3 — —
Deferred tax liability 5,871.4 13,963.5 201.9
Net deferred tax asset (liability) Rs.34,286.1 Rs.33,889.2 US$490.0

* includes deductible temporary differences relating to accrued expenses and other liabilities Rs. 3,400.5 million and Rs. 4,310.4 million as at March 31,
2018 and March 31, 2019, respectively.

Management believes that the realization of the recognized deferred tax assets is more likely than not and the realization is predominantly based on
expectations as to future pretax income.

The total unrecognized tax benefit as of March 31, 2018 and March 31, 2019 is Rs. 648.3 million and Rs. 14,448.1 million, respectively. The major
income tax jurisdiction for the Bank is India. The open tax years (first assessment by the tax authorities) is pending from fiscal 2017 onwards. However,
appeals filed by the Bank are pending with various local tax authorities in India for earlier tax years.

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A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows:

Fiscal year ended March 31,

2018 2019 2019
(In millions)
Opening balance Rs.648.3 Rs. 648.3 US$ 9.4
Increase/(decrease) related to prior year tax positions — 13,799.8 199.5
Closing balance Rs.648.3 Rs.14,448.1 US$208.9

The Bank’s total unrecognized tax benefits, if recognized, would reduce the income tax expense by Rs. 14,448.1 million as of March 31, 2019 and
thereby would affect the Bank’s effective tax rate. There is no tax liability relating to the above unrecognized tax benefits.

Significant changes in the amount of unrecognized tax benefits within the next 12 months cannot be reasonably estimated as the changes would
depend upon the progress of tax examinations with various tax authorities.

The Bank’s policy is to include interest and penalties related to unrecognized tax benefits within income taxes.

22. Stock-based compensation

The stock-based compensation plans of the Bank are as follows.

Employees Stock Option Scheme(ESOP):

The shareholders of the Bank approved in January 2000 Plan “A”, in June 2003 Plan “B”, in June 2005 Plan “C”, in June 2007 Plan “D”, in June
2010 Plan “E”, in June 2013 Plan “F”, in July 2016 Plan “G” of the Employees’ Stock Option Scheme (the “Plan”). The Bank reserved 50.0 million equity
shares, with an aggregate nominal value of Rs.100.0 million, for issuance under each Plan “A”, “B” and “C”. Under Plan “D” the Bank reserved
75.0 million equity shares with an aggregate nominal value of Rs.150.0 million. The Bank reserved 100.0 million equity shares with an aggregate nominal
value of Rs. 200.0 million, for issuance under each Plan “E”, “F” and “G”. Under the terms of each of these Plans, the Bank may issue stock options to
employees and whole time directors of the Bank, each of which is convertible into one equity share.

Plan A provides for the issuance of options at the recommendation of the Nomination and Remuneration Committee of the Board (the “NRC”) at an
average of the daily closing prices on the BSE Limited during the 60 days preceding the date of grant of options, which was the minimum prescribed option
price under regulations then issued by the Securities and Exchange Board of India (“SEBI”). Presently, there are no stock options issued and outstanding
under Plan A.

Plan B, Plan C, Plan D, Plan E, Plan F and Plan G provide for the issuance of options at the recommendation of the NRC at the closing price on the
working day immediately preceding the date when options are granted. For Plan B the price is that quoted on an Indian stock exchange with the highest
trading volume during the preceding two weeks, while for Plan C, Plan D, Plan E, Plan F and Plan G, the price is that quoted on an Indian stock exchange
with the highest trading volume as of the working day preceding the date of grant. Presently, there are no stock options issued and outstanding under Plan B.

Such options vest at the discretion of the NRC. These options are exercisable for a period following vesting at the discretion of the NRC, subject to a
maximum of five years, as set forth at the time of the grant. Modifications, if any, made to the terms and conditions of these Plans as approved by the NRC
are disclosed separately.

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On April 4, 2017 and April 21, 2017, the NRC approved, under Plan F, the grant of 16,865,850 options (Scheme XXVII) and the grant of 16,200
options (Scheme XXVIII), respectively, to the employees of the Bank. On September 1, 2018, September 29, 2018 and February 2, 2019 the Nomination
and Remuneration Committee of the Board approved, under Plan G, the grant of 19,119,000 options (Scheme XXIX), the grant of 440,000 options (Scheme
XXX) and the grant of 336,000 options (Scheme XXXI), respectively, to the employees of the Bank.

Modification of employee stock option schemes

During the periods ended March 31, 2017, March 31, 2018 and March 31, 2019, there were no modifications to employee stock option schemes.

Assumptions used
The fair value of options has been estimated on the dates of each grant using a binomial option pricing model with the following assumptions:

Years ended March 31,

2017 2018 2019
Dividend yield — 0.65%-0.66% 0.62%-0.65%
Expected volatility — 19.94%-21.65% 14.53%-18.68%
Risk-free interest rate — 6.73%-7.20% 7.23%-8.31%
Expected term (in years) — 4.66-6.06 2.78-5.16

The Bank recognizes compensation expense related to stock and option awards over the requisite service period, generally based on the instruments’
grant-date fair value, reduced by expected forfeitures. Ultimately, the compensation cost for all awards that vest is recognized.

Activity and other details

Activity in the options available to be granted under the Employee Stock Option Scheme is as follows:

Number of options available to be granted

year ending March 31,
2017 2018 2019
Options available to be granted, beginning of period 31,534,850 133,673,650 117,841,600
Equity shares allocated for grant under the plan 100,000,000 — —
Options granted — (16,882,050) (19,895,000)
Forfeited/lapsed 2,138,800 1,050,000 3,260,085
Options available to be granted, end of period 133,673,650 117,841,600 101,206,685

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Activity in the options outstanding under the Employee Stock Option Scheme is as follows:

Years ended March 31,

2017 2018 2019
Weighted
average Weighted Weighted
exercise average average
Options price Options exercise price Options exercise price
Options outstanding, beginning of period 128,654,300 Rs.840.19 92,156,300 Rs. 904.97 75,443,800 Rs.1,050.22
Granted — — 16,882,050 1,433.23 19,895,000 2,060.47
Exercised (34,359,200) 658.20 (32,544,550) 837.59 (23,772,304) 925.79
Forfeited (1,992,500) 981.44 (986,800) 1,055.59 (3,205,385) 1,518.42
Lapsed (146,300) 857.61 (63,200) 963.45 (54,700) 837.10
Options outstanding, end of period 92,156,300 Rs.904.97 75,443,800 Rs.1,050.22 68,306,411 Rs.1,365.97
Options exercisable, end of period 56,314,000 Rs.835.06 46,810,250 Rs. 901.44 40,304,861 Rs.1,017.78
Weighted average fair value of options granted during the
year Rs. — Rs. 464.17 Rs. 525.57

The following summarizes information about stock options outstanding as of March 31, 2019:

As of March 31, 2019

Weighted
Number of average Weighted
shares arising remaining life average
Plan Range of exercise price out of options (years) exercise price
Plan C Rs.680.00 to Rs.835.50 (or US$ 9.83 to US$ 12.08) 1,537,400 0.87 685.70
Plan D Rs.680.00 (or US$ 9.83) 659,900 0.97 680.00
Plan E Rs.680.00 (or US$ 9.83) 2,498,700 0.96 680.00
Plan F Rs.835.50 to Rs. 1,462.15 (or US$ 12.08 to US$ 21.14) 44,238,411 2.71 1,134.48
Plan G Rs.2,006.05 to Rs. 2,090.45 (or US$ 29.01 to US$ 30.23) 19,372,000 3.57 2,060.45

The intrinsic value, of options exercised during the years ended March 31, 2017, March 31, 2018 and March 31, 2019 at grant date was
Rs. 140.7 million, Rs. 28.8 million and nil, respectively, and at exercise date was Rs. 26,951.4 million, Rs. 34,123.2 million and Rs. 33,117.4 million,
respectively. The aggregate intrinsic value as of grant date and as at March 31, 2019 attributable to options which are outstanding as on March 31, 2019 was
Rs. 0.6 million (previous year Rs. 0.6 million) and Rs. 65,091.1 million (previous year Rs. 63,062.0 million), respectively. The aggregate intrinsic value as
at grant date and as at March 31, 2019 attributable to options exercisable as on March 31, 2019 was Rs. 0.2 million (previous year nil) and was Rs.
52,441.6 million (previous year Rs. 46,092.3 million), respectively. Total stock compensation cost (including on modification) recognized under these plans
was Rs. 8,203.2 million, Rs. 6,594.6 million and Rs. 5,343.3 million during the years ended March 31, 2017, March 31, 2018 and March 31, 2019,
respectively. There is no income tax benefit recognized associated with share-based compensation expense. As of March 31, 2019, there were 28,001,550
(previous year 28,633,550) unvested options with weighted average exercise price of Rs. 1,867.2 (previous year Rs. 1,293.5) and aggregate intrinsic value
at grant date and as at March 31, 2019 was Rs. 0.3 million (previous year Rs. 0.6 million) and Rs.12,649.5 million (previous year Rs. 16,969.6 million),
respectively. As at March 31, 2019, the total estimated compensation cost to be recognized in future periods was Rs.7,065.9 million (previous year
Rs. 4,168.8 million). This is expected to be recognized over a weighted average period of 0.92 years.

