Bfil Ar 2018 PDF

72.
7 Lakh
Women Members in
Over 1 Lakh Villages
Kirana Point 2.8 Lakh

Local ATM for a Range CSR Beneficiaries in
of Banking Services 12 Indian States
Touching
Lives Annual Report
2017-18
Bharat Financial Inclusion Limited
(Formerly known as ‘SKS Microfinance Limited’)
Contents
ABOUT US MANAGEMENT DISCUSSION
AND ANALYSIS 22
TOUCHING LIVES 01
OUR BOARD OF DIRECTORS 02 DIRECTORS’ REPORT 51
OUR CORE EXECUTIVE TEAM 03
REPORT ON CORPORATE
WE ARE BHARAT FINANCIAL GOVERNANCE 90
INCLUSION LIMITED 04
OUR GROWTH MOMENTUM 06
HOW ARE WE BUILDING FINANCIAL STATEMENTS
SCALE ACROSS INDIA 10
INDEPENDENT AUDITOR’S
PERFORMING WITH PASSION 12 REPORT 112
IMPACTING MORE LIVES 14 BALANCE SHEET 120
FAST-TRACKING THE KIRANA STATEMENT OF
POINT PILOT 16 PROFIT AND LOSS 121
2.8 LAKH CSR BENEFICIARIES CASH FLOW STATEMENT 122
IN 12 INDIAN STATES 18
NOTES TO
PROPOSED MERGER WITH FINANCIAL STATEMENTS 124
INDUSIND BANK 20
Corporate Information
AUDITORS REGISTERED OFFICE
B S R & Associates LLP Unit No. 410, ‘Madhava’,
Salarpuria Knowledge City, Bandra-Kurla Complex,
Orwell, 6th Floor, Unit – 3, Bandra (East), Mumbai – 400 051.
Sy. No. 83/1, Plot No. 2, Raidurg, Phone No.: 022-26592375
Hyderabad – 500 081, India. Fax No.: 022-26592375
REGISTRAR & SHARE HEAD OFFICE

TRANSFER AGENT 3rd Floor, My Home Tycoon,
Karvy Computershare Pvt. Ltd. Block A, 6-3-1192,
Selenium Tower B, Plot 31-32, Kundanbagh, Begumpet,
Gachibowli Financial District, Hyderabad – 500 016.
Nanakramguda, Phone No.: 040-44526000
Hyderabad – 500 032. Fax No.: 040-44526001
Email: [email protected]
Phone No: 040-67162222 Email: [email protected]
Fax No: 040-23001153 Website: www.bfil.co.in
Contents
ABOUT US MANAGEMENT DISCUSSION
AND ANALYSIS 22
TOUCHING LIVES 01
OUR BOARD OF DIRECTORS 02 DIRECTORS’ REPORT 51
OUR CORE EXECUTIVE TEAM 03
REPORT ON CORPORATE
WE ARE BHARAT FINANCIAL GOVERNANCE 90
INCLUSION LIMITED 04
OUR GROWTH MOMENTUM 06
HOW ARE WE BUILDING FINANCIAL STATEMENTS
SCALE ACROSS INDIA 10
INDEPENDENT AUDITOR’S
PERFORMING WITH PASSION 12 REPORT 112
IMPACTING MORE LIVES 14 BALANCE SHEET 120
FAST-TRACKING THE KIRANA STATEMENT OF
POINT PILOT 16 PROFIT AND LOSS 121
2.8 LAKH CSR BENEFICIARIES CASH FLOW STATEMENT 122
IN 12 INDIAN STATES 18
NOTES TO
PROPOSED MERGER WITH FINANCIAL STATEMENTS 124
INDUSIND BANK 20
Corporate Information
AUDITORS REGISTERED OFFICE
B S R & Associates LLP Unit No. 410, ‘Madhava’,
Salarpuria Knowledge City, Bandra-Kurla Complex,
Orwell, 6th Floor, Unit – 3, Bandra (East), Mumbai – 400 051.
Sy. No. 83/1, Plot No. 2, Raidurg, Phone No.: 022-26592375
Hyderabad – 500 081, India. Fax No.: 022-26592375
REGISTRAR & SHARE HEAD OFFICE

TRANSFER AGENT 3rd Floor, My Home Tycoon,
Karvy Computershare Pvt. Ltd. Block A, 6-3-1192,
Selenium Tower B, Plot 31-32, Kundanbagh, Begumpet,
Gachibowli Financial District, Hyderabad – 500 016.
Nanakramguda, Phone No.: 040-44526000
Hyderabad – 500 032. Fax No.: 040-44526001
Phone No: 040-67162222 Email: [email protected]
Fax No: 040-23001153 Website: www.bfil.co.in
1
Touching Lives
At Bharat Financial Inclusion Limited (BFIL), we
are touching the lives of low-income women
borrowers from under-served households in
significant ways. With a historical legacy of more
than 15 years in providing financial services
to the economically weaker sections, we have
emerged as the largest community-based micro-
finance institution with 72.7 lakh low-income
women members, covering more than 100,000
villages. We are supporting those excluded
from the formal financial marketplace in taking
control of their own economic destiny.
We are touching the lives of low-income women at the bottom of the socio-economic pyramid in
different ways. Our tailor-made and affordable loans, priced at one of the lowest interest rates
among NBFCs, provide them with financial sustainability and augmenting economic opportunities
for them and in turn help them to improve their lives. Over the years, we have established a strong
and wide-spread reach with presence in 342 districts, covering around half of India’s total districts
(excluding Andhra Pradesh and Telangana).
We touch their lives by facilitating them to conduct banking and financial transactions at the local
Kirana shop. We also enable them to enjoy better customer service through our cashless and
paperless loan disbursals. Another significant way in which we touch the lives of people is through
our CSR projects, thus making a meaningful contribution to the society.
At BFIL, we are significantly impacting India’s financial fabric by enabling customers meaningfully
invest the loans accessed and create stable and sustainable livelihoods for themselves. Based on
our sensitive, deep understanding of our customer base, we are working towards our larger vision of
touching people’s lives, nurturing them and enabling them to achieve a better quality of life.
We provide them with income-generation loans, paving way for them to evolve and climb up the
economic ladder.
About Us
Our Board of Directors
P. H. Ravikumar M. R. Rao Ashish Lakhanpal

Non-Executive Chairman & Managing Director & CEO Non-Executive Director
Independent Director
S. Balachandran Geoffrey Tanner K. G. Alai

Independent Director Woolley Nominee Director - SIDBI
Independent Director
Dr. Punita Kumar-Sinha R. M. Malla Dr. Tarun Khanna

Independent Director Independent Director Independent Director
BHARAT FINANCIAL INCLUSION LIMITED

3
Our Core Executive Team
Ashish Damani Ashish Pipaliya J. S. Sai

Chief Financial Officer Senior Executive Vice President, Chief Marketing &
Investor Relations & New Initiatives Communications Officer
Kanchan Pandhre Pratap R Rajendra Patil

Chief, Internal Audit Chief Risk Officer & Deputy Chief Senior Executive Vice President,
Financial Officer Legal & Company Secretary
Ritesh Chatterjee Shalabh Saxena Srinivas Peddada

Chief, Organizational Excellence Chief Distribution Officer Chief Information Officer
& Service Quality
Srinivas Reddy Vudumula Vikas Muttoo

Chief People Officer Chief Business Officer
Annual Report 2017-18

About Us
We are
We are the largest microfinance company in India with a gross loan portfolio of
Rs 12,594.4 crore, 72.7 lakh members (excluding Andhra Pradesh and
Telangana) & 1,567 branches. We are the most efficient micro finance institution (MFI)
and one of the low-cost lenders amongst NBFC-MFIs, with interest rate at sub 20%.
We have established ourselves in the industry Our Mission

with best-in-class return ratios and superior
asset quality. We remain focused on providing Our mission is to provide financial services to the
innovative solutions to our customers while economically weaker sections.
leveraging our disciplined risk management
culture and increasing operational efficiencies. Our Vision
Our vision is to serve 50 million households
across India and other parts of the world and
also create a commercial microfinance model
that delivers high value to our customers.
Key Highlights of the Year
`12,594.4 Crore 72.7 Lakh 1,567

Gross Loan Total Number of Number of
Portfolio Members Branches
(Excluding Andhra across India
Pradesh and
Telangana)
19.75% `2,998.8 Crore `85,179 Crore

One of the Networth Cumulative
Lowest Lending Disbursement
Rates among
NBFC-MFIs
`20,316 95% 33.2%

Average Ticket Size Cashless Capital
Disbursement Adequacy Ratio
(For the period
FY2018)

5
Growth in Assets Under Management (AUM)
12,594
9,150
5 Years AUM
7,677
CAGR is
44.3%
CAGR: 44.3% 4,171
2,016 2,837
FY2013 FY2014 FY2015 FY2016 FY2017 FY2018
Assets Under Management (` Crore)
Our Market Differentiators

• Most efficient and one of the lowest cost lenders • Pan - India presence with balanced geographic
amongst NBFC-MFIs (Interest rate at sub-20%) exposure
• Extensive reach in 342 districts in India • Sufficient capital adequacy and liquidity
• 80% Rural Customer Base
Key Highlights
Operational Efficiency Credit Quality Financial Efficiency Balance Sheet

• 95% Cashless • Cumulative collection • Marginal cost of • AUM of Rs 12,594.4
disbursement efficiency of 99.8% borrowings reduced to Crore
• Gross addition of ~30.6 for loans disbursed 8.6%* in Q4FY18 • Networth of
Lakh customers between • Weighted average cost Rs 2,998.8 Crore
January 1, 2017 and of borrowings reduced
• Loan disbursements March 31, 2018 • Capital Adequacy at
grew 25.9% to to 9.3%** in Q4FY18 33.2%
Rs 18,472 crore • Net NPA reduced to
0.1% • Cash & Cash Equivalents
of Rs 1,858 Crore
*On & Off Balance Sheet borrowings, including processing fees

**On & Off Balance Sheet (daily average), including processing fees

About Us
Our Growth Momentum
Building world-class technology driven operations is the key to sustainable

growth at Bharat Financial Inclusion Limited. Further, our ability to grow through
client acquisition, recruit and retain skilled employees, optimise staff productivity,
retain existing borrowers and expand into newer regions is also helping us sustain
growth, as we continue to focus on efficiencies to maintain and improve our
operating leverage.
One of the Lowest Lending

We remain Rural Focused Rates among NBFC-MFIs (%)
29.25%
URBAN
24.55% 23.55% 22.00% 20.75%
RURAL 19.75%
20% 80%
Oct-10 Jan-11 Oct-14 Jul-15 Oct-15 Dec-15
Cost to Income Ratio (%) Marginal Cost of Borrowing* (%)
74.5% 12.6%
11.9%
61.1% 10.2%
9.4%
48.3% 50.0% 50.4% 8.7%
FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018
*On & Off Balance Sheet loans, including processing fees

7
Towards Technology Upgradation:
Mobile / digital / Refractoring of

cashless transactions in-house lending system
Biometric All branch connectivity

authentication with daily data receipt
Equipped loan
officers with tablets
Moving up the Value Chain in Technology

Year 2000 Year 2012 Year 2014-15 Year 2015-16 Year 2017(Onwards)
Step 1 Step 2 Step 3 Step 4 Step 5
Installed Ushered in Refractored Equipped Progressed

computers at all-branch the in-house Loan Officers to Mobile,
all branches connectivity lending with Tablets Digital,
with in-house with daily system Cashless
lending system data receipt Transactions

About Us
Balanced Geographical Mix (As on March 31, 2018)

Madhya Pradesh Others
4% 6%
Jharkhand
5% Odisha
16%
Kerala
6%
Rajasthan
6% Bihar
15%
Uttar Pradesh
8%
West Bengal
13%
Maharashtra
10%
Karnataka
11%
Our Competitive Landscape
UNIQUE PAN - INDIA EXTENSIVE REACH

OPERATING MODEL PRESENCE
• 100% Group Lending to • 342 Districts (Excluding • 72.7 Lakh Members
Women Andhra Pradesh and (Excluding Andhra Pradesh
• 80% Rural Customer Telangana) and Telangana)
Base

9
Our Strategic
Priorities
• CAPITAL
• CAPACITY
• COST REDUCTION
LOWEST COST EXTERNAL

LENDER ENDORSEMENTS
• 19.75% • Highest MFI Grading “MFI 1”
One of the Lowest • Highest Code of Conduct Assessment Grading of “C1”
Interest Rates among
NBFC-MFIs • Corporate Governance rating at “CGR2+”
• Highest safety short-term rating at “A1+”
• Multiple AAA rated securitised pools

About Us
10
How Are We Building

Scale Across India
Our presence in 18 states of India and our wide distribution network in rural India
results in significant competitive advantages for us. Further, our well-developed
distribution network in rural India gives us the capability to offer a variety of
financial products nationally in areas where most companies are not able to reach.
Total Branches = 1,567

(Weighted Avg. Vintage in Years)
Jammu & Kashmir
As of March 31, 2018
Himachal Pradesh
2
(3.3)
Punjab
27
(5.9)
Uttarakhand
11
Haryana (7.9)
34 Arunachal Pradesh
(4.6) Delhi
2 Sikkim
(5.3)
Rajasthan Uttar Pradesh Assam

84 158 Nagaland
(6.8)
(6.8) Bihar Meghalaya
178 Manipur
(7.0)
Tripura
Jharkhand
Mizoram
Gujarat Madhya Pradesh 70 West Bengal
(5.9)
1 80 150
(10.3) (8.4)
(7.9)
Chattisgarh
53
(4.5) Odisha
188
(7.9)
Maharashtra
148
(7.8)
Telangana
58
(9.0)
Andhra Pradesh
Karnataka 75
178 (9.2)
(9.7)
Tamilnadu
Kerala
70
(5.7)

11
Historical
Legacy
With more than 15 years in
supporting the rural poor,
we have emerged as the
largest community-based
microfinance institution
with over 72.7 Lakh low-
income women members,
covering over 1 lakh villages.

About Us
12
Performing with Passion
During FY2013-18, our revenues have registered a CAGR of 42.9%. Over the years,
we have maintained sufficient financial discipline and a relative degree of financial
strength. We reported a profit of Rs 455.5 crore during the year, our fifth consecutive
year of profit, and our networth stood at Rs 2,998.8 crore, while our capital adequacy
ratio was 33.2%.
Networth (` Crore) Capital Adequacy Ratio (%)
33.5% 33.2%
2,999
2,447
23.1%
1,383
1,046
459
FY2014 FY2015 FY2016 FY2017 FY2018 FY2016 FY2017 FY2018
Drawdowns* (` Crore) Cost to Income Ratio (%)
74.5%
9,977 61.1%
48.3% 50.0% 50.4%
7,317 6,900
5,020
3,503
*Excluding Managed Loans

13
Disbursements (` Crore) Net Interest Income (` Crore)
18,472 1,095
14,667 848
12,088
641
6,891 377
4,788 244
Opex to Gross Loan Portfolio (%) Gross Loan Portfolio (` Crore)
9.6% 9.5%
12,594
7.1%
6.6% 9,150
6.5%
7,677
4,171
2,837
Profit After Tax (` Crore) Reducing Interest Rates (%)
29.25%
24.55%
455 23.55%
22.00%
303 290
20.75%
188 19.75%
70
FY2014 FY2015 FY2016 FY2017 FY2018 Oct-10 Jan-11 Oct-14 Jul-15 Oct-15 Dec-15

About Us
14
Impacting More
Lives
• 25% CAGR growth in borrowers in

11 Years
• Unique distinction of meeting our
borrowers 52 times each year
• CSR in the key segments of Veterinary
Care, Eye Care and Mental Health has
benefited 2.8 Lakh people in 12 Indian
states

15
Being one of the globally lowest cost private sector

MFI lenders, with record cost efficiencies, we have
been touching the lives of our 72.7 Lakh members in
countless ways. With 95% cashless disbursals, fast-
tracking of the Kirana Point project, and by targeting
100% digital financial inclusion across our operations,
we have been offering products and services to low-
income borrowers in their neighbourhood.
At Bharat Financial Inclusion KEY HIGHLIGHTS

Limited, we truly live up to
• RoA and Capital Adequacy:
our mantra of delighting
We are proud of maintaining
our customers. Our strong
sufficient liquidity and a steady
differentiators in customer
RoA of 4%+ (Q3 and Q4 of
service have enabled us to
FY2018), the highest amongst
record 25% CAGR growth in the
the financial services players in
number of borrowers over the
India. Our Capital Adequacy
last 11 years. During the year
Ratio stood at 33.2% as of
under review, we witnessed a
March 31, 2018.
healthy addition of 30.6 lakh
members, reaching a total of • Technology:
72.7 lakh members by March 31, Our technology initiatives are
2018. leading to superior overall risk
mitigation, owing to a drastic
What truly sets us apart is the reduction in the cash-handling
pervasive impact we have on processes, along with the
these borrowers through our vast reduction in fraudulent loans.
network of 1,567 branches pan- • Cost-to-Income Ratio:
India. We are further extending Our Cost-to-Income ratio is
our reach by lending in the new 50.4% for FY2018. Our aim
geographies and new districts is to bring this down to 40%
through a contiguous expansion over the next 1-2 years, with
planning approach. Our Gross the implementation of various
Loan Portfolio grew by 37.6% efficiency improvement and
in FY18 to Rs 12,594.4 crore, technology initiatives.
compared with Rs 9,149.6 crore
in the previous year. • Customer Grievance
Redressal:
To address the grievances
of our customers, we have
adopted a robust Customer
Grievance Redressal
procedure. Till date, we have
imparted more than
1,00,000 hours of training on
Customer Protection Practices
to borrowers and employees.

About Us
16
Fast-Tracking
the Kirana Point
Pilot
Kirana Point (or Retail Distribution & Service Points Model) acts as a single window
for the customers, empowering her to conduct various kinds of financial transactions
at a nearby location. Some of these include making cash deposits and withdrawals
from the savings account; making remittances to other accounts; digital repayments
and recharge; allied and OTC financial services; product facilitation
and E-Commerce.

17
Benefits of Kirana Point or Retail Distribution

& Service Points Model
Cashless Operations Savings and OTC Leveraging our

• Cashless Disbursement Products Distribution Strength
• Cashless Collections • Insurance • Allied Financial Services
• Recurring Deposit • Last Mile Connectivity
• New Savings Bank for Leading Retailers
Accounts • Fixed Utility Loan
• Direct Benefit Transfer Products
The Kirana Bank Architecture

Cross sell and
E-commerce
Bill payments
and Recharges
Single
Window
< 0.5 km
With RDSP Travels to for all
Allied and Requirements
Customer K-Store OTC Financial
Services
Deposits and
Withdrawls
Point

About Us
18
2.8 Lakh CSR

Beneficiaries
in 12 Indian
States

19
At Bharat Financial Inclusion Limited, we recognise and own our responsibilities

towards the under-served sections of the society, striving to better their lives
in various aspects. Our CSR projects are designed and implemented with a
multi-dimensional approach, bringing about a greater ease into the life of the
beneficiaries. The three CSR projects we run across the country have strengthened
the local communities and are ascending to create a long-term impact.
For us, Corporate CSR is a and above all, live with dignity. To As of March 2018, 91,000+ cattle
creative opportunity to kindle address the challenge of affordability owners have been covered under the
and, access to healthcare, our project and over 3,02,928 cattle have
the social, environmental, and Company commenced the project been administered treatment. The
economic impact and enable “Drishti”, partnering with NGOs lives of 16,718 cattle facing critical
such as HelpAge India, Operation illness have been saved by providing
a difference for a progressive Eyesight India and Sightsavers. The them with timely treatment through
future. The key beneficiaries of project works to restore the vision of the Project.
our CSR initiatives belong to senior citizens from the marginalised
sections by facilitating their cataract
the rural areas, where the reach
of basic healthcare and related
surgery free of cost. So far, Drishti has
reached 12 states and has conducted
S(P)EEK:
services remains a challenge. 30,731 free surgeries in 28 hospitals. Quick Facts
Our efforts have impacted the • Launched in: April 2017
poverty-stricken milk producers
in Jharkhand and Madhya
Sanjeevani • Place: Kerala
• Objective: To create awareness on
Pradesh, the mentally and Quick Facts mental healthcare and eliminate
the stigma associated with it
emotionally handicapped in • Launched in: April 2016 among the needy in the state
Kerala, and the cataract-affected • Place: 11 districts in Jharkhand, 2 of Kerala.
senior citizens. districts in Madhya Pradesh
Key Statistics
• Objective: The Project is a
revolutionary model in Veterinary • No. of Households Sensitised:
Drishti Care Services aimed to provide
emergency treatment services at
23,000
• No. of Community Workers
door-step – through a world-class Trained: 2,599
Quick Facts technology and toll-free call-center.
• Launched in: March 2015 Project Details
Key Statistics
• Place: Jharkhand Around 6.5% of India’s population
• No. of Villages Covered: 2,346 suffers from various mental illnesses
• Objective: To restore vision for and the number is estimated to go
cataract-affected elderly people in • No. of Districts Covered: 13
up to 20% by 2020. The staggering
rural areas through free surgeries. • No. of Cattle Owners Covered: rise in such cases in India indicates a
91,663 stronger need for a robust healthcare
Key Statistics
• No. of Cattle Treated: 3,02,928 system, with higher accessibility
• No. of States Covered: 12 of services, delivery of timely
• No. of Lives Saved: 16,718
• No. of Camps Conducted: 1,684 interventions and cost-effective
• People Screened: 1,67,276 Project Details solutions to treat individuals with
There are an average 60 lakh mental illnesses.
• No. of Cataract Surgeries
Conducted: 30,731 farmers dependent on livestock for
livelihood. ‘Sanjeevani’ provides S(P)EEK is our unique project with
States Covered door-step veterinary care services the Mental Healthcare and Research
in Jharkhand and Madhya Pradesh Foundation (Mehac) and National
• Maharashtra • Bihar Health Mission (NHM). The objective
to optimize the service delivery and
• Karnataka • West Bengal access of the necessary services of this is to create community-
• Rajasthan • Chhattisgarh through a phone call. Sanjeevani is based mental health awareness
run in association with the Jharkhand with a model that includes training
• Kerala • Madhya Pradesh for doctors, nurses, volunteers to
Milk Federation in Jharkhand and
• Odisha • Uttar Pradesh with the State Government in educate and address the needs in
Madhya Pradesh. the community. The project runs
• Jharkhand • Andhra Pradesh in Ernakulam in Kerala, aiming to
Project Details The project aims to arrest cattle increase awareness and eliminate
casualty, boost milk production, stigma.
In India, cataract is a highly prevalent
eye- disease, affecting 73% of people in turn aiding to earn a better
aged above 50 years. A simple livelihood. The services include
restorative surgery can increase treatment of illnesses, emergency
the patient’s ability to engage in care, artificial insemination,
productive work, support the family, vaccination and nutritional care
support.

About Us
20

21
The merger is expected to be value accretive since

inception, given IndusInd Bank’s lower cost of funds,
ability to monetise excess Priority Sector Lending
qualifying assets, efficient capital utilisation and
optimal resource utilisation.
Proposed
Merger with
IndusInd Bank
Bharat Financial Inclusion Limited Post-merger, IndusInd Bank
fits with the Rural Banking and will have 3,887 banking points
Microfinance theme of IndusInd (excluding ATMs). Its 11.2-million
Bank’s Planning Cycle-4 strategy, strong customer base will stand
and will provide IndusInd enhanced through the addition
access to best-in-class micro- of Bharat Financial Inclusion
lending capabilities and domain Limited’s 7.3 million customers.
expertise in micro-finance. Bharat Financial Inclusion
Limited’s distribution network
Bharat Financial Inclusion Limited also offers a large untapped
has 1,567 branches across 342 deposit potential from the rural
districts which complement and under-served customers, as
IndusInd Bank’s branch network also for their emerging banking
of 1,400 bank branches (including needs.
261 rural branches) and 920
Vehicle Finance outlets.
3,887
Number of Banking Points of
the Merged Entity
18.5
Million
Customer Base of the
Merged Entity

Management Discussion & Analysis
22
Management Discussion
& Analysis
The Company is primarily engaged in providing microfinance to households
belonging to Economically Weaker Section of India. The Company focuses its
operations in 16 states (excluding Andhra Pradesh and Telangana) in India, and has
1,567 branches and 16,021 employees, as on March 31, 2018.
Overview the doorstep of its Members.

The Members are predominantly
channel to provide certain
other financial products and
Bharat Financial Inclusion located in rural areas in India, services that its Members may
Limited (‘BFIL’ or ‘the Company’) and the Company extends loans need. The Company offers loans
is the largest NBFC-MFI in India to them mainly for use in small for the purchase of products
by Gross Loan Portfolio (as businesses or for other income- which help its borrowers to
per MFIN March 2018 Report) generating activities and not for enhance their productivity
and the first MFI to be publicly personal consumption. such as mobile phones, solar
listed in India. The Company is lamps, sewing machines and
primarily engaged in providing In its core business, the bicycles, among other products.
microfinance to households Company follows a village- The Company also operates a
belonging to Economically centric, group-lending model number of pilot programs that
Weaker Section of India. The to provide unsecured loans to may be gradually converted
Company focuses its operations its Members. This model relies into separate business verticals
in 16 states (excluding Andhra on a form of ‘social collateral’, subject to satisfactory results
Pradesh and Telangana) in India, and ensures credit discipline of pilot programs. The existing
and has 1,567 branches and through peer support within pilot programs primarily
16,021 employees, as on March the group. The Company relate to giving loans to its
31, 2018. believes this model makes its Members for the purchase of
Members prudent in conducting certain additional productivity-
The core business of the their financial affairs and enhancing products such as
Company is to provide small encourages them to be prompt water purifiers, mixer-grinders,
value unsecured loans and in repaying their loans. Failure refrigerators and for the
certain other basic financial by an individual Borrower to purchase of two-wheelers. The
services to its Members (Women make timely loan repayments Company intends to expand
from EWS households who will prevent other Members in its involvement in these other
are clients of the Company the group from being able to financial products and services
are classified as “Members”, borrow from the Company in to the extent consistent with
and those Members whose future. Therefore, the group will its mission, client-focus and
loans are outstanding are use peer support to encourage commercial viability.
classified as “Borrowers”). These the delinquent Borrower to
individuals often have no, or make timely repayments or will In 2005, the Company registered
very limited, access to loans often make a repayment on with, and has since been
from institutional sources of behalf of a defaulting Borrower, regulated by, the RBI as a Non-
financing. The Company believes effectively providing an Deposit Taking Non-Banking
that non-institutional sources informal joint guarantee on the Financial Company (NBFC-ND).
lending to these borrowers Borrower’s loan. In 2009, it became a Public
typically charge them very high Limited Company. It completed
rates of interest. The Company In addition to its core business its Initial Public Offering (IPO)
aims to bridge this gap by of providing micro-credit, the and its equity shares were
providing financial services at Company uses its distribution listed on the Bombay Stock

23
Exchange (BSE Limited) and a separate category of Non- 2018, the Company had 72.7
the National Stock Exchange Deposit Taking Non-Banking lakh Members, including 61.9
of India Limited in August Financial Companies engaged in lakh Borrowers with a Gross
2010. In November 2013, the microfinance activities. Loan Portfolio of ₹12,594.4
RBI re-classified the Company crore and 1,567 branches. The
as an NBFC-MFI, permitting it For FY18, BFIL’s total revenue Company charges an interest
to carry on the business of a and profit after tax was rate at 19.75%, one of the
Non-Banking Financial Company ₹2,102.0 crore and ₹455.5 crore, lowest among all private sector
- Micro Finance Institution, respectively. As on March 31, NBFC-MFIs.

24
Merger of the contributed 33% of the overall portfolio, while SFBs had a 22%
share and Banks (including BC Portfolio) had a 37% share.
Company with
IndusInd Bank Micro-credit loan amount outstanding
Limited across lenders (31 Mar 2018) (In ` Crore)
The Board of Directors of the

Company, at its meeting held on `967 Cr
October 14, 2017, had approved `10,337 Cr 1% Banks
the Composite Scheme of 7%
`50,418 Cr SFBs
Arrangement (“Scheme”)
37%
between the Company, IndusInd NBFC - MFIs
Bank Limited (“Bank”) and the NBFCs
wholly owned subsidiary of
Non Profit MFIs
the Bank (under process of
incorporation as on the date of `44,892 Cr
this Report) (“Subsidiary”) and 33% * Source: MFIN
their respective shareholders Micrometer March
`30,019 Cr 2018
and creditors under Sections 22%
230-232 of the Companies
Act, 2013, subject to receipt of
applicable regulatory approvals.
Portfolio Growth - SHG
In this regard, as on date of
this report, the amalgamation During FY17, the SHG portfolio grew by 8% to ₹61,581 crore from
has been approved by the ₹57,119 crore in FY16. Between FY14 and FY17, the SHG portfolio
Competition Commission of grew at a CAGR of 13%.
India on December 19, 2017 and
no objection has been issued by
Gross Loan Portfolio (In ` Crore)ytt
the Reserve Bank of India, the
National Stock Exchange of India
Limited and the BSE Limited on
9% 20% 11% 8%
March 13, 2018, June 1, 2018
SHG
and June 4, 2018, respectively.
61,581 YoY Growth SHG (%)
57,119
51,545
The Scheme remains subject to 42,927
the receipt of approval from the
National Company Law Tribunal,
the respective shareholders and
creditors of the Company and
* Source: Status of
the Bank and other applicable
Microfinance Reports
statutory and regulatory 2014 2015 2016 2017
2014 to 2017
approvals.
I. Industry
Structure and NBFC – MFI Industry
Developments The NBFC-MFI industry reported strong growth in FY18. During
FY18, the industry disbursed loans worth ₹59,629 crore,
The Micro-Credit representing a 49% increase over previous year. This resulted in
Industry a 50% growth over previous year in Gross Loan Portfolio (“GLP”)
to ₹48,094 crore. During the same period, the number of clients
According to MFIN report, the increased by 25% to 2.53 crores, while the number of people
micro-credit total loan portfolio employed by the industry grew by 25% to 82,004 and the number
was ₹1,36,633 crore as on of branches also rose by 25%. Average loan amount disbursed per
March 31, 2018. NBFC-MFIs account was ₹22,273.

25
Particulars FY18 FY17 % increase Asset Quality of

Disbursements (₹ crore) 59,629 39,986 49%
Gross Loan Portfolio 48,094 32,039 50%
NBFC-MFIs
(₹ crore) The Industry witnessed higher
No. of Clients (In crore) 2.53 2.02 25% Portfolio at Risk (PAR) since
No. of Employees 82,004 65,839 25% December 2016 owing to events
No. of Branches 10,077 8,032 25% subsequent to demonetisation.
However, the PAR has shown
Note: The NBFC-MFI industry data does not include data for SFBs. a declining trend in FY18.
Source: MFIN Micrometer Mar 2018 Portfolio at Risk figure (PAR 30
days) for the NBFC-MFI industry
dropped to 4.44% as on March
Geographical Mix – SHG V/S NBFC-MFI 31, 2018, from 11.05% as on
The SHG industry portfolio remains concentrated in the states of March 31, 2017. PAR figures
Andhra Pradesh, Telangana, Karnataka and Tamil Nadu, with a 71% (PAR 90 days and PAR 180
share. The SHG exposure in these states is given in the graph below. days) were at 3.64% and 2.83%,
respectively, as on March 31,
SHG Portfolio in Top 4 States 2018.
Source: MFIN Micrometer March 2018
Debt Funding to
28% NBFC-MFIs
20% During FY18, NBFC-MFIs
13% received a total of ₹20,695 crore
10% in debt funding from banks
and other financial institutions.
Debt funding through
* Source- NABARD- Status
Andhra Telangana Karnataka Tamil of Microfinance 2017 securitisation of MFI’s portfolio
Pradesh Nadu was at ₹8,120 crore.
Micro-credit loan amount outstanding across lenders (31 Mar 2018)

NBFC-MFIs and
Karnataka
Odisha Market Share
18% 13%
Uttar Pradesh As on March 31, 2018, top five
11%
Bihar (5) NBFC-MFIs accounted in
4% Tamil Nadu aggregate for approximately
Maharashtra 56% of the GLP of all NBFC-
7% Madhya Pradesh MFIs. Top 2 MFIs were BFIL
10%
West Bengal (GLP - ₹12,594 crore) and Satin
8% (GLP * - ₹4,304 crore).
Kerala
10% * As on Dec-17
9% Other States
10% Source: MFIN Micrometer March 2018
* Source - MFIN Micrometer

March 2018
NBFC-MFIs now cover 30 states / union territories of India. The

coverage of these microfinance institutions is now geographically
well dispersed with Gross Loan Portfolio in East and North East at
44%, South at 20%, North at 14%, West at 11% and Central at 11%.
Karnataka has the largest NBFC-MFI exposure at 13% of the total
Gross Loan Portfolio.

26
During FY18, the industry Overview of the

disbursed loans worth Regulatory Framework and recent
` 59,629 crore, Regulatory Developments
representing a 49% The Non-Banking Financial Company - Micro Finance Institutions
increase over previous (Reserve Bank) – Directions, 2011 (“NBFC-MFI Directions”) were
issued in December 2011 by the Reserve Bank of India (RBI)
year. This resulted in a pursuant to the Reserve Bank of India Act, 1934 (“RBI Act”). The
NBFC-MFI directions apply to all Non-Deposit taking Non-Banking
50% growth over previous Financial Companies (“NBFCs”) (other than companies registered
year in Gross Loan under Section 25 of the Companies Act, 1956) that satisfy certain
conditions.
Portfolio (“GLP”) to
` 48,094 crore. The Company satisfies these conditions and was re-classified as a
Non-Banking Financial Company - Micro Finance Institution (“NBFC-
MFI”) on November 18, 2013. As a result, the Company is required
to comply with the applicable directions given in ‘Non-Banking
Financial Company - Systemically Important Non-Deposit taking
Company and Deposit taking Company (Reserve Bank) Directions,
2016’. These directions include guidelines on qualifying assets
criteria, asset classification and provisioning, pricing of credit,
capital adequacy and fair practices.