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23. Retirement benefits

Gratuity
In accordance with Indian law, the Bank provides for gratuity, a defined benefit retirement plan, covering eligible employees. The plan provides for
lump sum payments to vested employees at retirement, resignation, death while in employment or on termination of employment in an amount equivalent to
15 days’ eligible salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The Bank makes annual
contributions to funds administered by trustees and managed by insurance companies for amounts notified by said insurance companies, and in respect of
certain employees, the Bank makes contributions to a fund set up for the purpose and administered by the board of trustees. The contributions are invested
in specific designated instruments as permitted by Indian law. The Bank accounts for the liability for future gratuity benefits using the projected unit cost
method based on an actuarial valuation done on March 31 of every year.

The following table sets out the funded status of the gratuity plan and the amounts recognized in the Bank’s financial statements as of March 31, 2018
and March 31, 2019:

As of March 31,
2018 2019 2019
(In millions)
Change in benefit obligations:
Projected benefit obligation (“PBO”), beginning of the period Rs. 5,225.6 Rs. 5,975.5 US$ 86.4
Service cost 741.0 820.6 11.9
Interest cost 392.2 476.7 6.9
Actuarial(gains)/ losses 97.8 (46.4) (0.7)
Benefits paid (481.1) (572.9) (8.3)
Projected benefit obligation, end of the period 5,975.5 6,653.5 96.2
Change in plan assets:
Fair value of plan assets, beginning of the period 3,902.2 4,573.4 66.1
Expected return on plan assets 297.4 347.4 5.0
Actuarial gains/(losses) 12.7 130.2 1.9
Actual return on plan assets 310.1 477.6 6.9
Employer contributions 842.2 1,023.7 14.8
Benefits paid (481.1) (572.9) (8.3)
Fair value of plan assets, end of the period 4,573.4 5,501.8 79.5
Funded Status Rs.(1,402.1) Rs.(1,151.7) US$(16.7)

The Bank’s expected contribution to the gratuity fund for the next fiscal year is estimated at Rs. 1,096.8 million. The accumulated benefit obligation
as of March 31, 2018 and March 31, 2019 was Rs. 3,363.1 million and Rs. 3,777.3 million, respectively. The vested accumulated benefit obligation as on
March 31, 2018 and March 31, 2019 was Rs. 3,032.9 million and Rs. 3,292.4 million, respectively.

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Net gratuity cost for the years ended March 31, 2017, March 31, 2018 and March 31, 2019 was comprised of the following components:

Fiscal years ended March 31,

2017 2018 2019 2019
(In millions)
Service cost Rs. 860.6 Rs. 741.0 Rs. 820.6 US$11.9
Interest cost 454.6 392.2 476.7 6.9
Expected return on plan assets (389.7) (297.4) (347.4) (5.0)
Actuarial (gains)/losses 287.6 85.1 (176.6) (2.6)
Net gratuity cost* Rs.1,213.1 Rs. 920.9 Rs. 773.3 US$11.2

* Effective April 1, 2018, the Bank adopted ASU 2017-07 Compensation- Retirement Benefits (Topic 715) -Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost. Accordingly, service cost is reported in the Consolidated Statements of Income in line
Non-interest expense-salaries and staff benefits and other components of net benefit cost is reported in the Consolidated Statements of Income in line
Non-interest expense –Administrative and other. The amendments have been applied retrospectively.

The assumptions used in accounting for the gratuity plan are set out below:

Fiscal years ended March 31,

2017 2018 2019
(% per annum)
Discount rate* 6.8-8.1 7.4-8.0 7.2-8.4
Rate of increase in compensation levels of covered employees 5.0-12.0 5.0-11.0 5.0-9.0
Rate of return on plan assets 7.0-7.6 7.0-8.0 7.0-7.2
Mortality rates used are based on the published “Indian Assured Lives Mortality (2012-2014)
Ultimate” table

* Weighted average assumptions used to determine both benefit obligations and net periodic benefit cost.

The rate of return on plan assets is based on historical returns, the current market conditions, anticipated future assets allocation and expected future
returns. The rate of return on plan assets represents a long-term average view of the expected return.

The following benefit payments, which includes benefits attributable to expected future service, as appropriate, are expected to be paid.

Year ending March 31, Benefit payments

(In millions)
2020 Rs. 847.8
2021 713.9
2022 604.1
2023 527.1
2024 470.2
2025 - 2029 1,906.5

The expected benefit payments are based on the same assumptions used to measure the Bank’s benefit obligations as of March 31, 2019.

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The gratuity contributions of the Bank which are administered by a trust set up for the purpose are managed by two insurance companies and in
respect of certain employees the funds are invested by the trust set up for the said purpose. The overall asset allocation of the gratuity fund by the two
insurance companies is structured so as to provide stable earnings while still allowing for potentially higher returns through an investment in equity
securities. As at March 31, 2019, the plan assets as a percentage of the total funds were as follows:

As of March 31, 2019

Funds managed Funds managed Funds
by insurance by insurance managed
company (1)* company (2)* by trust
Government securities 76.9% 15.7% 36.0%
Debenture and bonds 17.3% 29.5% 48.8%
Equity securities 5.5% 53.3% —
Other 0.3% 1.5% 15.2%
Total 100.0% 100.0% 100.0%

* The data pertaining to plan investment assets measured at fair value by level and total at March 31, 2019 are provided separately.

Pension
In respect of pensions payable to certain erstwhile CBoP employees, which are payable pursuant to a defined benefit scheme, the Bank contributes
10% of basic salary to a pension fund set up by the Bank and administered by the board of trustees and the balance amount is provided based on an actuarial
valuation at the balance sheet date conducted by an independent actuary. In respect of employees who have moved to a cost to company (CTC) driven
compensation structure and have completed services up to 15 years as on the date of movement to a CTC driven compensation structure, any contribution
made until such date, and any additional one-time contribution made for employees (who have completed more than 10 years but less than 15 years) stand
frozen and will be converted into an annuity on separation after a lock-in-period of two years. Hence for this category of employees, liability stands frozen
and no additional provision is required except for interest, if any. In respect of employees who accepted the offer and have completed services for more than
15 years, the pension would be paid based on the employee’s salary as of the date of movement to a CTC driven compensation structure and a provision is
made based on an actuarial valuation at the balance sheet date conducted by an independent actuary.

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The following table sets out the funded status of the pension plan and the amounts recognized in the Bank’s financial statements as of March 31, 2018
and March 31, 2019:

As of March 31,
2018 2019 2019
(In millions)
Change in benefit obligations:
Projected benefit obligation (“PBO”), beginning of the period Rs. 722.2 Rs. 722.8 US$ 10.5
Service cost 7.6 7.7 0.1
Interest cost 57.9 66.3 1.0
Actuarial (gains)/losses 22.6 6.5 0.1
Benefits paid (87.5) (125.7) (1.8)
Projected benefit obligation, end of the period 722.8 677.6 9.9
Change in plan assets:
Fair value of plan assets, beginning of the period 361.6 313.0 4.5
Expected return on plan assets 23.6 18.6 0.3
Actuarial gains/(losses) 5.9 4.8 0.1
Actual return on plan assets 29.5 23.4 0.4
Employer contributions 9.4 8.8 0.1
Benefits paid (87.5) (125.7) (1.8)
Fair value of plan assets, end of the period 313.0 219.5 3.2
Funded Status Rs. (409.8) Rs. (458.1) US$ (6.7)

The Bank’s expected contribution to the pension fund for the next fiscal year is estimated at Rs. 140.5 million. The accumulated benefit obligation as
of March 31, 2018 and March 31, 2019 was Rs. 502.1 million and Rs. 468.3 million, respectively. The vested accumulated benefit obligation as of
March 31, 2018 and March 31, 2019 was Rs. 473.7 million and Rs. 455.5 million, respectively.

Net pension cost for the years ended March 31, 2017, March 31, 2018 and March 31, 2019 was comprised of the following components:

As of March 31,
2017 2018 2019 2019
(In millions)
Service cost Rs. 12.9 Rs. 7.6 Rs. 7.7 US$ 0.1
Interest cost 53.4 57.9 66.3 1.0
Expected return on plan assets (26.1) (23.6) (18.6) (0.3)
Actuarial (gains)/losses 17.7 16.7 1.7 —
Net pension cost* Rs. 57.9 Rs. 58.6 Rs. 57.1 US$ 0.8

* Effective April 1, 2018, the Bank adopted ASU 2017-07 Compensation- Retirement Benefits (Topic 715) -Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost. Accordingly, service cost is reported in the Consolidated Statements of Income in line
Non-interest expense-salaries and staff benefits and other components of net benefit cost is reported in the Consolidated Statements of Income in line
Non-interest expense –Administrative and other. The amendments have been applied retrospectively.

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The assumptions used in accounting for the pension plan are set out below:

Fiscal years ended March 31,

2017 2018 2019
(% per annum)
Discount rate* 8.1 8.0 8.4
Rate of increase in compensation levels of covered employees 8.0 8.0 8.0
Rate of return on plan assets 7.0 7.0 7.0
Mortality rates used are based on the published “Indian Assured Lives Mortality (2012-2014) Ultimate” table

* Weighted average assumptions used to determine both benefit obligations and net periodic benefit cost.

The following benefit payments, which include benefits attributable to expected future service, as appropriate, are expected to be paid.

Year ending March 31, Benefit payments

(In millions)
2020 Rs. 107.7
2021 97.5
2022 54.2
2023 26.6
2024 42.8
2025-2029 117.5

The expected benefits are based on the same assumptions used to measure the Bank’s benefit obligations as of March 31, 2019.

The retirement funds of a section of the employees are managed by a trust set up for the purpose. The trust essentially manages the defined retirement
benefit plans belonging to certain employees. The funds are mainly invested in government securities and other corporate bonds. The weighted-average
asset allocation of the said plan assets for the pension benefits as at March 31, 2019 is as follows:

Funds managed
Asset category by trust
Government securities 8.5%
Debenture and bonds 91.5%
Other — %
Total 100.0%

For information on fair value measurements, including descriptions of Levels 1, 2 and 3 of the fair value hierarchy and the valuation methods
employed by the Bank, see note 32 – Fair value measurements.

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Plan investment assets for gratuity funds and the pension fund measured at fair value by level and in total as of March 31, 2018 and March 31, 2019
are summarized in the table below.

As of March 31, 2018 As of March 31, 2019

Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
(In millions)
Funds managed by insurance company (1) Rs. — Rs. — Rs. 519.9 Rs. — Rs. — Rs. 625.0
Funds managed by insurance company (2) — 3,797.4 — — 4,632.5 —
Funds managed by trust
— Government securities — 106.0 — — 106.6 —
— Debenture and bonds — 372.4 — — 320.1 —
— Others 90.7 — — 37.1 — —
Total Rs. 90.7 Rs. 4,275.8 Rs. 519.9 Rs. 37.1 Rs. 5,059.2 Rs. 625.0
US$ 0.5 US$ 73.2 US$ 9.0

The table below presents a reconciliation of all Plan investment assets measured at fair value using significant unobservable inputs (Level 3) during
fiscal 2018 and 2019.

Funds managed by Insurance

companies as of March 31,
2018 2019 2019
(In millions)
Particulars
Opening balance Rs. 457.7 Rs. 519.9 US$ 7.5
Realized interest credited to fund 40.6 36.7 0.5
Contribution during the period 93.2 88.6 1.3
Amount paid towards claim (71.6) (20.2) (0.3)
Closing balance Rs. 519.9 Rs. 625.0 US$ 9.0

Superannuation
Eligible employees of the Bank are entitled to receive retirement benefits under the Bank’s superannuation fund. The superannuation fund is a defined
contribution plan under which the Bank annually contributes a sum equivalent to 13% of the employee’s eligible annual salary (15% for the Managing
Director, Executive Directors and for certain employees of CBoP) to the insurance companies in India, which administers the fund. The Bank has no
liability for future superannuation fund benefits other than its annual contribution, and recognizes such contributions as an expense in the year incurred. The
Bank contributed Rs. 786.7 million, Rs. 676.8 million and Rs. 1,034.1 million to the superannuation plan for the years ended March 31, 2017, March 31,
2018 and March 31, 2019, respectively.

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Provident fund
In accordance with Indian law, eligible employees of the Bank are entitled to receive benefits under the provident fund, a defined contribution plan in which
both the employee and the Bank contribute monthly at a determined rate (currently 12% of an employee’s eligible salary). These contributions are made to a
fund set up by the Bank and administered by a board of trustees, except that out of the employer’s contribution, an amount equal to 8.33% of the lower of
employee’s monthly eligible salary or Rs. 0.015 million, is contributed by the Bank to the Pension Scheme administered by the Regional Provident
Fund Commissioner. Employees are credited with interest, which is subject to a government specified minimum rate. The Bank has no liability for future
provident fund benefits other than its annual contribution and the shortfall, if any, between the government specified minimum rate and the yield on the
fund’s assets, and recognizes such contributions as an expense in the year incurred. The amount contributed being Rs. 2,920.0 million, Rs. 3,081.4 million
and Rs. 3,312.1 million to the Provident Fund Trust and Regional Provident Fund Commissioner for the years ended March 31, 2017, March 31, 2018 and
March 31, 2019, respectively. The Hon’ble Supreme Court of India issued an order dated February 28, 2019 relating to employer’s contribution to the
provident fund under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Based on external legal opinion, the Bank has concluded
the abovementioned order is applicable prospectively and hence it is not probable that there will be an outflow of resources in relation to past periods.

National Pension Scheme

In respect of employees who opt for contribution to the National Pension Scheme, the Bank contributes a certain percentage of the basic salary of
employees to the aforesaid scheme, a defined contribution plan, which is managed and administered by pension fund management companies. The Bank
has no liability other than its contribution, and recognizes such contributions as an expense in the year incurred. The amount contributed being
Rs. 27.6 million and Rs. 32.7 million to the National Pension Scheme for the fiscal years ended March 31, 2018 and March 31, 2019, respectively.

Compensated absences
The Bank has provided for unutilized leave balances as on March 31, 2019 standing to the credit of each employee on an actuarial valuation
conducted by an independent actuary.

24. Financial instruments

Foreign exchange and derivative contracts
The Bank enters into forward exchange contracts, currency options, forward rate agreements, currency swaps and rupee interest rate swaps with inter-
bank participants on its own account and for customers. These transactions enable customers to transfer, modify or reduce their foreign exchange and
interest rate risks.

Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments
to exchange cash flows by way of interest in one currency against another currency and exchange of principal amount at maturity based on predetermined
rates. Interest rate swaps are commitments to exchange fixed and floating rate interest cash flows. A forward rate agreement gives the buyer the ability to
determine the underlying rate of interest for a specified period commencing on a specified future date (the settlement date) when the settlement amount is
determined being the difference between the contracted rate and the market rate on the settlement date. Currency options give the buyer the right, but not an
obligation, to buy or sell specified amounts of currency at agreed rates of exchange on or before a specified future date.

The market and credit risk associated with these products, as well as the operating risks, are similar to those relating to other types of financial
instruments. Market risk is the exposure created by movements in interest rates and exchange rates during the tenure of the transaction. The extent of
market risk affecting such transactions depends on the type and nature of the transaction, the value of the transaction and the extent to which the transaction
is uncovered. Credit risk is the exposure to loss in the event of default by counterparties. The extent of loss on account of a counterparty default will depend
on the replacement value of the contract at the ongoing market rates.

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Bank uses its pricing models to determine fair values of its derivative financial instruments. The Bank records credit risk valuation adjustments
on derivative financial instruments in order to reflect the credit quality of the counterparties and its own credit quality. The Bank calculates valuation
adjustments on derivatives based on observable market credit risk spreads.

The following table presents the aggregate notional principal amounts of the Bank’s outstanding forward exchange and other derivative contracts as
of March 31, 2018 and March 31, 2019, together with the fair values on each reporting date.