27
Specific directions applicable to NBFC – MFIs

Key guidelines are highlighted below:
NBFC – MFIs Qualifying assets to constitute not less than 85% of its total assets
(excluding cash and bank balances)
At least 50% of loans for income generation activities
Qualifying Assets Criteria
Annual Income of Borrowers Rural <= ₹1,00,000
Household Non-Rural <= ₹1,60,000
Ticket Size <= ₹60,000 - 1st cycle
<= ₹1,00,000 - subsequent cycle
Indebtedness <= ₹1,00,000
Tenure If Loan amount > ₹30,000, then >= 24 months
Collateral without collateral
Repayment Frequency Weekly, Fortnightly and Monthly
Pricing Guidelines
Interest Rate A. Margin cap - 10% above cost of borrowings – With effect from April
1, 2017 - Average interest rate on loans sanctioned during a quarter
shouldn’t exceed the Average borrowing cost during the preceding
quarter plus margin cap.
B. Avg. base rate of top 5 commercial banks X 2.75
Lower of the A and B
Processing Fee <= 1% of the loan amount
Insurance Premium Actual cost of insurance can be recovered from borrower and spouse
Administrative charges can be recovered as per the Insurance Regulato-
ry and Development Authority
Security deposit No security deposit/ margin to be taken
Capital Adequacy 15%
Margin Cap 10% for MFIs with loan portfolio > ₹100 crore
Note: As per RBI FAQ for NBFC-MFIs, the pricing regulations including variance norms are
The guidelines envisage banks
not applicable to non-qualifying assets.
to monitor their PSL compliance
every quarter with effect from
Priority Sector Lending (PSL)
FY17, instead of annually, which
Priority Sector funds have been a major contributor to the funding will lead to a flow of PSL funds
source for the overall MFI sector. Key guidelines for PSL are as throughout the year and not
follows: merely towards the end of the
fiscal year.
S. Sector Category Target for
No Banks %*
1 Agriculture Target 18% Directions on
- Direct Agriculture Sub-Target ~13.5%#
Managing risks and
- Direct Small & Marginal Farmers Sub-Target 8% Code of conduct
2
3
Weaker
Micro-enterprises
Target
Target
10%
7.5% in outsourcing of
* Target details given in the table are applicable to domestic scheduled commercial banks
Financial services
and foreign banks with 20 branches and above by NBFCs
# As per RBI notification dated July 16, 2015, Banks are directed to ensure that overall
direct lending to non-corporate farmers does not fall below the system wide average of last On November 9, 2017, the RBI
three years achievement. In an RBI notification dated September 21, 2017, the applicable vide Notification DNBR.PD.CC.
system wide average figure for FY17-18 was notified as 11.78%. Banks should also continue
No.090/03.10.001/2017-18
to maintain all efforts to reach the level of 13.5% direct lending to beneficiaries
issued directions to put in place

28
The MFIN Board required necessary safeguards applicable to outsourcing of activities by

NBFCs. The underlying principles behind these directions are that
all its members for all the the regulated entity shall ensure that outsourcing arrangements
loans disbursed under the neither diminish its ability to fulfill its obligations to customers and
RBI nor impede effective supervision by RBI. NBFCs, therefore, have
group lending (JLG/SHG) to take steps to ensure that the service provider employs the same
high standard of care in performing the services as is expected to
to cap total indebtedness be employed by the NBFCs, if the activities were conducted within
per borrower at ` 80,000 the NBFCs and not outsourced. Accordingly, NBFCs shall not engage
in outsourcing that would result in their internal control, business
effective April 1, 2018. This conduct or reputation being compromised or weakened. In this
was revised from ` 60,000 regard, the Company has adopted Outsourcing Policy in accordance
with the directions.
earlier.
Ombudsman scheme for Non-Banking
Financial companies, 2018
On February 23, 2018, the RBI vide Notification DNBR.PD.CC.No
091/03.10.001/2017-18 brought into operation the Ombudsman
`
80,000 Scheme for Non-Banking Financial Companies, 2018. The NBFCs are
advised to ensure that a suitable mechanism exists for receiving and
addressing complaints from their customers with specific emphasis
Cap on Total Indebtedness on resolving such complaints expeditiously and in a fair manner. The
Per Borrower Company has an independent Ombudsman since January 2012, under
the Comprehensive Customer Grievance Redressal Mechanism.
MFIN - Mutually agreed Code of conduct

(MACC) in provision of micro-credit
According to MFIN- Mutually Agreed Code of Conduct, in provision
of micro-credit released in September 2017, if a customer has a loan
from 3 different providers (entity agnostic), the provider must not
become the 4th lender to a customer. This should be validated by
the Credit Bureau report prior to sanction of the loan.
MFIN Directive - Cap on total

indebtedness of the borrower under
group lending
In a Directive issued by MFIN on April 1, 2018, the MFIN Board
required all its members for all the loans disbursed under the group
lending (JLG/SHG) to cap total indebtedness per borrower at
` 80,000 effective April 1, 2018. This was revised from
` 60,000 earlier.
Credit Bureau Reporting

As per the Microfinance India Social Performance Report 2014 (an
ACCESS publication), CRIF High Mark Credit Information Services
Private Limited and Equifax Credit Information Services Private
Limited collect and collate data from MFIs and Banks which lend
directly to the client segment of MFIs. These MFIs use credit bureau
data for checking regulatory compliances.
In February 2015, the RBI mandated all NBFCs to become members

of all credit bureaus, viz Credit Information Bureau (India) Limited

29
(CIBIL), Equifax Credit Information Services Private Limited, (AP Act 1 of 2011)’ is adopted
Experian Credit Information Company of India Private Limited and as ‘The Telangana Micro Finance
CRIF High Mark Credit Information Services Private Limited. Institutions (Regulation of
Money Lending) Act, 2011. (Act
BFIL, in addition to being member of all the above-named credit 1 of 2011)’.
bureaus, provides data to these bureaus with respect to lending to
its clients (including historical data) on a weekly and monthly basis.
MFI as Business
Andhra Pradesh and Telangana – Correspondents
The Reserve Bank of India
The AP MFI Act permitted Non-Deposit Taking
In January 2011, the then Government of the erstwhile undivided NBFCs to act as Business
Andhra Pradesh state enacted the Andhra Pradesh Micro Finance Correspondents for banks with
Institutions (Regulation of Money Lending) Act, 2011 (the “AP MFI effect from June 2014. The
Act”) promulgated as an ordinance in October 2010, to regulate Company has an arrangement to
the activities of the microfinance institutions in the undivided act as a Business Correspondent
State of Andhra Pradesh. The AP MFI Act imposed significant with a leading private sector
restrictions on the business and operations of microfinance bank and had a managed loan
companies in the erstwhile undivided State of Andhra Pradesh, and portfolio of ` 1,034.2 crore as
several companies, including BFIL, challenged the validity of the on March 31, 2018 under the
AP MFI Act. The proceedings are pending before the Honourable said arrangement.
Supreme Court of India and, pursuant to the interim orders of the
Honourable Supreme Court in March 2013, the Company is required
to comply with only Sections 9 and 16 of the AP MFI Act to carry
Government’s
on its business in the erstwhile undivided Andhra Pradesh. These Promotion on
provisions limit the amount of interest recoverable on loans to no
more than the principal amount loaned as well as prohibit coercive
Financial Inclusion
actions in connection with the conduct of microfinance business. Schemes
The Company complies with the interim orders of the Honourable Pradhan Mantri Jan-Dhan
Supreme Court by following the two provisions (9&16) of the AP MFI
Yojana (PMJDY)
Act. Subsequent to the reorganisation of the State of Telangana,
as per GO MS No. 45, Law(F), 1st June 2016, ‘The Andhra Pradesh The Pradhan Mantri Jan-Dhan
Micro Finance Institutions (Regulation of Money Lending) Act, 2011. Yojana (PMJDY) is a National

30
Mission for Financial Inclusion

to ensure access to financial
services, namely, banking/
savings and deposit accounts,
remittance, credit, insurance
and pension in an affordable
manner. Accounts can be
opened in any bank branch or
Business Correspondent (Bank
Mitra) outlet. PMJDY accounts
are being opened with zero
balance.
These accounts can help the

MFI industry to implement
cashless disbursements directly
to customer bank accounts and
help MFIs reduce the related
operating cost.
As on March 28, 2018, 31 crore

bank accounts have been
opened under this scheme
(Public Sector Banks opened
25.4 crore accounts, Regional
Rural Banks 5.0 crore accounts
and Private Sector Banks
opened 1.0 crore accounts). The
Balance per Jan Dhan Account
has risen from ` 1,065 as on
March 31, 2015 to ` 2,497 as on
March 28, 2018.
Source: http://www.pmjdy.gov.in/
last-mile financers and, in turn, to the micro/ small enterprises, most
of which are in the informal sector.
Micro Units Development
& Refinance Agency Ltd.
The Secretary of the Department of Financial Services clarified in
(MUDRA) January 2016 that MUDRA will not be the regulator of NBFC-MFIs.
The Government of India NBFC-MFIs will continue to be under the supervision of RBI.
proposed to set up a Micro Units Source – Indian Express http://indianexpress.com/article/business/business-others/
Development and Refinance mudra-not-to-regulate-micro-finance-institutions-govt/
Agency (MUDRA) Bank through
a statutory enactment. Pending During FY18, the amount sanctioned under Prime Minister Mudra
the enactment it has been Yojana (PMMY) scheme was ` 2.53 lakh crore and the amount
set up as a subsidiary of Small disbursed was ` 2.46 lakh crore.
Industries Development Bank
Source - MUDRA
of India (SIDBI). MUDRA will be
responsible for developing and
In Budget 2018-19, the lending target under Prime Minister Mudra
refinancing all MFIs which are
Yojana has been set at ` 3.0 lakh crore.
in the business of lending to
Source – India Budget 2016-17
micro/ small business entities
engaged in manufacturing,
trading and service activities.
MUDRA would not only help
II. Opportunities And Strengths
in increasing access to finance
to the unbanked but also bring
Microfinance
down the cost of finance for the The Microfinance industry has the potential for sustainable growth,
based on industry reports. According to MFIN Micrometer, during

31
FY18, the NBFC-MFI industry GLP grew by 50% YoY, while the During FY18, the NBFC-
disbursements grew by 49%. The industry grew by 28% in FY17 and
102% in FY16. As on March 31, 2018, the NBFC-MFI industry served MFI industry GLP grew
2.53 crore clients. GLP outstanding for MFI industry* and SHG by 50% YoY, while the
together was ` 1,98,214 crore (GLP for SHG - ` 61,581 crore as on
March 31, 2017 and GLP for MFI – ` 1,36,633 crore as on March 31, disbursements grew by
2018). Micro-credit demand in India is estimated at ` 5,40,00 crore.
49%. The industry grew
Source –MFIN Micrometer March 2018; March 2017; NABARD - Status of Microfinance 2017,
Company estimates by 28% in FY17 and 102%
*GLP outstanding for MFI industry includes GLP of NBFC-MFI, SFB, Direct Bank lending in FY16. As on March
including Managed loans, NBFCs and Non-Profit MFIs
31, 2018, the NBFC-MFI
The financial inclusion schemes introduced by the government industry served 2.53 crore
complement the existing MFI outreach. The accounts opened
through PMJDY can help the MFI industry to implement cashless clients.
disbursements directly to customer bank accounts and help MFIs
reduce the related operating cost. Through the Pradhan Mantri’s
Mudra Yojana, MFIs will have access to low cost refinancing from
MUDRA.
NBFC-MFIs will continue to enjoy the following benefits: 166 Million

• Generate Agri-Allied/ Priority Sector Lending for banks. Estimated Number of Rural
• Leverage their distribution network through Business Households in India
Correspondent (BC) model to offer bank accounts and saving
products to customers without CRR and SLR drag.
The Company is well placed to reap the benefits as an NBFC-MFI.

With the increase in demand for microfinance, the Company
believes that, with its operating strength and focus on 16 states
(excluding Andhra Pradesh and Telangana), it will be able to capture
a significant share of the demand for micro credit in India.
Home Improvement
The Company believes Home Improvement in rural areas is still
an un-accessed market segment, and hence, foresees a huge
opportunity. As per Census 2011, there are 166 million rural
households in India. The Company estimates 120 million rural
households addressable after discounting for service difficulties and
rented households. Based on NSSO survey (NSS Survey 65: Housing
Condition and Amenities in India, 2008-09) it has been observed
that approximately 12% of the addressable households spent on
construction annually. With an average ticket size of ₹1,00,000,
the Company estimates an annual demand of ₹1,40,000 crore,
representing a significant opportunity.
Two-Wheeler
Based on a ‘Need Assessment Survey’ conducted by the Company
among its existing members, the Company observed interest among
the respondents towards purchasing a two-wheeler. It was the most
preferred product in the survey.
Post this survey, the Company started providing two-wheeler loans

on Pilot basis and has since disbursed ₹4.4 crore worth loans among
990 members (representing 0.02% of total borrowers), as on March

32
As part of the Company’s endeavour to move to Cashless Collections, the Company

piloted the Retail Distribution Service Point (RDSP) model under the Business
Correspondent arrangement with IndusInd Bank Limited to offer its members basic
banking services like cash deposits and loan repayments through a retail store (For
e.g., RDSP-Kirana store).
31, 2018. The Company plans to conflicts, banks which were effectively managed returned to
gradually extend this pilot and normalcy sooner than other financial institutions. The Company
offer this product to the larger believes that the merger with IndusInd Bank Limited will help in
customer base. reducing the impact of political risk.
Benefits of Merger • Create a Robust Secured Lending Platform: Over the years,
the Company has been offering collateral-free loans to its
with IndusInd Bank members through the JLG model. To address the other financial
needs of the members such as loans for home improvement,
• Access to Savings & Deposits two-wheeler, among others, the Company believes that the
Products: The Company merger with IndusInd Bank Limited will help it in leveraging the
believes that the merger banks’ expertise in secured lending, which when coupled with
will help in addressing the the Company’s extensive distribution, will create a significant
other financial needs of the opportunity.
members such as access to
Savings Account & Deposit • Retail Distribution Service Points (RDSP) Rollout: During
Products. The merger will act FY18, the Company disbursed 95% of the loan amount directly
as a gateway to a gamut of to the bank account of its borrowers. As part of the Company’s
financial products / services endeavour to move to Cashless Collections, the Company piloted
to the Company’s members the RDSP model under the Business Correspondent arrangement
which will enhance member with IndusInd Bank Limited to offer its members basic banking
relationship furthering services like cash deposits and loan repayments through a retail
financial inclusion. This will store (For e.g., RDSP-Kirana store). The Company believes that
provide a competitive edge the merger with IndusInd Bank Limited will help it to scale up
with significant head start vis- the RDSP model which will increase the engagement with its
à-vis SFBs. members, thereby providing more insights about the members’
financial behaviour.
• Access to Lower Cost of
Funds: The Company believes By moving towards Cashless collections, the Company expects
the merger will provide the improvement in Sangam manager productivity which will further
business with access to funds improve the Company’s overall operational efficiency. The RDSP
at much lower costs than the model will also create cross-selling opportunities (e.g. Solar, Mobile,
existing funding rates. Sewing machines, among others) to Non-MFI customers, apart
from existing members. This will further enhance the Company’s
• Reduced Impact of Political outreach.
Risk: The Company believes
that the merger with IndusInd
Bank Limited will enable the Competitive Strengths
Company to be under a more
The Company believes the following competitive strengths will
secured banking framework.
enable it to better leverage the opportunities:
In the past, it has been
observed that during extreme
Market Leadership
events like demonetisation
or any other regional political The Company is the largest NBFC-MFI in India by Gross Loan
Portfolio. The Company believes that its consistent position among

33
95 %
Loans Disbursed Directly

to Bank Accounts of
Borrowers
the leading MFIs in the microfinance sector enhances its reputation understand their concerns, while
and credibility with its members and its lenders. This enhanced growing its business in a
reputation and credibility has numerous benefits, including the prudent manner.
ability to secure capital at lower costs, recruit and retain skilled
employees, optimise staff productivity, retain existing Borrowers Stable Financial Condition
and add new Members, and also expand into new regions and Although the Company’s
product areas. financial condition deteriorated
in the aftermath of events
Low Cost Lender in Andhra Pradesh and the
The Company has one of the lowest lending rates (19.75%) amongst Company incurred losses during
private sector NBFC-MFIs. The lending rate of the Company is lower FY12 and FY13, the Company
than the lending rate of other major NBFC-MFIs in India. The low believes it has maintained
lending rate enables the Company to enhance the value proposition sufficient financial discipline
of its products by bringing down the cost to its Borrowers. as well as a relative degree
of financial strength during
Expertise in the Microfinance Industry these periods. For instance, the
The Company believes that its long-standing experience in the Company satisfied all its debt
Microfinance industry has given it a specialised understanding repayment obligations even
of the needs and behaviour of the borrowers and lenders in this during the Andhra Pradesh
industry, particularly in rural areas across India, the complexities of microfinance situation, that is, in
lending to these individuals and issues specific to the Microfinance FY12 and FY13, and thereafter
industry in India. The Company believes this expertise gives it a its revenues grew at a CAGR of
competitive advantage in this industry. 42.9% from FY13 to FY18, and
the Company reported a profit
The Company has developed skills in training its members. The of ₹455.5 crore for FY18, the 5th
Company uses its knowledge of its members, including their culture, consecutive year of profit post
habits and education, to design customised financial products and the turnaround.
pricing plans. Further, consultation and dialogue with regulators and
policy-makers has provided the Company with an opportunity to

34
`
2,998.8 Crore
BFIL's Total Networth
As on March 31, 2018, the borrow for a longer tenure while lending for a shorter tenure, and
Company’s net worth was hence, the Company has a positive asset liability management
₹2,998.8 crore and its debt structure. As on March 31, 2018, the average maturity of its
to equity ratio was 2.5. The Gross Loan Portfolio as assets was 6.1 months, while the average
Company’s capital adequacy maturity of its outstanding borrowings including principal amounts
ratio was 33.2% of risk- outstanding for securitisation and assignment transactions was
weighted assets, as on March 9.0 months. The Company believes this strategy allows it to better
31, 2018, which is well above manage liquidity and meet the growing loan demands of an
the requirement of 15% of increasing membership, even if external borrowings and funding
risk-weighted assets prescribed sources face temporary disruption.
by the RBI under the specific
directions applicable to NBFC- Access to several sources of Capital and Cost-Effective Funding
MFIs. The Company believes The Company constantly strives to diversify its sources of capital.
that these factors provide it During FY11, the Company raised ₹ 722.2 crore through its
with a competitive advantage IPO, followed by a Qualified Institutional Placement (QIP) and
when borrowing funds for its preferential allotment, raising a total of ₹ 263.5 crore in FY13.
operations. The Company further raised ₹ 397.6 crore in May 2014 and ₹750
crore in September 2016 through QIPs. Its incremental borrowings
In addition to traditional cash from banks and financial and other institutions, including net
flow management techniques, proceeds from securitisations/assignment between April 1, 2011
the Company also manages its and March 31, 2018 were ₹37,076.9 crore. As on March 31, 2018, the
cash flows through an active Company had an outstanding debt in principal amount of ₹ 7,616.7
asset and liability management crore (₹ 10,602.9 crore outstanding in principal amount, including
strategy. The Company has securitisation and assignment transactions) from more than 32
structured its model to primarily banks, financial and other institutions.

35
ICRA has upgraded Corporate Governance Rating of the Company to “CGR2+” from
CGR2 earlier (the second highest available rating on a ten-point scale) which implies
a “high level” of assurance on the quality of corporate governance matters.
In FY18, the Company received sanctions for ₹ 12,401 crore, as three components, which the
compared to ₹ 8,022 crore during FY17. The Company availed funds Company believes are required
of ₹ 9,977.2 crore in FY18, as compared to ₹ 6,900.2 crore in FY17. to effectively scale up its
Funds availed in FY18 include ₹ 1,018.5 crore and business:
` 3,161.9 crore through securitisation and assignment of portfolio
loans respectively. Historically, the MFI sector has significantly • Capital: Historically, the
relied on PSL funds from commercial banks. The Company believes Company has successfully
that the cost of such funds is considerably lower than the cost of obtained a variety of funds
other bank funds. The Company is eligible to borrow PSL funds from required to finance its lending
banks as an NBFC-MFI. operations;
The Company has been assigned a rating of “C1” for Code of • Capacity: With its pan-India
Conduct Assessment by ICRA, which is the highest rating in that presence and extensive
assessment. ICRA has upgraded Corporate Governance Rating of distribution network, the
the Company to “CGR2+” from CGR2 earlier (the second highest Company believes it has the
available rating on a ten-point scale) which implies a “high level” of capacity to provide products
assurance on the quality of corporate governance matters. and services to a large number
of members;
The Company has obtained bank debt ratings for a funding exposure
of ₹7,500 crore as CARE ‘A1+’ (for its short-term facilities) and CARE • Cost reduction: The Company
‘A+’ (for its long-term facilities). The Company has a long-term NCD believes it has implemented
rating of ‘A+’ for ₹400 crore and short-term (CP/ NCD) rating of ‘A1+’ process-based systems
for ₹200 crore from CARE. The Company has also obtained long and customised software
term debt rating of A+(on watch with positive implications) and that reduce the cost of
short-term debt rating of ‘A1+’ for a total sum of conducting transactions
₹ 750 crore (subject to long-term borrowings limit of ₹ 300 crore) across a widespread branch
from ICRA. network and a substantial
member base. To manage
The Company’s securitised transactions during FY18 were rated by its operating expenses and
CARE at ‘AA(SO)’ and by ICRA at ‘AA(SO)’ (one- provisional and one- increase efficiency, the
final rating). CARE upgraded ratings for 2(of total 3) transactions Company has deployed ‘SKS
from ‘AA(SO)’ to ‘AAA(SO)’. AAA(SO) rating signifies highest degree Smart’ (a significant upgrade
of safety regarding timely servicing of financial obligations and to the earlier Portfolio
carry lowest credit risk and AA(SO) rating signifies high degree of Tracker), a customised and
safety regarding timely servicing of financial obligations and very comprehensive software
low level of credit risk. which simplifies data entry
and targets to improve
Streamlined and Scalable Operating Model with effective use accuracy and efficiency
of Technology of collections and fraud
The Company recognises that establishing and growing a successful detection. The Company has
rural microfinance business in India involves the significant provided all loan officers
challenge of addressing a borrower base that is quite large and with TABs (handheld devices)
typically lives in remote locations. To address this challenge, the to increase efficiency,
Company believes it has designed a streamlined and scalable data integrity and ease of
model, and developed systems and solutions for the following operations.

36
The Company focuses its operations across 16 states in India. Further, as on March
31, 2018, the Company had 13,841 Branch Managers, Assistant Branch Managers and
Sangam Managers, including Trainees, who comprise 86.4% of its total workforce.
The Company’s business

processes, from member
acquisition to cash collections,
have been standardised and Total branches = 1,567
documented. Its branch offices Jammu & Kashmir
(Weighted Avg. Vintage in Years)
are similarly structured, As of March 31, 2018
allowing for quick rollout of Himachal Pradesh

new branches. In addition, the 2
(3.3)
Punjab
terms and conditions of its loan 27
(5.9) Uttarakhand
products are generally uniform Haryana
11
throughout India. Further, the 34
(7.9)
Arunachal
(4.6) Delhi
Company has standardised 2
Pradesh
Sikkim
its recruitment and training Rajasthan
(5.3)
Uttar Pradesh
Assam
programmes and materials, so 84
(6.8)
158
(6.8) Bihar
Nagaland
Meghalaya
that they are easily replicated 178
(7.0) Manipur
across its entire organisation. Jharkhand Tripura
This standardised approach also Gujarat Madhya Pradesh 70
(5.9)
West Bengal
Mizoram
1 80 150
allows employees to efficiently (10.3) (8.4)
Chattisgarh
(7.9)
move from one region to 53
(4.5) Odisha
another based on demand and 188
(7.9)
Maharashtra
growth requirements. 148
(7.8)
Pan-India Presence and Telangana

58
Extensive Distribution (9.0)
Network
Andhra Pradesh
As on March 31, 2018 the Karnataka
178
75
(9.2)
Company had 72.7 lakh (9.7)
Members, including 61.9 lakh

Borrowers and 1,567 branches.
Tamilnadu
The Company focuses its Kerala
operations across 16 states in 70
(5.7)
India. Further, as on March 31,
2018, the Company had 13,841
Branch Managers, Assistant
Branch Managers and Sangam Distribution Platform: The Company’s pan-India presence allows
Managers, including Trainees, it to lend across the country and enables it to mitigate its exposure
who comprise 86.4% of its total to local economic factors and disruptions resulting from political
workforce. As of March 31, 2018, circumstances or natural disasters. Furthermore, its well-developed
each of its Sangam Managers distribution network in rural India gives it the capability to offer a
managed 744 members on an variety of financial products nationally in areas that the Company
average in states other than believes most companies do not currently reach.
Andhra Pradesh and Telangana.
The Company believes that
its presence throughout India Product Pricing Power: The Company believes that its national
and its distribution network in presence and the ability to access a large member base gives it
rural India results in significant the leverage to negotiate favourable terms with institutions which
competitive advantages, would like to distribute their products through its network. This, in
particularly in the turn, results in lower pricing for the products that
following areas: are distributed to its members.

37
For instance, the Company currently works with TNS Mobile India Given the huge gap in demand
Private Limited for the financing of Nokia mobile phones; with D. and supply in micro credit in
Light Energy Private Limited and Green Light Planet India Private India and that a large part
Limited for the financing of solar lamps; with Usha International of this gap is serviced by
Limited and Singer India Limited for the financing of sewing informal sources, including
machines; with Eureka Forbes Limited for the financing of water moneylenders, this represents
purifiers; with Hero Cycles Limited and T. I. Cycles of India for an attractive business
financing of bicycles; with TTK Prestige Limited for financing of opportunity for NBFC-MFIs
Pressure Cookers; with Usha International Limited and TTK Prestige such as BFIL. The Company
Limited for financing of Mixer Grinders; with Godrej & Boyce Mfg. Co. believes that, with its operating
Ltd. and Samsung India Electronics Private Limited for financing of strength and focus on 16 states
Refrigerators. The Company financed 8.1 lakh solar lamps, 6.2 lakh (excluding Andhra Pradesh and
mobile phones and 2.6 lakh mixer grinders during FY18. The Company Telangana), it will be able to
also partnered with HeroMotoCorp for financing of two-wheeler capture a significant share of
loans on a pilot basis. the demand for micro
EXPERIENCED MANAGEMENT TEAM AND BOARD credit in India.
The Company’s Board comprises experienced bankers, investors,
industry experts and management professionals. Out of a total of Continue to remain
eight Directors on the Company Board, six are Independent Directors.
The Company believes that it has a strong Senior Management team Rural Focused
under Mr. M. R. Rao, Managing Director and Chief Executive Officer. According to Micrometer, the
The Company’s Senior Management team has members who have MFI industry growth remained
significant experience in the microfinance and financial services skewed towards Urban. The
industry. The team has developed the knowledge to identify and “Urban” share of the total
offer products and services that meet the needs of its members, portfolio rose from 33% as on
while maintaining effective risk management and competitive March 31, 2013 to 57% as on
margins. The Company’s mid-level management personnel also have March 31, 2017. BFIL, however,
years of experience, in-depth industry knowledge and expertise. has remained rural focused with
80% of the Company's portfolio
III. Business Strategy being “rural”. The Company
intends to continue building on
Emphasis on Customer Acquisition this competitive advantage and
focus on opportunities
Client acquisition remains the key factor for the Company’s growth. in rural areas.
During the last decade, the number of borrowers grew at a CAGR of
25%. FY18 saw loan clients grow by 16% YoY at 61.9 lakhs.
The Company expects client acquisition to be the key driver to

overall growth going forward.
CAGR (%)
150%
124% Gross loan portfolio

Active Borrowers
Gross loan
portfolio/ Active
Borrowers
44% 42%
22% 25% *Enterprise figures
13% 19% 13% Excluding states of
2% A.P and Telangana
-13% -15%
FY07-10* FY10-13 FY13-FY18 FY07-FY18*
The Graph above indicates growth rates for GLP, Borrowers and
GLP/Borrowers across different time periods.

38
The Company has been URBAN RURAL
successful in achieving
its intended strategy of We are
rural
lowering the interest rate Industry focused
growth
charged to its borrowers skewed
towards 43%
to sub-20%. It intends to urban
leverage opportunities in 67% 80%
future to further reduce

the interest rates to NBFC-
MFI borrowers.
33% 57% 20%
MFI Industry MFI Industry BFIL

Mar'13^ Mar'17* Mar'18
19.75 %
Source – ^Sa-Dhan Report
2013, *MFIN Micrometer
BFIL's Interest Rate on

Income Generating Loans
Low Cost Provider to NBFC-MFI
Borrowers
The Company has reduced the interest rates it charges on loans,
with the objective of bringing down the cost to its borrowers. With
diversification of funding sources and further reduction in cost of
borrowing, the Company reduced the interest rate on its income-
generating loans to 19.75% effective from December 7, 2015. The
Company has been successful in achieving its intended strategy
of lowering the interest rate charged to its borrowers to sub-20%.
The Company intends to leverage opportunities in future to further
reduce the interest rates to NBFC-MFI borrowers.
Continue to Strengthen Client Protection

Initiatives
The Company continues to implement several client protection
initiatives. They have helped to ingrain the client protection
practices and customer grievance redressal mechanism which
are aligned with globally recognised benchmarks, deep in all its
processes, policies, and culture. These two are now the guiding
principles for design, development, and implementation of all the
processes and policies. The Company has identified five elements
for these initiatives:
• Strengthening privacy of its client data: Ensuring that clients’

data is kept confidential at all levels and shared only with
government agencies, government appointed agencies, or on
approval of the concerned member.
• Transparent and responsible pricing of loans: Pricing of the

products are well explained to members and done within the
regulatory framework of RBI. BFIL’s interest rate of 19.75%

39
interest rate is one of the lowest among private MFIN had conducted a third-
sector NBFC-MFIs. party Evaluation in the month
of June 2017 and the Company
• Timely redressal of queries and grievances of its members: has been categorised as
BFIL has a well-defined and fully automated Complaint Grievance “Excellent Compliance” as
Redressal Mechanism (CGRM) for ensuring timely redressal. It per MFIN standards. Also, the
also proactively reaches out to members for their feedback on Company has been assessed
different products through “Voice of Customers” program. at “C1” (highest in that rating)
by ICRA, further endorsing the
• Avoidance of over-indebtedness and multiple borrowing Company’s “Customer-centric”
among its borrowers: Adherence of strict KYC policy and approach.
Credit Bureau and automated systems ensures the seamless
implementation with controls, thereby avoiding over- The Company was awarded
indebtedness and multiple borrowing among the Company’s by MFIN as part of MFIN
borrowers. The Company has launched e-KYC service for all the Microfinance Awards, 2018
clients to ensure customer authentication. Instant CB is done and for implementing outstanding
members are informed about outcome of rejection. The Company initiatives in the category
follows a conservative approach in its lending criteria. "Effective Grievance Redressal
Systems".
• Establishing appropriate collection practices by its employees:
Design and Implementation of collection practices, in alignment
with the RBI and SRO guidelines and regulatory frameworks.
Diversification of
Revenue Streams
The Company has been conducting Client Protection awareness
programmes for its members and employees pan-India in major
and Cross-Selling of
vernacular languages with greater focus in the last five years. Products & Services
The Client Protection Programme (CPP) of the Company has
The Company has built a large
been certified by Smart Campaign, USA. In FY18, around 95% of
distribution network in rural
members as well as staff were trained on various CPP modules.
India. The Company believes it
Client awareness of the CPP module consistently stands at >90%.
can leverage this network to
The Company has also voluntarily adopted a ceiling of 3% Return on
distribute financial and non-
Assets (RoA) from its micro-credit business.
financial products of other
institutions to its members at
During FY18, the Company’s well-established inbound toll-free
a cost lower than competition.
member helpline successfully serviced 11,49,905 customer calls.
Its network also allows such
Inbound calls increased by 22% over the previous year, indicating
distributors to access a segment
growing awareness amongst customers about the member helpline.
of the market to which many do
Effective CGR processes have ensured that 99.64% of these calls
not otherwise have access.
were closed within the defined turn-around time (TAT). Turn-around
times and CGR performance is regularly reviewed by Mr. Verghese
While the Company continues
Jacob who has been appointed as an independent Ombudsman
to focus on its core business of
since January 1, 2012. The Company has also established a
providing micro credit services,
dedicated follow-up team and quality team, which ensures timely
it seeks to diversify into other
closure and quality call monitoring. Due to timely closure, the
businesses by scaling up
Company received Zero Ombudsman Calls in FY18.
certain pilot projects involving
fee-based services, and will
The Company has also proactively reached out to its customers
gradually convert them into
through Voice of Customer programme to identify their needs
separate business verticals
and collect their feedback on existing products. More than
or operate them through
4,53,234 customers were surveyed under different surveys, across
subsidiaries. Its objective in
geographies. Areas of assessment include need assessment,
these other businesses is to
satisfaction with existing products and process, perception of BFIL
focus on lending that will allow
and Competitor analysis. Customer Satisfaction across products
it to maintain repayment rates,
is around 99% which is a clear indicator of right products being
increase member loyalty and
offered by BFIL. Majority of members perceived BFIL as “Financial
also provide economic benefits
Support” followed by “Best MFI”. Need assessment study was
to its members and their
conducted which enables BFIL to explore new opportunities for
families. The Company believes
providing new products to its clients.
that such other products and

40
services may offer higher

operating margins as compared
to micro credit under the new
regulatory framework and will
help it increase its overall RoA.
The Company’s existing

initiatives in relation to financial
products and services other
than micro credit include
providing:
• Loans to its members for the

purchase of Nokia mobile
handsets in association with
TNS Mobile India Private
Limited, and for solar lamps
in association with D. Light
Energy Private Limited and
Green Light Planet India
Private Limited.
• Loans to its members to

facilitate the purchase
of sewing machines in scale based on their pilot performance. As on March 31, 2018,
association with Usha Two-Wheeler loans comprised 0.03% of the Company’s Gross Loan
International Limited and Portfolio.
Singer India Limited; bicycles
in association with Hero Home Improvement Loans: The Company has started a pilot on
Cycles Limited and T. I. Cycles loans for home improvement. The loans are provided for purposes
of India; water purifiers in such as repair of houses, for e.g., changing a thatched or asbestos
association with Eureka roof to RCC, or make improvements such as building a toilet or
Forbes Limited; and two- adding an extra room.
wheelers in association with
Hero MotoCorp Limited. Enhance Operating and Financial
• Loans to its members for Leverage
the purchase of pressure The Company provides collateral-free credit to a majority of its
cookers in association members in their neighbourhood, and its Sangam Managers assist
with TTK Prestige Private with the processes related to credit verification. While this helps its
Limited; mixer grinders borrowers save on travel costs, it results in high operating expenses
in association with Usha for the Company, particularly personnel and administrative costs.
International Limited and TTK Personnel costs accounted for 75.0% of its operating expenses during
Prestige Private Limited; and FY18.
refrigerators in association
with Godrej & Boyce Mfg. The Company has embarked on cost-optimisation initiatives by
Co. Ltd. and Samsung India improving its ratio of Borrowers per Sangam Manager, while
Electronics Private Limited. realising the benefits of economies of scale. The Borrowers per
Sangam Manager ratio was 312 as on March 31, 2012 and has since
Two-Wheeler Loans: The improved to 633 as on March 31, 2018. In addition, the Company
Company has launched a Two- grew its loan portfolio from FY14 to FY18 without adding a
Wheeler loans pilot product significant number of new branches or incurring significant capital
for its members who have expenditure. There was a net reduction of approximately 200
been with the Company for a branches during FY13, six branches during FY14 and net addition of
minimum of two years. Loans 13 branches in FY15, 56 branches in FY16, 75 branches in FY17 and
range from ₹33,044 to ₹54,950. 168 branches in FY18. As on March 31, 2018, the Company had 1,567
The Company plans to roll out branches. Its total headcount was reduced from 16,194 as on March
Two-Wheeler loans on a larger

41
31, 2012 to 8,932 as on March 31, 2014. With resumption of hiring, The Company has
the headcount increased to 9,698 as on March 31, 2015, 11,991
as on March 31, 2016, 14,755 as on March 31, 2017 and 16,021 as embarked on cost-
on March 31, 2018. To implement its growth strategy, though the optimisation initiatives
Company plans to increase its headcount and open branches in
certain areas, it will continue to focus on efficiencies to maintain by improving its ratio of
and improve operating leverage.
Borrowers per Sangam
Other factors that the Company continues to focus to optimise its Manager, while realising
cost structure include enhancing the productivity of employees,
introducing technology for expedient reporting and re-engineering the benefits of economies
the internal processes. The results of cost optimisation are evident of scale. The Borrowers
in the reduction in cost-to-income ratio from 74.5% in FY14 to 50.4%
in FY18. The Company plans to bring down the cost-to-income ratio per Sangam Manager
to 40% in the medium term. ratio was 312 as on March
The Company’s debt to equity ratio was 2.5 as on March 31, 2018, as 31, 2012 and has since
compared to 2.9 as on March 31, 2017. With growth in its portfolio,
and increase in the availability of financing, the Company aims to
improved to 633 as on
maximise its operating and financial leverage. March 31, 2018.
Deepening Financial Inclusion

through RDSP
The Company acts as a Business Correspondent to IndusInd Bank.
2.5
Under this arrangement, the Company earmarked 240 branches as
on March 31, 2018 where it also plans to offer liability products such
as Savings account and Recurring Deposit account to its members.
RDSP will be rolled out as a service point corresponding to these BFIL's Debt-Equity Ratio as
branches. The Company has identified 150 merchants as RDSP
on 31st March, 2018
points in Karnataka and Odisha, where it has piloted this model
and found encouraging results even for the store owner who saw
increased footfalls and enabled greater customer accessibility.
Update on RDSP Pilot: The Company converted Kirana Stores

as cash transaction points by enabling them with smart phones/
Tab. These Kirana store owners are IndusInd Bank’s sub-agent and
provide services such as accepting loan repayment, cash deposits,
cash withdrawal, and utility payment. The cross-sell products
facilitated by the Company will also be available for its members
through RDSP and this will also create cross-sell opportunities (e.g.
Solar, Mobile, Sewing machines, etc.) to non-members. The Company
believes that this will further enhance its outreach.
Information Technology as an Enabler

BFIL continued its leadership in Digital transformation for enabling
a world-class organisation. In today’s constantly evolving market
landscape and cashless economy that the country is embracing,
building world-class technology driven operations is the key to
sustainable growth and customer value. The Company is leveraging
new-age mobile and data driven technologies to effectively
and efficiently manage processes, taking the operations to the
next level of world-class delivery of products and services to the
remotest parts of the country.