As of March 31, 2018

Notional Gross Assets Gross Liabilities Net Fair Value
(In millions)
Interest rate derivatives Rs. 3,084,700.1 Rs. 10,618.3 Rs. 9,520.9 Rs. 1,097.4
Forward rate agreements 2,073.1 2.5 2.6 (0.1)
Currency options 234,613.3 1,863.1 2,361.6 (498.5)
Currency swaps 161,301.3 4,929.0 4,882.5 46.5
Forward exchange contracts 4,344,675.7 33,423.4 39,357.1 (5,933.7)
Total Rs. 7,827,363.5 Rs. 50,836.3 Rs. 56,124.7 Rs. (5,288.4)

As of March 31, 2019

Notional Gross Assets Gross Liabilities Net Fair Value Notional Net Fair Value
(In millions)
Interest rate derivatives Rs. 3,159,867.1 Rs. 27,932.0 Rs. 27,102.8 Rs. 829.2 US$ 45,689.2 US$ 12.0
Forward rate agreements — — — — — —
Currency options 282,096.9 2,326.1 2,617.2 (291.1) 4,078.9 (4.2)
Currency swaps 197,044.2 5,841.0 4,070.7 1,770.3 2,849.1 25.6
Forward exchange contracts 5,561,859.5 96,425.0 94,658.3 1,766.7 80,420.2 25.5
Total Rs. 9,200,867.7 Rs. 132,524.1 Rs. 128,449.0 Rs. 4,075.1 US$ 133,037.4 US$ 58.9

The Bank has not designated the above contracts as accounting hedges and accordingly the contracts are recorded at fair value on the balance sheet
with changes in fair value recorded in net income. The gross assets and the gross liabilities are recorded in ‘other assets’ and ‘accrued expenses and other
liabilities’, respectively.

The following table summarizes certain information related to derivative amounts recognized in income:

Non-interest revenue, net –

Derivatives for the years ended March 31,
2017 2018 2019 2019
(In millions)
Interest rate derivatives Rs. 399.3 Rs. 1,027.5 Rs. 736.4 US$ 10.6
Forward rate agreements 1.2 0.5 0.1 —
Currency options 677.7 (15.0) (262.5) (3.8)
Currency swaps (2,453.4) (1,706.9) 1,045.0 15.1
Forward exchange contracts (4,363.3) 7,436.5 10,890.1 157.5
Total gains/(losses) Rs. (5,738.5) Rs. 6,742.6 Rs. 12,409.1 US$ 179.4

Offsetting
The following table shows the impact of netting arrangements on derivative financial instruments, repurchase and reverse repurchase agreements that
are subject to enforceable master netting arrangements or similar agreements, but are not offset in accordance with ASC 210-20-45 and ASC 815-10-45.

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Bank enters into International Swaps and Derivatives Association, Inc. (ISDA) master netting agreements or similar agreements with
substantially all of the Bank’s foreign exchange and derivative contract counterparties. These master netting agreements, give the Bank, in the event of
default by the counterparty, the right to liquidate collaterals held or placed and to offset receivables and payables with the same counterparty. In the table
below the Bank has presented the gross derivative assets and liabilities adjusted for the effects of master netting agreements and collaterals received or
pledged.

Transactions with counterparties for Securities sold under agreements to repurchase (“repos”) and securities purchased under agreements to resell
(“reverse repos”) are settled through the Clearing Corporation of India Limited (“CCIL”), a centralized clearing house. Collaterals received or pledged
comprise of highly liquid investments. For undertaking the above transactions, power of attorney is executed by the Bank and the counterparties in favor of
CCIL to liquidate the securities pledged in the event of default.

As of March 31, 2018

Amounts subject to enforceable netting arrangements
Effects of offsetting on balance sheet Related amounts not offset
Net amounts
Amounts reported in the Financial Financial
Gross Amounts offset balance sheet instruments collateral (1) Net amount
(In millions)
Financial assets
Derivative assets Rs. 50,836.3 Rs. — Rs. 50,836.3 Rs. 34,782.9 Rs. 4,297.0 Rs. 11,756.4
Securities purchased under agreements to
resell 650,018.6 — 650,018.6 — 650,018.6 —
Financial liabilities
Derivative liabilities Rs. 56,124.7 Rs. — Rs. 56,124.7 Rs. 34,782.9 Rs. 378.3 Rs. 20,963.5
Securities sold under repurchase
agreements 138,000.0 — 138,000.0 — 138,000.0 —

(1) Comprised of securities and cash collaterals. These amounts are limited to the asset/liability balance, and accordingly, do not include excess collateral
received/pledged.

As of March 31, 2019

Amounts subject to enforceable netting arrangements
Effects of offsetting on balance sheet Related amounts not offset
Net amounts
Amounts reported in the Financial Financial
Gross Amounts offset balance sheet instruments collateral (1) Net amount
(In millions)
Financial assets
Derivative assets Rs. 132,524.1 Rs. — Rs. 132,524.1 Rs. 104,025.7 Rs. 2,651.7 Rs. 25,846.7 US$ 373.7
Securities purchased under
agreements to resell 76,213.5 — 76,213.5 — 76,213.5 — —
Financial liabilities
Derivative liabilities Rs. 128,449.0 Rs. — Rs. 128,449.0 Rs. 104,025.7 Rs. 3,098.1 Rs. 21,325.2 US$ 308.3
Securities sold under
repurchase agreements 174,000.0 — 174,000.0 — 174,000.0 — —

(1) Comprised of securities and cash collaterals. These amounts are limited to the asset/liability balance, and accordingly, do not include excess collateral
received/pledged.

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Guarantees
As a part of its commercial banking activities, the Bank has issued guarantees and documentary credits, such as letters of credit, to enhance the credit
standing of its customers. These generally represent irrevocable assurances that the Bank will make payments in the event that the customer fails to fulfill
its financial or performance obligations. Financial guarantees are obligations to pay a third-party beneficiary where a customer fails to make payment
towards a specified financial obligation. Performance guarantees are obligations to pay a third-party beneficiary where a customer fails to perform a
non-financial contractual obligation. The tenure of the guarantees issued or renewed by the Bank is normally in line with requirements on case-by-case
basis as may be assessed by the Bank. The remaining tenure of guarantees presently issued by the Bank and currently outstanding ranges from 1 day to 26.6
years.

The credit risk associated with these products, as well as the operating risks, is similar to those relating to other types of financial instruments.

In accordance with FASB ASC 460-10 the Bank has recognized a liability of Rs. 2,825.4 million and Rs. 3,544.4 million as of March 31, 2018 and
March 31, 2019, respectively, in respect of guarantees issued or modified. Based on historical trends, in accordance with FASB ASC 450, the Bank has
recognized a liability of Rs. 2,545.2 million and Rs. 2,589.5 million as of March 31, 2018 and March 31, 2019, respectively.

Details of guarantees and documentary credits outstanding are set out below:

As of March 31,
2018 2019 2019
(In millions)
Nominal values:
Bank guarantees:
Financial guarantees Rs. 237,417.3 Rs. 254,075.9 US$ 3,673.7
Performance guarantees 214,088.3 285,748.4 4,131.7
Documentary credits 395,452.7 475,617.8 6,877.1
Total Rs. 846,958.3 Rs.1,015,442.1 US$14,682.5
Estimated fair values:
Guarantees Rs. (2,825.4) Rs. (3,544.4) US$ (51.2)
Documentary credits (406.1) (501.7) (7.3)
Total Rs. (3,231.5) Rs. (4,046.1) US$ (58.5)

As part of its risk management activities, the Bank continuously monitors the credit-worthiness of customers as well as guarantee exposures. If a
customer fails to perform a specified obligation, a beneficiary may draw upon the guarantee by presenting documents in compliance with the guarantee. In
that event, the Bank makes payment on account of the defaulting customer to the beneficiary up to the full notional amount of the guarantee. The customer
is obligated to reimburse the Bank for any such payment. If the customer fails to pay, the Bank liquidates any collateral held and sets off accounts; if
insufficient collateral is held, the Bank recognizes a loss. Margins in the form of cash and fixed deposit available to the Bank to reimburse losses realized
under guarantees amounted to Rs. 103.9 billion and Rs. 99.5 billion as of March 31, 2018 and March 31, 2019, respectively. Other property or security may
also be available to the Bank to cover losses under these guarantees.

Undrawn commitments
The Bank has outstanding undrawn commitments to provide loans and financing to customers. These commitments aggregated to Rs. 452.0 billion
and Rs. 452.9 billion (US$ 6.5 billion) as of March 31, 2018 and March 31, 2019, respectively. Among other things, the making of a loan is subject to a
review of the credit-worthiness of the customer at the time the customer seeks to borrow, at which time the Bank has the unilateral right to decline to make
the loan. If the Bank were to make such loans, the interest rates would be dependent on the lending rates in effect when the loans were disbursed. Further,
the Bank has unconditional cancellable commitments aggregating to Rs. 2,738.5 billion and Rs. 3,150.9 billion (US$ 45.6 billion) as of March 31, 2018 and
March 31, 2019, respectively.

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25. Estimated fair value of financial instruments

The Bank’s financial instruments include financial assets and liabilities recorded on the balance sheet, including instruments such as foreign exchange
and derivative contracts. Management uses its best judgment in estimating the fair value of the Bank’s financial instruments; however, there are inherent
weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily
indicative of all the amounts the Bank could have realized in a sales transaction as of March 31, 2018 and March 31, 2019. The estimated fair value
amounts as of March 31, 2018 and March 31, 2019 have been measured as of the respective year ends, and have not been re-evaluated or updated for
purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to
the respective reporting dates may be different than the amounts reported at each year end.

A comparison of the fair values and carrying values of financial instruments is set out below:
As of
March 31, 2018 March 31, 2019
Estimated Fair Value Estimated Fair Value
Estimated
Carrying Carrying Carrying Fair
Value Level 1 Level 2 Level 3 Total Value Level 1 Level 2 Level 3 Total Value Value
(In millions)
Financial Assets:
Cash and due from
banks, and
restricted cash Rs. 574,151.0 Rs. 574,151.0 Rs. — Rs. — Rs. 574,151.0 Rs. 734,872.6 Rs. 734,872.6 Rs. — Rs. — Rs. 734,872.6 US$ 10,625.7 US$ 10,625.7
Investments held for
trading 167,513.9 3,652.4 163,861.5 — 167,513.9 265,516.1 1,999.6 263,516.5 — 265,516.1 3,839.2 3,839.2
Investments
available for sale
debt securities 2,221,443.3 4,009.7 2,198,899.0 18,534.6 2,221,443.3 2,633,348.4 34,807.2 2,559,728.3 38,812.9 2,633,348.4 38,076.2 38,076.2
Securities purchased
under agreements
to resell 650,018.6 — 650,018.6 — 650,018.6 76,213.5 — 76,213.5 — 76,213.5 1,102.0 1,102.0
Loans 7,263,671.8 — 2,078,100.0 5,218,275.8 7,296,375.8 8,963,232.6 — 2,593,533.9 6,378,523.8 8,972,057.7 129,601.3 129,729.0
Accrued interest
receivable 77,894.7 — 77,894.7 — 77,894.7 93,031.7 — 93,031.7 — 93,031.7 1,345.2 1,345.2
Other assets 248,805.3 559.3 246,590.6 — 247,149.9 344,873.6 2,390.1 340,767.5 — 343,157.6 4,986.6 4,961.8
Financial
Liabilities :
Interest-bearing
deposits 6,693,649.3 — 6,716,360.3 — 6,716,360.3 7,804,717.5 — 7,826,794.0 — 7,826,794.0 112,850.2 113,169.4
Non-interest-bearing
deposits 1,190,102.2 — 1,190,102.2 — 1,190,102.2 1,420,309.4 — 1,420,309.4 — 1,420,309.4 20,536.6 20,536.6
Securities sold
under repurchase
agreements 138,000.0 — 138,000.0 — 138,000.0 174,000.0 — 174,000.0 — 174,000.0 2,515.9 2,515.9
Short-term
borrowings 779,201.7 — 779,418.7 — 779,418.7 654,058.0 — 655,215.2 — 655,215.2 9,457.2 9,473.9
Accrued interest
payable 65,514.4 — 65,514.4 — 65,514.4 79,372.5 — 79,372.5 — 79,372.5 1,147.7 1,147.7
Long-term debt 932,906.3 — 943,813.5 — 943,813.5 1,044,553.0 — 1,061,687.0 — 1,061,687.0 15,103.4 15,351.2
Accrued expenses
and other
liabilities 301,871.0 — 301,871.0 — 301,871.0 366,071.3 — 366,071.3 — 366,071.3 5,293.1 5,293.1

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

26. Segment information

The Bank operates in three reportable segments: wholesale banking, retail banking and treasury services. The revenue and related expense recognition
policies are set out in note 2. Substantially all operations and assets are based in India.

The retail banking segment serves retail customers through a branch network and other delivery channels. This segment raises deposits from
customers and grant loans, provides credit cards and debit cards, distributes third-party financial products, such as mutual funds and insurance, and provides
advisory services to such customers. Revenues of the retail banking segment are derived from interest earned on retail loans, fees for banking and advisory
services, profit from foreign exchange and derivative transactions and interest earned from other segments for surplus funds placed with those segments.
Expenses of this segment are primarily comprised of interest expense on deposits, infrastructure and premises expenses for operating the branch network
and other delivery channels, personnel costs, other direct overheads and allocated expenses. The Bank’s retail banking loan products also include loans to
small and medium enterprises for commercial vehicles, construction equipment and other business purposes. Such grouping ensures optimum utilization
and deployment of specialized resources in the retail banking business.

The wholesale banking segment provides loans and transaction services to corporate customers. As discussed above, loans to small and medium
enterprises for commercial vehicles, construction equipment and other business purposes are included in the retail banking segment. Revenues of the
wholesale banking segment consist of interest earned on loans given to corporate customers, investment income from credit substitutes, interest earned on
the cash float arising from transaction services, fees from such transaction services and profits from foreign exchange and derivative transactions with
wholesale banking customers. The principal expenses of the segment consist of interest expense on funds borrowed from other segments, premises
expenses, personnel costs, other direct overheads and allocated expenses.

The treasury services segment undertakes trading operations on proprietary account (including investments in government securities), foreign
exchange operations and derivatives trading both on proprietary account and customer flows and borrowings. Revenues of the treasury services segment
primarily consist of fees and gains and losses from trading operations and of net interest revenue/expense from investments in government securities and
borrowings. Revenues from foreign exchange and derivative operations and customer flows are classified under the retail or wholesale segments depending
on the profile of the customer.

Segment income and expenses include certain allocations. Interest income is charged by a segment that provides funding to another segment, based
on yields benchmarked to an internally developed composite yield curve which broadly tracks market-discovered interest rates.

Directly identifiable overheads are attributed to a segment at actual amounts incurred. Indirect shared costs, principally corporate office expenses, are
generally allocated to each segment on the basis of area occupied, number of staff, volume and nature of transactions. Wholesale banking segment includes
unallocated tax balances and other items.

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Summarized segment information for the years ended March 31, 2017, March 31, 2018 and March 31, 2019:

Fiscal year ended March 31,

2017 2018
Retail Wholesale Treasury Retail Wholesale Treasury
Banking Banking Services Total Banking Banking Services Total
(In millions)
Net interest income/(expense) (External) Rs. 188,803.6 Rs. 159,644.3 Rs. 3,347.7 Rs. 351,795.6 Rs. 279,198.3 Rs. 120,341.3 Rs. 23,611.0 Rs. 423,150.6
Net interest income/(expense) (Internal) 97,969.3 (100,757.5) 2,788.2 — 65,690.2 (48,571.1) (17,119.1) —
Net interest revenue 286,772.9 58,886.8 6,135.9 351,795.6 344,888.5 71,770.2 6,491.9 423,150.6
Less: Provision for credit losses 31,341.7 6,609.7 — 37,951.4 52,577.1 6,820.7 — 59,397.8
Net interest revenue, after allowance for credit
losses 255,431.2 52,277.1 6,135.9 313,844.2 292,311.4 64,949.5 6,491.9 363,752.8
Non-interest revenue 95,914.4 11,090.1 3,321.6 110,326.1 122,582.6 12,674.1 9,350.3 144,607.0
Non-interest expense (187,591.4) (15,352.0) (1,261.4) (204,204.8) (210,257.2) (19,792.1) (1,204.1) (231,253.4)
Income before income tax Rs. 163,754.2 Rs. 48,015.2 Rs. 8,196.1 Rs. 219,965.5 Rs. 204,636.8 Rs. 57,831.5 Rs. 14,638.1 Rs. 277,106.4
Income tax expense Rs. 79,224.9 Rs. 98,272.5
Segment assets:
Segment total assets Rs. 4,987,187.1 Rs. 3,346,273.0 Rs. 733,520.4 Rs. 9,066,980.5 Rs. 6,351,601.7 Rs. 4,140,606.7 Rs. 875,100.4 Rs. 11,367,308.8

Fiscal year ended March 31,

2019
Wholesale Treasury
Retail Banking Banking Services Total Total
(In millions)
Net interest income/(expense) (External) Rs. 336,677.1 Rs. 140,085.0 Rs. 30,743.5 Rs. 507,505.6 US$ 7,338.1
Net interest income/(expense) (Internal) 62,339.1 (43,842.8) (18,496.3) — —
Net interest revenue 399,016.2 96,242.2 12,247.2 507,505.6 7,338.1
Less: Provision for credit losses 64,051.0 8,228.3 — 72,279.3 1,045.1
Net interest revenue, after allowance for credit
losses 334,965.2 88,013.9 12,247.2 435,226.3 6,293.0
Non-interest revenue 138,783.0 23,789.6 (2,450.4) 160,122.2 2,315.2
Non-interest expense (230,726.5) (22,744.8) (1,918.2) (255,389.5) (3,692.7)
Income before income tax Rs. 243,021.7 Rs. 89,058.7 Rs. 7,878.6 Rs. 339,959.0 US$ 4,915.5
Income tax expense Rs. 119,393.5 US$ 1,726.3
Segment assets:
Segment total assets Rs. 7,432,733.8 Rs. 4,732,290.7 Rs. 1,115,049.1 Rs. 13,280,073.6 US$ 192,019.7

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

27. Commitments and contingencies

Commitments and contingent liabilities other than for off balance sheet financial instruments (see note 24) are as follows:

Capital commitments
The Bank has entered into committed capital contracts, principally for branch expansion and technology upgrades. The estimated amounts of
contracts remaining to be executed on the capital account as of March 31, 2018 and March 31, 2019 aggregated Rs. 5,196.7 million and Rs. 5,503.6 million,
respectively.