42
The Company is leveraging new-age mobile and data driven technologies to

effectively and efficiently manage processes, taking the operations to the next level
of world-class delivery of products and services to the remotest parts of the country.
Technology for RDSP (Retail program ‘Pashu Dhan Sanjeevani’. The service delivery process
Distribution Service Points): will be enabled and monitored through the ‘Bharat Sanjeevani’
The Company endeavours software’- a Mobile App with automated call routing especially
to make transaction with developed for doctors, veterinary field officers and artificial
borrowers cashless. Clients insemination technicians comprising the entire value chain. The
will pay the instalment in the Company has initiated a pilot in 2 districts in Madhya Pradesh and
nearest Kirana store with expects to expand with the support of the local Government. A
Aadhaar number and Biometric 24x7 call centre has been set up which acts as the central command
authentication on any day centre for providing the services. This enables Veterinary services
as per their convenience. To including emergency treatment, on-demand artificial insemination,
facilitate these services, the vaccination and deworming to be provided at the door-step of
Company deployed Mobile farmers. The service will help farmers immensely as they used to
applications using Android face difficulty in bringing cattle to the treatment centers. A team
technology. Technologies based of doctors and veterinary assistants will provide tele-consultation
on Java using Web services or schedule a visit based on the severity of the cattle’s health
for data transfer with Banking condition. The Company plans to extend similar pilot programmes in
system, the Company and the Odisha and Jharkhand.
Client are established through
secured channels between the HR Biometric Attendance:
participating entities. The Company introduced attendance tracking of all employees from
the Branch using biometric device. This reduced the manual efforts
e-KYC and Cashless Disbursal: involved in collating the attendance registers from all the branches
spread across the country, validation/verification and man-hours
With the emphasis on going spent for processing the payroll. This approach is authenticated
paperless, the Company and error-free and has aided the HR team immensely in manpower
adopted Aadhaar based planning.
biometric identification (e-KYC)
of clients. This enabled instant HR Compliance:
credit bureau verification,
reduced turnaround time The Company has automated the entire HR related compliance
for loan disbursements and such as PF, ESI and Gratuity for all its employees to be filed on-
improved data quality, thus time across Government agencies, at varied frequencies - monthly,
reducing the instance of fake quarterly and yearly. Distinct rules and methodologies across 18
clients. BFIL is a registered KUA states and districts’ specific compliance made the existing process
with NPCI. much more complex. The Company developed a system that
provides automatic alerts to the respective team, generates forms
In FY18, the Company disbursed as per requirement, ready templates for uploading to the respective
95% of the loans directly to department website. Stage-gated workflow based approval
Client’s Bank account. mechanism is in place and the system provides a dashboard with
updated status to the leadership team.
‘Bharat Sanjeevani’ Software:
GPS-enabled Route Optimisation and Cashless Fuel
An end-to-end IT ecosystem
Reimbursement:
has been developed by Bharat
Financial Inclusion Limited The Company has developed a location-based field force task
for animal healthcare Service automation and geo-intelligence, GPS based platform. This helped

43
Risk Management Committee

of the Board reviews the risk
management policies in relation
to various risks and regulatory
compliance issues.
The Company identifies the

following as key risks:
Political Risk
The Company recognises
political risk as one of the major
risks facing the industry and
believes that political risk can be
mitigated through responsible
lending and fair pricing by way
of:
• Low cost lender – The

Company charges one of the
lowest interest rates among
NBFC-MFIs to its borrowers.
• Voluntary Cap on RoA from

core lending – The Company
the Company in effective field force management: manage their
has voluntarily capped its
work, organise their travel/movement, optimise their geographies.
returns from core lending at
Sangam Manger route mapping, optimisation and automated
3%.
fuel reimbursements for the Company’s employees across length
and breadth of the operational areas were introduced. This has
• Robust Customer
facilitated in time and motion, task-on-device, territory and route
Grievance Redressal (CGR)
planning, location Intelligence using mobile technologies and cloud
Mechanism with Independent
for a seamless anywhere-anytime experience.
Ombudsman
IV. Risks And Management Strategies • Calibrated Growth – The

Company’s growth strategy
Risk is an integral part of the Company’s business, and sound aims to meet requirements
risk management is critical to the success of the organisation. of its members and also
As a financial intermediary, the Company is exposed to risks address concerns of various
that are particular to its lending and the environment within stakeholders.
which it operates. The Company has identified and implemented
comprehensive policies and procedures to assess, monitor and
manage risk throughout the Company. The risk management Concentration Risk
process is continuously improved and adapted to the changing The Company aims to avoid
risk scenario and the agility of the risk management process is unbalanced concentration in
monitored and reviewed for its appropriateness in the changing risk both its loan portfolio and
landscape. The process of continuous evaluation of risks includes borrowings. To mitigate the
taking stock of the risk landscape on an event-driven basis. concentration risk, the Company
has well defined Geographic and
The Company has an elaborate process for risk management. This Borrower dependence norms.
rests on the three pillars of Business Risk Assessment, Operational
Controls Assessment and Policy Compliance Processes. Major Geographic Concentration
risks identified by the businesses and functions are systematically Norms – In order to mitigate
addressed through mitigating actions on a continuing basis. the risk of external intervention,
These are discussed with both the Management and the Risk concentration in any particular
Management Committee. Some of the risks relate to competitive state, district or branch, as well
intensity and the changing legal and regulatory environment. The as to manage non-payment risk,

44
the Company has implemented Portfolio Outstanding Related Caps:

the following limits: • Net-worth related caps:
Each state to ensure that its Gross Loan Portfolio will not exceed
Disbursement Related Caps: 75% of the Company’s net worth (100% for Odisha); each district
The disbursement limits to maintain that its Gross Loan Portfolio will not exceed 5% of the
stipulate each state to entail Company’s net worth (up to 5% of the operating districts may go
less than 15% of the total up to 10% of the Company’s net worth); each Branch to maintain
disbursements for the Company that its Gross Loan Portfolio will not exceed 1% of the Company’s
(except states of Bihar and net worth (up to 5% of the operating branches may go up to 2%
Odisha which have a 17.5% of the Company’s net worth).
limit); each district to entail
less than 3% of the total • Portfolio Mix:
disbursements for the Company Each state to ensure that its Gross Loan Portfolio will not exceed
(except districts in states of 15% of the Company’s total portfolio (except states of Bihar and
Bihar and Odisha which have Odisha which have a 17.5% limit).
a 4% limit); each branch to
entail less than 1% of the total Caps are subject to tolerance of 10%.
disbursements for the Company
(except branches in states of Borrowing Dependence Norms – In order to reduce dependence on
Bihar and Odisha which have a a single lender, the Company has adopted a cap on borrowing from
1.25% limit); no disbursements any single credit granter at 15% (25% for IndusInd Bank). The share
to be made by branches that of borrowing from top 3 banks reduced significantly from 61% in
have an NPA of more than March 2013 to 26% in March 2018.
1% (2% in certain cases) or
collection efficiency of less
than 95%; Caps are subject to Operational Risk
tolerance limits. The core business of the Company is to provide collateral-free loans
in rural areas, and consequently, requires enhanced operational risk
management. To mitigate the operational risk, the Company adopts
the following strategy.

45
• Integrated cash management system – The Company’s loan The Company has well-
disbursements are predominantly cashless, however, collections
from borrowers are predominantly in cash. Inconvenient access to established and strong
bank accounts for transactions, and relatively lower penetration internal controls with
of mobile-enabled payment systems in rural India where the
Company lends, drive the need for transactions in cash. Hence well-designed systems,
Cash management is an important element of the business.
policies and procedures
To reduce the potential risks of theft, fraud and mismanagement, to maintain financial
the Company has been implementing an integrated cash
management system since July 2009 which is operational in discipline. Its Internal
approximately 1,419 of its branches as on March 31, 2018. The Control Systems are
system utilises an Internet banking software platform that
interfaces with various banks to provide the Company with real- commensurate with the
time cash information for these branches and the loan activity
nature of its business and
therein.
the size and complexity of
The Company believes this integrated system augments its
management information systems and facilitates its bank its operations.
reconciliations, audits and cash flow management. The system
also reduces errors.
• Product and Process Design – The Company adopts a

standardised approach to product design and operational
procedures at the branches and centers to enable predictability of
transactions as a risk mitigant.
`
455.5 Crore
• ISO Certified Internal Audit – The Company has adequate BFIL's Profit After Tax in
controls and processes in place with respect to its operations. FY 2018
The Internal Audit department acts as the third line of defence
by monitoring adherence to controls and processes and provides
inputs for strengthening risk management. The Internal Audit
function has been certified with ISO 9001:2015.
Liquidity Risk
The Company places significant importance on liquidity
management and has a bias for liquidity mainly to address
operational requirements and corporate commitments. Along with
funding strategy and asset liability management, the Company has
well-defined liquidity metrics such as cash burn, optimal liquidity
and liquidity cap tests to ensure sufficient liquidity in line with
business requirements and aid risk mitigation.
V. Internal Control Systems And

Their Adequacy
The Company has well-established and strong internal controls
with well-designed systems, policies and procedures to maintain
financial discipline. The Company’s Internal Control Systems are
commensurate with the nature of its business and the size and
complexity of its operations. Based on the guidelines received on
various issues of control from the Reserve Bank of India and the
Government of India, the Company’s Board of Directors and the
Audit Committee of the Board are part of the Internal Control
System for better compliance at all levels.

46
Internal Audit Department of the Company is an independent function that ensures, checks and
evaluates operational risks, internal controls, internal financial controls, and adherence to policies and
procedures by conducting inspection of branches/ offices. These are routinely tested and cover all
Branches, Regional Offices and the Head Office. Significant audit observations and follow-up actions
thereon are reported to the Audit Committee.
The Audit Committee of the Board oversees the Internal Audit function of the Company. The Audit
Committee reviews the adequacy and effectiveness of the Company’s Internal Control System, including
Internal Financial Controls and monitors the implementation of audit recommendations including those
related to strengthening of the Company’s risk management policies and systems. The Audit Committee
monitors compliance with inspection and audit reports of the Reserve Bank of India, other regulators
and statutory auditors.
VI. FY18 - Update

Operational and Financial Highlights
During FY18, the Company reported a profit after tax of ₹455.5 crore as compared to a profit of ₹289.7
crore in FY17.
Revenue increased by 21.7% during FY18. The Company obtained incremental drawdowns (excluding
managed) of ₹9,977.2 crore in FY18, an increase of 44.6% compared to FY17. Disbursements were
higher in FY18 and the Company registered a growth of 37.6% in the loan portfolio during FY18 from
₹9,149.6 crore as on March 31, 2017 to ₹12,594.4 crore as on March 31, 2018. Gross Loan Portfolio in
states other than Andhra Pradesh and Telangana increased at a CAGR of 45.6% from ₹1,320.0 crore as
on March 31, 2012 to ₹12,594.4 crore as on March 31, 2018. Further, average loan recovery rates was at
98.7% for FY18 for all loans and 99.8% for loans disbursed since January 1, 2017.
Operational Performance
Operational Highlights Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
No. of branches 1,255 1,268 1,324 1,399 1,567
No. of districts 294 314 323 322 342
No. of employees 8,932 9,698 11,991 14,755 16,021
No. of members (in Lakh) 57.8 64.0 69.7 67.0 72.7
Disbursements for the year (₹ in crore) 4,787.6 6,890.8 12,087.8 14,666.9 18,472.0
Gross loan portfolio (₹ in crore)* 3,112.8 4,184.5 7,688.0 9,149.6 12,594.4
*Includes securitised, assigned and managed loan portfolio
Financial Highlights Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

Incremental borrowings* (₹in crore) 3,703 5,561 8,309 8,022 12,401
Total revenue (₹in crore) 544.8 803.1 1,320.7 1,727.9 2,102.0
Profit after tax (₹in crore) 69.9 187.7 303.0 289.7 455.5
Total assets (₹in crore) 2,497.2 4,698.7 7,153.7 10,417.6 11,530.7
Return on average asset^ 2.3% 4.3% 4.2% 0.8%~ 2.8%~
Return on average equity 16.7% 21.6% 25.1% 3.9%~ 14.3%~
*Amount of sanctions received from banks and financial institutions

^ Assets include securitised, assigned and managed loan portfolio
~ Return exclude MAT Credit

47
The Company's Gross Loan Portfolio in states other than Andhra Pradesh and
Telangana increased at a CAGR of 45.6% from ₹1,320.0 crore as on March 31, 2012
to ₹12,594.4 crore as on March 31, 2018. Further, average loan recovery rates was at
98.7% for FY18 for all loans and 99.8% for loans disbursed since January 1, 2017.
Financial Performance
(Comparison of FY18 With FY17)
FY18 FY17
Increase /
Particulars ` in Crore Percent to ` in Crore Percent to Decrease
Revenue Revenue
Income from operations 1,917.2 91.2% 1,553.1 89.9% 23.4%
Other income 184.8 8.8% 174.8 10.1% 5.7%
Gross revenue 2,102.0 100.0% 1,727.9 100.0% 21.7%
Employee benefit expenses 526.4 25.0% 406.2 23.5% 29.6%
Finance costs 710.4 33.8% 622.5 36.0% 14.1%
Other expenses 162.1 7.7% 134.3 7.8% 20.7%
Depreciation and amortisation 13.2 0.6% 12.8 0.7% 3.7%
Provisions and write-offs 235.0 11.2% 359.4 20.8% (34.6)%
Total expenditure 1,647.2 78.4% 1,535.1 88.8% 7.3%
Profit before tax 454.8 21.6% 192.8 11.2% 135.8%
Tax expense (0.7) 0.0% (96.9) (5.6)% (99.3)%
Profit after tax 455.5 21.7% 289.7 16.8% 57.2%
Income from Operations Financial Expenses

Income from operations increased by 23.4%, from ₹1,553.1 crore The Company’s financial
in FY17 to ₹1,917.2 crore in FY18. This growth is primarily due to expenses represent 43.1% of
an increase in average (quarterly) Gross Loan Portfolio by 24.6% the total expenses for FY18.
from ₹8,577.0 crore in FY17 to ₹10,687.7 crore in FY18. The opening Financial expenses increased
and closing Gross Loan Portfolio for FY18 were ₹9,149.6 crore (as by 14.1% from ₹622.5 crore in
on March 31, 2017) and ₹12,594.4 crore (as on March 31, 2018) FY17 to ₹710.4 crore in FY18
respectively. due to an increase in average
(quarterly) borrowings by 20.3%
Other Income from ₹6,009.5 crore in FY17 to
Other income increased by 5.7%, from ₹174.8 crore in FY17 to ₹7,231.1 crore in FY18.
₹184.8 crore in FY18. The increase in other income was primarily due
to an increase in the Company’s other fee income. Other fee income Employee Benefit Expenses
relates to fees for acting as business correspondent with regards to Employee benefit expenses
managed loans and fee received from strategic alliance partners for consist of salaries and other
financing their products, such as mobile phones, solar lamps, sewing employee benefits. Employee
machine, bicycle, mixer grinder and pressure cookers. benefit expenses increased by
29.6% from ₹406.2 crore in FY17
to ₹526.4 crore in FY18, due to

48
annual increments and increase from ₹359.4 crore in FY17 to ₹235.0 crore in FY18 primarily due to
in the number of employees reversal of provision of ₹207.7 crore in FY18 as a result of a write-
from 14,755 at the end of FY17 offs of loan portfolios which were fully provided for in prior periods.
to 16,021 at the end of FY18.
Other Expenses FUND RAISING

Other expenses represented In FY18, the Company received sanctions for ₹12,401 crore as
9.8% of the total expenses for compared to ₹8,022 crore during FY17. The Company raised
FY18 and increased by 20.7% funds of ₹9,977.2 crore in FY18, as compared to ₹6,900.2 crore in
from ₹134.3 crore in FY17 FY17. Funds raised in FY18 include ₹1,018.5 crore and ₹ 3,161.90
to ₹162.1 crore in FY18. This crore through securitisation and assignment of portfolio loans
increase was primarily due to respectively.
an increase in travelling and
conveyance expenses. The Company’s debt funding sources are broad based and, as
on March 31, 2018, its total outstanding borrowings and funds
Depreciation and from securitisation/assignment of loans from public sector banks,
Amortisation domestic private banks, foreign banks and financial and other
institutions were 33.5%, 43.1%, 9.8% and 13.6%, respectively, of
Depreciation and amortisation
its total borrowed funds and funds from securitisation/assignment
increased by 3.7%, from ₹12.8
of loans. As on March 31, 2017, its total outstanding borrowings
crore in FY17 to ₹13.2 crore in
and funds from securitisation/assignment of loans from public
FY18. This increase was primarily
sector banks, domestic private banks, foreign banks and financial
on account of net additions of
institutions and other institutions were 40.7%, 32.3%, 9.9% and
fixed and intangible assets of
17.1% respectively of its total borrowed funds and funds from
₹13.5 crore during FY18.
securitisation/assignment of loans. The Company’s weighted
average cost of borrowings including processing fees (on B/S daily
Provisions and Write-offs
average) reduced to 9.8% in FY18 from 10.9% in FY17.
Provisions and write-offs
represented 14.3% of the The Company meets the requirements of PSL guidelines and
total expenses for FY18 and regularly accesses bank financing that qualifies as PSL. On July 07,
decreased by ₹124.3 crore, 2016, the RBI revised PSL norms for all the scheduled commercial

49
The Company is embarking on a new growth journey, with new aspirations and
milestones. In this journey, the Company values the contribution of its frontline
managers who are driving its vision by demonstrating sincerity & passion.
banks (excluding regional rural with excellence was the way in FY18, with focus on HR process
banks). The scope of PSL has automations with a vision to build efficient and error-free function.
been expanded to include new
segments for lending such as As part of HR Automation, the Company has taken a significant
medium enterprises, social stride in implementing the Aadhaar based e-joining process to
infrastructure and renewable on-board its employees. This process improvement has made the
energy. PSL norms have been Company’s on-boarding process more authentic and helped it
detailed earlier in this section. to move away from tedious paper work involved during the on-
The PSL guidelines also specify boarding process which could potentially result in manual errors at
that, going forward, the the time of capturing employee details which is the core of Human
monitoring on compliance for Resource Management.
banks on Priority Sector targets
will be done on a more frequent To channelise the employee movements, the Company has adopted
basis, that is, quarterly (instead Bio-metric attendance recording system at the branch offices to
of yearly) and banks will have to track attendance in real-time. This has facilitated HR in effective
publish the information of their manpower planning and initiate disciplinary actions on-time without
Priority Sector advances on both human intervention.
quarterly as well as annual basis.
With the quarterly compliance Self-manager services are extended to field-staff and the leadership
on PSL reporting for banks, the team at the field level are enabled with automated dashboards
seasonality in funding is reduced for better man-management through HRIS (Human Resources
and ensures credit flow to the Information System) – SPARK.
MFI sector on a regular basis
through the year. The managers are equipped with the HRMS App (Adrenalin app)
with which they can action the employees’ requests like absence
VII. Human regularization, leave approvals, PMS approvals etc. on the go.
Processes related to payroll were automated which helped the
Resources Company to enhance efficiencies in payroll management. The
Company continues to monitor field HR reports through DAMS –
Management Disciplinary Actions Management System and HR Connect.
The Company is embarking on a
new growth journey, with new The Company has launched employee recognition program called
aspirations and milestones. SMILE (Succeed, Motivate, Improve, Learn & Engage) to recognise
In this journey, the Company exceptional performances at the workplace with awards like SPOT
values the contribution of its and Employee of the month.
frontline managers who are
driving the Company’s vision Continuing the thrust on developing and grooming of internal leadership
by demonstrating sincerity among middle-level managers, a new program is developed and
& passion. The Company delivered called ‘SHIKHAR’ – Building future leaders, a 4-day program for
continued to show signs of Area Managers, which focused on developing competencies required to
positivity and growth, providing take up the next level roles and responsibilities.
the Management an appetite for
enhancing potential and driving The Company continues to pay special attention to new joinees
growth and development at the field level to ensure that the entry level employees of the
of its people. Engaging organization are WELCOMED in the organization in the right way
and in the right spirit through a program called ‘WELCOME – One

50
Day Induction’. As part of building process capabilities for field staff,

the Company provided 12,77,244 man-hours of technical training in
seven vernacular languages.
The Company has been recognised by Great Places to Work Institute

India as one of India’s 15 Best Workplaces in BFSI -2018.
To support its growing business, the Company hired Business

Leaders from the banking industry to head various regional
offices. The Company also started hiring talent from various Rural
Management Colleges and trained them to create a talent pool for
future leadership positions. The Company has provided internal
growth opportunities to consistent performing employees.
16,021
The Company reinforced retention of Mid & Senior level employees Number of Employees as
through issuance of ESOPs. As on March 31, 2018, the overall
employee strength of the Company was 16,021. The Company on March 31, 2018
has given equal and fair career growth opportunities within the
organisation, as a result of which 1,630 were promoted to the next
level. The human resource distribution shows that the number
of field employees in branch offices were 13,841 (86%) and the
number of Head Office & Regional Office staff were 2,180 (14%).
Voluntary attrition rate during FY18 was 25.55%.

51
Directors' Report
Dear Members,
Your Board of Directors (the “Board”) takes pleasure in presenting the Fifteenth Annual Report of
Bharat Financial Inclusion Limited (the “Company”) together with the audited financial statements for
the year ended March 31, 2018.
FINANCIAL AND OPERATIONAL HIGHLIGHTS

The financial performance of the Company is summarized below:
FY 2018 FY 2017 Change

(%)
Total revenue (Rs. in crore) 2,102.0 1,727.9 21.7%
Less: Total expenditure (Rs. in crore) 1,647.2 1,535.1 7.3%
Profit Before Tax (Rs. in crore) 454.8 192.8 135.8%
Profit After Tax (Rs. in crore) 455.5 289.7 57.2%
Earnings Per Share (EPS) (Rs.) 32.9 21.8 50.7%
Diluted EPS (Rs.) 32.6 21.6 51.1%
The operational highlights of the Company are summarized below:
Year ended March 31 2018 2017 Change (%)

Number of branches 1,567 1,399 12.0
Number of members (in lakh) 72.7 67.0 8.5
Number of employees 16,021 14,775 8.6
Amount disbursed (Rs. in crore) 18,472 14,666.9 25.9
Gross loan portfolio (Rs. in crore) 12,594.4 9,149.6 37.6
Gross loan portfolio* -(Rs. in crore) 12,594.4 9,149.6 37.6
*outside Andhra Pradesh and Telangana
The Government of India demonetized Rs.500 and Rs.1000 bank notes effective November 9, 2016. This
step was taken with a view to curb financing of terrorism through the proceeds of Fake Indian Currency
Notes and the use of such funds for subversive activities such as espionage, smuggling of arms, drugs
and other contrabands into India and to eliminate menace of black money. However, this has severely
affected the growth and collection of all MFIs (including the Company) for almost six months.
As per the Company’s provisioning policy for portfolio loans, the Company was constrained to make
provision of Rs.308.4 crore (in addition to the standard provision of Rs.71.8 crore) and consequently the
Company had posted a loss of Rs.234.9 crore for the fourth quarter of FY17 and a profit of
Rs. 289.7 Crore for FY17. Further, the Company was constrained to make provision of Rs.151.9 crore and
consequently posted a loss of Rs.37 crore for the first quarter of FY18.
In view of the Company’s unique operating model of extending small ticket size loan to joint liability
group repayable on weekly instalment and various other initiatives undertaken by the Company which
included cashless disbursement, credit discipline / controlled disbursement, the Company’s operations
started to move towards to normalcy in Q1-FY18 and the Company reported PAT Rs.119.4 crore,
Rs.162.6 crore and Rs.210.5 crore in the second, third and fourth quarters of FY18 respectively. Further,
the Company reported a PAT of Rs.455.5 crore for FY18 as compared to a PAT of Rs.289.7 crore for FY17.

Directors' Report
52
Directors' Report (CONTD.)
CAPITAL INFUSION
During the year, the Company has allotted 13,39,842 equity shares arising out of the exercise of
employees stock options granted to the employees and directors of the Company.
Post allotment of equity shares as aforesaid, the issued, subscribed and paid-up share capital of the
Company stands at Rs. 139,32,11,400 (Rupees One Hundred Thirty Nine Crore Thirty Two Lakh Eleven
Thousand Four Hundred only) comprising of 13,93,21,140 (Thirteen Crore Ninety Three Lakh Twenty
One Thousand One Hundred Forty) equity shares of Rs.10 each as on March 31, 2018. The Company’s
Capital Adequacy Ratio (‘CAR’) as at March 31, 2018 was 33.2 % well in excess of the mandated 15% and
the net worth of the Company as at March 31, 2018 was Rs.2,998.8 crore.
During the year, the Company has not raised capital in any other manner.
During the year, the Company has redeemed the following Debentures.
- 11.48% Series 1 secured, non-cumulative, redeemable, taxable, listed, rated non-convertible

debentures of face value Rs.10 lakh each aggregating to Rs.100 crore (1,000 Debentures) on April
28, 2017;and
- 11.48% Series 2 secured, non-cumulative, redeemable, taxable, listed, rated non-convertible
debentures of face value Rs.10 lakh each aggregating to Rs. 50 crore (500 Debentures) on April 28,
2017 and remaining Rs.50 crore (500 Debentures) on October 31, 2017.
Further, the Company has redeemed the following balance debentures on May 15, 2018:-
- 11.95% Series 3 secured, non- cumulative, redeemable, taxable,listed, rated non-convertible
debentures of face value of Rs. 10 lakh each aggregating to Rs 100 crore (1,000 debentures); and
- 11.95% Series 4 secured, non- cumulative, redeemable, taxable,listed, rated non-convertible
debentures of face value of Rs. 10 lakh each aggregating to Rs 100 crore (1,000 debentures)
RESOURCE MOBILISATION
During the year under review, the Company continued to diversify its sources of funds and raised a
sum of Rs.9,977.2 crore by way of short-term loans, long-term loans and commercial papers, which was
44.6% higher as compared to Rs.6,900.2 crore raised during FY17.
The Company’s weighted average cost of borrowing including processing fees (on Balance sheet daily
average) reduced to 9.8% in FY18 from 10.9% in FY 17. This reduction was mainly driven by sustained
turnaround and diversification of sources of funding. In line with the Company’s policy of passing on the
cost advantages accruing from economies of scale, operational efficiency and reduction in the cost of
borrowing to its borrowers, the rate of interest charged by the Company, which is one of the lowest rate
among the private sector Non-Banking Financial Company - Micro Finance Institutions (NBFC-MFIs), on
its core Income Generating Loans (IGL) remained the same effective since December, 2015.
BUSINESS OVERVIEW
As of March 31, 2018, the Company had 72.7 lakh Members including 61.9 lakh Borrowers spread across
1,434 branches (all branches in states other than Andhra Pradesh and Telangana) in India, with a gross
loan portfolio of Rs. 12,594.4 crore as compared to Rs. 9,149.6 crore in FY17.
Please refer Management Discussion and Analysis Report for more information on the Company’s
Business Overview.

53
DIVIDEND
As on March 31, 2018, the Company has unabsorbed losses to the extent of Rs. 303.23 crore and in
accordance with the Companies Act, 2013(CA 2013), Company can declare dividend only after setting of the
unabsorbed losses fully against the Profit earned by the Company. In order to conserve the resources of the
Company to meet its business requirements, the Company has not declared dividend in FY18.
COMPOSITE SCHEME OF ARRANGEMENT BETWEEN THE COMPANY AND INDUSIND BANK

LIMITED:
The Board, after evaluating several options for the organic and inorganic growth of the Company had
approved the Composite Scheme of Arrangement (“Scheme”) between the Company, IndusInd Bank
Limited (“Bank”) and the wholly owned subsidiary of the Bank (under process of incorporation as on the
date of this report) (“Subsidiary”) and their respective shareholders and creditors under Section 230-232
of the CA 2013, subject to receipt of applicable regulatory approvals on October 14, 2017. The Scheme
provides for the voluntary amalgamation of the Company with the Bank and dissolution of the Company
without winding up and the consequent issuance of equity shares of the Bank to the shareholders of
the Company. The share exchange ratio for the amalgamation of Company with the Bank shall be 639
(six hundred thirty nine) equity shares of the Bank for every 1,000 (one thousand) equity shares of
Company.
Pursuant to the Scheme after the amalgamation, the business correspondent activities of the Company
shall be transferred to the Bank and then as a going concern, on a slump sale basis, from the Bank to the
Subsidiary in exchange for the equity shares of the Subsidiary to the Bank.
In this regard, as on date of this report, the amalgamation has been approved by the Competition
Commission of India on December 19, 2017 and no objection has been issued by the Reserve Bank of
India, the National Stock Exchange of India Limited and the BSE Limited on March 13, 2018,
June 1, 2018 and June 4, 2018 respectively.
The Scheme remains subject to the receipt of approval from the National Company Law Tribunal, the
respective shareholders and creditors of the Company and the Bank.
The amalgamation will provide the following benefits to the amalgamated entity and its stakeholdes:
1. Combined business would create meaningful value for all stakeholders through increased scale,
wider product diversification, lower funding cost, stronger balance sheet and ability to drive
synergies across revenue opportunities, operating efficiencies and underwriting efficiencies.
2. Materially realizable synergies for the benefit of a large common shareholder base and stable
market perception.
3. Access to a growing customer base and outlets to increase opportunities of various main-stream
banking products to financially underserved customers in rural India.
4. Deeper reach in low income segment and increased access for the combined customer base to the
Bank’s wide array of products and services.
5. Alignment of the mission objectives of both entities on increased financial inclusion.

Directors' Report
54
DIRECTORS AND KEY MANAGERIAL PERSONNEL

Changes in the composition of the Board of Directors
During the year under review, no change took place in the composition of the Board, except
appointment of Mr. Ashish Lakhanpal as a Director by the members at the 14th AGM held on
July 7, 2017.
Directors Retiring by Rotation

In terms of provisions of Section 152 of the CA 2013, Mr. Ashish Lakhanpal, Non-Executive Director shall
retire by rotation at the ensuing AGM and being eligible, offered himself for reappointment.
Declaration of Independence
The Company has received declarations from all Independent Directors of the Company confirming that
they meet the criteria of independence as prescribed under Section 149(6) of the CA 2013 and SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR Regulations”).
Key Managerial Personnel

As on date of the report, Mr. M. R. Rao, Managing Director & CEO, Mr. Ashish Damani, Chief Financial
Officer and Mr. Rajendra Patil, Sr. EVP – Legal & Company Secretary of the Company are the Key
Managerial Personnel (“KMP”) of the Company.
During the year under review, Mr. K. V. Rao, Chief Operating Officer, has resigned from the services of
the Company and was relieved effective January 31, 2018.
Details of subsidiary, associate and joint venture of the company:
The Company doesn’t have any subsidiary, associate and joint venture.
DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134(3)(c) of the CA 2013 with respect to Directors’
Responsibility Statement, it is hereby confirmed that:
1. in the preparation of the accounts for the year ended March 31, 2018, the applicable accounting
standards have been followed and there are no material departures from the same;
2. the Directors had selected such accounting policies and applied them consistently, and made
judgments and estimates that were reasonable and prudent so as to give a true and fair view of
the state of affairs of the Company as at March 31, 2018 and of the profit of the Company for the
year under review;
3. the Directors had taken proper and sufficient care for the maintenance of adequate accounting
records in accordance with the provisions of the CA 2013 for safeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities;
4. the Directors had prepared annual accounts of the Company on a ‘going concern’ basis;
5. the Directors had laid down internal financial controls to be followed by the Company and that
such internal financial controls are adequate and were operating effectively; and
6. the Directors had devised proper systems to ensure compliance with the provision of all applicable
laws and that such systems were adequate and operating effectively.

55
POLICY FOR SELECTION AND APPOINTMENT OF DIRECTORS AND REMUNERATION POLICY
Policy for Selection and Appointment of Directors

In compliance with the provisions of the CA 2013 and SEBI LODR Regulations, the Board, on the
recommendation of the Nomination and Remuneration Committee (“NRC”), had adopted the Policy for
Selection and Appointment of Directors in the year 2015.
The aforesaid Policy provides a framework to ensure that suitable and efficient succession plans are in
place for appointment of Directors on the Board so as to maintain an appropriate balance of skills and
experience within the Board. The Policy also provides for selection criteria for appointment of directors,
viz. educational and professional background, general understanding of the Company’s business
dynamics, global business and social perspective, personal achievements, Board diversity and payment
of remuneration to the directors of the Company.
NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

The details of the meetings of the Board of Directors of the Company held during the year are
mentioned in the Corporate Governance Report which is provided separately in this Annual Report.
AUDITORS
(a) Statutory Auditors
At the Fourteenth Annual General Meeting of the Company held on July 7, 2017, the members
approved the appointment of BSR & Associates LLP, Chartered Accountants (FRN : 116231W /
W-100024) as the Statutory Auditors of the Company for a period of five continuous years i.e. from
the conclusion of Fourteenth Annual General Meeting till the conclusion of Nineteenth Annual
General Meeting of the Company subject to ratification by the members of the Company at every
annual general meeting till the term of their appointment.
As per the recommendation of the Audit Committee and the Board of Directors of the Company,
the proposal for ratification of appointment of BSR & Associates LLP as Statutory Auditors of the
Company is being included in the notice of the ensuing AGM for your approval.
(b) Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the CA 2013, the Company had appointed BS & Company, Company
Secretaries LLP, as its secretarial auditors to conduct the secretarial audit of the Company for FY18.
The Report of Secretarial Auditor for FY18 is annexed herewith as Annexure - I to Directors’ Report.
There are no qualifications, reservation or adverse remark made by the Auditors in their reports, save
and except disclaimer made by them in discharge of their professional obligation.
DETAILS OF FRAUDS REPORTED BY THE STATUTORY AUDITORS

During the year under review, the Statutory Auditors, the Internal Auditors and the Secretarial Auditors
of the Company have not reported any fraud as required under Section 143(12) of the CA 2013.
PARTICULARS OF LOANS OR GUARANTEES OR INVESTMENTS

Pursuant to the clarification dated February 13, 2015 issued by the Ministry of Corporate Affairs and
Section 186(11) of the CA 2013, the provision of Section 134 (3)(g) of the CA 2013 requiring disclosure
of particulars of the loans given, investments made or guarantees given or securities provided is not
applicable to the Company.

Directors' Report
56
RELATED PARTY TRANSACTIONS

All transactions entered into with Related Parties as defined under the CA 2013 and SEBI LODR
Regulations during the year under review were in the ordinary course of business and at an arm’s length
pricing basis and do not attract the provisions of Section 188 of the CA 2013.
Details of the related party transactions, which are exempted according to a proviso to Section 188 of
the CA 2013, during FY18 are disclosed in Note 27 of the financial statements.
The policy on Related Party Transactions, as approved by the Board, is displayed on the website of the
Company at http://www.bfil.co.in/wp-content/themes/sks/public/downloads/SKS-Related%20Party%20
Transaction%20Policy-Version%201-October%2029%202014.pdf
TRANSFER TO RESERVES
During the year, the Company has transferred an amount of Rs.91.1 crore to Statutory Reserve as
required (20% of Profit after tax) under Section 45-IC of RBI Act, 1934.
MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION

OF THE COMPANY
There are no material changes and commitments affecting the financial position of the Company, which
has occurred between the end of the financial year of the Company i.e. March 31, 2018 and the date of
the Directors’ Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS

AND OUTGO UNDER SECTION 134(3)(m) OF THE CA 2013
The provisions of Section 134(3) (m) of the CA 2013 relating to conservation of energy and technology
absorption do not apply to the Company. The Company has, however, used information technology
extensively in its operations.
Detailed information on usage of information technology is provided in the Management Discussion

and Analysis Report which is provided separately in this Annual Report
During the year under review, the Company’s earning and outgo in foreign exchange earning was Nil
and Rs.0.54 crore respectively. In connection with the foreign exchange outgo, you are also advised to
refer Note 32 of the financial statements for FY18.
ANNUAL EVALUATION OF THE BOARD

A statement on formal evaluation of the Board is mentioned in the Corporate Governance Report which
is provided separately in this Annual Report.
RISK MANAGEMENT POLICY

The Board of the Company has adopted the Risk Management Policy based on the recommendation of
the Risk Management Committee in order to assess, monitor and manage risk throughout the Company.
Risk is an integral part of the Company’s business, and sound risk management is critical to the success
of the organization.
Detailed information on risk management is provided in the Management Discussion and Analysis
Report which is provided separately in this Annual Report.

57
CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with Section 135 of the CA 2013 read with the Companies (Corporate Social Responsibility
Policy) Rules 2014, the Company has established the Corporate Social Responsibility Committee (CSR
Committee) in the year 2014 and the composition and function thereof are mentioned in the Corporate
Governance Report.
The Board adopted the CSR Policy, formulated and recommended by the CSR Committee, and the same
is available on the Company’s website.
During FY18, the Company has pursued three (3) CSR Projects viz. Drishti, Sanjeevani and Mental
Health awareness programme, details thereof are given Report on Corporate Social Responsibility (CSR)
Activities which is annexed herewith as Annexure - II to the Directors’ Report.
DEPOSITS
During the year under review, the Company has not accepted any deposit from the public.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR

COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY
OPERATIONS IN FUTURE
There are no significant material orders passed by the Regulators, Courts or Tribunals which would
impact the going concern status of the Company and its future operations.
INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

(PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
The Company has a policy against sexual harassment and a formal process for dealing with complaints
of harassment or discrimination. The Company seeks to ensure that all such complaints are resolved
within defined timelines. During FY18, the Company has received 15 complaints, of these 12 complaints
have been resolved and 3 complaint were pending as on March 31, 2018. The Company has conducted
27 workshops/ awareness programs on prevention of sexual harassment.
INTERNAL FINANCIAL CONTROLS

The Company has adequate internal controls and processes in place with respect to its operations,
which provide reasonable assurance regarding the reliability of the preparation of financial statements
and financial reporting as also functioning of other operations. These controls and processes are driven
through various policies and procedures.
Detailed information on Internal Financial Controls is provided in the Management Discussion and
Analysis Report.
VIGIL MECHANISM
The Company has adopted the Whistle-blower Policy, and details of the same are explained in the
Corporate Governance Report. The Policy is also available on the Company’s website.

PARTICULARS OF EMPLOYEES
The ratio of the remuneration of each director to the median employee’s remuneration and other
details in terms of Section 197(12) of the CA 2013 read with Rule 5(1) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014, have been annexed herewith as Annexure – III
to the Directors’ Report.

Directors' Report
58
The statement containing particulars of employees as required under Rules 5(2) and 5(3) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a
separate annexure forming part of the Directors’ Report. In terms of Section 136 of the CA 2013, the
Directors’ Report and the Accounts are being sent to the Members excluding the aforesaid annexure
and the same is open for inspection at the Registered Office of the Company. A copy of the statement
may be obtained by the Members, by writing to the Company Secretary of the Company.
MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report for the year under review is presented separately in
this Annual Report.
CORPORATE GOVERNANCE
The Company has adopted best corporate practices, and is committed to conducting its business in
accordance with the applicable laws, rules and regulations. The Company follows the highest standards
of business ethics. A report on Corporate Governance (forming part of Directors’ Report) is provided
separately in this Annual Report. During the year under review, the Corporate Governance Rating of
the Company was upgraded from CGR2 to CGR2+ by ICRA Limited which implies that, in ICRA’s current
opinion, the rated company has adopted and follows such practices, conventions and codes as would
provide its financial stakeholders a high level of assurance on the quality of corporate governance.
The ‘+’ sign suffixed to the rating symbol indicates a relatively higher standing within the category.
The Compliance Certificate from BS & Company, Company Secretaries LLP regarding compliance of
conditions of corporate governance under the SEBI LODR Regulations for FY18 is annexed to the
Corporate Governance Report which is provided separately in the Annual Report.
BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report for the year under review has been annexed as Annexure - IV to the
Directors’ Report.
EMPLOYEE STOCK OPTION PLAN (ESOP) AND EMPLOYEE SHARE PURCHASE SCHEME
(ESPS)
Presently, stock options have been granted or shares have been issued under the following scheme/
plans :
A. SKS Microfinance Employee Share Purchase Scheme 2007 (“ESPS 2007”)
B. SKS Microfinance Employee Stock Option Plan 2008 (Independent Directors) (“ESOP 2008 (ID)”)
C. SKS Microfinance Employee Stock Option Plan 2008 (“ESOP 2008”)
D. SKS Microfinance Employee Stock Option Plan 2009 (“ESOP 2009”)
E. SKS Microfinance Employee Stock Option Plan 2010 (“ESOP 2010”)
F. Bharat Financial Inclusion Employee Stock Option Plan 2011 (“ESOP 2011”)
The disclosures with respect to each of the above-mentioned scheme/plans, as required by the
Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, is displayed
on the Company’s website http://www.bfil.co.in.
EXTRACT OF ANNUAL RETURN

Pursuant to Section 134 (3)(a) and Section 92 (3) of the CA 2013, read with Rule 12 of the Companies
(Management and Administration) Rules, 2014, an extract of the Annual Return as at March 31, 2018 in
form MGT 9 has been annexed as Annexure - V to the Directors’ Report.