Contingencies
The Bank is party to various legal proceedings in the normal course of business. The Bank estimates the provision for contingencies which majorly
include indirect taxes since no precedents exist which could be used as points of reference. The amount of claims against the Bank towards indirect taxes
and other claims which are not acknowledged as debts as of March 31, 2019 aggregated to Rs. 8,936.3 million (previous year Rs. 8,398.3 million). The
Bank does not expect the outcome of these proceedings to have a material adverse effect on the Bank’s results of operations, financial condition or cash
flows. The Bank intends to vigorously defend these claims. Although the results of other legal actions cannot be predicted with certainty, it is the opinion of
management, after taking appropriate legal advice, that the likelihood of these claims becoming obligations of the Bank is remote and hence the resolution
of these actions will not have a material adverse effect, if any, on the Bank’s business, financial condition or results of operations.

Lease commitments
The Bank is party to operating leases for certain of its office premises, employee residences and ATMs, with a renewal at the option of the Bank. The
Bank has sub-leased certain of its properties taken on lease. The rental expenses and sub-lease income is as follows:

As of March 31,
2017 2018 2019 2019
(In millions)
The total minimum lease expense during the year recognized in the
consolidated statement of income Rs. 11,548.5 Rs. 12,311.3 Rs. 12,700.8 US$183.6

The future minimum lease payments as of March 31, 2019 were as follows:

Year ending March 31, Payments

(In millions)
2020 Rs. 10,538.6 US$ 152.4
2021 9,921.4 143.5
2022 9,100.7 131.6
2023 8,137.3 117.7
2024 7,104.2 102.7
Thereafter 41,090.6 594.1
Total Rs. 85,892.8 US$ 1,242.0

The terms of renewal and escalation clauses are those normally prevalent in similar agreements. There are no undue restrictions or onerous clauses in
the agreements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Reward points
The movement in provision for credit card and debit card reward points as of March 31, 2018 and March 31, 2019 is as follows:

As of March 31,
2018 2019 2019
(In millions)
Opening provision of reward points Rs. 4,312.4 Rs. 4,711.2 US$ 68.1
Provision made during the year 2,650.9 3,747.3 54.2
Utilization/write back of provision (2,220.7) (2,555.9) (37.0)
Effect of change in rate of accrual of reward points 1.3 91.5 1.3
Effect of change in cost of reward points (32.7) 36.8 0.5
Closing provision of reward points Rs. 4,711.2 Rs. 6,030.9 US$ 87.1

28. Related party transactions

The Bank’s principal related parties consist of HDFC Limited, its principal owner, subsidiaries of HDFC Limited and affiliates of the Bank.
Transactions disclosed under “others” primarily consist of transactions with subsidiaries of HDFC Limited and affiliates of the Bank. The Bank enters into
transactions with its related parties, such as providing banking services, sharing costs and service providers, purchasing services, making joint investments,
and borrowing from related parties and subletting premises. The Bank is prohibited from making loans to companies with which it has directors in common.
The Bank, being an authorized dealer, deals in foreign exchange and derivative transactions with certain parties which include the principal owner and
related companies. The foreign exchange and derivative transactions are undertaken in line with the RBI guidelines. The Bank’s related party balances and
transactions are in the normal course of business and are summarized as follows:

Balances payable to related parties are as follows:

As of March 31,
2018 2019
Principal Principal
owner Others Total owner Others Total Total
(In millions)
Balances in non-interest-bearing
deposits Rs. 21,758.0 Rs. 11,771.8 Rs. 33,529.8 Rs. 32,176.8 Rs. 14,170.1 Rs. 46,346.9 US$670.1
Balances in interest-bearing deposits 10,749.7 1,905.0 12,654.7 733.1 1,732.9 2,466.0 35.7
Accrued expenses and other liabilities 327.8 — 327.8 836.4 — 836.4 12.1
Total Rs. 32,835.5 Rs. 13,676.8 Rs. 46,512.3 Rs. 33,746.3 Rs. 15,903.0 Rs. 49,649.3 US$717.9

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Balances receivable from related parties are as follows:

As of March 31,
2018 2019
Principal Principal
owner Others Total owner Others Total Total
(In millions)
Loans Rs. — Rs. 55.0 Rs. 55.0 Rs. — Rs. 33.9 Rs. 33.9 US$ 0.5
Other assets 288.1 2,317.3 2,605.4 310.2 1,474.7 1,784.9 25.8
Total Rs. 288.1 Rs. 2,372.3 Rs. 2,660.4 Rs. 310.2 Rs. 1,508.6 Rs. 1,818.8 US$26.3

Purchase of property and equipment from related parties for the years ended March 31, 2018 and 2019 were nil. Purchase and sale of investments
from Others for the year ended March 31, 2019 were Rs. 6,490.7 million (previous year Rs. 4,565.9 million) and Rs. 22,236.2 million (previous year Rs.
5,099.3 million), respectively. Investments of Others in the Bank’s subordinated debt for the fiscal year ended March 31, 2019 were Rs. 250.0 million
(previous year Rs. 250.0 million).

Included in the determination of net income are the following significant transactions with related parties:

Fiscal year ended March 31,

2017 2018 2019
Principal Principal Principal
owner Others Total owner Others Total Others owner Total Total
(In millions)
Non-interest revenue-Fees and commissions Rs. 2,074.5 Rs. 10,356.4 Rs. 12,430.9 Rs. 2,642.7 Rs. 14,913.5 Rs. 17,556.2 Rs. 2,829.7 Rs. 14,558.3 Rs. 17,388.0 US$ 251.4
Interest and Dividend revenue — 37.2 37.2 132.8 1,396.9 1,529.7 352.0 1,549.7 1,901.7 27.5
Interest expense-Deposits (55.7) (117.7) (173.4) (59.6) (115.9) (175.5) (54.9) (138.0) (192.9) (2.8)
Non-interest expense-Administrative and
other (3,405.7) (1,582.2) (4,987.9) (4,031.9) (2,266.8) (6,298.7) (4,838.3) (2,841.7) (7,680.0) (111.0)
Non-interest expense-Premises and
equipment (25.3) (7.7) (33.0) (19.8) (7.6) (27.4) (31.2) (6.1) (37.3) (0.5)

Other transactions with the Bank’s principal owner are as follows:

During the years ended March 31, 2018 and March 31, 2019, the Bank purchased loans from the principal owner aggregating Rs. 56,239.4 million
and Rs. 239,824.2 million, respectively. Dividends paid to the principal owner during the years ended March 31, 2018 and March 31, 2019 were Rs.
4,325.3 million and Rs. 5,111.7 million, respectively. The Bank also enters into foreign exchange and derivative transactions with its principal owner. The
notional principal amount and the mark-to-market gains in respect of foreign exchange and derivative contracts outstanding as of March 31, 2019 was Rs.
58,655.0 million (previous year Rs. 59,721.4 million) and Rs. 143.1 million (previous year Rs. 87.7 million), respectively. During the fiscal year ended
March 31, 2019, the Bank subscribed to debt securities of Rs. 6,850.0 million (previous year Rs. 21,050.0 million) issued by the principal owner. During the
fiscal year ended March 31, 2019, the Bank issued Guarantees on behalf of its Principal owner and Others for Rs. 3.7 million (previous year Rs. 2.5 million)
and for Rs. 1,127.4 million (previous year Rs. 857.4 million), respectively.

For contributions made to provident funds and pension funds set up by the Bank, see note 23 – Retirement benefits.

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29. Earnings per equity share

A reconciliation of the equity shares used in the computation of basic and diluted earnings per equity share has been provided below. Potential equity
shares in the nature of ESOPs with average outstanding balance of nil were excluded from the calculation of diluted earnings per share for the years ended
March 31, 2018 and March 31, 2019, respectively, as these were anti-dilutive.

As of March 31,
2017 2018 2019
Weighted average number of equity shares used in computing basic
earnings per equity share 2,544,333,609 2,580,538,505 2,680,034,029
Effect of potential equity shares for stock options outstanding 31,017,917 33,400,121 26,792,948
Weighted average number of equity shares used in computing diluted
earnings per equity share 2,575,351,526 2,613,938,626 2,706,826,977

The following are reconciliations of basic and diluted earnings per equity share and earnings per ADS.

Fiscal years ended March 31,

2017 2018 2019 2019
Basic earnings per share Rs. 55.23 Rs. 69.18 Rs. 82.13 US$1.19
Effect of potential equity shares for stock options outstanding 0.66 0.89 0.82 0.01
Diluted earnings per share Rs. 54.57 Rs. 68.29 Rs. 81.31 US$1.18

Basic earnings per ADS Rs.165.69 Rs.207.54 Rs.246.39 US$3.57

Effect of potential equity shares for stock options outstanding 1.98 2.67 2.46 0.03
Diluted earnings per ADS Rs.163.71 Rs.204.87 Rs.243.93 US$3.54

Dividends
Any dividends declared by the Bank are based on the profit available for distribution as reported in the statutory financial statements of the Bank
prepared in accordance with Indian GAAP. Additionally, the Banking Regulation Act and related regulations require the Bank to transfer 25% of its Indian
GAAP profit after-tax to a non-distributable statutory reserve and to meet certain other conditions in order to pay dividends without prior RBI approval. As
per the RBI guidelines, the dividend payout (excluding dividend tax) for March 31, 2019 cannot exceed 35% of net income of Rs. 210,781.6 million as
calculated under Indian GAAP. Accordingly, the net income reported in these financial statements may not be fully distributable in that year. Dividends
declared for the years ended March 31, 2017, March 31, 2018 and March 31, 2019 were Rs. 11.0, Rs. 13.0 and Rs. 15.0 per equity share, respectively.

30. Subsidiaries
HDB Financial Services Limited (“HDBFSL”) is a non-deposit taking non-banking finance company and a subsidiary of the Bank. As at March 31,
2019, HDFC Bank Ltd. and its subsidiaries effectively hold 96.1% (previous year 96.4%). The financial statements of HDBFSL are consolidated.

On December 1, 2016, Atlas Documentary Facilitators Company Private Limited (“ADFC”) and its subsidiary HBL Global Private Limited (“HBL”)
amalgamated with HDBFSL. ADFC specializes in back office processing and the Bank regularly transacts business with ADFC. As of the date of
amalgamation the Bank effectively held 59.0% equity interests of ADFC and consolidated its financial statements. HBL provides direct sales support for
certain products of the Bank. As of date of amalgamation ADFC held 98.0% of its equity and the financial statements of HBL were consolidated.

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In terms of the scheme of amalgamation HDBFSL issued 7,540,515 equity shares of Rs. 10 each to ADFC equity shareholders (in the ratio of 16.75
HDBFSL equity shares of Rs. 10 each for every 1 (one) equity share of Rs. 10/- of ADFC) and it also issued 20,470 HDBFSL equity shares of Rs. 10 each
to HBL equity shareholders (in the ratio of 102.35 HDBFSL equity shares of Rs. 10 each for every 1 (one) equity share of Rs. 10 of HBL). In terms of the
scheme of amalgamation it was agreed that the “effective date” of the amalgamation would be the date or the last of the dates on which the certified copies
of the orders passed by the High Court of Judicature at Bombay and the High Court of Judicature at Gujarat, approving the scheme, are filed by each of the
Transferor Companies (viz. ADFC and HBL) and the Transferee Company (viz. HDBFSL) with the respective Registrar of Companies (ROC).
Accordingly, December 1, 2016 is determined as the “Effective Date” of the Scheme of Amalgamation between ADFC and HBL with HDBFSL being the
last of the dates on which the certified copy of the Bombay High Court order approving the Scheme was filed with the ROC by the transferor companies.

The amalgamation did not have a material impact on the Bank’s financial condition and results of operation since the financial statements of the three
named companies i.e., HDBFSL, ADFC and HBL were hitherto also consolidated by the Bank.

HDFC Securities Ltd. (“HSL”) offers trading facilities in a range of equity, fixed income and derivative products to its clients. As at March 31, 2019
the Bank holds a 97.6% (previous year 97.9%) effective equity interest. The financial statements of HSL are consolidated.

31. Investments in Affiliates

The Bank frequently partners with other HDFC group companies when making investments. The Bank currently has one strategic investment in
which HDFC group companies are co-investors. Without the prior approval of the RBI, the Bank cannot hold more than a 30% equity stake in another
company. The following is a list of investments in affiliates as at March 31, 2019:

HDFC Bank Limited HDFC Bank Limited

and Subsidiaries and Subsidiaries Total HDFC
Company* Type of Business Investment Ownership Group Ownership
(In millions)
Softcell Technologies Limited Business-to-business
(“Softcell”) software services Rs. 30.3 14.0% 26.0%

* Computer Age Management Services Private Limited (“CAMS”) is no longer accounted for under the equity method of accounting. The total HDFC
Group Ownership in this strategic investment is 12.5% of which HDFC Bank Limited and Subsidiary Ownership is 6.5%.
* International Asset Reconstruction Company Private Limited (“IARC”) is no longer accounted for under the equity method of accounting. The total
HDFC Bank Limited Ownership in this investment is 19.2%. There are no investments in this company either by the Bank’s subsidiaries or any other
group companies.

The holdings in the above-mentioned companies are accounted for under the equity method of accounting. The increase/(decrease) in the carrying
value in these companies was Rs. (2.3) million in fiscal March 31, 2019 (previous year Rs. 156.0 million). This is included under non-interest revenue—
other, net.

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

32. Fair value measurement

FASB Accounting Standards Codification “ASC” 820 (Topic 820) Fair Value Measures and Disclosures, defines fair value, establishes a framework
for measuring fair value in US GAAP, and expands disclosures about fair value measurements. The valuation hierarchy is based upon the transparency of
inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level of input Definition

Level 1 Unadjusted quoted market prices in active markets that are accessible at the measurement date for identical unrestricted assets or liabilities.
Level 2 Quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or
indirectly, for substantially the full term of the financial instrument.
Level 3 Inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

The following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such
instruments pursuant to the valuation hierarchy. These valuation methodologies were applied to all of the Bank’s financial assets and financial liabilities
carried at fair value. For Level 1 instruments the valuation is based upon the unadjusted quoted prices of identical instruments traded in active markets. For
Level 2 instruments, where such quoted market prices are not available, the valuation is based upon the quoted prices for similar instruments in active
markets, the quoted prices for identical or similar instruments in markets that are not active, prices quoted by market participants and prices derived from
standard valuation methodologies or internally developed models that primarily use, as inputs, such as interest rates, yield curves, volatilities and credit
spreads, which are available from public sources such as Reuters, Bloomberg and the Fixed Income Money Markets and Derivatives Association of India.
The valuation methodology primarily includes discounted cash flow techniques. Valuation adjustments may be made to ensure that financial instruments are
recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the Bank’s creditworthiness, among other things, as
well as unobservable parameters. Any such valuation adjustments are applied consistently over time. The valuation of Level 3 instruments is based on
valuation techniques or models which use significant market unobservable inputs or assumptions.

The Bank uses its quantitative pricing models to determine the fair value of its derivative instruments. These models use multiple market inputs
including interest rates, prices and indices to generate continuous yield or pricing curves and volatility factors to value the positions that are observable
directly or indirectly. Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include
amounts to reflect counterparty credit quality and the Bank’s creditworthiness, among other things, as well as unobservable parameters. Any such valuation
adjustments are applied consistently over time.

Financial assets and financial liabilities measured at fair value on a recurring basis:

Available for sale debt securities: Available for sale debt securities are carried at fair value. Such fair values were based on quoted market prices, if
available. If quoted market prices did not exist, fair values were estimated using the market yield on the balance period to maturity on similar instruments
and similar credit risks. The fair values of asset-backed and mortgage-backed securities is estimated based on revised estimated cash flows at each balance
sheet date, discounted at current market pricing for transactions with similar risk. A reduction in the estimated cash flows of these instruments will
adversely impact the value of these securities. A change in the timing of these estimated cash flows will also impact the value of these securities.

Trading securities: Trading securities are carried at fair value based on quoted market prices or market observable inputs.