59
ACKNOWLEDGEMENTS
Your Directors take this opportunity to express their deep and sincere gratitude to the Sangam Members for
their confidence and patronage, as well as to the Reserve Bank of India, the Government of India and Regulatory
Authorities for their cooperation, support and guidance. Your Directors would like to express a profound sense of
appreciation for the commitment shown by the employees in supporting the Company in its endeavor of becoming
one of the leading microfinance institutions of the country. Your Directors would also like to express their gratitude
to the members, bankers and other stakeholders for their trust and support.
For and on behalf of the Board of Directors
sd/- sd/-
P. H. Ravikumar M. R. Rao
Non-Executive Chairman Managing Director & CEO
Date: June 22, 2018 DIN No.: 00280010 DIN No.: 03276291

Directors' Report
60
Annexure I
To Directors’ Report
FORM NO. MR-3

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014]
SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED MARCH 31, 2018
To,
The Members,
(Formerly known as SKS Microfinance Limited)
We were appointed by the Board of Directors of Bharat Financial Inclusion Limited (“the Company”) to
conduct the Secretarial Audit for the financial year ended March 31, 2018.
We have conducted the Secretarial audit in respect of compliance with applicable statutory provisions
and the adherence to good corporate practices by the Company. Secretarial Audit was conducted
in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory
compliances and expressing our opinion thereon.
Based on our verification of the Company’s books, papers, minute books, forms and returns filed
and other documents/records maintained by the Company and also the information provided by the
Company, its officers, agents and authorized representatives during the conduct of Secretarial audit, we
hereby report that in our opinion, the Company has, during the audit period covering the financial year
ended on March 31, 2018 complied with the statutory provisions listed hereunder and also that the
Company has proper Board-processes and compliance mechanism in place to the extent, in the manner
and subject to the reporting made hereinafter.
We have examined the books, papers, minute books, forms and returns filed and other records
maintained by the Company for the financial year ended March 31, 2018, according to the provisions of:
(i) The Companies Act, 2013 (“the Act”) and the rules made thereunder;
(ii) The Securities Contracts (Regulation) Act, 1956 and the rules made thereunder;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
(iv) The Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to
the extent of Foreign Direct Investment;
(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of
India Act, 1992:-
(a) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations, 2015.
(b) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011;
(c) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;
(d) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2009;

61
(e) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014;
(f) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;
(g) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents)
Regulations, 1993 regarding the Act and dealing with client;
The Company has identified Master Direction and guidelines issued by the Reserve Bank of India as
applicable to NBFCs–ND- SI (Microfinance Institutions) dated September 1st, 2016 as specifically
The Company has identified the following laws, Regulations, Guidelines, Rules, etc., as applicable to
the Company:
1. The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 & Employee’s Provident
Fund Schemes, 1952
2. The Employees’ State Insurance Act, 1948 and Rules made thereunder
3. The Minimum Wages Act, 1948 and Rules made thereunder
4. The Payment of Wages Act, 1936 and Rules made thereunder
5. The Payment of Bonus Act, 1965 and Rules made thereunder
6. The Payment of Gratuity Act and Rules made thereunder
7. The Maternity Benefit Act, 1961
8. The Equal Remuneration Act, 1976
9. The Employment Exchange (Compulsory Notification of Vacancies) Act, 1959
10. The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
11. Shops and Establishments Acts under various state legislations where the Company has offices.
12. The Contract Labour (Regulation and Abolition) Act, 1970 and rules made thereunder.
We have also examined compliance with the applicable clauses of the Secretarial Standards issued by
The Institute of Company Secretaries of India (ICSI).
During the period under review, the Company has complied with the provisions of the Act, Rules,
Regulations, Guidelines, Standards, etc. mentioned above.
We further report that:

The Board of Directors of the Company is duly constituted with proper balance of Executive Director,
Non-Executive Directors and Independent Directors. The changes in the composition of the Board
of Directors that took place during the period under review were carried out in compliance with the
provisions of the Act.
Adequate notice was given to all directors to schedule the Board meetings, agenda and detailed notes
on agenda were sent within stipulated time, and a system exists for seeking and obtaining further
information and clarifications on the agenda items before the meeting and for meaningful participation
at the meeting.

Directors' Report
62
Annexure I
During the period under review, resolutions were carried through majority. The minutes of the
meetings held during the audit period did not reveal any dissenting member’s view. As confirmed by
the Management, there were no dissenting views expressed by any of the members on any business
transacted at the meetings held during the period under review.
Based on the information, documents provided and the representations made by the Company,
its officers during the audit process and also on review of the compliance reports of the Company
Secretary taken on record by the Board of Directors of the Company periodically, in our opinion,
there are adequate systems and processes exists in the Company to commensurate with the size and
operations of the Company, to monitor and ensure compliance with applicable laws, rules, regulations
and guidelines.
The compliance by the Company of the applicable financial laws like direct and indirect tax laws and
maintenance of financial records and books of accounts has not been reviewed by us since the same
have been subject to review by statutory auditors and other professionals.
We further report that during the audit period the Company had following events:
a. The board approved merger of the Company with IndusInd Bank Limited subject to the necessary
regulatory approvals.
b. Redeemed the Debentures of value of Rs. 200 crore.
For BS & Company, Company Secretaries LLP

Sd/-
Date: April 13, 2018 K.V.S. Subramanyam
Place: Hyderabad FCS No.: 5400
C P No.: 4815
Note: This report is to be read with our letter of even date which is annexed as ‘Annexure’ and forms an
integral part of this report.

63
ANNEXURE
To,
The Members,
Our report of even date is to be read along with this letter.
1. Maintenance of Secretarial records is the responsibility of the Management of the Company. Our
responsibility is to express an opinion on these secretarial records based on our audit.
2. We have followed the audit practices and process as were appropriate to obtain reasonable
assurance about the correctness of the contents of the Secretarial records. The verification was
done on test basis to ensure that correct facts are reflected in secretarial records. We believe that
the processes and practices, we followed provide a reasonable basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records and Books of
Accounts of the Company.
4. Wherever required, we have obtained the Management representation about the compliance of
applicable laws, rules and regulations etc.
5. The compliance of the provisions of Companies Act, 2013 and other applicable laws, Rules,
Regulations, secretarial standards issued by ICSI is the responsibility of the Management. Our
examination was limited to the verification of procedures on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor
of the efficacy or effectiveness with which the Management has conducted the affairs of the
Company.
7. We further report that, based on the information provided by the Company, its officers,
authorized representatives during the conduct of the audit and also on the review of quarterly
compliance report by the respective departmental heads/ Company Secretary/ Managing Director
taken on record by the Board of the Company, in our opinion adequate systems and process and
control mechanism exist in the Company to monitor compliance with applicable general laws like
labour laws & Environment laws and Data protection policy.
8. We further report that the compliance by the Company of applicable fiscal laws like Direct &
Indirect tax laws have not been reviewed in this audit since the same has been subject to review by
the statutory financial audit and other designated professionals.
For BS & Company Company Secretaries LLP

K.V.S. Subramanyam
Date: April 13, 2018 FCS No.: 5400
Place: Hyderabad C P No.: 4815

Directors' Report
64
Annexure II
ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES IN FY18
CORPORATE SOCIAL RESPONSIBILITY

In compliance with Section 135 of the (CA 2013) read with the Companies (Corporate Social
Responsibility Policy) Rules 2014, the Company has established the Corporate Social Responsibility
Committee (“CSR Committee”) in the year 2014.
The Board adopted the CSR Policy, formulated and recommended by the CSR Committee, and the same
is available on the Company’s website.
Why we care – Our CSR strategy

At Bharat Financial Inclusion Limited, enhancing livelihood for the economically marginalized sections
of the society has been at the core of all endeavors. The CSR strategy has been carefully designed after
years of close-knit association with the rural downtrodden families, who face difficulties in bringing
together pieces of life and attain it in its wholesomeness. The proportion of social challenges that scar
their lives cannot remain unseen and owning it is the first step to move ahead together.
Our social impact initiatives are aimed to support the livelihoods of rural households who are
dependent on dairy/livestock; support the old aged people to live a dignified life by restoring their
vision and empower people in Ernakulam by destigmatizing mental illness. Addressing this healthcare
need at the doorstep brings greater convenience and relief in the day to day activities of the lesser
privileged families. More importantly, it does not hamper their financial ecosystem – a fine balance that
they would have otherwise struggled to maintain with the burden of unplanned expenditures.
To adopt a holistic approach in addressing healthcare challenges, three social programs were given
utmost importance in 2017-18.
(1)‘Drishti’ – which provides free cataract operations was scaled up to 12 states along with our NGO
partners - Operation Eyesight, HelpAge India and Sight Savers. The need for this expansion had risen
out of the looming possibility of blindness as old age sets on, impacting their ability of usefulness to
their family - and loss of pride. Blindness at old age is a death knell for people who are from the lesser
privileged strata. Restoring vision, helps bring back dignity and makes them independent in carrying out
their tasks.
The program benefits patients right from screening the cataract to post-operative care, in deep rural
pockets of Andhra Pradesh, Bihar, Chhattisgarh, Jharkhand, Karnataka, Kerala, Madhya Pradesh,
Maharashtra, Odisha, Telangana, Uttar Pradesh and West Bengal. In FY18, Drishti completed 5400
cataract surgeries with seven partner hospitals.
(2)‘Sanjeevani’ : The life-loving approach in the direction of healthcare urged the Company to not just
address human health challenges but also concentrate on the largely passed over livestock nutrition
and wellbeing segment. Indian farmers typically rely heavily on livestock for income-generation. Yet, the
productivity of livestock in India is estimated to be 20-60% lower than the global average, because of
challenges pertaining to their care and nutrition support.
Our project ‘Sanjeevani’ has embarked on a mission to connect doctors and farmers on-call, to provide
services at the doorstep. It leverages technology to build a holistic approach in cattle-care services. As
of March 2018, the project has provided timely medical intervention to 3,02,928 cattle and livestock,
saving lives of 16,718 cattle in 2,346 villages of Jharkhand and Madhya Pradesh. The doctors directly

65
reach the farmers to provide treatment, medication along with guidance on techniques to enhance milk
and dairy products productivity.
Today, apart from Jharkhand, Sanjeevani’s success is resounding in new states like Madhya Pradesh. In
FY18, the project started its operations in Madhya Pradesh, taking animal-care to an advanced pedestal.
We also witnessed the inching forward in our collaboration with the JK Trust Gram Vikas Yojana and
Animal Husbandry Department of Odisha State Government to conduct animal welfare camps primary
and emergency veterinary services.
(3) ‘SPE(E)K – Speak out – Seek Help’: Pilot efforts were also drawn towards an important yet
unaddressed aspect of human healthcare, which remains marked by stigma and ignorance - mental
health. More than 60% of individuals with mental health problems do not get any evidence-based
mental health care due to stigma and lack of awareness. Hence, we embarked on a mission to educate
and sensitise communities in the state of Kerala, by implementing personalised stakeholder group
sessions and interactive media campaigns. Talking openly in public platforms helps reduce the element
of disgrace and shame associated with mental illness.
At Ernakulam, Kerala where the project is in run, awareness sessions on mental health were conducted
for the ASHA and Anganwadi workers. 99 ASHA have so far sensitized 23,000 BPL households and 2,500
Anganwadi teachers are expected to sensitize 30,000 BPL mothers shortly. In addition, we partnered
with Manorama News channel - a leading news channel in Kerala - to bring out a TV series on the subject
of mental health. The show named “Manassu”, with 15 episodes, is being produced creatively with
theme songs, movie extracts, book reviews, patient/fictional manifestations, celebrity talks, expert
panel discussions, and policy suggestions.
To bring more and more impactful changes in the lives of many, our projects would continue to make
deeper in-roads this year too, aiming to reach the unreached areas.
The disclosure of the contents of the CSR policy pursuant to Section 134(3)(o) of CA 2013 and Rule 9 of
the Companies (Corporate Social Responsibility) Rules, 2014, are as follows:
S. No. Particulars Remarks
1. A brief outline of the Company’s CSR policy, including overview of Please refer to the overview of programmes undertaken by the
projects or programs proposed to be undertaken and a reference to Company, as mentioned above.
the web-link to the CSR policy and projects or programs.
The CSR policy is available on the web link :
www.bfil.co.in/wp-content/themes/sks/public/downloads/
SKS-CSR%20Policy%20-%20Version%201%20-%20dated%20
October%20292014.pdf
2. The Composition of the CSR Committee. Mr. Geoffrey Tanner Woolley (Chairman);
Mr. K. G. Alai;
Mr. M. Ramachandra Rao;
Dr. Punita Kumar-Sinha; and
Dr. Tarun Khanna.
3. Average net profit of the company for last three financial years. Rs.322.10 crore
4. Prescribed CSR Expenditure (two per cent of the amount as in item Rs.6.44 crore
3 above)
5. Details of CSR sanctioned & spent during the financial year:
a) Total amount to be spent for the financial year; a) Rs.4.55 crore
b) Amount unspent, if any b) Rs.0.25 crore
c) Manner in which the amount spent during the financial year is c) Details given below in Table A
detailed below

Directors' Report
66
Annexure II
S.
Particulars Remarks
No.
6. In case the Company has failed to spend the two per cent of the The Company believes in discharging its corporate social
average net profit of the last three financial years or any part responsibilities as responsible corporate engaged in the
thereof, the company shall provide the reasons for not spending the business to provide financial assistance to the weaker
amount in its Board report.
section of the society. In FY17, the Company was required
to spent Rs.3.12 crore towards CSR activities. However, the
Company has spent a sum of Rs.4.66 crore (49% additional
amount). In FY18, the Company took time in carrying out
the pilots for impactful projects/place and as a consequence
of this, the Company has spent a sum of Rs.4.25 crore and
decided that the shortfall of Rs.2.19 crore may be utilized
in FY19 along with the CSR Budget of FY19 for undertaking
more impactful CSR Projects.
TABLE A
1 2 3 4 5 6 7 8
S. No. CSR Project Sector in Projects or Amount Amount spent Amount spent Cumulative Amount Spent
or Activity which the programs Outlay on the Projects on the Projects Expenditure Direct or through
Identified Project is (1) Local area or (Budget) or Programs Sub or Programs Up to the Implementing
covered others Project Heads: Sub Heads: reporting Agency
(2) Specify the or Program (1) Direct (2) Overheads period i.e.
State and wise Expenditure (Rs. in crore) FY 2017- 2018
District where (Rs. in crore) on Projects or (Rs. in crore)
projects or Programs
programs (Rs. in crore)
were
undertaken.
1 Drishti Clause (i) Karnataka-
Promoting Dharwad, Gadak, 1.00 0.89 0.00 0.89 Operation
preventive Belgaum, Bijapur, Eyesight and
health care Koppal and Bidar HelpAge India
Bihar- Patna,
Bhojpur, Vaishali,
Begusarai and
Samsatipur
Uttar Pradesh-
Kanpur Dehat,
Jalaun, Kanooj,
Unnav, Fatehpur,
Farrukhabad,
Odisha- Puri,
Khordha
West Bengal-
Hooghly,Howrah,
North 24 Parganas,
South 24 Parganas

67
1 2 3 4 5 6 7 8
S. No. CSR Project Sector in Projects or Amount Amount spent Amount spent Cumulative Amount Spent
or Activity which the programs Outlay on the Projects on the Projects Expenditure Direct or
Identified Project is (1) Local area or (Budget) or Programs Sub or Programs upto the through
covered others Project or Heads: Sub Heads: reporting Implementing
(2) Specify the Program wise (1) Direct (2) Overheads period i.e. Agency
State and (` in crore) Expenditure (` in crore) FY 2017- 2018
District where on Projects (` in crore)
projects or or Programs
programs (` in crore)
were
undertaken.
2 Sanjeevani Clause (iv) Jharkhand- Ranchi,
Animal Lohardagga, 2.55 2.51 0.04 2.55 Spent directly
Welfare Latehar, Garwha,
Palamu, Ramgarh,
Giridh, Chatra,
Deoghar, Koderma,
Hazaribagh
Madhya Pradesh-
Dewas and Raisen
3 Mental Clause (i)
Health Promoting Kerala- Ernakulam, 1.00 0.78 0.03 0.81 Mehac Foundation
preventive Telangana and and MMTVand
health care Hyderabad Family Planning
Association of
India
Total 4.55 4.25
RESPONSIBILITY STATEMENT
The Responsibility Statement of the CSR Committee of the Board of Directors of the Company has been
reproduced below:
The implementation and monitoring of the CSR Policy is in compliance with the CSR objectives and
policy of the Company.
Sd/- Sd/-
M.R. Rao Geoffrey Tanner Woolley
Managing Director and CEO Chairman, Corporate
June 22, 2018 (DIN:03276291) Social Responsibility Committee
(DIN:00306749)

Directors' Report
68
Annexure III
The ratio of the remuneration of each Director to the median employee’s remuneration and
such other details in terms of Section 197(12) of the Companies Act, 2013 read with rule 5 of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
S. No. Requirements Disclosure

i. The ratio of the remuneration of each P.H. Ravikumar 24.14 : 1
director to the median remuneration of Ashish Lakhanpal 3.63 : 1
the employees of the Company for the S. Balachandran 25.44 : 1
financial year Geoffrey Tanner Woolley 20.80 : 1
Kartik Gopal Alai $ 4.62 : 1
M. Ramachandra Rao 183.00 : 1
Punita Kumar-Sinha 20.14 : 1
Rajender Mohan Malla 22.35 : 1
Tarun Khanna 17.39 : 1
ii. The percentage increase in
remuneration of each director*, Chief M. R. Rao, MD & CEO 19.00%
Financial Officer, Chief Executive K. V. Rao, Chief Operating Officer# 16.00%
Officer, Company Secretary or Manager, Ashish Damani, Chief Financial Officer 27.50%
if any, in the financial year Rajendra Patil, Company Secretary 19.00%
iii. The percentage increase in the median The percentage increase in the median remuneration
remuneration of employees in the of employees in the financial year is around 11.00%.
financial year
iv. The number of permanent employees 15,465 as of 31st March 2018.
on the rolls of the Company
v. Average percentile increase already The average percentage increase made in the salaries
made in the salaries of employees of total employees other than the Key Managerial
other than the managerial personnel Personnel is around 17.11%, while the average
in the last financial year and its increase in the remuneration of the Key Managerial
comparison with the percentile increase Personnel is in the range of 16.00% to 27.50%.
in the managerial remuneration and
justification thereof and point out if
there are any exceptional circumstances
for increase in the managerial
remuneration
vi. Affirmation that the remuneration is Yes
as per the remuneration policy of the
Company
$ Till April 2017, Sitting Fee was paid to SIDBI.

*the details of percentage increase in remuneration of each director are provided in the Corporate
Governance Report.
#Ceased to be an employee and KMP of the Company w.e.f. closing hours of January 31, 2018.
Sd/- Sd/-
P.H. Ravikumar M.R. Rao

69
Annexure IV
BUSINESS RESPONSIBILITY REPORT

SECTION A: GENERAL INFORMATION ABOUT THE COMPANY
1. Corporate Identity Number (CIN) of the Company L65999MH2003PLC250504
2. Name of the Company Bharat Financial Inclusion Limited
3. Registered address Registered Office:
Unit No. 410, Madhava,
Bandra-Kurla Complex, Bandra East,
Mumbai – 400 051,
Maharashtra, India
4. Website www.bfil.co.in
5. E-mail id [email protected]
6. Financial Year reported 2017-18
7. Sector(s) that the Company is engaged in Financial Services (Microfinance)
(industrial activity code-wise)
8. List three key products/services that the Microfinance Services i.e., providing loans for
Company manufactures/provides income generation activities to economically
(as in balance sheet) weaker sections.
9. Total number of locations where business
activity is undertaken by the Company
i. Number of International Locations Nil
(Provide details of major 5)
ii. Number of National Locations Branches: 1567
Registered Office: 1
Head Office: 1
Regional Offices: 37
10. Markets served by the Company – Local/ State/ National
National/ International
SECTION B: FINANCIAL DETAILS OF THE COMPANY

1. Paid up Capital (INR) 139.32 Crores
2. Total Turnover (INR) 2,102 Crores
3. Total profit after taxes (INR) 455.5 Crores
4. Total Spending on Corporate Social 2% of average profit of 2014-15 to 2016-17.
Responsibility (CSR) as percentage of
profit after tax (%)
5. List of activities in which expenditure in Refer Report on CSR activities forming part of
4 above has been incurred Directors’ Report

Directors' Report
70
Annexure IV
SECTION C: OTHER DETAILS

1. Does the Company have any Subsidiary Company/ Companies? The Company does not have
any subsidiary
2. Do the Subsidiary Company/Companies participate in the BR Not Applicable
Initiatives of the parent company? If yes, then indicate the
number of such subsidiary company(s)
3. Do any other entity/entities (e.g. suppliers, distributors etc.) that No
the Company does business with, participate in the BR initiatives
of the Company? If yes, then indicate the percentage of such
entity/entities?
[Less than 30%, 30-60%, More than 60%]
SECTION D: BR INFORMATION
1. Details of Director/Directors responsible for BR
a) Details of the Director/Director responsible for implementation of the BR policy/policies

DIN Number 03276291
Name Mr. M. R. Rao
Designation Managing Director & CEO
b) Details of the BR head
1. DIN Number 03276291
2. Name Mr. M. R. Rao
3. Designation Managing Director & CEO
4. Telephone number 040-44526000
5. e-mail id [email protected]
2. Principle-wise (as per NVGs) BR Policy/policies (Reply in Y/N)

The National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of
Business (NVGs) released by the Ministry of Corporate Affairs has adopted nine areas of Business
Responsibility. These briefly are as under:
P1 Businesses should conduct and govern themselves with Ethics, Transparency and
Accountability.
P2 Businesses should provide goods and services that are safe and contribute to sustainability
throughout their life cycle.
P3 Businesses should promote the wellbeing of all employees.
P4 Businesses should respect the interests of, and be responsive towards all stakeholders,
especially those who are disadvantaged, vulnerable and marginalised.
P5 Businesses should respect and promote human rights.
P6 Business should respect, protect, and make efforts to restore the environment.
P7 Businesses, when engaged in influencing public and regulatory policy, should do so in a
responsible manner.
P8 Businesses should support inclusive growth and equitable development.
P9 Businesses should engage with and provide value to their customers and consumers in a
responsible manner.

71
Stakeholders engagement
Wellbeing of employees
Product Responsibility
Customer Relations
Business Ethics
Human rights
Environment
Public Policy
CSR
S.No Questions P P P P P P P P P
1 2 3 4 5 6 7 8 9
1. Do you have a policy/policies for.... Y Y Y Y Y Y Y Y Y
2. Has the policy being formulated in consultation with Y Y Y Y Y Y Y Y Y
the relevant stakeholders?
3. Does the policy conform to any national/ international Y Y Y Y N N N Y Y
standards? If yes, specify? (50 words)
The spirit and intent of the Company’s Code of
Conduct, Fair Practices Code and other Codes/Policies
are prepared in compliance with applicable laws /rules
/guidelines. In addition, they reflect the vision and
mission of the Company of providing financial services
to the economically weaker sections that create a
commercial microfinance model that delivers high
value to our customers.
4. Has the policy being approved by the Board? If yes, has Y Y Y Y Y Y Y Y Y
it been signed by MD/ owner/ CEO/ appropriate Board
Director?
5. Does the company have a specified committee Y Y Y Y Y Y Y Y Y
of the Board/ Director/ Official to oversee the
implementation of the policy?
6. Indicate the link for the policy to be viewed online? www.bfil.co.in
7. Has the policy been formally communicated to all Y Y Y Y Y Y Y Y Y
relevant internal and external stakeholders?
8. Does the company have in-house structure to Y Y Y Y Y Y Y Y Y
implement the policy/ policies
9. Does the Company have a grievance redressal Y Y Y Y Y Y Y Y Y
mechanism related to the policy/ policies to address
stakeholders’ grievances related to the policy/policies?
10. Has the company carried out independent audit/ Y Y Y Y Y Y Y Y Y
evaluation of the working of this policy by an internal
or external agency?

Directors' Report
72
Annexure IV
3. Governance related to BR
• Indicate the frequency with which the Board Quarterly
of Directors, Committee of the Board or
CEO to assess the BR performance of the
Company. Within 3 months, 3-6 months,
Annually, More than 1 year
• Does the Company publish a BR or No. There is no separate BRR or a Sustainability
a Sustainability Report? What is the Report. However, the Business Plan constitutes
hyperlink for viewing this report? How the Company’s Sustainability Report which is
frequently it is published? reflected in the Quarterly / Annual Report of
the Company and available at http://www.bfil.
co.in/reporting/
SECTION E: PRINCIPLE-WISE PERFORMANCE

Principle 1 - Businesses should conduct and govern themselves with Ethics, Transparency and
Accountability
1. Does the policy relating to ethics, bribery and Yes.
corruption cover only the company? Yes/ No.
Does it extend to the Group/ Joint Ventures/
Suppliers/ Contractors/ NGOs / Others?
2. How many stakeholder complaints have been 1. Please refer note 44 (t) of the financial statements
received in the past financial year and what for customer complaints redressal status.
percentage was satisfactorily resolved by the 2. Please refer Corporate Governance Report for
management? If so, provide details thereof, in investor complaints redressal status.
about 50 words or so.
Principle 2 - Businesses should provide goods and services that are safe and contribute to sustainability
throughout their life cycle
1. List up to 3 of your products or services whose Microfinance Services i.e. providing loans for
design has incorporated social or environmental Income Generation activities to economically
concerns, risks and/or opportunities. weaker section.
2. For each such product, provide the following Not applicable
details in respect of resource use (energy,
water, raw material etc.) per unit of
product(optional):
i. Reduction during sourcing/ production/
distribution achieved since the previous year
throughout the value chain?
ii. Reduction during usage by consumers
(energy, water) has been achieved since the
previous year?

73
3. Does the company have procedures in place for Yes. The Company has policy on raising borrowings
sustainable sourcing (including transportation)? from different sources to optimise mix at the
lowest cost of funds.
i. If yes, what percentage of your inputs was
sourced sustainably? Also, provide details
thereof, in about 50 words or so
4. Has the company taken any steps to procure Yes, wherever possible.
goods and services from local & small
producers, including communities surrounding
their place of work?
If yes, what steps have been taken to improve
their capacity and capability of local and small
vendors?
5. Does the company have a mechanism to Yes, wherever possible
recycle products and waste? If yes what is the
percentage of recycling of products and waste
(separately as <5%, 5-10%, >10%).
Also, provide details thereof, in about 50 words
or so.
Principle 3 - Businesses should promote the well-being of all employees

1. Please indicate the Total number of employees. Permanent Employees: 15465
2. Please indicate the Total number of employees 556 (Trainees)
hired on temporary/ contractual/ casual basis
3. Please indicate the Number of permanent 451
women employees.
4. Please indicate the Number of permanent Nil
employees with disabilities
5. Do you have an employee association that is No
recognized by management?
6. What percentage of your permanent Not applicable
employees is members of this recognized
employee association?
7. Please indicate the Number of complaints relating to child labour, forced labour, involuntary labour,
sexual harassment in the last financial year and pending, as on the end of the financial year

Directors' Report
74
Annexure IV
No of complaints No of complaints
S. No. Category filed during the pending as on end of the
financial year financial year
1. Child Labour/ forced labour/ 0 0
involuntary labour
2. Sexual harassment 15 3
3. Discriminatory employment 0 0
8. What percentage of your under mentioned Certain selected employees of the Company at
employees were given safety & skill up Registered Office, Head Office, Regional Offices
gradation training in the last year? and Branches have been given fire & other safety
training and first-aid training.
- Permanent Employees
- Permanent Women Employees
- Casual/Temporary/Contractual Employees
- Employees with Disabilities
Principle 4 - Businesses should respect the interests of, and be responsive towards all stakeholders,
especially those who are disadvantaged, vulnerable and marginalised.
1. Has the company mapped its internal and Yes
external stakeholders? Yes/ No
2. Out of the above, has the company identified Yes
the disadvantaged, vulnerable & marginalized
stakeholders
3. Are there any special initiatives taken by the The Company is engaged in providing financial
company to engage with the disadvantaged, products at one of the lowest cost prevalent
vulnerable and marginalized stakeholders. If so, in market to rural women belonging to weaker
provide details thereof, in about 50 words or so. section of society to enable them to start
economic activity and generate income for their
family.
Principle 5 - Businesses should respect and promote human rights

1. Does the policy of the company on human The Company’s policy on Codes of Conduct apply
rights cover only the company or extend to the to staff, borrowers and vendors.
Group/Joint Ventures/ Suppliers/ Contractors/
NGOs/ Others?
2. How many stakeholder complaints have been 1. Please refer note 44(t) of financial statement
received in the past financial year and what for customer complaints redressal status.
percent was satisfactorily resolved by the
2. Please refer Corporate Governance Report for
management?
investor complaints redressal status

75
Principle 6 - Business should respect, protect, and make efforts to restore the environment
1. Does the policy related to Principle 6 cover Not applicable
only the company or extends to the Group/
Joint Ventures/ Suppliers/ Contractors/ NGOs/
others.
2. Does the company have strategies/ initiatives Not applicable
to address global environmental issues such as
climate change, global warming, etc? Y/N. If yes,
please give hyperlink for webpage etc
3. Does the company identify and assess potential Not applicable
environmental risks? Y/N
4. Does the company have any project related to Not applicable
Clean Development Mechanism? If so, provide
details thereof, in about 50 words or so. Also,
if Yes, whether any environmental compliance
report is filed?
5. Has the company undertaken any other Not applicable
initiatives on – clean technology, energy
efficiency, renewable energy, etc. Y/N. If yes,
please give hyperlink for web page etc.
6. Are the Emissions/ Waste generated by the Not applicable
company within the permissible limits given
by CPCB/ SPCB for the financial year being
reported?
7. Number of show cause/ legal notices received Not applicable
from CPCB/ SPCB which are pending (i.e. not
resolved to satisfaction) as on end of Financial
Year.
Principle 7 - Businesses, when engaged in influencing public and regulatory policy, should do so in a
responsible manner
1. Is your company a member of any trade and The Company is a member of the following
chamber or association? If Yes, Name only those associations:
major ones that your business deals with: 1. Microfinance Institutions Network (MFIN)
2. Sa-Dhan
2. Have you advocated/ lobbied through MFIN and Sa-Dhan do MFI industry advocacy and
above associations for the advancement or are part of policy making related to MFI Industry.
improvement of public good? Yes/No; if yes
specify the broad areas ( drop box: Governance
and Administration, Economic Reforms,
Inclusive Development Policies, Energy security,
Water, Food Security, Sustainable Business
Principles, Others)

Directors' Report
76
Annexure IV
Principle 8 - Businesses should support inclusive growth and equitable development

1. Does the company have specified programmes/ The Company focusses on responsible business
initiatives/ projects in pursuit of the policy practices with community centric interventions.
related to Principle 8? If yes details thereof. The thrust areas are sustainable livelihood –
especially skill development and employability
training, education and health care, all of which
constitute the Human Development Index – a
quality of life indicator.
2. Are the programmes/ projects undertaken The Company collaborates with Government
through in-house team/ own foundation/ bodies, NGOs and donor agencies to implement
external NGO/ government structures/ any community initiatives in the thematic areas of
other organization? livelihoods, health, education, environment and
ethnicity. Through employee volunteerism it also
utilises in-house resource persons in areas like
skill development, etc. The entire gamut of CSR
activities are implemented through the following
delivery arms: HelpAge India, Operations Eye
Sight India, MEHAC Foundation, MMTV and Family
Planning Association of India.
3. Have you done any impact assessment of your Yes
initiative?
4. What is your company’s direct contribution to Please refer to Report on CSR Activities for details.
community development projects- Amount in
INR and the details of the projects undertaken.
5. Have you taken steps to ensure that this Please refer to Report on CSR Activities for details.
community development initiative is
successfully adopted by the community? Please
explain in 50 words, or so
Principle 9 - Businesses should engage with and provide value to their customers and consumers in a
responsible manner
1. What percentage of customer complaints/ 1. Please refer note 44 (t) of financial statement
consumer cases are pending as on the end of for customer complaints redressal status.
financial year.
2. Please refer Corporate Governance Report for
investor complaints redressal status
2. Does the company display product information Yes. As per Fair Practices code, the Company is
on the product label, over and above what is required to display interest being charged and
mandated as per local laws? other practices being adopted by the Company in
lending loans to its Borrowers.
Yes/No/N.A./Remarks(additional information)

77
3. Is there any case filed by any stakeholder During FY17, public interest litigation has been
against the company regarding unfair trade filed against State of Maharashtra & Others
practices, irresponsible advertising and/or anti- (including five MFIs, one of which is the Company)
competitive behaviour during the last five years before the Hon’ble High Court at Bombay, alleging
and pending as on end of financial year. If so, certain unfair trade practices followed by MFIs
provide details thereof, in about 50 words or so such charging excessive rate of interest and
adopting coercive recovery practice against the
customers.
The Company has been following the best client

protection principles and conducting its business
activities in compliance with the applicable
regulations. The Company is not involved in any
of the alleged unfair trade practices and has
submitted its response to the Court.
4. Did your company carry out any consumer Yes. This is done periodically.
survey/ consumer satisfaction trends?
Sd/- Sd/-

Directors' Report
78
Annexure V
FORM NO. MGT-9

EXTRACT OF ANNUAL RETURN
as on the financial year ended on March 31, 2018
[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies
(Management and Administration) Rules, 2014]
I. REGISTRATION AND OTHER DETAILS:

i. CIN L65999MH2003PLC250504
ii. Registration Date SEPTEMBER 22, 2003
iii. Name of the Company Bharat Financial Inclusion Limited
(formerly known as SKS Microfinance Limited)
iv. Category/ Sub-Category of the Company NON-BANKING FINANCE COMPANY – MICROFINANCE INSTITUTION
(NBFC-MFI)
v. Address of the Registered Office and contact details Registered Office:
Bandra-Kurla Complex, Bandra East,
Mumbai – 400 051,
Maharashtra, India
Email: [email protected];
Website: www.bfil.co.in;
Phone 022-26592375/ 040-44526000
Fax No.022-26592375/ 040-44526001.
vi. Whether listed company Yes
vii. Name, Address and Contact details of Registrar and Karvy Computershare Private Limited
Transfer Agent, if any Unit: Bharat Financial Inclusion Limited
Karvy Selenium Tower B, Plot 31-32, Gachibowli Financial District,
Nanakramguda, Hyderabad - 500 032
Email: [email protected];
Website: www.karvycomputershare.com;
Phone 040-23312454
Fax No. 040-23311968
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10 % or more of the total turnover of the Company shall be
stated:-
Name and Description of main
S. No. NIC Code of the Product/ service % to total turnover of the Company
products/ services
1. Microfinance Services 64990 91.2%
Other financial service activities
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES –

Name and Address of the
S. No. CIN/GLN Holding/ Subsidiary/ Associate % of shares held Applicable Section
Company
- Not Applicable -

79
IV. SHARE HOLDING PATTERN (EQUITY SHARE CAPITAL BREAKUP AS PERCENTAGE OF

TOTAL EQUITY)
1. Category-wise Shareholding
Category of Shareholders No. of Shares held at the beginning of the No. of Shares held at the end of the year %
year (April 1, 2017) (March 31, 2018) # Change
during
Demat Physical Total % of Total Demat Physical Total % of Total
the year
Shares Shares
A. Promoters
(1) Indian
a) Individual / HUF - - - - - - - - -
b) Central Government - - - - - - - - -
c) State Government(s) - - - - - - - - -
d) Bodies Corp. - - - - - - - - -
e) Banks/ Financial - - - - - - - - -
Institutions
f) Any Other….
Sub-total (A) (1):- - - - - - - - - -
(2) Foreign
a) NRIs - Individuals - - - - - - - - -
b) Other – Individuals - - - - - - - - -
c) Bodies Corp. 2290219 - 2290219 1.66% 2290219 - 2290219 1.64%
d) Banks/ FI - - - - - - - - -
e) Any Other - - - - - - - - -
Sub-total (A) (2):- 2290219 - 2290219 1.66% 2290219 - 2290219 1.64% -
Total shareholding of 2290219 - 2290219 1.66% 2290219 - 2290219 1.64% -
Promoter (A) = (A(1)+A(2)
B. Public Shareholding
(1) Institutions
a) Mutual Funds 10762690 - 10762690 7.80% 27077652 - 27077652 19.44% 11.64%
b) Venture Capital Funds - - - - - - - - -
c) Alternate Investment 13000 - 13000 0.01% 132419 - 132419 0.10% 0.09%
Funds
d) Foreign Venture - - - - - - - - -
Capital Funds
e) Foreign Portfolio 89641228 - 89641228 64.97% 82227730 - 82227730 59.02% -5.95%
Investors
f) Financial Institutions / 1635518 - 1635518 1.19% 1732482 - 1732482 1.24% 0.05%
Banks
g) Insurance companies - - 999998 0.72% 2017566 - 2017566 1.45% 0.73%
h) Provident Funds / - - - - - - - - -
Pension Funds
i) Foreign Bodies 5766509 - 5766509 4.18% 5766509 - 5766509 4.14% -
corporate
j) Others (specify) - - - - - - - - -
Sub-total (B)(1):- 108818943 - 108818943 78.86% 118954358 - 118954358 85.38% 6.52%

Directors' Report
80
Annexure V
Category of Shareholders No. of Shares held at the beginning of the No. of Shares held at the end of the year %
year (April 1, 2017) (March 31, 2018) # Change
during
Demat Physical Total % of Total Demat Physical Total % of Total
the year
Shares Shares
2. Central Government / - - - - - - - - -
State Government(s) /
President of India
Sub-total (B)(2):- - - - - - - - - -
3. Non-Institutions
a) Individuals
i) Individual 8003972 117392 8121364 5.89% 4996521 58884 5055405 3.63% -2.26%
shareholders holding
nominal share capital
up to Rs. 2 lakh
ii) Individual 4375228 75384 4450612 3.23% 6592005 25384 6617389 4.75% 1.52%
shareholders holding
nominal share capital
in excess of Rs. 2 lakh
b) NBFCs Registered with 42842 - 42842 0.03% 1810 - 1810 0.00% -0.03%
RBI
c) Employee Trusts - - - - - - - - -
d) Overseas Depositories - - - - - - - - -
(Holding DRs)
(Balancing figure)
e) Others (specify)
1. Trusts 22203 - 22203 0.02% 230500 - 230500 0.17% -
2. Resident Directors 41666 187500 229166 0.17% 22666 187500 210166 0.15% -0.02%
3. Non-resident Director 34000 - 34000 0.02% 135000 - 135000 0.10% 0.086%
4. Non-resident Indians 4562280 - 4562280 3.31% 582470 - 582470 0.42% -2.89%
5. Clearing Members 3797120 - 3797120 2.75% 308541 - 308541 0.22% -2.53%
6. Bodies Corporate 5353498 - 5353498 3.38% 3511701 - 3511701 2.52% -0.86%
7. Non Resident Non 242054 - 242054 0.18% 1406920 - 1406920 1.01% 0.83%
Repatriable
8. Foreign Nationals 336 - 336 0.00 - - - - 0.00
Sub-total (B)(3):- 26475199 380276 26855475 19.46% 17788134 187500 18059902 12.96% - 6.50%
Total Public Shareholding (B) 135294142 380276 135674418 98.33% 136742492 271768 137014260 98.34% 0.01%
= (B)(1) + (B)(2) + (B)(3)
C. Employee Benefit Trust - 16661 16661 0.01% - 16661 16661 0.01 0.00%
(under SEBI (Share based
Employee Benefit)
Regulations 2014)
Grand Total (A+B+C) 137584361 396937 137981298 100.00% 139032711 288429 139321140 100%
# Company issued 13,39,842 equity shares under various ESOP Plans to employees during FY18.