Held to maturity securities: There were no HTM securities as of March 31, 2018 and March 31, 2019.

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HDFC BANK LIMITED AND ITS SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes investments measured at fair value on a recurring basis as of March 31, 2018, segregated by the level of the
valuation inputs within the fair value hierarchy utilized to measure fair value:
Fair Value Measurements Using
Quoted prices in Significant
active markets Significant other unobservable
for identical assets observable inputs inputs
Particulars Total (Level 1) (Level 2) (Level 3)
(In millions)
Trading account securities Rs. 167,513.9 Rs. 3,652.4 Rs. 163,861.5 Rs. —
Securities Available-for-Sale 2,221,443.3 4,009.7 2,198,899.0 18,534.6
Equity securities*# 559.3 559.3 — —
Total Rs.2,389,516.5 Rs. 8,221.4 Rs.2,362,760.5 Rs.18,534.6

The following table summarizes investments measured at fair value on a recurring basis as of March 31, 2019, segregated by the level of the
valuation inputs within the fair value hierarchy utilized to measure fair value:
Fair Value Measurements Using
Quoted prices in Significant
active markets Significant other unobservable
for identical assets observable inputs inputs
Particulars Total (Level 1) (Level 2) (Level 3)
(In millions)
Trading account securities Rs. 265,516.1 Rs. 1,999.6 Rs. 263,516.5 Rs. —
Securities Available-for-Sale 2,633,348.4 34,807.2 2,559,728.3 38,812.9
Equity securities*# 11,024.0 2,390.1 8,633.9 —
Total Rs. 2,909,888.5 Rs. 39,196.9 Rs. 2,831,878.7 Rs. 38,812.9
Total US$ 42,074.7 US$ 566.7 US$ 40,946.8 US$ 561.2

* Effective April 1, 2018, the Bank adopted ASU 2016-01 (See note 2(w)(ii) to the Consolidated Financial Statements for additional details).
# Equity securities classified within other assets.

Available-for-Sale securities aggregating to Rs. 0.1 billion and classified as Level 1 as of March 31, 2018 were transferred to Level 2 during fiscal
2019.The following table summarizes, certain additional information about changes in the fair value of Level 3 assets pertaining to instruments carried at
fair value for the years ended March 31, 2018 and March 31, 2019:
Particulars As of March 31, 2018
(in millions)

Beginning balance at April 1, 2017 Rs. 21,899.1

Total gains or losses (realized/unrealized)
-Included in net income —
-Included in other comprehensive income (76.9)
Purchases/additions 13,110.3
Sales —
Issuances —
Settlements (16,397.9)
Transfers in Level 3 —
Transfers out of Level 3 —
Foreign currency translation adjustment —
Ending balance at March 31, 2018 Rs. 18,534.6

Total amount of gains or (losses) included in net income attributable to

change in unrealized gains or (losses) relating to assets still held at
reporting date Rs —

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Particulars As of March 31, 2019
(In millions)

Beginning balance at April 1, 2018 Rs. 18,534.6

Total gains or losses (realized/unrealized)
-Included in net income —
-Included in other comprehensive income 355.9
Purchases/additions 42,885.7
Sales —
Issuances —
Settlements (22,963.3)
Transfers in Level 3 —
Transfers out of Level 3 —
Foreign currency translation adjustment —
Ending balance at March 31, 2019 Rs. 38,812.9

Total amount of gains or (losses) included in net income attributable to

change in unrealized gains or (losses) relating to assets still held at
reporting date Rs —

Derivatives: The Bank enters into forward exchange contracts, currency options, forward rate agreements, currency swaps and rupee interest rate
swaps with inter-bank participants on its own account and for customers. These transactions enable customers to transfer, modify or reduce their foreign
exchange and interest rate risks. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate.
Currency swaps are commitments to exchange cash flows by way of interest in one currency against another currency and exchange of principal amount at
maturity based on predetermined rates. Rupee interest rate swaps are commitments to exchange fixed and floating rate cash flows in rupees.

The Bank uses its pricing models to determine the fair value of its derivative instruments. These models use market inputs that are observable directly
or indirectly.

The following table summarizes derivative instruments measured at fair value on a recurring basis as of March 31, 2018, segregated by the level of
the valuation inputs within the fair value hierarchy utilized to measure fair value:

Fair Value Measurements Using

Quoted prices in Significant
active markets Significant other unobservable
for identical assets observable inputs inputs
Particulars Total (Level 1) (Level 2) (Level 3)
(In millions)
Derivative assets Rs.50,836.3 Rs. — Rs. 50,836.3 Rs. —
Derivative liabilities Rs.56,124.7 Rs. — Rs. 56,124.7 Rs. —

The following table summarizes derivative instruments measured at fair value on a recurring basis as of March 31, 2019, segregated by the level of
the valuation inputs within the fair value hierarchy utilized to measure fair value:

Fair Value Measurements Using

Quoted prices in Significant
active markets Significant other unobservable
for identical assets observable inputs inputs
Particulars Total (Level 1) (Level 2) (Level 3)
(In millions)
Derivative assets Rs.132,524.1 Rs. — Rs. 132,524.1 Rs. —
Derivative liabilities Rs.128,449.0 Rs. — Rs. 128,449.0 Rs. —

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

33. Subsequent events

In the meeting of Board of Directors of the Bank held on April 20, 2019, the Board recommended a dividend of Rs. 15.0 per share, which has been
subsequently approved by the shareholders for payment in their Annual General Meeting, held on July 12, 2019. The amount of such dividend aggregated
to Rs. 40,992.2 million.

By an ordinary resolution on July 12, 2019, the shareholders of the Bank approved a sub division (stock split) of equity shares to reduce the face
value of each equity share from Rs. 2.0 to Rs. 1.0 per share. The Board of Directors in their meeting held on July 20, 2019 fixed the record date as
September 20, 2019, the effective date.

In the meeting of Board of Directors of the Bank held on July 20, 2019, the Board has declared a special interim dividend of Rs. 5.00 per share to
commemorate 25 years of HDFC Bank’s operations and fixed the record date as August 2, 2019.

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EXHIBIT INDEX

Exhibit
No. Description of Document

1.1 HDFC Bank Memorandum of Association, as amended (incorporated by reference to HDFC Bank Limited’s Registration Statement on
Form F-1 filed on July 12, 2001 (Registration No. 333-13718))*
1.2 HDFC Bank Articles of Association, as amended (incorporated by reference to HDFC Bank Limited’s Registration Statement on Form F-1
filed on July 12, 2001 (Registration No. 333-13718))*
1.3 Amendment to Memorandum and Articles of Association (incorporated herein by reference to HDFC Bank Limited’s Annual Report on
Form 20-F filed on September 29, 2008)
1.4 Amendment to Memorandum and Articles of Association (incorporated herein by reference to HDFC Bank Limited’s Annual Report on
Form 20-F filed on September 30, 2011)
1.5 Amendment to Memorandum of Association (incorporated herein by reference to HDFC Bank Limited’s Annual Report on Form 20-F filed on
July 29, 2016)
2.1 HDFC Bank’s Specimen Certificate for Equity Shares (incorporated herein by reference to HDFC Bank Limited’s Registration Statement on
Form F-1 filed on July 12, 2001 (Registration No. 333-13718))*
2.2 Amended and Restated Deposit Agreement among HDFC Bank Limited, JPMorgan Chase Bank, N.A. and all holders from time to time of
American Depositary Receipts issued thereunder (including as an exhibit, the form of American Depositary Receipt) (incorporated herein by
reference to Form F-6 filed on September 9, 2015 (Registration No. 333-175521))
12.1 Certification of the Managing Director pursuant to Rule 13a-14(b)
12.2 Certification of the Chief Financial Officer of HDFC Bank pursuant to Rule 13a-14(b)
13 Certifications by the Managing Director and Chief Financial Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of
the United States Code
23.1 Consent of Independent Registered Public Accounting Firm KPMG
101 The following financial information from HDFC Bank Ltd. Annual Report on Form 20-F for the year ended March 31, 2019 is formatted in
XBRL: (i) Consolidated Statements of Income, (ii) Consolidated statements of comprehensive income, (iii) Consolidated Balance Sheets,
(iv) Consolidated Statements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial
Statements.

HDFC Bank Limited agrees to furnish to the Securities and Exchange Commission, upon its request, the instruments relating to the long-term debt for
securities authorized thereunder that do not exceed 10 percent of HDFC Bank Limited’s total assets.

* Paper filing

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign
this annual report on its behalf.

HDFC Bank Limited

/s/ Sashidhar Jagdishan

Name: Sashidhar Jagdishan
Title: Chief Financial Officer
Date: July 31, 2019

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