81
(ii) Shareholding of Promoters

S. No. Shareholder’s Name Shareholding at the beginning Shareholding at the end of the % Change in
of the year (April 1, 2017) Year (March 31, 2018) Shareholding
during the
No. of % of total % of Shares No. of % of total % of Shares
year
Shares Shares Pledged/ Shares Shares Pledged/
of the encumbered of the encumbered
Company to total Company to total
shares shares
1 Kismet Microfinance 2290219 1.66% - Nil - 2290219 1.64% - Nil - Nil
(iii) Change in Promoters’ Shareholding (please specify, if there is no change)

S. No. Shareholder’s Name Shareholding at the Date# Increase(+)/ Reason Cumulative
beginning of the year Decrease(-) shareholding during
(As on April 1, 2017) In the year (01.04.2017 –
shareholding 31.3.2018)
No. of % of total No. of % of total
shares shares shares shares
of the of the
Company Company
1 Kismet Microfinance 2290219 1.66% Nil Nil - 2290219 1.64%

Directors' Report
82
Annexure V
(iv) Shareholding Pattern of Top Ten Shareholders (other than Directors, Promoters and
Holders of GDRs and ADRs):
S Shareholder’s name Shareholding at the Date# Increase(+)/ Reason Cumulative shareholding
No. beginning of the year Decrease(-) in during the year
(As on April 1, 2017) shareholding (01.04.2017 - 31.3.2018)
No. of % of total No. of shares % of total
shares shares shares
of the of the
Company Company
1. MORGAN STANLEY 9306333 6.74 15/09/2017 -46574 Transfer 2462004 1.77
MAURITIUS COMPANY 22/09/2017 -37897
LIMITED 29/09/2017 -210981
06/10/2017 -61477
13/10/2017 -214
20/10/2017 -900258
27/10/2017 -712632
31/10/2017 -10980
03/11/2017 -306842
10/11/2017 -466502
17/11/2017 -65021
01/12/2017 -9199
15/12/2017 -523306
22/12/2017 -646716
29/12/2017 -22196
05/01/2018 -176042
12/01/2018 -342868
19/01/2018 -36279
26/01/2018 -215082
02/02/2018 -213809
09/02/2018 -299479
16/02/2018 -30607
23/02/2018 -188648
02/03/2018 -486061
09/03/2018 -152272
16/03/2018 -281870
23/03/2018 -340517
30/03/2018 -60000
2. AMANSA HOLDINGS PRIVATE 5400000 3.91 16/06/2017 -952100 Transfer 4463628 3.20
LIMITED 18/08/2017 270398
22/09/2017 -286050
10/11/2017 -68620
24/11/2017 100000
3. EAST BRIDGE CAPITAL 4633460 3.36 Nil Nil Nil 4633460 3.33
MASTER FUND LIMITED
4. TREE LINE ASIA MASTER 3850000 3.02 Nil Nil Nil 3850000 2.79
FUND (SINGAPORE) PTE LTD

83

of the of the
Company Company
5. MATTHEWS INDIA FUND 3539665 2.57 12/05/2017 266573 Transfer 4199665 3.01
26/05/2017 334464
16/06/2017 168963
23/06/2017 136204
30/06/2017 53796
30/03/2018 -300000
6. IDFC PREMIER EQUITY FUND 3004000 2.18 07/04/2017 532000 Transfer 1316894 0.95
14/04/2017 -414995
21/04/2017 -32364
05/05/2017 200000
05/05/2017 -256000
12/05/2017 -331000
19/05/2017 -507000
26/05/2017 -301000
09/06/2017 -82000
16/06/2017 -305000
23/06/2017 -52641
30/06/2017 -130000
07/07/2017 91000
07/07/2017 -304751
14/07/2017 -166755
21/07/2017 -264494
01/09/2017 181000
08/09/2017 -45000
15/09/2017 -35000
29/09/2017 3000
06/10/2017 48000
27/10/2017 284000
03/11/2017 21000
17/11/2017 22000
01/12/2017 84000
08/12/2017 -18000
15/12/2017 -44000
22/12/2017 49737
29/12/2017 15470
05/01/2018 228558
26/01/2018 -26000
02/02/2018 -101000
16/03/2018 31067
23/03/2018 41062
23/03/2018 -102000
7. VINOD KHOSLA 2863189 2.08 05/05/2017 -289532 Transfer Nil 0.00
12/05/2017 -853577
19/05/2017 -1117845
26/05/2017 -602235

Directors' Report
84
Annexure V

of the of the
Company Company
8. GOLDMAN SACHS 2832377 2.05 07/04/2017 78000 Transfer 1168091 0.84
(SINGAPORE) PTE 21/04/2017 -25000
28/04/2017 -80506
12/05/2017 120000
26/05/2017 111553
16/06/2017 29007
23/06/2017 59231
14/07/2017 -237000
28/07/2017 358439
04/08/2017 -58000
25/08/2017 -79980
15/09/2017 -68000
06/10/2017 -6424
20/10/2017 -115509
27/10/2017 -285653
31/10/2017 -101737
03/11/2017 -18263
17/11/2017 -19847
24/11/2017 -84500
15/12/2017 156
22/12/2017 -108529
29/12/2017 -26632
05/01/2018 -236802
12/01/2018 -57726
19/01/2018 -684734
26/01/2018 -13555
02/02/2018 -30010
23/02/2018 -50000
09/03/2018 -32265
9. CREDIT SUISSE (SINGAPORE) 2423477 1.76 07/04/2017 3647 Transfer 103 0.00
LIMITED 14/04/2017 85568
21/04/2017 -27503
28/04/2017 -9313
05/05/2017 -14881
12/05/2017 -120276
19/05/2017 -150419
26/05/2017 -76281
02/06/2017 138474
09/06/2017 -960
30/06/2017 -197307
07/07/2017 647224
14/07/2017 494382

85

of the of the
Company Company
21/07/2017 -90000
28/07/2017 -412370
04/08/2017 -40000
11/08/2017 71980
18/08/2017 131032
25/08/2017 -131093
01/09/2017 -39274
15/09/2017 -371938
22/09/2017 -203289
06/10/2017 -196312
20/10/2017 -252293
27/10/2017 -925018
03/11/2017 -28037
10/11/2017 -85985
22/12/2017 -204678
05/01/2018 -95465
12/01/2018 -40120
19/01/2018 -27250
26/01/2018 -111671
02/02/2018 -142571
09/02/2018 -1377
10 SANDSTONE INVESTMENT 2347117 1.70 Nil Nil Transfer 2347117 1.68
PARTNERS I
# Date of transfer has been considered as the date on which the beneficiary position was provided by the Depositories to the Company.

Directors' Report
86
Annexure V
(v) Shareholding of Directors and Key Managerial Personnel:

S. Director’s / Category of Shareholding at Date# Increase(+)/ Reason Cumulative
No. KMP name Directors/ KMP the beginning of Decrease(-) shareholding
the year (As on In during
April 1, 2017) shareholding the year
(01.04.2017 -
31.3.2018)
No. of % of No. of % of
shares total shares total
shares shares
of the of the
Company Company
1 P.H. Ravikumar Independent 35000 0.02% 05.05.2017 (-) 15000 Transfer 16000 0.01%
Director 08.05.2017 (-) 15000 Transfer
15.06.2017 (+) 25000 Allotment
09.11.2017 (-) 8344 Transfer
10.11.2017 (-) 3356 Transfer
13.11.2017 (-) 7000 Transfer
14.11.2017 (-) 5000 Allotment
17.11.2017 (+) 25000 Allotment
20.03.2018 (-) 8000 Transfer
21.03.2018 (-) 7300 Transfer
2. Geoffrey Tanner Independent 1000 0.00% 10.11.2017 (+)34000 Allotment 135000 0.10%
Woolley Director 01.03.2018 (+)100000 Allotment
3. M. R. Rao Managing Director 194166 0.15% Nil Nil Nil 194166 0.14%
& CEO
4. Kartik Gopal Alai Nominee Director Nil Nil Nil Nil Nil Nil Nil
(SIDBI)
5. Punita Kumar-Sinha Independent Nil Nil Nil Nil Nil Nil Nil
Director
6. R. M. Malla Independent Nil Nil Nil Nil Nil Nil Nil
Director
7. S. Balachandran Independent Nil Nil Nil Nil Nil Nil Nil
Director
8. Tarun Khanna Independent 33000 0.02% 10.05.2017 (-)33000 Transfer Nil Nil
Director 06.11.2017 (+) 34000 Allotment
23.11.2017 (-)34000 Transfer
01.03.2018 (+) 100000 Allotment
15.03.2018 (-) 100000 Transfer
9. Ashish Lakhanpal Director Nil Nil Nil Nil Nil Nil Nil
10. K. V. Rao* Chief Operating 70675 0.05% 05.05.2017 (-) 28000 Transfer 58413 0.04%
Officer 18.09.2017 (+) 65325 Allotment
06.11.2017 (-) 33738 Transfer
24.11.2017 (-) 15849 Transfer
11. Ashish Damani Chief Financial 59586 0.04% 05.05.2017 (-)15000 Transfer 44900 0.03%
Officer 08.05.2017 (-)15000 Transfer
18.09.2017 (+) 28150 Allotment
18.12.2017 (-) 12836 Transfer
12. Rajendra Patil Company Secretary Nil Nil 06.11.2017 (+) 41080 Allotment 17333 0.01
21.11.2017 (-) 10844 Transfer
24.11.2017 (-) 11156 Transfer
19.12.2017 (-) 1747 Transfer
* Resigned from the services of the company with effect from closing hours of January 31, 2018.

87
V. INDEBTEDNESS
Indebtedness of the Company including interest outstanding/ accrued but not due for payment
S. No. Particulars Secured Loans excluding deposits Unsecured Loans Deposits Total Indebtedness
1. Indebtedness at the beginning of
the financial year
i) Principal Amount 63,997,730,270 7,253,077,932 - 71,250,808,202
ii) Interest due but not paid - - -
iii) Interest accrued but not due 369,924,280 2,404,662 - 372,328,942
Total (i+ii+iii) 64,367,654,549 7,255,482,594 - 71,623,137,143
2. Change in Indebtedness during
the financial year
• Addition (Only principal) 62,014,449,495 8,810,255,621 - 70,824,705,116
• Reduction (Only principal) 49,851,393,780 16,057,559,052 - 65,908,952,832
Net Change 12,163,055,715 (7,247,303,431) - 4,915,752,284
Indebtedness at the end of the
financial year
i) Principal Amount 76,160,785,985 5,774,501 - 76,166,560,486
ii) Interest due but not paid - - - -
iii) Interest accrued but not due 432,074,162 25,108 - 432,099,270
Total (i+ii+iii) 76,592,860,147 5,799,609 - 76,598,659,756
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/ or Manager:
(` in lakhs)
S. No. Particulars of Remuneration Name of Managing Director
M.R. Rao
1. Gross salary
(a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961 244.36
(b) Value of perquisites u/s 17(2) Income-tax Act, 1961 18.28
(c) Profits in lieu of salary under section 17(3) Income-tax Act, 1961 -
2. Stock Options* 492500
3. Sweat Equity -
4. Commission - as % of profit - others, specify… -
5. Others, please specify
a) Bonus 136.80
b) Contribution to PF 16.61
c) Leave encashment 0.00
Total (A) 416.04
Ceiling as per the CA 2013 1888.61
*Mr. M. R. Rao holds 194166 equity shares allotted prior to FY17 .

Directors' Report
88
Annexure V
B. Remuneration to other Directors

(` in lakhs)
A Name of the Independent P.H. Geoffrey Tanner S. Tarun Punita Kumar R. M.
Director Ravikumar Woolley Balachandran Khanna Sinha Malla
1. Fee for attending Board/ 18.80 11.25 21.75 3.50 9.75 14.75
committee meetings
2. Commission 36.00 36.00 36.00 36.00 36.00 36.00
3. Others, please specify - - - - - -
Total 54.80 47.25 57.75 39.50 45.75 50.75
Total (A) 295.8
B Name of Non-executive
Kartik Gopal Alai Ashish Lakhanpal
Director
1. Fee for attending Board/ 10.50 8.25

committee meetings
2. Commission - -
3. Others, please specify - -
Total 10.50 8.25
Total (B) 18.75
TOTAL (A)+(B) 314.55
Total Managerial 730.59

Remuneration including
Managing Director
Overall Ceiling as per the 4154.95

CA 2013

C. Remuneration to Key Managerial Personnel other than MD/ Manager/ WTD
(` in lakhs)
S. No. Particulars of Remuneration
K. V. Rao, Chief Ashish Damani, Rajendra Patil, Total
Operating Officer* Chief Financial Company
Officer Secretary
1. Gross salary
a) Salary as per provisions contained in section 17(1) 85.01 66.84 65.73 217.58
of the Income-tax Act, 1961
b) Value of perquisites u/s 17(2) Income-tax Act, 1961 14.99 5.40 5.32 25.71
c) Profits in lieu of salary under section 17(3) Income- - - - -
tax Act, 1961

89
2. Stock Options $ 85000 83000 82000 250000

3. Sweat Equity - - - -
4. Commission - - - -
- as % of profit
- others, specify
5. Others, please specify
- Bonus 29.69 21.25 15.20 66.14
- Contribution to PF 5.24 4.57 4.48 14.29
- Leave encashment 3.52 0.00 0.00 3.52
Total 138.45 98.06 90.73 327.24
*Ceased to be an employee and KMP of the Company w.e.f. Closing Hours January 31, 2018
*$ Stock options granted during FY18
VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Type Section of the Brief Details of Penalty/ Authority Appeal made, if any
Companies Act Description Punishment/ [RD / NCLT / (give details)
Compounding fees COURT]
imposed
A. Company
Penalty Nil Nil Nil Nil Nil
Punishment Nil Nil Nil Nil Nil
Compounding Nil Nil Nil Nil Nil
B. Directors
C. Other Officers in
Default
Sd/- Sd/-

Report on Corporate Governance
90
Company’s Philosophy on Code of Governance

Bharat Financial Inclusion Limited (“the Company”) follows the highest standards of governance
principles, given the profile of customers that the Company works with. This approach has helped
the Company weathering the turbulent times that the MFI sector has faced from time to time.
This approach has also demonstrated that the vulnerability to a financial crisis is reduced through
acceptance of the Company’s approach by other stakeholders in the ecosystem in which the Company
operates. It has also ensured sustained access to capital and debt markets on a continuing basis. The
Company is committed to strengthen this approach through adoption of ‘best in class’ philosophy,
systems and processes in the realm of governance.
In India, corporate governance standards for listed companies are mandated under the Companies Act,
2013 (“CA 2013”) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI
LODR Regulations”). In addition to the above, corporate governance standards for Non-Banking Finance
Companies are also prescribed by Reserve Bank of India.
The Company has always believed in implementing corporate governance guidelines and practices
that go beyond meeting the letter of the law and has comprehensively adopted practices mandated
in the CA 2013 and SEBI LODR Regulations to fulfil its responsibility towards the stakeholders. These
guidelines ensure that the Board of Directors (“the Board”) will have the necessary authority to review
and evaluate the operations when required. Further, these guidelines allow the Board to make decisions
that are independent of the Management.
This chapter, along with the chapters on Management Discussion and Analysis and Additional
Shareholders Information, reports the Company’s compliance with Regulations 34 and 53 of SEBI LODR
Regulations.
Board of Directors
Composition and category of the Directors
As on March 31, 2018, the Company’s Board comprised of nine (9) Directors, including six (6)
Independent Directors. The Chairman of the Board is a Non-Executive and Independent Director.
The composition of the Board is in conformity with Regulations 17 of SEBI LODR Regulations, which
stipulates that the Board should have an optimum combination of executive and non-executive
directors with at least one (1) woman director and at least fifty per cent (50%) of the Board should
consist of non-executive directors. It further stipulates that if the chairperson of the Board is a
non-executive and non-promoter Director then at least one-third of the board should comprise of
independent directors.
During the year under review, the Board met eight (8) times on May 1, 2017, June 8, 2017, July 6, 2017,
July 26, 2017, September 5, 2017, October 14, 2017, October 28, 2017 and January 30, 2018. The time
gap between any two meetings was less than one hundred and twenty days.
The names of the members of the Board, their status, their attendance at the Board Meetings and the
last Annual General Meeting (“AGM”), number of other Directorships and Committee membership(s)/
chairmanship(s) of each Director are as under:

91
S No. Name of Director Category of No. of No. of Whether No. of No. of No. of
Directors meetings meetings attended other other Chairman-
held in attended last AGM Director- Board ships of
FY18 (including (including ships held in Committee other Board
through through other public Member- Committees
electronic electronic companies ships
mode) in mode)
FY18
1. Mr. P. H. Ravikumar Non-executive 8 8 Yes 8 6 1
Chairman &
Independent
Director
2. Mr. Ashish Lakhanpal Non-executive 7 7 Yes -- - -
(w.e.f. May 24, 2017) Director
3. Mr. S. Balachandran Independent 8 8 Yes 1 1 1
Director
4. Mr. Geoffrey Tanner Woolley Independent 8 7 Yes - - -
Director
5. Mr. K.G. Alai Nominee 8 8 Yes - - -

Director
(SIDBI)
6. Mr. M. Ramachandra Rao Managing 8 8 Yes - - -
Director &
CEO
7. Dr. Punita Kumar-Sinha Independent 8 8 Yes 8 6 2
Director
8. Mr. R. M. Malla Independent 8 8 Yes 5 2 -
Director
9. Dr. Tarun Khanna Independent 8 4 Yes - - -
Director
Notes:
1. None of the Directors of the Company were members in more than ten (10) committees or acted
as Chairperson of more than five (5) committees across all public limited companies in which they
were Directors. For the purpose of reckoning the limit, Chairmanship/ membership of the Audit
Committee and the Stakeholders’ Relationship Committee alone have been considered;
2. None of the Directors held directorships in more than ten (10) public limited companies;
3. None of the Directors is related to any Director or is a member of an extended family;
4. None of the employees of the Company is related to any of the Directors;
5. None of the Directors has any business relationship with the Company;
6. None of the Directors has received any loans or advances from the Company during the year.

92
Report on Corporate Governance (CONTD.)
No. of Shares and convertible instruments held by the Non-Executive Directors

Details of shares or convertible instruments of the Company held by the Non-Executive Directors as on
March 31, 2018 are given below:
S. Director’s name No. of equity shares

No.
1. Mr. P.H. Ravikumar 16,000
2. Mr. Geoffrey Tanner Woolley 1,35,000
Familiarization programme
The Board has been apprised/ familiarized about the business performance, product and processes,
business model, nature of the industry in which the Company operates, roles and responsibilities
of the Board Members under the applicable laws, etc., on a periodic basis and the details of such
familiarization programmes are available at
http://www.bfil.co.in/wp-content/themes/sks/public/downloads/Familirisation%20Programme.pdf
All new Directors inducted into the Board are introduced to the Company through appropriate
orientation sessions. Presentations are made by senior management officers to provide an overview
of the Company’s operations and to familiarize the new Directors with the operations. They are also
introduced to the organization’s culture, services, constitution, Board procedures, matters reserved for
the Board and risk management strategy.
The Company also facilitates the continual education requirements of its Directors. Support is provided
for Independent Directors, if they choose to attend professional educational programmes in the areas
of Board/ corporate governance.
Information Supplied to the Board

The Board has complete access to all relevant information of the Company. The quantum and quality
of information supplied by the management to the Board goes well beyond the minimum requirement
stipulated in Regulation 17 (7) of SEBI LODR Regulations. All information, except critical unpublished
price sensitive information (which is circulated at a shorter notice than the period prescribed under
Secretarial Standard on Meetings of the Board of Directors), is given to the Directors well in advance of
the Board and the Committee meetings.
The Board works closely with the Executive Management Team to constantly review the evolving
operating environment and strategies best suited to enhance the Company’s performance and
periodically reviews compliance reports of all laws applicable to the Company as well as steps taken by
the Company to rectify instances of non-compliance, if any.
Code of Conduct
The Board has laid down a Code of Conduct for all the Board Members and Senior Management of the
Company. The Code of Conduct is available on the website of the Company at http://www.bfil.co.in/
code-of-conduct/. All Board Members and Senior Management personnel have affirmed compliance
with the Code of Conduct. A declaration signed by the Chief Executive Officer (“CEO”) to this effect is
enclosed at the end of this report.

93
Committees of the Board

The Board has interalia constituted the below named committees as required under the CA 2013, SEBI
LODR Regulations and RBI Guidelines to delegate particular matters that require greater and more
focused attention in the affairs of the Company.
(a) Audit Committee

(b) Asset Liability Management Committee
(c) Corporate Social Responsibility Committee
(d) Nomination and Remuneration Committee
(e) Risk Management Committee
(f) Stakeholders’ Relationship Committee
(g) IT Governance and Strategy Committee
All decisions pertaining to the constitution of committees, appointment of members and fixing of
terms of reference for committee members is taken by the Board. Details on the role and composition
of these committees, including the number of meetings held during the financial year and the related
attendance, are provided below:
a) Audit Committee
The Audit Committee comprises of five (5) members including four (4) Independent Directors:
During the year, Mr. Ashish Lakhanpal and Mr. Geoffrey Tanner Woolley were appointed as
Members of the Committee effective July 26, 2017. Mr. K. G. Alai ceased to be a Member of the
Committee effective July 26, 2017. The composition of the Committee is given in the Table A.
The Audit Committee oversees the financial reporting process and reviews, with the Management,
the financial statements to ensure that the same are correct and credible. The Audit Committee
has the ultimate authority and responsibility to select and evaluate the Independent Auditors
in accordance with the law. The Audit Committee also reviews performance of the Statutory
Auditors, the Internal Auditors, adequacy of the internal control system and Whistle-blower
mechanism.
The Audit Committee charter is available on the website of the Company at http://www.bfil.co.in/
charter-of-committees/
During the year under review, the Audit Committee met seven (7) times on April 10, 2017, April
30, 2017, July 25, 2017, October 13, 2017, October 28, 2017, January 30, 2018 and March 26, 2018.
The time gap between any two meetings was less than one hundred and twenty days. During
the year of review, there were no instances where the Board of Directors of the Company did

94
not accept the recommendation of the Audit Committee. The details of the attendance of the
Directors at the Audit Committee meetings are given below:
TABLE – A
Attendance record of the Audit Committee
Name of the Position Status No. of No. of

Member Meetings Meetings
held Attended
(including
through
electronic
mode)
Mr. R.M. Malla Independent Director Chairman 7 7

Mr. Ashish Lakhanpal Non-Executive Member 4 4
(w.e.f. July 26, 2017) Director
Mr. S. Balachandran Independent Director Member & 7 7
Alternate Chairman
Mr. Geoffrey Tanner Independent Director Member 4 4
Woolley
(w.e.f. July 26, 2017)
Mr. K.G. Alai Nominee Director Member 3 1
(Upto July 25, 2017) (SIDBI)
Mr. P.H. Ravikumar Independent Director Member 7 7
The Chief Financial Officer, who is responsible for the finance function, the Head of Internal Audit
and the representative of the Statutory Auditors, are regularly invited to attend meetings of the
Audit Committee. Mr. Rajendra Patil, Sr. EVP – Legal & Company Secretary & Compliance Officer,
acts as the Secretary to the Audit Committee.
All members of the Audit Committee have accounting and financial management expertise. The
Chairman of the Audit Committee participated through video conference and Mr.S.Balachandran,
Alternative Chairman was present in person at the Company’s Fourteenth Annual General Meeting
of the Company held on July 7, 2017 to answer queries of the shareholders
b) Asset Liability Management Committee

The Asset Liability Management Committee (“ALM Committee”) comprises of five (5) members
including three (3) Independent Directors.
During the year, Mr. K. G. Alai was appointed as Member of the Committee effective July 26, 2017.
The composition of the Committee is given in the Table B.
The functions of the ALM Committee include addressing concerns regarding asset liability
mismatches, interest rate risk exposure, and achieving optimal return on capital employed while
maintaining acceptable levels of risk including and relating to liquidity, market and operational
aspects and adhering to the relevant policies and regulations.
The ALM Committee charter is available on the website of the Company at http://www.bfil.co.in/

95
During the year under review, the ALM Committee met four (4) times on May 12, 2017, July 25,
2017, October 28, 2017 and January 30, 2018. The details of the attendance of the Directors at
the ALM Committee meetings are given below:
TABLE – B
Attendance record of the ALM Committee
Name of the Member Position Status No. of No. of

Meetings Meetings
held Attended
(including
through
electronic
mode)
Mr. S. Balachandran Independent Director Chairman 4 4

Mr. M.R. Rao Managing Director & CEO Member 4 4
Mr. K. G. Alai Nominee Director (SIDBI) Member 2 2
(w.e.f. July 26, 2017)
Mr. P.H. Ravikumar Independent Director Member 4 4
Mr. R.M. Malla Independent Director Member 4 4
c) Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee (“CSR Committee”) comprises of five (5) members
During the year, Mr. K. G. Alai was appointed as Member of the Committee effective July 26, 2017.
The composition of the Committee is given in the Table C.
The functions of the CSR Committee include formulation and monitoring of CSR Policy,
recommending CSR Projects and budgets thereof, review of CSR initiatives undertaken/ to
be undertaken by the Company and to do such other things as directed by the Board and in
compliance with the applicable laws.
The CSR Committee charter and the CSR policy of the Company are available on the website of the
Company http://www.bfil.co.in/charter-of-committees/

96
During the year under review, the CSR Committee met two (2) times on May 1, 2017 and October
28, 2017. The details of the attendance of the Directors at the CSR Committee meetings are
given below:
TABLE – C
Attendance record of the CSR Committee

Meetings Meetings
held Attended
Mr. Geoffrey Tanner Independent Director Chairman 2 2
Woolley
Mr. K. G. Alai Nominee Director (SIDBI) Member 1 1
(w.e.f. July 26, 2017)
Dr. Punita Kumar-Sinha Independent Director Member 2 2
Dr. Tarun Khanna Independent Director Member 2 1
d) Nomination and Remuneration Committee

The Nomination and Remuneration Committee (“NRC Committee”) currently comprises of five (5)
members including four (4) Independent Directors .
During the year, Mr. Ashish Lakhanpal was appointed as Member of the Committee effective July
26, 2017. The composition of the Committee is given in the Table D.
The NRC Committee charter is available on the website of the Company http://www.bfil.co.in/
During the year under review, the NRC Committee met five (5) times on May 1, 2017, May 17,
2017, October 14, 2017, October 28, 2017 and January 30, 2018. The details of the attendance of
the Directors at the NRC Committee meetings are given below:
TABLE – D
Attendance record of the NRC Committee

Meetings Meetings
held Attended
Mr. S. Balachandran Independent Director Chairman 5 5
Mr. Ashish Lakhanpal Director Member 3 3
(w.e.f. July 26, 2017)
Woolley
Dr. Punita Kumar-Sinha Independent Director Member 5 5
Dr. Tarun Khanna Independent Director Member 5 1

97
Performance evaluation of Board Members

CA 2013 and SEBI LODR Regulations stipulates the performance evaluation of the Directors
including Chairperson, Board and its Committees. Further, SEBI vide its circular dated January 5,
2017 issued a guidance note on Board Evaluation for listed companies. The Company has devised
a process and criteria for the performance evaluation which has been recommended by the NRC
Committee and approved by the Board.
The evaluations for the Directors and the Board are done through separate structured
questionnaires, one each for Independent and Non-Executive Directors, Managing Director & CEO,
Board and the Committees of the Board.
A separate exercise was carried out to evaluate the performance of all Directors including the
Chairman of the Board, who were evaluated on parameters such as level of engagement and
contribution; knowledge, skill and understanding of the areas which are relevant to them in
their capacity as members of the Board; independence of judgement; adherence to the code
of conduct, etc. The performance of the Managing Director & CEO was evaluated on additional
parameters such as strategy formulation and execution; financial performance; leadership;
knowledge of the product, etc. The performance evaluation of each Independent Director was
carried out by the entire Board, excluding the Independent Director concerned. The performance
evaluation of the Non-Executive Directors was carried out by the Independent Directors.
Remuneration Policy
The NRC Committee determines and recommends to the Board the compensation payable to the
Directors. The NRC Committee reckons the performance of the team, the manner in which the
sector is performing and the prevailing and emerging levels of compensation while submitting to
the Board their views. All Board-level compensation is approved by the shareholders and disclosed
separately in the financial statements.
Remuneration for the Managing Director & CEO and other senior executives consists of a fixed
and components and other benefits as per the policies of the Company. The NRC Committee
conducts an annual appraisal of the performance of the Managing Director and CEO and other
senior executives based on a performance-related matrix. The annual compensation of the senior
executives is approved by the NRC Committee. It also recommends the annual compensation of
the Managing Director and CEO, which is approved by the Board.
The Managing Director and CEO of the Company is entitled to an annual variable pay each fiscal
year, which is subject to the achievement of certain fiscal year milestones by the Company, as
determined by the Board.
The compensation payable to the Independent Directors is as decided by the Board, the sum of
which does not exceed 1% of the net profits for the year, calculated as per the provisions of the
CA 2013. The performance of the Independent Directors is reviewed by the Board on an annual
basis.

98
Remuneration paid to Mr. M.R. Rao, Managing Director & CEO

(` in lakhs)
FY18 FY17
Salary and Perquisites 262.64 230.52
Contribution to Provident and Other Funds 16.61 14.47
Performance Linked Incentive 136.80 120.00
Total 416.05 364.99
Remuneration to Non-Executive Directors including Independent Directors

(` in lakhs)
FY18 FY17
Name of the Director Sitting Commission# Total Sitting Commission# Total %
Fees Fees Increase
Mr. P.H. Ravikumar 18.80 36.00 54.80 14.85 36.00 50.85 7.77
Mr. Ashish Lakhanpal 8.25 - 8.25 -
Mr. S. Balachandran 21.75 36.00 57.75 17.05 36.00 53.05 8.86
Mr. Geoffrey Tanner 11.25 42.50 53.75 7.50 36.00 43.50 23.56
Woolley
Mr. K.G. Alai* 10.50 - 10.50 7.00 - 7.00 50.00
Dr. Punita Kumar-Sinha 9.75 42.50 52.25 7.30 36.00 43.30 20.67
Mr. R.M. Malla 14.75 42.50 57.25 10.00 36.00 46.00 24.46
Dr. Tarun Khanna 3.50 36.00 39.50 3.50 36.00 39.50 -
# Commission for FY17 was paid in FY18 and for FY18 it will be paid in FY19. Commission was paid to
Independent Directors based on the tenure of their association with the Company and other criteria as
decided by the board of directors of the Company.
* Till April 2017, Sitting Fee was paid to SIDBI.
During FY18, the Company has not advanced loans to any of its Directors.
e) Risk Management Committee

The Company follows well-established and detailed risk assessment and minimization procedures.
The Company especially focuses on improving its sensitivity to the assessment of risks and
improving methods of computation of risk weights. The risk assessment and mitigation
procedures are reviewed by the Board periodically. The Company’s risk management framework is
discussed in detail in the chapter on Management Discussion and Analysis.
The Risk Management Committee (“RM Committee”) comprises of five (5) members including
three (3) Independent Directors.
During the year, Mr. Ashish Lakhanpal was appointed as Member of the Committee effective July
26, 2017. The composition of the Committee is given in the Table E.

99
The functions of the RM Committee include monitoring and reviewing risk management plan,
operational risk, information technology risk, integrity risk, etc., and taking strategic actions in
mitigating risk associated with the business.
The RM Committee charter is available on the website of the Company http://www.bfil.co.in/

charter-of-committees/.
During the year under review, the RM Committee met four (4) times on May 12, 2017, July 25,
2017, October 28, 2017 and January 30, 2018. The details of the attendance of the Directors at
the RM Committee meetings are given below:
TABLE - E
Attendance record of the RM Committee

Meetings Meetings
held Attended
Mr. P.H. Ravikumar Independent Director Chairman 4 4
(w.e.f. July 26, 2017)
Mr. S. Balachandran Independent Director Member 4 4
f) Stakeholders’ Relationship Committee

The Stakeholders’ Relationship Committee (“SRC Committee”) comprises of four (4) members,
During the year, Mr. Ashish Lakhanpal was appointed as Member and Mr. S. Balachandran ceased
as Member of the Committee both effective July 26, 2017. The composition of the Committee is
given in the Table F.
The functions and powers of the SRC Committee include review and resolution of grievances
of shareholders, debenture holders and other security holders; dealing with all aspects relating
to the issue and allotment of shares, debentures and other securities; approve sub-division,
consolidation, transfer and issue of duplicate share/ debenture certificate.
The SRC Committee charter is available on the website of the Company http://www.bfil.co.in/
During the year under review, the SRC Committee met three (3) times on April 10, 2017,

100
July 25, 2017 and October 28, 2017. Details of the attendance are given below:
TABLE – F
Attendance record of the SRC Committee

Meetings Meetings
held Attended
Mr. P.H. Ravikumar Independent Director Chairman 3 3
(w.e.f. July 26, 2017)
(upto July 25, 2017)
Woolley
(w.e.f. May 4, 2016)

Mr. Rajendra Patil, Sr. EVP-Legal & Company Secretary is the Compliance Officer of the Company
and acts as the Secretary to the SRC Committee.
g) IT Governance & Strategy Committee

During the current year, the Board, in accordance with the provisions of Reserve Bank of India’s
Master Direction on the Information Technology Framework for the NBFC Sector, constituted IT
Governance & Strategy Committee (“IT Committee”) at its meeting held on October 28, 2017.
The IT Committee comprises of four (4) members, two of whom are Independent Directors and
the other two are Chief Information Officer and Chief Technical Officer of the Company. The
Composition of the IT Committee is given in the Table G.
The functions of the IT Committee include approval of IT strategies and policy documents, to
ascertain whether the company’s management has implemented processes / practices which
ensure that IT delivers value to business, ensure that the budgets allocated vis-à-vis IT investments
are commensurate, monitor the method adopted to ascertain the IT resources needed to achieve
strategic goals of the company and to provide high-level directions for sourcing and use of IT
resources.
The IT Committee charter is available on the website of the Company http://www.bfil.co.in/


101
During the year under review, the IT Committee met on January 29, 2018. Details of the attendance are
given below:
TABLE – G
Attendance record of the IT Committee

Meetings Meetings
held Attended
Mr. Geoffrey Tanner Independent Director Chairman 1 1
Woolley
Mr. Srinivas Peddada Chief Information Officer Member 1 1
Mr. Dhrumil Dalal Chief Technical Officer Member 1 1
Nature of complaints received and attended to during FY18

Details of queries and grievances received and attended to by the Company during FY18 are given
below:
Nature of Complaint Pending Received Answered Pending
as on during during as on
April 1, 2017 2017-18 2017-18 March 31, 2018
1. Transfer / Transmission / Nil Nil Nil Nil
Duplicate
2. Non-receipt of Dividend Nil 2 2 Nil
3. Dematerialization / Nil Nil Nil Nil
Rematerialization of shares
4. Complaints received from:
- Securities and Exchange Nil Nil Nil Nil
Board of India/Scores
- Stock Exchanges Nil 2 2 Nil
- Registrar of Companies/ Nil Nil Nil Nil
Ministry of Corporate Affairs:
- Company & Registrar (Non Nil 6 6 Nil
receipt of Annual Report
and Change / correction of
address)
5 Legal Nil Nil Nil Nil
In addition to the aforesaid Committees, the Board has constituted two (2) non-mandatory Committees
to oversee specific operational activities, namely the ESOP Allotment Committee and the Finance
Committee.

102
GENERAL BODY MEETINGS

Details of location and time, where last three Annual General Meetings held are given below:
Financial Category Location of the meeting Date Time
Year
2016-17 AGM Y.B. Chavan Auditorium, General Jagannath July 7, 2017 2.30 p.m.
Bhosle Marg, Mumbai - 400 021, Maharashtra
2015-16 AGM Rangswar Auditorium, Y.B.Chavan Centre, July 21, 2.30 p.m.
General Jagannath Bhosle Marg, Mumbai - 400 2016
021, Maharashtra
2014-15 AGM Y.B. Chavan Auditorium, General Jagannath September 11.00 a.m.
Bhosle Marg, Mumbai - 400 021, Maharashtra 23, 2015
The following business items were approved by Special Resolution in the last three AGMs, and were
passed with the requisite majority:
FY17: Fourteenth Annual General Meeting

1. Issue and allotment of Non-Convertible Debentures and other debt securities on private
placement basis; and
2. Enhancement of employee stock options pool.
FY16: Thirteenth Annual General Meeting

1. Infusion of Capital
FY15: Twelfth Annual General Meeting

1. Revision in the commission payable to the Independent Directors of the Company; and
2. Issue and allotment of Non-Convertible Debentures and other debt securities on private
placement basis.
Postal Ballot
During the year, no resolution was proposed to the Shareholders of the Company through Postal Ballot.
Means of Communication with Shareholders

All important information relating to the Company and its performance, including financial results and
shareholding pattern, are posted on the website of the Company: www.bfil.co.in. The website also
displays all official press releases and presentation to analysts made by the Company.
The quarterly, half yearly and annual results of the Company’s performance are published in leading
newspapers like The Financial Express (English) , Business Standard (English), Loksatta (Marathi) and
Tarun Bharat (Marathi).

103
General Shareholder Information
i. Annual General Meeting

Date: July 26, 2018
Time: 3.00 p.m
Venue: Y.B. Chavan Auditorium,
General Jagannath Bhosle Marg,
Mumbai - 400 021, Maharashtra
ii. Financial Calendar

Financial year: April 1 to March 31
For the year ended March 31, 2018, results were announced on:
• July 26, 2017: First quarter
• October 28, 2017 : Half yearly
• January 30, 2018 : Third quarter
• April 23, 2018: Fourth quarter and annual
For the year ending March 31, 2019, results will be announced by
• On or before August 14, 2018: First quarter

• On or before November 14, 2018: Half yearly
• On or before February 14, 2019: Third quarter
• On or before May 30, 2019: Fourth quarter and annual
iii. Dividend Payment Date : The Company has not declared any Dividend for FY 18.
iv. Dates of Book Closure for AGM

The dates of book closure are from July 20, 2018 to July 26, 2018 inclusive of both days.
v. Name and address of each Stock Exchange(s) at which the Company’s securities are listed and a
confirmation about payment of annual listing fee to each of such stock exchange(s)
At present, the equity shares of the Company are listed on:
1. BSE Limited (BSE)
Phiroze Jeejeebhoy Towers
Dalal Street
Mumbai – 400 001
2. National Stock Exchange of India Limited (NSE).

Exchange Plaza, Bandra-Kurla Complex
Bandra (East)
Mumbai – 400 050
The annual listing fees for FY18 to BSE and NSE has been paid.

104
vii. Stock Exchange Codes

Name of the Stock Exchange Stock Code
The National Stock Exchange of India Limited, Mumbai BHARATFIN
BSE Limited, Mumbai 533228
vii. Market Price Data & Performance in comparison to broad-based indices

High, lows and volumes of the Company’s shares for FY18 at BSE and NSE
Month BSE NSE

High Low Volume High Low Volume
Apr-17 823.55 721.35 81,60,893 823.80 720.00 84204061
May-17 817.00 650.60 1,25,27,649 817.55 651.00 83083926
Jun-17 758.00 663.10 51,39,500 758.50 663.30 83083926
Jul-17 862.20 715.00 52,45,846 861.90 715.00 45808621
Aug-17 900.00 755.20 32,59,605 901.15 753.00 42090288
Sep-17 979.00 873.00 50,94,647 980.50 872.05 49209582
Oct-17 1046.50 900.00 21,41,079 1047 899.60 35222133
Nov-17 1008.00 947.00 7,75,849 1007.80 946.00 14764144
Dec-17 1024.95 955.00 38,88,564 1023.90 971.20 13752606
Jan-18 1067.90 983.00 11,15,678 1061.25 988.00 14123774
Feb-18 1094.90 960.05 5,76,419 1097.50 960.00 14723220
Mar-18 1107.00 1018.35 8,01,428 1105.95 1018.40 12273407
Note: High and low are in Rupees per traded share

105
Company’s Share Performance on BSE versus BSE Sensex
4000
3500
3000
2500
2000
1500
1000
500
0
Apr-17
Dec-17
Jan-18
Feb-18
May-17
Mar-18
Nov-17
Aug-17
Sep-17
Jun-17
Oct-17
Jul-17
BSE SENSEX BFIL (High)
Note: The BSE Sensex have been indexed to 10
Company’s Share Performance on NSE versus Nifty
12000
10000
8000
6000
NSE NIFTY
4000 BFIL (High)
2000
0
Apr-17
Dec-17
Jan-18
Feb-18
May-17
Mar-18
Nov-17
Aug-17
Sep-17
Jun-17
Oct-17
Jul-17

106
viii. Registrar & Share Transfer Agents

The Company has appointed Karvy Computershare Private Limited (Karvy) as its Registrar and
Transfer Agent. All share transfers and related operations are conducted by Karvy, which is
registered with the SEBI
Karvy Computershare Private Limited

(Unit : Bharat Financial Inclusion Limited)
Karvy Selenium Tower B, Plot 31-32,
Gachibowli Financial District, Nanakramguda,
Hyderabad 500 032.
Phone No: 040-67162222
Fax No: 040-23001153
ix. Share Transfer System

The Company has constituted a Stakeholders Relationship Committee for redressing shareholder
and investor complaints. The Applications for transfer and transformation of shares in
physical form are processed by the company's Registrar & Share Transfer Agent on approval of
Stakeholders Relationship Committee.
x. Distribution of shareholding as on March 31, 2018
Category No of % of Total Amount % of

Cases Cases Shares Amount
upto 1- 5000 35580 94.61 1987815 19878150 1.43
5001- 10000 824 2.19 645879 6458790 0.46
10001- 20000 430 1.14 673639 6736390 0.48
20001- 30000 166 0.44 431475 4314750 0.31
30001- 40000 72 0.19 260973 2609730 0.19
40001 - 50000 58 0.15 274625 2746250 0.20
50001- 100000 118 0.31 852286 8522860 0.61
100001 & ABOVE 361 0.96 134194448 1341944480 96.32
TOTAL 37609 100 139321140 1393211400 100
xi. Dematerialization of Shares and liquidity

As at March 31, 2018, over 99.79% shares of the Company were held in dematerialized form.
xii. Outstanding GDRs/ ADRs/ Warrants/ Options or any Convertible instruments, conversion
date and likely impact on equity
Nil
xiii. Commodity price risk or foreign exchange risk and hedging activities: - N.A
xiv. Branch Offices

107
The Company has 1567 branches as on March 31, 2018 across India.
xv. Plant Locations: N.A

xvi. Address for correspondence
Shareholders/ Investors may write to the Company Secretary at the following address:
The Company Secretary

Registered Office Address:
Unit No. 410, ‘Madhava’, Bandra-Kurla Complex,
Bandra (East), Mumbai – 400 051.
Phone No: 022-26592375,040-4452 6000
Fax No: 040-4452 6001/ 022-2659 2375
In addition to the aforesaid, Debenture holders may write to the Debenture Trustee at the
following address:
IDBI Trusteeship Services Limited

Asian Building, Ground Floor,
17, R. Kamani Marg, Ballard Estate,
Mumbai 400 001
Phone No: +91 22 4080 7000
Fax No: +91 22 6631 1776
Investor Grievance Email: [email protected]
Other Disclosures
Materially significant related party transactions
No materially significant related party transactions that may have potential conflict with the interests of
the Company at large were reported during FY18.
Details of non-compliance by the Company

The Company has complied with all the requirements of regulatory authorities. No penalties/ strictures
were imposed on the Company by the stock exchanges or the SEBI or any statutory authority on any
matter relating to the capital market during the last three years.
Whistle-blower mechanism
The Company has adopted the Whistle-blower Policy pursuant to which employees of the Company
can raise their concerns relating to malpractices, inappropriate use of funds or any other activity or
event which is against the interest of the Company. Further, the mechanism adopted by the Company
encourages the employees to report genuine concerns or grievances, and provides for adequate

108
safeguards against victimization of employees who avail of such a mechanism and also provides for
direct access to the Chairperson of the Audit Committee, in exceptional cases.
Code of Conduct for prevention of insider trading

In compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015 on prevention of insider
trading, the Company has adopted a revised Code of Conduct for prevention of Insider Trading to
regulate, monitor and report trading; and preserve confidentiality of unpublished price sensitive
information to prevent misuse of such information by its employees and other connected persons. The
Code of Conduct lays down guidelines which advise them on procedures to be followed and disclosures
to be made while dealing with shares of the Company, and cautioning them of the
consequences of violations.
Details of compliance with mandatory requirements

The Company is fully compliant with the applicable mandatory requirements of Regulation 34 of SEBI
LODR Regulations.
Adoption of non-mandatory requirements

Although it is not mandatory, the Board has appointed separate persons for the post of Chairman of the
Board [Non-Executive (Independent) Director] and Managing Director and CEO; and the Internal Auditor
reports directly to the Audit Committee.
Weblink where policy on dealing with related party transactions

The policy on Related Party Transactions, as approved by the Board, is displayed on the website of the
Company at http://www.bfil.co.in/wp-content/themes/sks/public/downloads/SKS-Related%20Party%20
Transaction%20Policy-Version%201-October%2029%202014.pdf
Commodity Price Risks and Commodity Hedging Activities : N.A

Compliance certificate regarding compliance of conditions of corporate governance
As required by Schedule V (E) to SEBI LODR Regulations, the auditors' certificate on corporate
governance is enclosed as Annexure to this report
Disclosures of the compliance with corporate governance requirements specified in regulation 17

to 27 and Regulation 46 (2) (b) to (i) of SEBI LODR Regulations

109
Particulars Regulation Compliance

Number status
Board composition 17(1) Yes
Meeting of Board of directors 17(2) Yes
Review of Compliance Reports 17(3) Yes
Plans for orderly succession for appointments 17(4) Yes
Code of Conduct 17(5) Yes
Fees/compensation 17(6) Yes
Minimum Information 17(7) Yes
Compliance Certificate 17(8) Yes
Risk Assessment & Management 17(9) Yes
Performance Evaluation of Independent Directors 17(10) Yes
Composition of Audit Committee 18(1) Yes
Meeting of Audit Committee 18(2) Yes
Composition of nomination & remuneration committee 19(1) & (2) Yes
Composition of Stakeholder Relationship Committee 20(1) & (2) Yes
Composition and role of risk management committee 21(1),(2),(3),(4) Yes
Vigil Mechanism 22 Yes
Policy for related party Transaction 23(1),(5),(6),(7) Yes
& (8)
Prior or Omnibus approval of Audit Committee for all related 23(2), (3) N.A
party transactions
Approval for material related party transactions 23(4) NA
Composition of Board of Directors of unlisted material 24(1) NA
Subsidiary
Other Corporate Governance requirements with respect to 24(2),(3),(4),(5) NA
subsidiary of listed entity & (6)
Maximum Directorship & Tenure 25(1) & (2) Yes
Meeting of independent directors 25(3) & (4) Yes
Familiarization of independent directors 25(7) Yes
Memberships in Committees 26(1) Yes
Affirmation with compliance to code of conduct from 26(3) Yes
members of Board of Directors and Senior management
personnel
Disclosure of Shareholding by Non-Executive Directors 26(4) Yes
Policy with respect to Obligations of directors and senior 26(2) & 26(5) Yes
management
Other corporate governance requirements 27 Yes

110
Particulars Regulation Compliance

Number status
Website 46 (b) to (i) Yes
CEO Certification on Code Of Conduct

I, M. R. Rao, Managing Director and CEO of Bharat Financial Inclusion Limited, hereby certify that all the Board
Members and Senior Managerial Personnel (Core Management Team) have affirmed compliance with the Code of
Conduct of the Company laid down by the Board of Directors, for the year ended March 31, 2018.
Sd/-
M.R. Rao
Date: June 22, 2018 Managing Director and CEO
Place: Hyderabad (DIN: 03276291)

111
CERTIFICATE OF CORPORATE GOVERNANCE

Under Regulation 34(3) read with Schedule V (E) of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015
To,
The Members,
Mumbai
We have examined all the relevant records of Bharat Financial Inclusion Limited (Formerly known as SKS
Microfinance Limited) (the Company) for the purpose of certifying the compliance of the conditions of
Corporate Governance as stipulated under Regulation 17 to 27, Clauses (b) to (i) of sub-regulation (2) of
Regulation 46 and para C, D and E of Schedule V of the Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 for the period commencing from 1st April,
2017 and ended on 31st March, 2018. We have obtained all the information and explanations which are
to the best of our knowledge and belief were necessary for the purpose of certification.
The compliance of the conditions of Corporate Governance is the responsibility of the Management.
Our examination was limited to the procedures and implementation thereof, adopted by the Company
for ensuring the compliance of the conditions of the Corporate Governance. It is neither an audit nor an
expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we
certify that the company has complied with the conditions of Corporate Governance as stipulated in
under Regulation 17 to 27 , Clauses (b) to (i) of sub-regulation (2) of regulation 46 of the Securities and
Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and para
C, D and E of Schedule V for the period commencing from 1st April, 2017 and ended on 31st March,
2018.
This Certificate is neither an assurance as to the future viability of the Company nor of the efficacy or
effectiveness with which the Management has conducted the affairs of the Company.
For BS & Company Company Secretaries LLP

(formerly BS & Company Company Secretaries)
Sd/-
Dafthardar Soumya
Designated Partner
Date: April 13, 2018 ACS No. 29312
Place: Hyderabad C P No.: 13199

Financial Statements Independent Auditor’s Report
112
INDEPENDENT AUDITOR’S REPORT
To the Members of Bharat Financial Inclusion Limited (formerly SKS Microfinance Limited)
Report on the Financial Statements

We have audited the accompanying financial statements of Bharat Financial Inclusion Limited (formerly
SKS Microfinance Limited) (“the Company”), which comprise the Balance Sheet as at 31 March 2018,
the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of
the significant accounting policies and other explanatory information (collectively referred to as the
‘financial statements’).
Management’s Responsibility for the Financial Statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the
Companies Act, 2013 (“the Act”) with respect to the preparation of these financial statements that
give a true and fair view of the financial position, financial performance and cash flows of the Company
in accordance with the accounting principles generally accepted in India, including the Accounting
Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules,
2014. This responsibility also includes maintenance of adequate accounting records in accordance
with the provisions of the Act for safeguarding the assets of the Company and for preventing and
detecting frauds and other irregularities; selection and application of appropriate accounting policies;
making judgments and estimates that are reasonable and prudent; and design, implementation and
maintenance of adequate internal financial controls, that were operating effectively for ensuring the
accuracy and completeness of the accounting records, relevant to the preparation and presentation
of the financial statements that give a true and fair view and are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the Company or to
cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the Audit Report under the provisions of the Act and the
Rules made thereunder.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10)
of the Act. Those Standards require that we comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal financial control
relevant to the Company’s preparation of the financial statements that give a true and fair view in order
to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating
the appropriateness of the accounting policies used and the reasonableness of the accounting
estimates made by the Company’s Directors, as well as evaluating the overall presentation of the
financial statements.

113
We are also responsible to conclude on the appropriateness of management’s use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the entity’s ability to continue as
a going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in the auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify the opinion. Our conclusions are based on the audit evidence obtained up to
the date of the auditor’s report. However, future events or conditions may cause an entity to cease to
continue as a going concern.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion on the financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the
aforesaid financial statements give the information required by the Act in the manner so required and
give a true and fair view in conformity with the accounting principles generally accepted in India, of the
state of affairs of the Company as at 31 March 2018, its profit and its cash flows for the year ended on
that date.
Other matters
The comparative financial information of the Company for the year ended 31 March 2017 have been
audited by predecessor auditor whose reports dated 1 May 2017 expressed unmodified opinion on
those financial statements.
Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order, 2016 (“the Order”) issued by the Central
Government of India in terms of sub-section (11) of Section 143 of the Act, and on the basis of
such checks of the books and records of the Company as we consider appropriate and according
to the information and explanation given to us, we give in the “Annexure A” a statement on the
matters specified in paragraphs 3 and 4 of the said Order to the extent applicable.
2. As required by Section 143 (3) of the Act, we report that:
(a) We have sought and obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purposes of our audit;
(b) In our opinion, proper books of account as required by law have been kept by the Company
so far as it appears from our examination of those books;
(c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt
with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid financial statements comply with the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules,
2014;
(e) On the basis of the written representations received from the directors and taken on record
by the Board of Directors, none of the directors is disqualified as on 31 March 2018 from
being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financial reporting of
the Company and the operating effectiveness of such controls, refer to our separate report
in “Annexure B”; and

114
INDEPENDENT AUDITOR’S REPORT (CONTD.)
(g) With respect to the other matters to be included in the Auditor’s Report in accordance with
Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of
our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations as at 31 March 2018 on its
financial position in its financial statements – Refer Note 36 and 38.
ii. The Company did not have any long-term contracts including derivative contracts for
which there were any material foreseeable losses.
iii. The Company has transferred amount required to be transferred to the Investor
Education and Protection Fund. Refer Note 42 to the financial statements.
iv. The disclosure regarding holdings as well as dealings in specified bank notes during the
period from 8 November 2016 to 30 December 2016 is not applicable for the financial
year ended 31 March 2018. Amounts as appearing in the audited financial statements
for the period ended 31 March 2017 have been disclosed.
for B S R & Associates LLP

Chartered Accountants
ICAI Firm Registration Number: 116231W/W-100024
Sriram Mahalingam
Partner
Membership Number: 049642
Place: Hyderabad
Date: 23 April 2018

115
Annexure A to the Independent Auditor’s Report on the financial statements
The Annexure A referred to in our Independent Auditor’s Report of even date to the Members of
Bharat Financial Inclusion Limited (formerly SKS Microfinance Limited) (“the Company”) on the financial
statements for the year ended 31 March 2018, we report that:
i. (a) The Company has maintained proper records showing full particulars, including quantitative
details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets by which all
the fixed assets are verified every year. In our opinion, the periodicity of physical verification
is reasonable having regard to the size of the Company and the nature of its assets. No
material discrepancies were noticed on such verification.
(c) The Company does not own any immovable properties. Hence, the provisions of Clause 3(i)(c)
of the said Order are not applicable to the Company.
ii. The Company was engaged in the business of providing Micro credit. Accordingly, it
does not hold any physical inventories. Hence, the provisions of Clause 3(ii) of the said
Order are not applicable to the Company.
iii. The Company has not granted any loans, secured or unsecured, to companies, firms,
Limited Liability Partnerships or other parties covered in the register maintained under
Section 189 of the Act. Hence, the provisions of Clause 3(iii)(a), (iii)(b) and (iii)(c) of the
said Order are not applicable to the Company.
iv. The Company has not given loans, investments, guarantees and security covered
under Section 185 and 186 of the Act. Therefore, paragraph 3(iv) of the Order is not
v. The Company has not accepted any deposits from the public.
vi. The Central Government of India has not prescribed the maintenance of cost records under
sub-section (1) of Section 148 of the Act for any of the services rendered by the Company.
vii. (a) According to the information and explanations given to us and on the basis of
our examination of the records of the Company, amounts deducted/accrued in
the books of account in respect of undisputed statutory dues including Provident
Fund, Employees’ state insurance, Income-tax, Service tax, Goods and services tax,
Cess and other material statutory dues have generally been regularly deposited by
the Company with the appropriate authorities, the Company did not have any dues
on account of Sales tax, duty of Customs, duty of Excise and Value added tax.
According to the information and explanations given to us, no undisputed
amounts payable in respect of Provident Fund, Employees’ state insurance,
Income-tax, Service tax, Goods and services tax, Cess and other material statutory
dues were in arrears as at 31 March 2018 for a period of more than six months
from the date they became payable.
(b) According to the information and explanations given to us, there are no dues of
Goods and services tax, duty of Customs, duty of Excise and Value added tax, which
have not been deposited with appropriate authorities on account of any dispute.
However, the Company disputes the following Income tax and service tax dues.

116
Name of the Nature Amount Amount paid Period to Forum where

Statute of the (Rs.)* # (Rs.) which the the dispute is
Dues amount pending
relates
Income Tax Income 8,117,274 8,117,274 Assessment Income Tax
Act, 1961 tax year 2012-13 Appellate Tribunal
Chapter V of Service 777,874,850 50,762,370 Financial Customs Excise
the Finance tax years 2006-07 and Service Tax
Act, 1994 to 2014-15 Appellate Tribunal
* Excluding interest and penalty, as applicable
# The Company has paid this amount under protest
viii. According to the records of the Company examined by us and the information and
explanation given to us, the Company has not defaulted in repayment of loans or
borrowings to any financial institution or bank or dues to debenture holders as at
the balance sheet date. The Company did not have any dues to Government.
ix. The Company has not raised any monies by way of initial public offer or further
public offer (including debt instruments). In our opinion, and according to the
information and explanations given to us, monies raised by way of term loans have
been applied, on an overall basis, for the purposes for which they were obtained.
x. According to the information and explanations given to us, we report that no
material fraud by the Company or by its employees or officers has been noticed or
reported during the year except for instances of cash embezzlements by certain
employees of the Company aggregating to an amount of Rs. 25,520,321 and
out of which an amount of Rs.7,790,197 has been recovered. The services of the
concerned employees have been terminated.
xi. According to the information and explanations given to us and based on our
examination of the records of the Company, the Company has paid/provided
for the managerial remuneration in accordance with the requisite approvals
mandated by the provisions of Section 197 read with Schedule V to the Act.
xii. The Company is not a Nidhi Company and the Nidhi Rules, 2014 are not applicable
to it. Accordingly, the provisions of Clause 3(xii) of the Order are not applicable to
the Company.
xiii. According to the information and explanations given to us, the transactions with
related parties are in compliance with the provisions of Sections 177 and 188 of
the Act where applicable and the details of such related party transactions have
been disclosed in the financial statements as required under Accounting Standard
(AS) 18, Related Party Disclosures specified under Section 133 of the Act, read
with Rule 7 of the Companies (Accounts) Rules, 2014.
xiv. The Company has not made any preferential allotment or private placement
of shares or fully or partly convertible debentures during the year. Therefore,
paragraph 3(xiv) of the Order is not applicable to the Company.

117
xv. The Company has not entered into any non-cash transactions with its directors
or persons connected with him. Accordingly, the provisions of Clause 3(xv) of the
Order are not applicable to the Company.
xvi. The Company has been registered under Section 45 IA of the Reserve Bank of
India Act, 1934 as a Non-Banking Finance Company – Micro Finance Institution

ICAI Firm Registration Number. : 116231W/W-100024
Sriram Mahalingam
Partner
Place : Hyderabad
Date: 23 April 2018

118
Annexure B to the Independent Auditor’s Report on the financial statements
The Annexure B referred to in our Independent Auditor’s Report of even date to the Members of Bharat
Financial Inclusion Limited (“the Company”) on the financial statements for the year ended 31 March 2018.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of the Section 143 of
the Companies Act, 2013 (“the Act”)
We have audited the internal financial controls over financial reporting of Bharat Financial Inclusion
Limited (formerly SKS Microfinance Limited) (“the Company”) as of 31 March 2018 in conjunction with
our audit of the financial statements of the Company for the year ended on that date.
Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls
based on the internal control over financial reporting criteria established by the Company considering
the essential components of internal control stated in the Guidance Note on Audit of Internal Financial
Controls over Financial Reporting issued by the Institute of Chartered Accountants of India (ICAI). These
responsibilities include the design, implementation and maintenance of adequate internal financial
controls that were operating effectively for ensuring the orderly and efficient conduct of its business,
including adherence to company’s policies, the safeguarding of its assets, the prevention and detection
of frauds and errors, the accuracy and completeness of the accounting records, and the timely
preparation of reliable financial information, as required under the Companies Act, 2013.
Auditor’s Responsibility
Our responsibility is to express an opinion on the Company’s internal financial controls over financial
reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit
of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) and the Standards on
Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act,
2013, to the extent applicable to an audit of internal financial controls, both issued by the Institute of
Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance about whether
adequate internal financial controls over financial reporting was established and maintained and if such
controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal
financial controls system over financial reporting and their operating effectiveness. Our audit of
internal financial controls over financial reporting included obtaining an understanding of internal
financial controls 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.
The procedures selected depend on the auditor’s judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion on the Company’s internal financial controls system over financial reporting.
Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial 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 the generally accepted accounting principles. A

119
company’s internal financial 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.
Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the
possibility of collusion or improper management override of controls, material misstatements due
to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal
financial controls over financial reporting to future periods are subject to the risk that the internal
financial control over financial reporting may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls
system over financial reporting and such internal financial controls over financial reporting were
operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria
established by the Company considering the essential components of internal control stated in the
Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute
of Chartered Accountants of India.

ICAI Firm Registration No. : 116231 W/W-100024

Sriram Mahalingam
Partner
Place : Hyderabad
Date : 23 April 2018

Financial Statements Balance Sheet / Statement of profit and loss
120
Balance Sheet
As at March 31, 2018
(Amount in ` unless otherwise stated)

Notes 31-Mar-18 31-Mar-17
EQUITY AND LIABILITIES
SHAREHOLDERS’ FUNDS
Share capital 3 1,393,211,400 1,379,812,980
Reserves and surplus 4 28,593,725,544 23,087,596,963
29,986,936,944 24,467,409,943
Share application money pending allotment 5 567,596 -
Non-current liabilities
Long-term borrowings 6 23,858,242,748 22,085,440,678
Other long-term liabilites 7 102,944,605 75,747,359
Long-term provisions 8 2,324,111,037 2,712,006,934
26,285,298,390 24,873,194,971
Current liabilities
Short-term borrowings 9 6,063,516,169 11,237,187,201
Other current liabilities 7 51,950,343,054 42,080,069,450
Short-term provisions 8 1,020,270,534 1,517,764,035
59,034,129,757 54,835,020,686
TOTAL 115,306,932,687 104,175,625,600
Assets
Non-current assets
Property, plant and equipment 10 163,883,920 169,559,208
Intangible assets 11 53,519,268 49,457,497
Intangible assets under development - 1,760,000
Non-current investments 12 2,000,000 2,000,000
Deferred tax assets 13 - -
Long-term loans and advances 14 14,790,900,390 14,416,937,518
Other non-current assets 15 1,166,812,928 682,750,737
16,177,116,506 15,322,464,960
Current assets
Trade receivables 16 113,705,008 109,263,741
Cash and bank balances 17 20,464,523,067 28,063,684,572
Short-term loans and advances 14 77,516,641,339 59,854,321,879
Other current assets 15 1,034,946,767 825,890,448
99,129,816,181 88,853,160,640
TOTAL 115,306,932,687 104,175,625,600
Summary of significant accounting policies 2.1
The accompanying notes are an integral part of
the financial statements
As per our report of even date attached

for B S R & Associates LLP For and on behalf of the Board of Directors of
Chartered Accountants Bharat Financial Inclusion Limited
ICAI Firm Registration Number: 116231W/W-100024 (Formerly known as ‘SKS Microfinance Limited’)
CIN: L65999MH2003PLC250504
Sd/- Sd/- Sd/-
Sriram Mahalingam P.H. Ravikumar M.R.Rao
Partner Non-Executive Chairman Managing Director and
Membership No. 049642 DIN: 00280010 Chief Executive Officer
DIN: 03276291
Sd/- Sd/-
Ashish Damani Rajendra Patil
Chief Financial Officer Company Secretary
ACS: 13346
Date: April 23, 2018 Date: April 23, 2018
Place: Hyderabad Place: Mumbai

121
Statement of profit and loss

For the year ended March 31, 2018

Notes 31-Mar-18 31-Mar-17
Income
Revenue from operations 18 19,172,312,604 15,530,750,637
Other income 19 1,847,671,329 1,748,297,186
Total revenue (I) 21,019,983,933 17,279,047,823
Expenses
Employee benefits expense 20 5,263,773,456 4,061,601,407
Finance costs 21 7,104,147,717 6,224,613,499
Other expenses 22 1,621,379,923 1,343,209,259
Depreciation and amortization expenses 23 132,491,407 127,714,322
Provisions and write-offs 24 2,350,403,653 3,593,530,741
Total expenses (II) 16,472,196,156 15,350,669,228
Profit before tax (III)=(I)-(II) 4,547,787,777 1,928,378,595
Tax expenses
Current tax (Minimum Alternate Tax) 789,174,013 1,094,306,076
Excess provision of tax relating to earlier years (6,994,577) -
Minimum Alternate Tax credit entitlement (789,174,013) (2,062,829,787)
Total tax expense (IV) (6,994,577) (968,523,711)
Profit after tax (III)-(IV) 4,554,782,354 2,896,902,306
Earnings per equity share 25
[Nominal value of share `10
(March 31, 2017: `10)]
Basic (Computed on the basis of total profit 32.89 21.82
for the year)
Diluted (Computed on the basis of total profit 32.58 21.56
for the year)
The accompanying notes are an integral part of
the financial statements
CIN: L65999MH2003PLC250504
Sd/- Sd/- Sd/-
DIN: 03276291
Sd/- Sd/-
ACS: 13346

Financial Statements Cash flow statement
122
Cash flow statement

For the year ended March 31, 2018

31-Mar-18 31-Mar-17
Cash flow from operating activities
Profit before tax 4,547,787,777 1,928,378,595
Adjustments to reconcile profit before tax to net
cash flows:
Depreciation and amortization 132,491,407 127,714,322
Provision for employee benefits 406,763 72,503,362
(Profit) / loss on sale of fixed assets (1,580,908) (911,102)
Stock option expenditure 598,772,464 193,075,333
Contingent provision against standard assets 190,002,844 197,272,856
Provision for non-performing assets (396,361,952) 2,405,261,999
Portfolio loans and other balances written off 2,076,762,292 86,719,013
Provision and loss on securitized / managed 480,000,469 904,276,873
portfolio
Other provisions and write offs 143,384,588 61,091,281
Operating profit before working capital changes 7,771,665,744 5,975,382,532
Movements in working capital :
Increase / (decrease) in other current liabilities 434,477,766 (1,529,065,469)
Decrease / (increase) in trade receivables (4,441,267) (45,581,575)
Decrease / (increase) in loans and advances (19,221,134,850) (22,132,121,976)
Decrease / (increase) in other current assets (209,056,319) 716,080,914
Decrease / (increase) in other non-current assets 902,712 93,021,547
Decrease / (increase) in margin money deposit 649,244,093 (847,584,642)
(net)
Cash generated from / (used in) operations (10,578,342,121) (17,769,868,669)
Direct taxes paid (net of refunds) (1,039,433,833) (1,101,178,822)
Net cash flow from / (used in) operating (11,617,775,954) (18,871,047,491)
activities (A)
Cash flows from investing activities
Purchase of property, plant and equipments, (133,563,561) (191,934,467)
including capital work in progress and capital
advances
Proceeds from sale of property, plant and 4,094,942 4,213,751
equipments
Net cash flow from / (used in) investing activities (B) (129,468,619) (187,720,716)

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31-Mar-18 31-Mar-17
Cash flows from financing activities
Proceeds from issuance of equity share capital 366,539,779 7,720,521,644
(including share application money)
Share issue expenses - (173,064,725)
Long-term borrowings (net) (including non- 10,089,423,317 15,159,957,013
convertible debentures)
Short-term borrowings (net) (including commercial (5,173,671,032) 4,794,013,496
paper)
Net cash flow from / (used in) financing activities 5,282,292,064 27,501,427,428
(C)
Net increase / (decrease) in cash and cash (6,464,952,509) 8,442,659,221
equivalents (A + B + C)
Cash and cash equivalents at the beginning of the 25,045,902,367 16,603,243,146
year
Cash and cash equivalents at the end of the year 18,580,949,858 25,045,902,367
(refer note 17)
The accompanying notes are an integral part of the
financial statements

CIN: L65999MH2003PLC250504
Sd/- Sd/- Sd/-
DIN: 03276291
Sd/- Sd/-
ACS: 13346

Financial Statements Notes to financial statements
124
Notes to financial statements

for the year ended March 31, 2018 (contd.)
1. Corporate information
Bharat Financial Inclusion Limited (Formerly known as ‘SKS Microfinance Limited’) (‘the Company’
or ‘BFIL’) is a public company domiciled in India and incorporated under the provision of the
Companies Act, 1956. The Company was registered as a non-deposit accepting Non-Banking
Financial Company (‘NBFC-ND’) with the Reserve Bank of India (‘RBI’) and has got classified as
a Non-Banking Financial Company – Micro Finance Institution (‘NBFC-MFI’) with effect from
November 18, 2013. Its shares are listed on BSE Limited and National Stock Exchange of India
Limited.
The Company is engaged primarily in providing micro finance services to women in the rural areas
of India who are enrolled as members and organised as Joint Liability Groups (‘JLG’). The Company
has its focus operation spread across 16 states.
In addition to the core business of providing micro-credit, the Company uses its distribution
channel to provide other financial products and services to the members. Programs in this regard
primarily relate to providing of loans to the members for the purchase of certain productivity-
enhancing products such as mobile handsets, solar lamps, bicycle, sewing machines, mixer grinder
and pressure cooker etc.
2. Basis of preparation
The financial statements of the Company have been prepared in accordance with generally
accepted accounting principles in India (Indian GAAP). The Company has prepared these financial
statements to comply in all material respects with the Accounting Standards notified under
section 133 of the Companies Act, 2013 (‘the Act’), read together with rule 7 of the Companies
(Accounts) Rules, 2014, Companies (Accounting Standards) Amendment Rules, 2016 and the
provisions of the RBI applicable as per Master Directions - Non-Banking Financial Company -
Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank)
Directions, 2016 issued vide Notification No. DNBR. PD. 008/03.10.119/2016-17 dated September
01, 2016, as amended from time to time (‘the NBFC Master Directions, 2016’). The financial
statements have been prepared on an accrual basis and under the historical cost convention
except as detailed in note 2.1 (b).
The accounting policies adopted in the preparation of financial statements are consistent with
those of previous year.
2.1. Summary of significant accounting policies

a. Use of estimates
The preparation of financial statements in conformity with Indian GAAP requires the
management to make judgments, estimates and assumptions that affect the reported
amounts of revenues, expenses, assets and liabilities and the disclosure of contingent
liabilities, at the end of the reporting period. Although these estimates are based on the
management’s best knowledge of current events and actions, uncertainty about these
assumptions and estimates could result in the outcomes requiring a material adjustment to
the carrying amounts of assets or liabilities in future periods.
b. Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow
to the Company and the revenue can be reliably measured.

125
i. Interest income on loans given is recognised under the internal rate of return method.
Income or any other charges on non-performing asset is recognised only when realised
and any such income recognised before the asset became non-performing and
remaining unrealised is reversed.
ii. Interest income on deposits with banks is recognised on a time proportion accrual basis
taking into account the amount outstanding and the interest rate applicable.
iii. Loan processing fees are amortised over the tenure of the loan on straight-line basis.
iv. Profit / premium arising at the time of securitisation / assignment of loan portfolio is
amortised over the life of the underlying loan portfolio / securities and any loss arising
therefrom is accounted for immediately. Income from interest strip (excess interest
spread) is recognised in the statement of profit and loss net of any losses when
redeemed in cash. Interest retained under assignment of loan receivables is recognised
on realisation basis over the life of the underlying loan portfolio.
v. All other income is recognised on an accrual basis.
c. Property, plant and equipment

All Property, plant and equipment are stated at cost net of accumulated depreciation and
accumulated impairment losses, if any. The cost comprises purchase price and directly
attributable cost of bringing the asset to its working condition for the intended use
d. Intangible assets
Computer software costs are capitalised and amortised using the written down value
method at a rate of 40% per annum.
e. Depreciation
Depreciation on tangible fixed assets is provided on the written down value method using
the rates arrived at based on useful life of the assets prescribed under Schedule II of the
Companies Act, 2013 which is also as per the useful life of the assets estimated by the
management
f. Impairment of Property, plant and equipment and intangible assets

The Company assesses at each reporting date whether there is an indication that an asset
may be impaired. If any indication exists, or when annual impairment testing for an asset is
required, the Company estimates the asset’s recoverable amount. An asset’s recoverable
amount is the higher of an asset’s net selling price and its value in use. The recoverable
amount is determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of assets. Where
the carrying amount of an asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks
specific to the asset. In determining net selling price, recent market transactions are taken
into account, if available. If no such transactions can be identified, an appropriate valuation
model is used
After impairment, depreciation is provided on the revised carrying amount of the asset over
its remaining useful life.

126

g. Leases (where the Company is the lessee)

Leases where the lessor effectively retains, substantially all the risks and benefits of
ownership of the leased item, are classified as operating leases. Operating lease payments
are recognised as an expense in the statement of profit and loss on a straight-line basis over
the lease term.
h. Investments
Investments which are readily realisable and intended to be held for not more than one year
from the date on which such investments are made, are classified as current investments.
All other investments are classified as long-term investments. Current investments are
carried in the financial statement at lower of cost and fair value determined on an individual
investment basis. Long-term investments are carried at cost. However, provision for
diminution in value is made to recognise a decline other than temporary in the value of the
investments. On disposal of an investment, the difference between the carrying amount and
net disposal proceeds are charged or credited to the statement of profit and loss.
i. Borrowing costs
Borrowing cost includes interest and other costs incurred in connection with the
arrangement of borrowings. All borrowing costs are expensed in the period they occur.
j. Foreign currency transactions

i. All transactions in foreign currency are recognised at the exchange rate prevailing on
the date of the transaction.
ii. Foreign currency monetary items are reported using the exchange rate prevailing at
the close of the financial year.
iii. Exchange differences arising on the settlement of monetary items or on the

restatement of Company’s monetary items at rates different from those at which they
were initially recorded during the year, or reported in previous financial statements,
are recognised as income or as expenses in the year in which they arise.
k. Retirement and other employee benefits

i. Retirement benefit in the form of provident fund is a defined contribution scheme. The
Company has no obligation, other than the contribution payable to the provident fund.
The Company recognizes contribution payable to the provident fund scheme as an
expenditure, when an employee renders the related service.
ii. Gratuity liability is a defined benefit obligation and is provided for on the basis of an
actuarial valuation on projected unit credit method made at the end of each financial
year. Actuarial gains and losses for defined benefit plans are recognised in full in the
period in which they occur in the statement of profit and loss.
iii. The Company treats accumulated leave expected to be carried forward beyond twelve
months, as long-term employee benefit for measurement purposes. Such long-term
compensated absences are provided for based on the actuarial valuation using the
projected unit credit method at the year-end. Actuarial gains/losses are immediately
taken to the statement of profit and loss and are not deferred. The Company presents
the leave as a current liability in the balance sheet, to the extent it does not have an
unconditional right to defer its settlement for 12 months after the reporting date.

127
iv. Accumulated leaves, which is expected to be utilised within the next 12 months, is
treated as short-term employee benefit. The Company measures the expected cost of
such absences as the additional amount that it expects to pay as a result of the unused
entitlement that has accumulated at the reporting date.
v. The Company recognizes termination benefit as a liability and an expense when the
Company has a present obligation as a result of past event, it is probable that an
outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
l. Income taxes
i. Tax expense comprises current and deferred tax. Current income tax is measured at
the amount expected to be paid to the tax authorities in accordance with the Income
Tax Act, 1961, enacted in India. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted, at the reporting date. Current
income tax relating to items recognised directly in equity is recognised in equity and
not in the statement of profit and loss.
ii. Deferred income taxes reflect the impact of timing differences between taxable
income and accounting income originating during the current year and reversal of
timing differences for the earlier years. Deferred tax is measured using the tax rates
and the tax laws enacted or substantively enacted at the reporting date. Deferred
income tax relating to items recognised directly in equity is recognised in equity and
not in the statement of profit and loss.
iii. Deferred tax liabilities are recognised for all taxable timing differences. Deferred tax
assets are recognised for deductible timing differences only to the extent that there
is reasonable certainty that sufficient future taxable income will be available against
which such deferred tax assets can be realised. In situations where the Company
has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are
recognised only if there is virtual certainty supported by convincing evidence that they
can be realised against future taxable profits.
iv. The carrying amount of deferred tax assets are reviewed at each reporting date.
The Company writes-down the carrying amount of deferred tax asset to the extent
that it is no longer reasonably certain or virtually certain, as the case may be, that
sufficient future taxable income will be available against which deferred tax asset can
be realised. Any such write-down is reversed to the extent that it becomes reasonably
certain or virtually certain, as the case may be, that sufficient future taxable income
will be available.
v. Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and
loss as current tax. The Company recognizes MAT credit available as an asset only
to the extent that there is convincing evidence that the Company will pay normal
income tax during the specified period, i.e., the period for which MAT credit is allowed
to be carried forward. In the year in which the Company recognizes MAT credit as an
asset in accordance with the Guidance Note on Accounting for Credit Available in
respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset
is created by way of credit to the statement of profit and loss and shown as “MAT
Credit Entitlement.” The Company reviews the MAT Credit Entitlement asset at each
reporting date and writes down the asset to the extent the Company does not have
convincing evidence that it will pay normal tax during the specified period.

128

m. Earnings per share

Basic earnings per share are calculated by dividing the net profit or loss for the year
attributable to equity shareholders by the weighted average number of equity shares
outstanding during the year. Partly paid equity shares are treated as fraction of an equity
share to the extent that they were entitled to participate in dividends related to a fully paid
equity share during the reporting year.
For the purpose of calculating diluted earnings per share, the net profit or loss for the year
attributable to equity shareholders and the weighted average number of shares outstanding
during the year are adjusted for the effects of all dilutive potential equity shares.
n. Provisions
A provision is recognised when the Company has a present obligation as a result of past
event, it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. Provisions are not discounted to their present value and are determined based
on the best estimate required to settle the obligation at the reporting date. These estimates
are reviewed at each reporting date and adjusted to reflect the current best estimates.
o. Contingent liabilities
A contingent liability is a possible obligation that arises from past events whose existence
will be confirmed by the occurrence or non-occurrence of one or more uncertain future
events beyond the control of the Company or a present obligation that is not recognised
because it is not probable that an outflow of resources will be required to settle the
obligation. A contingent liability also arises in extremely rare cases where there is a liability
that cannot be recognised because it cannot be measured reliably. The Company does not
recognise a contingent liability but discloses its existence in the financial statements.
p. Cash and cash equivalents

Cash and cash equivalents for the purpose of cash flow statement comprise cash in hand and
cash at bank and short-term investments with an original maturity of three months or less.
q. Share based payments

In case of stock option plan, measurement and disclosure of the employee share-based
payment plans is done in accordance with Securities and Exchange Board of India (Share
Based Employee Benefits) Regulations, 2014 and the Guidance Note on Accounting for
Employee Share-based Payments, issued by the Institute of Chartered Accountants of India.
The Company measures compensation cost relating to employee stock options using the fair
value method. Compensation expense is amortised over the vesting period of the option on
the straight line basis.
r. Classification of loan portfolio

i. Portfolio loans are classified as follows:
Asset classification Arrear period
Standard assets Overdue for less than 8 weeks
Non-performing assets
Sub-standard assets Overdue for more than 8 weeks and upto 25 weeks
Loss assets Overdue for more than 25 weeks

129
“Overdue” refers to interest and / or installment remaining unpaid from the day it
became receivable.
The above classification is in compliance with the NBFC Master Directions, 2016.
Loans and advances other than portfolio loans are classified as standard, sub-standard,
doubtful and loss assets in accordance with the NBFC Master Directions, 2016
s. Provisioning policy for Loan portfolio

i. Provisioning policy for loan portfolio:
Asset Classification Arrear period Provisioning percentage
Standard assets Overdue for less than 8 weeks Refer note 1 and 2
Sub-standard assets Overdue for more than 8 weeks 50%
and upto 25 weeks
Loss assets Overdue for more than 25 weeks 100% provision / Written
off (Refer note (iv))

Note 1: The above mentioned provision for standard assets is linked to the Portfolio at
Risk (PAR) as shown below:
Portfolio at Risk Provisioning percentage (% of Standard Assets)

0 – 1% 0.40%
Above 1% to 1.5% 0.50%
Above 1.5% to 2% 0.75%
Above 2% 1.00%
Provision on standard assets has been made in line with the NBFC Master Directions, 2016.
Note 2: The overall provision for portfolio loans determined as per the above
mentioned provisioning policy is subject to the provision prescribed in the NBFC Master
Directions, 2016 for Non-Banking Financial Company – Micro Finance Institutions
(NBFC-MFIs). These Directions require the total provision for portfolio loans to be
higher of (a) 1% of the outstanding loan portfolio or (b) 50% of the aggregate loan
installments which are overdue for more than 90 days and less than 180 days and 100%
of the aggregate loan installments which are overdue for 180 days or more.

Such additional provision created in order to comply provisioning policy as applicable
to NBFC-MFI is classified and disclosed in the Balance Sheet alongwith the contingent
provision for standard assets
ii. Loans and advances other than portfolio loans are provided for at the higher of
management estimates and provision required as per the NBFC Master Directions,
2016.
iii. Provision on securitised / managed portfolio is made as per the Company’s provisioning
policy for portfolio loans mentioned in (i) above net of losses, if any and subject to the
maximum guarantee given in respect of these arrangements.

130

iv. All overdue loans including loans where the tenure of the loan is completed and in the
opinion of the management any amount is not recoverable, are fully provided for /
written off.
t. Grants
Grants and subsidies from the government are recognized when there is reasonable
assurance that (i) the company will comply with the conditions attached to them, and (ii) the
grant/subsidy will be received.
When the grant or subsidy relates to revenue, it is recognized as income on a systematic

basis in the statement of profit and loss over the periods necessary to match them with
the related costs, which they are intended to compensate. Such grants are either be shown
separately under ‘other income’ or deducted in reporting the related expense. Where the
grant relates to an asset, it is recognized as deferred income and released to income in equal
amounts over the expected useful life of the related asset.
Where the company receives non-monetary grants, the asset is accounted for on the basis
of its acquisition cost. In case a non-monetary asset is given free of cost, it is recognized at a
nominal value.
Government grants of the nature of promoters’ contribution are credited to capital reserve
and treated as a part of the shareholders’ funds

131

3. Share capital 31-Mar-18 31-Mar-17
Authorized
157,000,000 (March 31, 2017: 157,000,000) equity shares of 1,570,000,000 1,570,000,000
`10/- each
13,000,000 (March 31, 2017: 13,000,000) preference shares of 130,000,000 130,000,000
`10/- each
Issued, subscribed and fully paid-up
139,321,140 (March 31, 2017: 137,981,298) equity shares of 1,393,211,400 1,379,812,980
`10/- each fully paid up
Total issued, subscribed and fully paid-up share capital 1,393,211,400 1,379,812,980
(a) Reconciliation of the equity shares outstanding at the beginning and at the end of the reporting year
Equity shares
31-Mar-18 31-Mar-17
No. of Shares ` No. of Shares `
At the beginning of the year 137,981,298 1,379,812,980 127,311,106 1,273,111,060
Issued during the year – Stock 1,339,842 13,398,420 929,933 9,299,330
options
Issued during the year - Qualified - - 9,740,259 97,402,590
Institutional Placement
Outstanding at the end of the year 139,321,140 1,393,211,400 137,981,298 1,379,812,980
(b) Terms/ rights attached to equity shares

The Company has only one class of equity shares having par value of `10 per share. Each holder of
equity shares is entitled to one vote per share. Any dividend proposed by the Board of Directors
is subject to the approval of the shareholders in the ensuing Annual General Meeting. Dividend
declared and paid would be in Indian rupees.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive
remaining assets of the Company, after distribution of all preferential amounts. The distribution
will be in proportion to the number of equity shares held by the shareholders.
(c) Aggregate number of shares issued for consideration other than cash during the period of
five years immediately preceding the reporting date:
The Company has issued 4,605,383 shares (March 31, 2017: 3,298,526) during the period of five
years immediately preceding the reporting date on exercise of options granted under stock option
plans wherein part consideration was received in the form of services rendered to the Company.
(d) Details of shareholders holding more than 5% shares in the Company
Equity shares of ` 10 each fully paid As at March 31, 2018

No. of Shares % holding in the class
Reliance Capital Trustee Co. Ltd. 11,702,841 8.40%

132

Equity shares of ` 10 each fully paid As at March 31, 2017

No. of Shares % holding in the class
Morgan Stanley Asia Mauritius Company Limited 9,306,333 6.74%
As per the records of the Company, including its register of shareholders / members and other
declarations received from shareholders regarding beneficial interest, the above shareholding
represents both legal and beneficial ownerships of shares.
(e) For details of shares reserved for issue under the employee stock option (ESOP) plan of the
Company, refer note 30.
4. Reserves and surplus 31-Mar-18 31-Mar-17

Securities premium account
Balance as per the last financial statements 26,955,864,671 19,418,354,240
Add: additions on Qualified Institutional Placement - 7,402,596,840
Add: additions on stock option exercised (cash premium) 352,573,763 211,247,430
Add: transferred from stock options outstanding (non-cash premium) 149,350,750 96,730,886
Less: share issue expenses - (173,064,725)
Closing Balance (A) 27,457,789,184 26,955,864,671
Employee stock options outstanding
Balance as per the last financial statements 339,530,069 247,310,752
Add / (Less): stock option expenditure for the year 598,772,464 193,075,333
Less: amount transferred towards options expired unexercised (4,912,238) (4,125,130)
Less: transferred to securities premium on exercise of stock options (149,350,750) (96,730,886)
Closing Balance (B) 784,039,545 339,530,069
Statutory reserve
Balance as per the last financial statements 2,473,614,061 1,894,233,600
Add: amount transferred from surplus balance in the 910,956,471 579,380,461
statement of profit and loss
Closing Balance ( C) 3,384,570,532 2,473,614,061
Surplus/ (deficit) in the statement of profit and loss
Balance as per last financial statements (6,681,411,838) (9,003,058,813)
Add: amount transferred towards options expired unexercised 4,912,238 4,125,130
Add: Profit/ (Loss) for the year 4,554,782,354 2,896,902,306
Less: transferred to Statutory Reserve [@ 20% of profit after tax (910,956,471) (579,380,461)
as required by section 45-IC of Reserve Bank of India Act, 1934]
Net deficit in the statement of profit and loss (D) (3,032,673,717) (6,681,411,838)
Total reserves and surplus (A+B+C+D) 28,593,725,544 23,087,596,963

133
5. Share application money pending allotment 31-Mar-18 31-Mar-17

Share application money pending allotment on exercise of options 567,596 -
567,596 -
The share application money received during the month of March 2018 towards allotment of 1,850
equity shares includes amount received towards securities premium aggregating `549,096. The said
shares were allotted on April 2, 2018. The terms and conditions of the equity shares issued are same as
that of existing equity shares issued.
6. Long-term Non-current portion Current maturities
borrowings 31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17
Debentures
1,000 (March 31, - - - 1,000,000,000
2017 : 1,000), Series
1, 11.48% Secured,
Redeemable,
Non-Convertible
Debentures of `
1,000,000 each
redeemable at par on
March 30, 2018 (refer
note 1 & 3 below)
1,000 (March 31, - - - 1,000,000,000
2017 : 1,000), Series
2, 11.48% Secured,
Redeemable,
Non-Convertible
Debentures of `
1,000,000 each
March 30, 2018 (refer
note 2 & 3 below)
1,000 (March 31, - - 1,000,000,000 1,000,000,000
2017 : 1,000), Series
3, 11.95% Secured,
Redeemable,
Non-Convertible
Debentures of `
1,000,000 each
May 15, 2018

134


6. Long-term Non-current portion Current maturities
borrowings 31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17
(Contd.)
1,000 (March 31, - - 1,000,000,000 1,000,000,000
2017 : 1,000), Series
4, 11.95% Secured,
Redeemable,
Non-Convertible
Debentures of `
1,000,000 each
May 15, 2018
Term loans
Indian rupee loan from 17,326,108,602 18,679,535,925 38,337,298,170 30,765,989,841
banks (secured)
financial institutions
(secured)
non banking financial
companies (secured)
23,858,242,748 22,085,440,678 46,244,801,569 37,928,180,322
The above amount
includes
Secured borrowings 23,858,242,748 22,085,440,678 46,244,801,569 37,928,180,322
Amount disclosed - - (46,244,801,569) (37,928,180,322)
under the head “other
current liabilities”
(note 7)
Net amount 23,858,242,748 22,085,440,678 - -
Notes:
1. The Series 1 non-convertible debentures were redeemed on April 28, 2017.
2. The Series 2 non-convertible debentures were partially redeemed to the extent of 500 units on April 28, 2017.
The remaining 500 Units were redeemed on October 31, 2017.
3. Interest on the Series 1 and Series 2 non-convertible debentures at the fixed rate of 11.48% per annum compounded
on a monthly basis equating to effective interest rate of 12.10% per annum payable on an annual basis.
Nature of security 31-Mar-18 31-Mar-17

a) Loans & debentures secured by hypothecation (exclusive 52,680,256,526 18,622,672,111
charge) of portfolio loans
b) Loans secured by hypothecation (exclusive charge) of 17,422,787,791 41,390,948,889
portfolio loans and margin money deposits
Total outstanding 70,103,044,317 60,013,621,000

135
6. Long-term borrowings (Contd.)

Terms of repayment of long term borrowings (term loans and non convertible debenture) as on
March 31, 2018
Interest Due within Due between Due between Due between
Original rate 1 year 1 to 2 Years 2 to 3 Years 3 to 4 Years
maturity No. of Amount No. of Amount No. of Amount No. of Amount Total
of loan install- ` install- ` install- ` install- `
ments ments ments ments
Monthly repayment schedule
12 181,894,737 12 181,894,737 9 136,210,526 - - 500,000,000
7.01%-7.50%
12 163,705,263 12 163,705,263 9 122,589,474 - - 450,000,000
12 140,000,004 12 139,999,996 - - - - 280,000,000
8.01%-8.50%
12 1,666,666,668 6 833,333,332 - - - - 2,500,000,000
12 150,000,000 12 150,000,000 - - - - 300,000,000
12 1,666,666,668 5 694,444,443 - - - - 2,361,111,111
11 458,333,333 12 500,000,000 1 41,666,667 - - 1,000,000,000
12 375,000,000 11 343,750,000 - - - - 718,750,000
12 900,000,000 1 75,000,000 - - - - 975,000,000
8.51%-9.00% 12 300,000,000 1 25,000,000 - - - - 325,000,000
12 375,000,000 9 281,250,000 - - - - 656,250,000
12 420,000,000 5 175,000,000 - - - - 595,000,000
12 571,428,577 - - - - - - 571,428,577
12 1,142,857,143 6 571,428,571 - - - - 1,714,285,714
12 457,142,857 6 228,571,429 - - - - 685,714,286
9 428,800,000 - - - - - - 428,800,000
9 428,800,000 - - - - - - 428,800,000
12 500,000,004 3 124,999,996 - - - - 625,000,000
12 350,000,004 4 116,666,663 - - - - 466,666,667
1-3 Yrs 9 299,999,997 12 399,999,996 9 300,000,007 - - 1,000,000,000
9 600,000,003 12 800,000,004 9 599,999,993 - - 2,000,000,000
9 600,000,003 12 800,000,004 9 599,999,993 - - 2,000,000,000
12 600,000,000 - - - - - - 600,000,000
12 1,043,478,261 6 521,739,130 - - - - 1,565,217,391
9.01%-9.50%
12 339,130,435 8 226,086,957 - - - - 565,217,391
12 182,608,696 9 136,956,522 - - - - 319,565,217
12 199,624,785 9 162,340,023 - - - - 361,964,808
12 198,086,001 10 179,708,456 - - - - 377,794,457
12 198,086,001 10 179,708,456 - - - - 377,794,457
12 195,058,993 12 213,977,221 - - - - 409,036,214
12 396,000,000 8 274,000,000 - - - - 670,000,000
12 336,000,000 8 218,000,000 - - - - 554,000,000
5 52,083,327 - - - - - - 52,083,327
12 700,000,000 12 700,000,000 - - - - 1,400,000,000
12 500,000,004 12 499,999,996 - - - - 1,000,000,000
12 1,043,478,261 - - - - - - 1,043,478,261
9.51%-10.00%
8 416,666,667 - - - - - - 416,666,667
9 150,000,000 - - - - - - 150,000,000
12 571,600,000 - - - - - - 571,600,000

136


March 31, 2018 (Amount in ` unless otherwise stated)
7 291,666,667 - - - - - - 291,666,667
7 220,000,000 220,000,000
7 291,666,661 - - - - - - 291,666,661
1-3 Yrs 6 249,999,994 - - - - - - 249,999,994
10.01%-11.00% 16 819,047,612 - - - - - - 819,047,612
1 7,291,667 - - - - - - 7,291,667
3 260,869,565 - - - - - - 260,869,565

Quarterly repayment schedule
4 1,714,285,712 3 1,285,714,288 - - - - 3,000,000,000
4 133,333,332 4 133,333,332 2 66,666,670 - - 333,333,334
8.01%-8.50%
3 750,000,000 1 250,000,000 - - - - 1,000,000,000
3 375,000,000 1 125,000,000 - - - - 500,000,000
4 428,571,429 1 107,142,857 - - - - 535,714,286
4 750,000,000 3 562,500,000 - - - - 1,312,500,000
4 500,000,000 4 500,000,000 - - - - 1,000,000,000
4 500,000,000 4 500,000,000 - - - - 1,000,000,000
4 100,000,000 4 100,000,000 - - - - 200,000,000
8.51%-9.00% 1 107,142,857 - - - - - - 107,142,857
3 500,000,000 - - - - - - 500,000,000
2 214,285,714 - - - - - - 214,285,714
4 250,000,000 4 250,000,000 - - - - 500,000,000
1-3 Yrs 4 250,000,000 4 250,000,000 - - - - 500,000,000
4 800,000,000 2 400,000,000 - - - - 1,200,000,000
4 375,000,000 2 187,500,000 - - - - 562,500,000
4 1,000,000,000 2 500,000,000 - - - - 1,500,000,000
4 333,333,333 4 333,333,333 3 250,000,000 - - 916,666,667
4 333,333,333 4 333,333,333 3 250,000,000 - - 916,666,667
4 333,333,333 4 333,333,333 3 250,000,000 - - 916,666,667
4 727,272,727 4 727,272,727 1 181,818,182 - - 1,636,363,636
9.01%-9.50% 4 363,636,364 4 363,636,364 1 90,909,141 - - 818,181,868
2 350,000,000 - - - - - - 350,000,000
2 125,000,000 - - - - - - 125,000,000
4 500,000,000 - - - - - - 500,000,000
4 250,000,000 1 62,500,000 - - - - 312,500,000
3 428,571,429 - - - - - - 428,571,429
4 250,000,000 1 62,500,000 - - - - 312,500,000

137

March 31, 2018 (Amount in ` unless otherwise stated)
Interest Due within Due between Due between Due between Total
maturity No. of Amount No. of Amount No. of Amount No. of Amount
4 500,000,000 2 250,000,000 - - - - 750,000,000
4 290,000,000 3 217,500,000 - - - - 507,500,000
4 166,800,000 3 124,700,000 - - - - 291,500,000
4 41,600,000 4 41,600,000 4 41,800,000 - - 125,000,000
4 125,200,000 4 125,200,000 4 124,600,000 - - 375,000,000
4 500,000,000 1 125,000,000 - - - - 625,000,000
4 325,000,000 - - - - - - 325,000,000
2 142,857,142 - - - - - - 142,857,142
2 142,857,142 - - - - - - 142,857,142
4 33,337,600 3 24,990,400 - - - - 58,328,000
9.01%-9.50%
4 8,334,400 3 6,247,600 - - - - 14,582,000
4 125,000,000 3 93,750,000 - - - - 218,750,000
4 333,333,333 4 333,333,333 1 83,333,333 - - 750,000,000
4 333,333,333 4 333,333,333 1 83,333,333 - - 750,000,000
4 500,000,000 - - - - - - 500,000,000
4 500,000,000 - - - - - - 500,000,000
4 500,000,000 4 500,000,000 4 500,000,000 - - 1,500,000,000
4 350,000,000 2 175,000,000 - - - - 525,000,000
4 800,000,000 - - - - - - 800,000,000
1-3 Yrs
2 142,857,143 - - - - - - 142,857,143
2 428,571,429 - - - - - - 428,571,429
1 63,750,000 - - - - - - 63,750,000
2 187,500,000 - - - - - - 187,500,000
9.51%-10.00% 4 200,000,000 - - - - - - 200,000,000
3 60,000,000 - - - - - - 60,000,000
3 90,000,000 - - - - - - 90,000,000
1 100,000,000 - - - - - - 100,000,000
2 100,000,000 - - - - - - 100,000,000
2 300,000,000 - - - - - - 300,000,000
10.01%- 2 200,000,000 - - - - - - 200,000,000
10.50%
3 150,000,000 - - - - - - 150,000,000
3 150,000,000 - - - - - - 150,000,000
3 249,400,000 249,400,000
4 333,333,333 3 250,000,000 - - - - 583,333,333
10.51%- 4 333,333,333 3 250,000,000 - - - - 583,333,333
11.50% 4 727,272,670 - - - - - - 727,272,670
4 166,656,000 - - - - - - 166,656,000
2 363,636,290 - - - - - - 363,636,290

138


Bullet repayment schedule
1-3 Yrs 11.51%-12.00% 1 2,000,000,000 - - - - - - 2,000,000,000
Total 46,244,801,569 20,135,315,429 3,722,927,319 - 70,103,044,317
March 31, 2017
Monthly repayment schedule
8.51% - 9.00% 9 428,571,423 12 571,428,577 - - - - 1,000,000,000
12 125,000,004 5 52,083,327 - - - - 177,083,331
12 142,857,142 - - - - - - 142,857,142
12 300,000,000 - - - - - - 300,000,000
9.01% - 9.50%
9 375,000,003 12 500,000,004 3 124,999,993 - - 1,000,000,000
10 333,142,857 12 399,771,429 8 267,085,714 - - 1,000,000,000
11 956,521,739 12 1,043,478,261 - - - - 2,000,000,000
12 571,428,577 - - - - - - 571,428,577
10 476,190,483 - - - - - - 476,190,483
12 571,428,577 - - - - - - 571,428,577
12 571,200,000 9 428,800,000 - - - - 1,000,000,000
12 571,200,000 9 428,800,000 - - - - 1,000,000,000
1-3 Yrs
9.51% - 10.00% 9 428,400,000 12 571,600,000 - - - - 1,000,000,000
12 500,000,000 7 291,666,665 - - - - 791,666,665
12 624,999,996 8 416,666,672 - - - - 1,041,666,668
12 200,000,004 9 149,999,995 - - - - 349,999,999
12 360,000,000 7 220,000,000 - - - - 580,000,000
6 350,000,000 12 700,000,000 12 700,000,000 - - 1,750,000,000
12 428,571,429 8 285,714,286 - - - - 714,285,714
12 500,000,004 6 249,999,994 - - - - 749,999,998
10.01%-10.50%
12 500,000,004 7 291,666,661 - - - - 791,666,665
12 1,043,478,261 3 260,869,565 - - - - 1,304,347,826
12 87,500,000 1 7,291,667 - - - - 94,791,667
10.51% - 11.00%
7 333,333,333 - - - - - - 333,333,333

139

10 416,666,662 - - - - - - 416,666,662
11 229,166,671 - - - - - - 229,166,671
10.51% - 11.00%
12 250,000,004 - - - - - - 250,000,004
12 800,000,004 8 533,333,326 - - - - 1,333,333,330
7 52,500,000 - - - - - - 52,500,000
6 166,666,667 - - - - - - 166,666,667
11.01% - 11.50% 6 500,000,000 - - - - - - 500,000,000
1-3 Yrs 5 652,173,913 - - - - - - 652,173,913
9 782,608,696 - - - - - - 782,608,696
1 6,250,000 - - - - - - 6,250,000
11.51% - 12.00% 6 312,500,000 - - - - - - 312,500,000
7 218,750,000 - - - - - - 218,750,000
11 157,142,857 - - - - - - 157,142,857
12.51% - 13.00% 11 283,333,333 - - - - - - 283,333,333
11 50,000,000 - - - - - - 50,000,000
Quarterly repayment schedule
4 428,571,428 1 107,142,858 - - - - 535,714,286
4 428,571,428 2 214,285,715 - - - - 642,857,143
8.51%-9.00%
3 500,000,000 3 500,000,000 - - - - 1,000,000,000
4 100,000,000 4 100,000,000 4 100,000,000 - - 300,000,000
3 375,000,000 4 500,000,000 1 125,000,000 - - 1,000,000,000
4 325,000,000 4 325,000,000 - - - - 650,000,000
9.01% - 9.50% 4 285,714,284 2 142,857,142 - - - - 428,571,426
1-3 Yrs 4 285,714,284 2 142,857,142 - - - - 428,571,426
4 500,000,000 4 500,000,000 - - - - 1,000,000,000
4 375,000,000 - - - - - - 375,000,000
4 375,000,000 2 187,500,000 - - - - 562,500,000
4 166,800,000 4 166,800,000 3 124,700,000 - - 458,300,000
9.51% - 10.00%
4 700,000,000 2 350,000,000 - - - - 1,050,000,000
4 250,000,000 2 125,000,000 - - - - 375,000,000
4 571,428,572 3 428,571,428 - - - - 1,000,000,000

140

4 285,714,286 2 142,857,143 - - - - 428,571,429
4 800,000,000 4 800,000,000 2 400,000,000 - - 2,000,000,000
4 800,000,000 4 800,000,000 - - - - 1,600,000,000
3 250,000,000 4 333,333,333 4 333,333,333 1 83,333,333 1,000,000,000
3 250,000,000 4 333,333,333 4 333,333,333 1 83,333,333 1,000,000,000
4 360,000,000 - - - - - - 360,000,000
4 60,000,000 - - - - - - 60,000,000
4 255,000,000 1 63,750,000 - - - - 318,750,000
4 857,142,856 2 428,571,430 - - - - 1,285,714,286
10.01%-10.50%
4 33,337,600 4 33,337,600 3 24,990,400 - - 91,665,600
4 8,334,400 4 8,334,400 3 6,247,600 - - 22,916,400
4 125,000,000 4 125,000,000 3 93,750,000 - - 343,750,000
4 200,000,000 3 150,000,000 - - - - 350,000,000
4 200,000,000 3 150,000,000 - - - - 350,000,000
4 500,000,000 4 500,000,000 - - - - 1,000,000,000
4 500,000,000 4 500,000,000 - - - - 1,000,000,000
4 100,000,000 - - - - - - 100,000,000
4 150,000,000 - - - - - - 150,000,000
4 400,000,000 1 100,000,000 - - - - 500,000,000
4 333,333,333 4 333,333,333 3 250,000,000 - - 916,666,667
4 333,333,333 4 333,333,333 3 250,000,000 - - 916,666,667
4 727,272,760 4 727,272,670 - - - - 1,454,545,430
10.51% - 11.00% 2 250,000,000 - - - - - - 250,000,000
4 200,000,000 - - - - - - 200,000,000
4 166,672,000 4 166,656,000 - - - - 333,328,000
4 125,000,000 - - - - - - 125,000,000
4 600,000,000 2 300,000,000 - - - - 900,000,000
4 400,000,000 2 200,000,000 - - - - 600,000,000
4 200,000,000 4 200,000,000 - - - - 400,000,000
4 333,600,000 3 249,400,000 - - - - 583,000,000
2 140,000,000 - - - - - - 140,000,000
2 20,000,000 - - - - - - 20,000,000
4 727,272,760 2 363,636,360 - - - - 1,090,909,120
11.01% - 11.50%
2 57,142,857 - - - - - - 57,142,857
4 80,000,000 3 60,000,000 - - - - 140,000,000
4 120,000,000 3 90,000,000 - - - - 210,000,000
4 200,000,000 2 100,000,000 - - - - 300,000,000

141
1 125,000,000 - - - - - - 125,000,000
2 166,500,000 - - - - - - 166,500,000
2 116,550,000 - - - - - - 116,550,000
2 49,950,000 - - - - - - 49,950,000
11.51% - 12.00% 4 363,636,364 - - - - - - 363,636,364
1-3 Yrs 3 61,214,265 - - - - - - 61,214,265
1 107,142,857 - - - - - - 107,142,857
4 100,000,000 - - - - - - 100,000,000
4 200,000,000 - - - - - - 200,000,000
2 41,660,000 - - - - - - 41,660,000
12.51% - 13.00%
3 124,988,000 - - - - - - 124,988,000
Bullet repayment schedule
11.51% - 12.00% 1 2,000,000,000 - - - - - - 2,000,000,000
1-3 Yrs
12.01% - 12.50% - - 1 2,000,000,000 - - - - 2,000,000,000
Total 35,928,180,310 20,785,333,649 3,133,440,374 166,666,667 60,013,621,000

142


7. Other liabilities Long-term Short-term
31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17
Employee benefits - - 326,309,808 309,966,362
payable
Payable towards - - 3,285,172,731 2,036,607,925
securitisation /
assignment transactions
Expenses payable - - 110,170,066 127,400,331
Other payable - - 97,671,445 163,356,923
Current maturities of - - 46,244,801,569 37,928,180,322
long-term borrowings
(refer note 6)
Interest accrued but not - - 432,099,270 372,328,942
due on borrowings
Statutory dues payable - - 125,490,552 50,083,512
Unrealised gain 7,677,829 3,435,359 364,096,154 404,485,740
on securitisation
transactions
Unamortised fee income 95,266,776 72,312,000 964,531,459 687,659,393
102,944,605 75,747,359 51,950,343,054 42,080,069,450

8. Provisions Long-term Short-term
31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17
Provision for employee
benefits
Provision for gratuity 183,160,942 199,158,531 - -
(refer note 31)
Provision for leave benefits - - 101,128,383 84,724,031
183,160,942 199,158,531 101,128,383 84,724,031
Other provisions
Provision for taxation - - 1,070,666 14,136,351
(Net of advance tax)
Contingent provision 93,175,329 77,979,918 771,617,102 596,809,669
against standard assets
(refer note 33)
Provision for non- 2,030,879,263 2,427,241,215 - -
performing assets (refer
note 33)
Provision for securitised / 16,895,503 7,627,270 146,454,383 822,093,984
managed portfolio (refer
note 2.1 (s) (iii))
2,140,950,095 2,512,848,403 919,142,151 1,433,040,004
2,324,111,037 2,712,006,934 1,020,270,534 1,517,764,035

143
9. Short-term borrowings 31-Mar-18 31-Mar-17

Cash credit from banks (Loan repayable on demand) 6,016,169 783,793,873
Indian rupee loan from banks (secured) 6,057,500,000 3,380,000,000
Commercial paper (unsecured) - 7,073,393,328
6,063,516,169 11,237,187,201
Cash credit from banks is secured by hypothecation of portfolio loans and margin money deposit and is
repayable on demand to the extent of ` 241,668
Indian rupee loan from banks are term loans secured by hypothecation of portfolio loans and margin
money deposit

10. Property, Plant Furniture Computers Office Vehicles Total
and Equipment and fixtures equipments
Cost
At April 1, 2016 123,234,870 307,695,681 64,981,233 1,586,966 497,498,750
Additions 25,784,334 128,049,373 15,143,215 2,040,298 171,017,220
Disposals (13,776,731) (33,964,983) (3,548,101) (319,642) (51,609,457)
At March 31, 2017 135,242,473 401,780,071 76,576,347 3,307,622 616,906,513
Additions 16,262,715 68,747,736 19,471,436 - 104,481,887
Disposals (5,542,898) (41,957,750) (6,181,836) - (53,682,484)
At March 31, 2018 145,962,290 428,570,057 89,865,947 3,307,622 667,705,916
Depreciation
At April 1, 2016 106,635,104 228,333,421 45,907,118 577,313 381,452,956
Charge for the year 8,616,603 86,924,960 11,297,759 811,773 107,651,095
Disposals (11,889,710) (29,525,170) (3,201,512) (160,694) (44,777,086)
At March 31, 2017 103,361,997 285,733,211 54,003,365 1,228,392 444,326,965
Charge for the year 9,771,938 81,975,021 13,315,871 648,675 105,711,505
Disposals (5,122,515) (37,502,180) (5,439,861) - (48,064,556)
At March 31, 2018 108,011,420 330,206,052 61,879,375 1,877,067 501,973,914
Impairment loss
At April 1, 2016 182,828 785,351 912,740 - 1,880,919
Charge for the year 68,470 1,398,593 137,484 - 1,604,547
Reversal for the year (4,965) (401,081) (59,080) - (465,126)

144


10. Property, Plant Furniture Computers Office Vehicles Total
and Equipment and fixtures equipments
At March 31, 2017 246,333 1,782,863 991,144 - 3,020,340
Charge for the year -
Reversal for the year (31,928) (1,036,971) (103,359) - (1,172,258)
At March 31, 2018 214,405 745,892 887,785 - 1,848,082
Net Block
At March 31, 2017 31,634,143 114,263,997 21,581,838 2,079,230 169,559,208
At March 31, 2018 37,736,465 97,618,113 27,098,787 1,430,555 163,883,920
All assets have been recognised at cost
11. Intangible assets Computer Total

software
Gross block
At April 1, 2016 226,306,459 226,306,459
Addition 33,372,837 33,372,837
At March 31, 2017 259,679,296 259,679,296
Addition 30,841,673 30,841,673
At March 31, 2018 290,520,969 290,520,969
Amortisation
At April 1, 2016 190,158,572 190,158,572
Charge for the year 20,063,227 20,063,227
At March 31, 2017 210,221,799 210,221,799
Charge for the year 26,779,902 26,779,902
At March 31, 2018 237,001,701 237,001,701
Net block
At March 31, 2017 49,457,497 49,457,497
At March 31, 2018 53,519,268 53,519,268

145

12. Non-current investments 31-Mar-18 31-Mar-17
Non-trade investments (valued at cost)
Investment in equity instruments (unquoted)
200,000 (March 31, 2017 : 200,000) Equity shares of `10/- each 2,000,000 2,000,000
fully paid-up in Alpha Micro Finance Consultants Private Limited
2,000,000 2,000,000
Aggregate amount of unquoted investments 2,000,000 2,000,000
13. Deferred tax asset 31-Mar-18 31-Mar-17

Deferred tax asset (refer note 2.1 (l))
Impact of expenditure charged to the statement of profit 35,256,749 29,400,148
and loss in the current year but allowed for tax purposes on
payment basis
Impact of difference between tax depreciation and 16,288,274 15,522,982
depreciation/ amortization charged for the financial reporting
Impact of accumulated tax losses and unabsorbed depreciation 32,304,501 1,394,061,242
Impact of provision for standard and non performing assets 1,090,795,077 1,374,869,109
Deferred tax asset 1,174,644,601 2,813,853,481
Deferred tax asset recognised - -

14. Loans and Non-current Current
advances 31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17
A. Portfolio Loans
Joint liability
group loans
Unsecured, 9,200,170,978 7,764,199,482 75,533,657,425 58,843,733,290
considered good*
Unsecured, 2,083,148,435 4,221,751,591 - -
considered
doubtful**
11,283,319,413 11,985,951,073 75,533,657,425 58,843,733,290
Individual loans
Secured, 22,435,452 1,482,149 19,765,860 3,628,230
considered good*
Secured, - - - -
considered
doubtful**
22,435,452 1,482,149 19,765,860 3,628,230
11,305,754,865 11,987,433,222 75,553,423,285 58,847,361,520

146


Contd...
Joint liability
group loans
placed as
collateral
towards
securitisation
/ assignment
transaction
Unsecured, 94,926,484 33,792,281 1,608,286,779 832,123,389
considered good*
Unsecured, 27,953,273 58,845,836 - -
considered
doubtful**
122,879,757 92,638,117 1,608,286,779 832,123,389
(A) 11,428,634,622 12,080,071,339 77,161,710,064 59,679,484,909
* Represents standard assets in accordance with Company’s asset classification policy (refer note 2.1 (s) & 33)
** Represents non-performing assets in accordance with Company’s asset classification policy (refer note 2.1 (s) & 33)
B. Security
deposits
Unsecured, 39,233,044 35,357,675 - -
considered good
(B) 39,233,044 35,357,675 - -
C. Advances
recoverable in
cash or kind
Unsecured, 63,082,345 51,713,229 246,656,063 118,873,382
considered good
Unsecured, 60,682,185 37,919,205 - -
considered
doubtful
123,764,530 89,632,434 246,656,063 118,873,382
Provision (60,682,185) (37,919,205) - -
for doubtful
advances
(C) 63,082,345 51,713,229 246,656,063 118,873,382

147

Contd...
D. Other loans
and advances
(unsecured,
considered
good)
Loans to SKS - 21,362,356 - -
Microfinance
Employees
Benefit Trust
(refer note 35)
Advance fringe - 937,183 - -
benefit tax (net
of provision)
Advance income 407,946,579 163,757,867 - -
tax (net of
provision)
MAT credit 2,852,003,800 2,062,829,787 - -
entitlement
Prepaid expenses - 908,082 108,275,212 55,963,588
(D) 3,259,950,379 2,249,795,275 108,275,212 55,963,588
Total (A+B+C+D) 14,790,900,390 14,416,937,518 77,516,641,339 59,854,321,879

15. Other assets Non-current Current
31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17
Non-current bank 1,130,669,730 645,704,827 - -
balances (refer note 17)
Interest accrued but not - - 188,435,067 107,167,972
due on portfolio loans
Interest accrued and due - - 2,979,860 38,600,204
on portfolio loans
Interest accrued but not 28,465,369 33,610,551 110,185,493 217,431,858
due on deposits placed
with banks
Interest strip on 7,677,829 3,435,359 364,096,154 404,485,740
securitisation
transactions
Unbilled revenue - - 74,404,623 58,204,674
Others-unsecured, - - 294,845,570 -
considered good
1,166,812,928 682,750,737 1,034,946,767 825,890,448

148

16. Trade receivables Current

31-Mar-18 31-Mar-17
Unsecured, considered good
Outstanding for a period less than six months from the date 113,705,008 109,263,741
they are due for payment
Outstanding for a period exceeding six months from the date - -
they are due for payment
113,705,008 109,263,741

17. Cash and bank Non-current Current
balances 31-Mar-18 31-Mar-17 31-Mar-18 31-Mar-17
Cash and cash
equivalents
Balances with banks
On current accounts - - 7,465,747,536 8,015,383,461
Deposits with original - - 11,000,000,000 17,000,000,000
maturity of less than
three months
Cash on hand - - 115,202,322 30,518,906
- - 18,580,949,858 25,045,902,367
Other bank balances
Margin money deposit 1,130,669,730 645,704,827 1,883,573,209 3,017,782,205
(refer note (a) below)
1,130,669,730 645,704,827 1,883,573,209 3,017,782,205
Amount disclosed under (1,130,669,730) (645,704,827)
non-current assets (refer
note 15)
- - 20,464,523,067 28,063,684,572
Note (a): Represent margin money deposits placed to avail term loans from banks, financial institutions and placed as
cash collateral in connection with securitisation / managed loans transactions.

149

18. Revenue from operations 31-Mar-18 31-Mar-17
Interest income on portfolio loans 15,112,657,792 12,280,503,214
Excess interest spread on securitisation / income from 2,338,285,089 1,718,937,520
assignment (refer note 2.1 (b) (iv)
Other operating revenue
Loan processing fees 1,430,428,460 1,241,609,242
Recovery against loans written off 47,518,753 39,853,303
Interest on margin money deposits* 243,422,510 249,847,358
19,172,312,604 15,530,750,637
* Represents interest on margin money deposits placed to avail term loans from banks, financial institutions and on
deposits placed as cash collateral in connection with securitisation / managed loans transactions.
19. Other income 31-Mar-18 31-Mar-17
Interest on fixed deposits 552,605,053 597,992,308
Other fee income 1,284,237,772 1,146,835,905
Profit on sale of assets 1,580,908 911,102
Miscellaneous income 9,247,596 2,557,871
1,847,671,329 1,748,297,186
20. Employee benefit expenses 31-Mar-18 31-Mar-17

Salaries and bonus / incentives 4,077,656,224 3,365,924,305
Leave benefits 45,829,569 44,357,839
Contribution to provident fund * 150,571,721 135,639,108
Contribution to Employee State Insurance Corporation 71,511,759 50,548,068
Gratuity expenses (refer note 31) 66,681,781 83,889,178
Staff welfare expenses 252,749,938 188,167,576
Stock option expenditure 598,772,464 193,075,333
5,263,773,456 4,061,601,407
*Contribution to provident fund is netted of with amount of `5,042,020 received under the scheme “Pradhan Mantri
Rojgar Prostsahan Yojana” for the year ended March 31, 2018 (March 31, 2017: `Nil). Refer note 2.1 (t).

150


21. Finance costs 31-Mar-18 31-Mar-17
Interest
On term loans from banks 5,308,115,422 4,683,033,061
On term loans from financial institutions 461,476,378 368,376,411
On term loans from non banking financial companies 328,290,936 104,499,889
On bank overdraft facility 38,027,518 44,396,746
On debentures 288,967,018 480,352,406
On commercial paper 376,606,672 367,534,612
On shortfall in payment of advance income tax - 1,680,440
Other finance costs 198,639,146 151,527,829
Bank charges 104,024,627 23,212,105
7,104,147,717 6,224,613,499
22. Other expenses 31-Mar-18 31-Mar-17

Rent 189,864,762 167,495,484
Rates and taxes 95,330,486 42,411,957
Insurance 51,109,483 24,950,357
Repairs and maintenance
Plant and machinery 78,225,584 68,592,684
Others 103,686,743 97,218,488
Electricity charges 38,812,894 35,056,089
Travelling and conveyance 574,576,976 461,476,152
Communication expenses 70,825,496 78,999,577
Printing and stationery 102,922,483 97,594,128
Legal and professional fees 151,768,816 134,044,539
Directors' sitting fees 9,855,000 6,795,000
Auditors' remuneration (refer note A below) 15,011,198 14,002,227
Other provisions and write off 52,180,970 23,672,715
CSR expenditure (refer note 40) 42,489,315 46,647,335
Miscellaneous expenses 44,719,717 44,252,527
1,621,379,923 1,343,209,259

151

A. Payment to auditors 31-Mar-18 31-Mar-17
Audit fee 3,800,000 7,850,000
Quarterly audit / limited review 9,000,000 4,500,000
Other services (certification fees) 825,000 550,000
Reimbursement of expenses 1,386,198 1,102,227
15,011,198 14,002,227
23. Depreciation and amortisation expense 31-Mar-18 31-Mar-17

Depreciation of property, plant and equipment 105,711,505 107,651,095
Amortisation of intangible assets 26,779,902 20,063,227
132,491,407 127,714,322
24. Provisions and write-offs 31-Mar-18 31-Mar-17

Contingent provision against standard assets (refer note 33) 190,002,844 197,272,856
Provision for non-performing assets (refer note 33) (396,361,952) 2,405,261,999
Portfolio loans and other balances written off 2,076,762,292 86,719,013
Provision and loss on securitised / managed loan portfolio 480,000,469 904,276,873
(refer note 2.1 (s) (iii))
2,350,403,653 3,593,530,741
25. Earnings per share (EPS) 31-Mar-18 31-Mar-17

The following reflects the profit and share data used in the
basic and diluted EPS computations:
Net Profit for calculation of basic EPS 4,554,782,354 2,896,902,306
Net Profit for calculation of diluted EPS 4,554,782,354 2,896,902,306
No. of shares No. of shares

Weighted average number of equity shares in calculating 138,497,868 132,739,073
basic EPS
Effect of dilution:
Stock options granted under ESOP 1,311,785 1,619,126
Weighted average number of equity shares in calculating 139,809,653 134,358,199
diluted EPS
Basic (Computed on the basis of total profit for the year) 32.89 21.82
Diluted (Computed on the basis of total profit for the year) 32.58 21.56

152

26. Segment information
The Company operates in a single business segment i.e. financing, which has similar risks and
returns for the purpose of Accounting standard 17 on ‘Segment Reporting’ specified under section
133 of the Companies Act 2013, read with rule 7 of the Companies (Accounts) Rules, 2014 and
Companies (Accounting Standards) Amendment Rules, 2016. The Company operates in a single
geographical segment i.e. domestic.
27. Related parties

a. Names of the related parties with whom transactions have been entered
Key Management Personnel Mr. M. R. Rao, Managing Director and Chief Executive
Officer
Mr. S. Dilli Raj, President (Resigned w.e.f October 28,
2016)
Mr. K.V. Rao, Chief Operating Officer (Resigned w.e.f
January 31, 2018)
Mr. Ashish Damani, Chief Financial Officer
Mr. Rajendra Patil, Company Secretary
b. Related party transactions

Transactions during the year 31-Mar-18 31-Mar-17
Salary, incentives and perquisites
– Mr. M. R. Rao 41,604,482 36,498,849
– Mr. S. Dilli Raj (Resigned w.e.f October 28, 2016) - 23,260,785
– Mr. K.V. Rao (Resigned w.e.f January 31, 2018) 13,844,968 11,948,283
– Mr. Ashish Damani 9,806,169 8,402,406
– Mr. Rajendra Patil 9,072,952 7,983,153
Equity shares issued during the year pursuant to
stock options
– Mr. K.V. Rao (Resigned w.e.f January 31, 2018) 94,283 46,783
– Mr. Ashish Damani 28,150 42,610
– Mr. Rajendra Patil 41,080 -
Note: As the provisions for gratuity, leave benefits and stock option expenditure are made for the
Company as a whole, the amounts pertaining to the Key Management Personnel are not specifically
identified and included above.

153
28. Commitments not provided for

Particulars March 31, 2018 March 31, 2017
Estimated amount of contracts remaining to be 18,930,253 3,787,389
executed on capital account
Commitments related to loans sanctioned but 33,309,900 192,710,327
undrawn
29. Contingent liabilities not provided for

Credit enhancements provided by the Company 1,829,512,975 3,235,287,242
towards securitisation (including cash collaterals,
principal and interest subordination)
Performance security provided by the Company 732,520,102 -
pursuant to business correspondent agreement

154

30. Stock option scheme

The Company has provided various share-based payment schemes to its Directors and Employees. The
plans in operation are Plan II (Other Independent Directors) and Plan III (Employees). The alphabet a, b,
c, etc. represents different grants made under these plans. During the year ended March 31, 2018, the
following series were in operation:
Particulars Plan II (f) Plan II (g) Plan III (g) Plan III (h) Plan III (i)
Date of grant Nov 23, 2011 Mar 12, 2013 Mar 22, 2013 Aug 23, 2013 Oct 23, 2013
Date of Board approval Nov 23, 2011 Mar 12, 2013 Mar 22, 2013 Aug 23, 2013 Oct 23, 2013
Date of shareholder's Jul 16, 2010 Dec 07, 2011 Dec 07, 2011 Dec 07, 2011 Dec 07, 2011
approval
Number of options 300,000 400,000 119,112 15,760 11,564
granted
Exercise price Rs.109.95 Rs.150.00 Rs.150 Rs.113 Rs.160.45
Method of settlement Equity Equity Equity Equity Equity
Vesting period End of year End of year End of year 1 25 % equally 25 % equally
1 – 33% 1 – 33% – 33% End of at the end of at the end of
End of year End of year year 2 – 33% each year each year
2 – 33% 2 – 33% End of year
End of year End of year 3 – 34%
3 – 34% 3 – 34%
Exercise period 36 months On or before On or before On or before On or before
from the Mar 11, 2018 Mar 21, 2018 Aug 22, 2018 Oct 22, 2018
date of
vesting
Vesting conditions Refer note 1 Refer note 1 Refer note 1 Refer note 1 Refer note 1
Name of the plan ESOP 2010 ESOP 2011 ESOP 2011 ESOP 2011 ESOP 2011
Particulars Plan III (j) Plan III(k) Plan III (l) Plan III (m) Plan III (n)
Date of grant Feb 04, 2014 April 28, August 16, October 29, January 30,
2014 2014 2014 2015
Date of Board approval Feb 04, 2014 April 28, August 16, October 29, January 30,
2014 2014 2014 2015
Date of shareholder's Dec 07, 2011 Dec 07, 2011 Nov 08, 2008 Dec 07, 2011 Dec 07, 2011
approval
Number of options 58,000 50,000 2,082,200 87,000 93,500
granted
Exercise price Rs.174.95 Rs.253.65 Rs.264.75 Rs.316.15 Rs.426.85

155
Particulars Plan III (j) Plan III (k) Plan III (l) Plan III (m) Plan III (n)
Vesting period 25 % equally 25 % equally End of year 1 25 % equally 25 % equally
at the end of at the end of – 33% End of at the end of at the end of
each year each year year 2 – 33% each year each year
End of year
3 – 34%
Exercise period On or before On or before On or before On or before On or before
Feb 03, 2019 April 27, August 15, October 28, January 29,
2019 2018 2019 2020
Particulars Plan III (o) Plan III (p) Plan III (q) Plan III (r) Plan III (s)
Date of grant May 04, 2015 July 22, 2015 October 30, February 04, February 13,
2015 2016 2016
Date of Board approval May 04, 2015 July 22, 2015 October 30, February 04, February 13,
2015 2016 2016
Date of shareholder's Dec 07, 2011 Dec 07, 2011 Dec 07, 2011 Dec 07, 2011 Dec 07, 2011
approval
Number of options 21,500 45,500 3,000 66,000 4,500
granted
Vesting period 25 % equally 25 % equally 25 % equally 25 % equally 25 % equally
at the end of at the end of at the end of at the end of at the end of
each year each year each year each year each year
May 03, 2020 July 21, 2020 October 29, February 03, February 12,
2020 2021 2021
Particulars Plan III (t) Plan III (u) Plan III (v) Plan III (w) Plan III (x)
Date of grant May 04, 2016 July 21, 2016 October 28, October 28, January 24,
2016 2016 2017
Date of Board approval May 04, 2016 July 21, 2016 October 28, October 28, January 24,
2016 2016 2017
Date of shareholder's Dec 07, 2011 Dec 07, 2011 Dec 07, 2011 Sep 30, 2009 Dec 07, 2011
approval July 16, 2010

156

Particulars Plan III (t) Plan III (u) Plan III (v) Plan III (w) Plan III (x)
Number of options 42,500 143,100 69,500 1,999,202 49,400
granted
Vesting period 25 % equally 25 % equally 25 % equally End of year 25 % equally
at the end of at the end of at the end of 1 – 33% at the end of
each year each year each year End of year each year
2 – 33%
End of year
3 – 34%
May 03, July 20, October 27, October 27, January 23,
2021 2021 2021 2020 2022
ESOP 2010
Particulars Plan III Plan III (z) Plan III Plan III Plan III Plan III (ad)
(y) (aa) (ab) (ac)
Date of grant May 01, August 01, October October January February 22,
2017 2017 14, 2017 28, 2017 30, 2018 2018
Date of Board May 01, August 01, October October January February 22,
approval 2017 2017 14, 2017 28, 2017 30, 2018 2018
Date of shareholder's Dec 07, Dec 07, Nov 08, Dec 07, Sep 30, July 07, 2017
approval 2011 2011 2008 2011 2009
Sep 30,
2009
Dec 07,
2011
July 07,
2017
Number of options 14,000 72,200 3,330,322 35,000 17,000 80,000
granted
Exercise price Rs.803.65 Rs.844.80 Rs.1,004.00 Rs.972.90 Rs.1,031.65 Rs.969.20
Method of settlement Equity Equity Equity Equity Equity Equity
Vesting period 25 % 25 % End of year 25 % 25 % 25 % equally
equally at equally at 1 – 33% equally at equally at the end of
the end the end of End of year the end of at the each year
of each each year 2 – 33% each year end of
year End of year each year
3 – 34%

157
(y) (aa) (ab) (ac)
Exercise period On or On or On or On or On or On or before
before before before before before February 21,
April 30, July 31, October October January 2023
2022 2022 13, 2021 27, 2022 29, 2023
Vesting conditions Refer Refer note Refer note Refer note Refer Refer note 1
note 1 1 1 1 note 1
Name of the plan ESOP ESOP ESOP 2008 ESOP 2011 ESOP ESOP 2011
2011 2011 ESOP 2009 2009
ESOP 2011
Note 1: Option holders are required to continue to hold the services being provided to the Company at
the time of exercise of options.
The details of all grants in operation during financial year 2017-18 have been summarised below:

Plan Grant Exercise Outstanding Grant Exercised Lapsed Outstanding Exercisable Weighted Weighted
Date Price at during during during at the end at the end average average
the the year the year the year of of Remaining share price
beginning the year the year contractual during the
of life of exercise
the year options period
(in years) (in `)^
Plan II (f) 23-Nov-11 109.95 68,000 - 68,000 - - - - 986.03
Plan II (g) 12-Mar-13 150.00 250,000 - 250,000 - - - - 991.78
Plan III (g) 22-Mar-13 150.00 2,246 - 2,246 - - - - 902.33
Plan III (h) 23-Aug-13 113.00 1,543 - 1,543 - - - - 902.33
Plan III (i) 23-Oct-13 160.45 5,782 - 5,782 - - - - 1,006.51
Plan III (j) 04-Feb-14 174.95 14,500 - 14,500 - - - - 1,030.55
Plan III (k) 28-Apr-14 253.65 37,500 - 25,000 - 12,500 - 1.1 987.65
Plan III (l) 16-Aug-14 264.75 1,302,316 - 851,926 4,891 445,499 445,499 0.4 963.40
Plan III (m) 29-Oct-14 316.15 14,500 - 7,250 - 7,250 - 1.6 983.18
Plan III (n) 30-Jan-15 426.85 45,627 - 22,935 - 22,692 9,192 1.8 982.99
Plan III (o) 04-May-15 470.05 18,750 - 6,575 3,375 8,800 300 2.1 804.88
Plan III (p) 22-Jul-15 529.15 37,500 - 10,300 8,500 18,700 6,200 2.3 971.77
Plan III (q) 30-Oct-15 433.40 2,500 - 850 - 1,650 150 2.6 911.08
Plan III (r) 04-Feb-16 548.45 8,000 - - - 8,000 4,000 2.8
Plan III (s) 13-Feb-16 495.65 4,500 - - - 4,500 2,250 2.9
Plan III (t) 04-May-16 614.50 42,500 - 249 - 42,251 10,376 3.1 780.84
Plan III (u) 21-Jul-16 782.15 143,100 - 6,799 18,500 117,801 25,476 3.3 1,031.17

158

Date Price at during during during at the end at the end average average
the the year the year the year of of Remaining share price
beginning the year the year contractual during the
of life of exercise
the year options period
(in years) (in `)
Plan III (v) 28-Oct-16 879.15 69,500 - - 13,500 56,000 14,000 3.6
28-Oct-16 879.15 1,958,448 - 66,237 1,750,879 555,961 2.6 1,050.44
Plan III (w)
141,332
Plan III (x) 24-Jan-17 669.70 49,400 - 1,500 - 47,900 10,850 3.8 1,035.75
Plan III (y) 01-May-17 803.65 - 14,000 - - 14,000 - 4.1

Plan III (z) 01-Aug-17 844.80 - 72,200 - - 72,200 - 4.3
Plan III (aa) 14-Oct-17 1,004.00 - 3,330,322 - 134,679 3,195,643 - 3.5

Plan III (ab) 28-Oct-17 972.90 - 35,000 - 6,000 29,000 - 4.6
Plan III (ac) 30-Jan-18 1,031.65 - 17,000 - - 17,000 - 4.8
Plan III (ad) 22-Feb-18 969.20 - 80,000 - - 80,000 - 4.9
4,076,212 3,548,522 1,341,692 330,777 5,952,265 1,084,254
Plan III (l) - Notice of exercise received for 1,370 options, however the allotment was pending as on
March 31, 2018
Plan III (n) - Notice of exercise received for 480 options, however the allotment was pending as on
March 31, 2018^ Disclosure of weighted average share price during the exercise period is applicable
only for plans where there has been an exercise of options in current financial year.
The details of all grants in operation during financial year 2016-17 have been summarised below:

Date Price at during during during at the end of at the end average average
the the year the year the year the year of Remaining share price
beginning of the year contractual during the
the year life of exercise
options period
(in years) (in `)^
Plan II (f) 23-Nov-11 109.95 134,000 - 66,000 - 68,000 68,000 0.6 687.43
Plan II (g) 12-Mar-13 150.00 300,000 - 50,000 - 250,000 250,000 0.9 760.29
Plan III (a) 03-Nov-09 300.00 1,300 - 1,300 - - - - 617.37
Plan III (c) 15-Dec-09 300.00 40,300 - 39,555 745 - - - 661.98
Plan III (e) 04-May-10 300.00 265 - 265 - - - - 628.47
Plan III (f) 07-Sep-11 229.40 165,393 - 147,727 17,666 - - - 762.08
Plan III (g) 22-Mar-13 150.00 65,168 - 62,922 - 2,246 2,246 1.0 730.95
Plan III (h) 23-Aug-13 113.00 3,088 - 1,545 - 1,543 - 1.4 892.65
Plan III (i) 23-Oct-13 160.45 5,782 - - - 5,782 2,891 1.6

159

Date Price at during during during at the end of at the end average average
the the year the year the year the year of Remaining share price
beginning of the year contractual during the
the year life of exercise
options period
(in years) (in `)
Plan III (j) 04-Feb-14 174.95 47,450 - 18,450 14,500 14,500 7,250 1.8 675.19
Plan III (k) 28-Apr-14 253.65 37,500 - - - 37,500 12,500 2.1
Plan III (l) 16-Aug-14 264.75 1,912,695 - 518,189 92,190 1,302,316 707,688 1.4 818.22
Plan III (m) 29-Oct-14 316.15 43,500 - 7,250 21,750 14,500 - 2.6 687.43
Plan III (n) 30-Jan-15 426.85 77,375 - 13,373 18,375 45,627 18,627 2.8 784.10
Plan III (o) 04-May-15 470.05 21,500 - 2,750 - 18,750 2,625 3.1 787.43
Plan III (p) 22-Jul-15 529.15 37,500 - - - 37,500 9,375 3.3
Plan III (q) 30-Oct-15 433.40 3,000 - 500 - 2,500 250 3.6 677.84
Plan III (r) 04-Feb-16 548.45 37,000 - - 29,000 8,000 2,000 3.8
Plan III (s) 13-Feb-16 495.65 4,500 - - - 4,500 1,125 3.9
Plan III (t) 04-May-16 614.50 42,500 - - 42,500 - 4.1
Plan III (u) 21-Jul-16 782.15 143,100 - - 143,100 - 4.3
Plan III (v) 28-Oct-16 879.15 69,500 - - 69,500 - 4.6
Plan III (w) 28-Oct-16 879.15 1,999,202 - 40,754 1,958,448 - 3.6
Plan III (x) 24-Jan-17 669.70 49,400 - - 49,400 - 4.8
2,937,316 2,303,702 929,826 234,980 4,076,212 1,084,577
Plan III (a) - Exercise period ending on November 2, 2015, extended upto May 2, 2016
Plan III (c) - Original exercise period ending on December 14, 2015, extended upto June 14, 2016
^ Disclosure of weighted average share price during the exercise period is applicable only for plans
where there has been an exercise of options in current financial year.
Stock options granted during the year: The Black-Scholes Model has been used for computing the
weighted average fair value considering the following:
Plan (y) Plan (z) Plan (aa) Plan (ab) Plan (ac) Plan (ad)
Share price on the 803.65 884.80 1004.00 972.90 1031.65 969.20
date of grant (Rs.)
Exercise price (Rs.) 803.65 884.80 1004.00 972.90 1031.65 969.20
Expected volatility (%) 47.04 48.03 44.30 44.52 31.68 30.49
Expected dividend rate 0 0 0 0 0 0
(%)

160

(y) (aa) (ab) (ac)
Life of the options Vest 1 - 3.00 Vest 1 - 3.00 Vest 1 -2.50 Vest 1 - 3.00 Vest 1 - 3.00 Vest 1 - 3.00
granted (years) Vest 2 - 3.50 Vest 2 - 3.50 Vest 2 - 3.00 Vest 2 - 3.50 Vest 2 - 3.50 Vest 2 - 3.50
Vest 3 - 4.00 Vest 3 - 4.00 Vest 3 - 3.50 Vest 3 - 4.00 Vest 3 - 4.00 Vest 3 - 4.00
Vest 4 - 4.50 Vest 4 - 4.50 Vest 4 - 4.50 Vest 4 - 4.50 Vest 4 - 4.50
Risk-free interest rate Vest 1 - 6.90 Vest 1 - 6.55 Vest 1 - 6.56 Vest 1 - 6.65 Vest 1 - 7.19 Vest 1 - 7.31
(%) Vest 2 - 7.00 Vest 2 - 6.59 Vest 2 - 6.62 Vest 2 - 6.69 Vest 2 - 7.25 Vest 2 - 7.44
Fair value of the option Vest 1 - 312.51 Vest 1 - 330.04 Vest 1 - 336.50 Vest 1 - 361.80 Vest 1 - 316.32 Vest 1 - 292.25
Weighted average fair 350.90 369.36 371.18 406.72 361.91 336.41

value
The expected life of the stock option is based on historical data and current expectations and is
not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the
assumption that the historical volatility for the one year period ended on the date of grant is indicative
of future trends, which also may not necessarily be the actual outcome.
Effect of the share-based payment plans on the statement of profit and loss and on the financial
position:
Particulars For the For the

year ended year ended
March 31, March 31,
2018 2017
Employees stock option expenditure 598,772,464 193,075,333
Stock options outstanding (gross) 1,892,967,706 834,524,720

Deferred compensation cost outstanding (1,108,928,161) (494,994,651)
Stock options outstanding (net) 784,039,545 339,530,069
31. Retirement benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five years or
more of service is eligible for gratuity on cessation of employment and it is computed at 15 days
salary (last drawn salary) for each completed year of service subject to limit of Rs.2,000,000 as per The
Payment of Gratuity Act, 1972 as amended from time to time. The scheme is funded with an insurance
Company in the form of a qualifying insurance policy.

161
The following tables summarise the components of net benefit expense recognised in the statement of
profit and loss and the funded status and amounts recognised in the Balance Sheet
for the gratuity plan.
Statement of profit and loss

Net employees benefit expense (recognised in employees benefit expense):
Particulars For the year ended For the year ended

March 31, 2018 March 31, 2017
Current service cost 39,108,194 29,015,447
Interest cost on benefit obligation 18,480,338 15,718,286
Past service cost 3,861,391 -
Expected return on plan assets (6,029,708) (4,522,580)
Net actuarial (gain) / loss recognised in the year 11,261,566 43,678,025
Net employee benefit expense 66,681,781 83,889,178
Actual return on plan assets 5,360,897
Balance Sheet
Details of provision for gratuity:
Particulars Gratuity
March 31, 2018 March 31, 2017
Defined benefit obligation 327,054,906 271,370,608
Fair value of plan assets (143,893,964) (72,212,077)
Plan liability 183,160,942 199,158,531
Changes in the present value of the defined benefit obligation are as follows:
March 31, 2018 March 31, 2017
Opening defined benefit obligation 271,370,608 200,488,343
Interest cost 18,480,338 15,718,286
Current service cost 39,108,194 29,015,447
Past service cost 3,861,391 -
Benefits paid (16,577,150) (18,466,321)
Actuarial (gains) / losses on obligation 10,811,525 44,614,853
Closing defined benefit obligation 327,054,906 271,370,608

162

Changes in the fair value of plan assets are as follows:
March 31, 2018 March 31, 2017
Opening fair value of plan assets 72,212,077 51,686,625
Expected return 6,029,708 4,522,580
Contributions by employer 82,679,370 33,532,365
Benefits paid (16,577,150) (18,466,321)
Actuarial gains / (losses) (450,041) 936,828
Closing fair value of plan assets 143,893,964 72,212,077
The Company expects to contribute Rs.25,400,000 (March 31, 2017: Rs. 37,300,000) to gratuity in the
next year.
The major categories of plan assets as a percentage of the fair value of total plan assets are as follows:
March 31, 2018 March 31, 2017
Investment with insurer 100% 100%
The overall expected rate of return on assets is determined based on the average long term rate of
return expected on investment of the fund during the estimated term of the obligations.
The principal assumptions used in determining gratuity:
March 31, 2018 March 31, 2017
Discount rate 7.65% 6.81%
Expected rate of return on assets 8.35% 8.35%
Salary escalation rate per annum 12.5% for the first 12.5% for the first
two years and 7% two years and 7%
there after there after
Rates of leaving service 15% 15%

163
Amounts for the current and previous four years are as follows:
31-Mar-18 31-Mar-17 31-Mar-16 31-Mar-15 31-Mar-14
Defined benefit 327,054,906 271,370,608 200,488,343 118,085,811 87,519,363
obligation
Plan assets 143,893,964 72,212,077 51,686,625 22,983,541 17,648,775
Surplus / (deficit) (183,160,942) (199,158,531) (148,801,718) (95,102,270) (69,870,588)
Experience 25,492,917 30,370,373 57,600,983 19,996,147 11,391
adjustments on plan
liabilities
Experience (450,041) 936,828 2,147,634 8,825 (940,135)
adjustments on plan
assets
32. Expenditure in foreign currency

March 31, 2018 March 31, 2017
Professional fees* 2,550,000 16,331,493
Travelling expenses 2,821,531 2,469,755
Total 5,371,531 18,801,248
*Professional fees for the year ended March 31, 2017 includes Rs.13,826,493 towards consultancy
services in connection with the Qualified Institutional Placement adjusted to securities premium
account as per section 52 of the Companies Act, 2013. The expenditure in foreign currency does not
include commission payable to three foreign directors (Previous year: Rs. 10,800,000) as the amount
payable to individual directors shall be determined by the Board of Directors, in accordance with the
shareholder resolution passed at 12th Annual General Meeting held on September 23, 2015. However,
the total amount payable to all directors has been charged to the statement of profit and loss.
33. Loan portfolio and provision for standard and non-performing assets as at March 31,
2018:
Asset Portfolio loans outstanding Provision for standard Portfolio loans outstanding
classifi- (Gross) and non-performing assets (Net)
cation
As at As at As at Provision Provision As at As at As at
March 31, March 31, March 31, made during written March 31, March 31, March 31,
2018 2017 2017 the year back 2018 2018 2017
during the
year
Standard 86,479,242,977 67,478,958,822 674,789,588 190,002,842 - 864,792,431 85,614,450,547 66,804,169,234
assets
Sub-standard 160,444,890 3,706,712,426 1,853,356,214 - 1,773,133,769 80,222,445 80,222,445 1,853,356,212
assets
Loss assets 1,950,656,819 573,885,000 573,885,000 1,376,771,818 - 1,950,656,818 - -
Total 88,590,344,686 71,759,556,248 3,102,030,802 1,566,774,660 1,773,133,769 2,895,671,694 85,694,672,992 68,657,525,446

164

Loan portfolio and provision for standard and non-performing assets as at March 31, 2017:
Asset Portfolio loans outstanding Provision for standard Portfolio loans outstanding
classifi- (Gross) and non-performing assets (Net)
cation
As at As at As at Provision Provision As at As at As at
March 31, March 31, March 31, made during written March 31, March 31, March 31,
2017 2016 2016 the year back 2017 2017 2016
during
the year
Standard 67,478,958,822 49,724,093,038 477,516,731 197,272,854 - 674,789,588 66,804,169,234 49,246,576,307
assets
Sub- 3,706,712,426 38,851,191 19,425,596 1,833,930,618 - 1,853,356,214 1,853,356,212 19,425,595
standard
assets
Loss assets 573,885,000 2,553,620 2,553,620 571,331,380 - 573,885,000 - -
Total 71,759,556,248 49,765,497,849 499,495,947 2,602,534,852 - 3,102,030,802 68,657,525,446 49,266,001,902
34. Leases (operating lease)

Office Premises:
Head office, registered office and branch office premises are obtained on operating lease. The
branch office premises are generally rented on cancellable term ranging from twelve months to
thirty six months with or without escalation clause, however none of the branch lease agreement
carries non-cancellable lease periods. The registered office premise has been obtained on a lease
term of thirty six months with an escalation clause of five percent after every twelve months. The
rent agreement for head office premise has been renewed on a lease term of nine years with an
escalation clause of five percent after every twelve months. There are no restrictions imposed
by lease arrangements. There are no subleases. Lease payments during the year are charged to
statement of profit and loss.
Descriptions March 31, 2018 March 31, 2017

Operating lease expenses recognised in the statement of 189,864,762 167,495,484
profit and loss
Minimum lease obligations
Not later than one year - 270,111
Later than one year but not later than five years - -
Vehicles:
The Company has taken certain vehicles on cancellable operating lease. Total lease expense under
cancellable operating lease during the year was Rs.34,301,259 (Previous year: Rs.27,686,441).
35. The Company had given interest free collateral free loan to an employee benefit trust under the
Employee Stock Purchase Scheme to provide financial assistance to its employees to purchase
equity shares of the Company under such scheme. The loan was repayable by the trust under a
back to back arrangement by the trust with the employees of the Company. The loan was fully
repaid during the year ended March 31, 2018 and the year-end balance for the total loan granted
is Rs. Nil (March 31, 2017: Rs.21,362,356 ).

165
36. In the financial years 2013-14, 2015-16 and 2016-17, the Company has received five demand
orders from service tax authorities against the show-cause notices received in earlier years. The
orders pertain to applicability of service tax on various items like income from asset assignment
transactions, administration charges collected by the Company on distribution of insurance
products to its borrowers, reimbursement of certain expenses from an insurance company, etc.
The amount of service tax demanded in two orders received in 2013-14 aggregated to
Rs.460,522,457 (plus penalty and interest, as applicable). The Company had filed appeals and
stay petition against these demand orders with The Customs, Excise and Service Tax Appellate
Tribunal (‘CESTAT’) and received a stay order in respect of one of the two orders amounting to
Rs.118,091,538 (plus penalty and interest, as applicable).
In the financial year 2015-16, the Company received a stay order from CESTAT for the demand
raised in the previous year for Rs.342,493,571 (plus penalty and interest, as applicable) against
pre-deposit of Rs.30,000,000. Further, the Company has received three orders on similar matters
aggregating Rs.276,831,601 (plus penalty and interest, as applicable). The Company has filed an
appeal before the CESTAT against these orders.
Based on the merits of the cases, the Company and its tax advisors believe that its position is likely
to be upheld in the appellate process for the above matters. Accordingly, no provision has been
made for the amounts mentioned above as at March 31, 2018.
37. The Company has provided for minimum alternate tax (‘MAT’) liability of Rs.789,174,013 for the
year ended March 31, 2018 and recognised a corresponding MAT credit entitlement as an asset on
the balance sheet.
38. The Company has certain litigations pending with income tax authorities, service tax authorities
and other litigations which have arisen in the ordinary course of business. The Company
has reviewed all such pending litigations having an impact on the financial position, and has
adequately provided for where provisions are required and disclosed the contingent liabilities
where applicable, in its financial statements. Refer note 36 for further details.
39. Dues to micro, small and medium enterprises

There are no amounts that need to be disclosed in accordance with the Micro Small and Medium
Enterprise Development Act, 2006 (the ‘MSMED’) pertaining to micro or small enterprises.
For the year ended March 31, 2018, no supplier has intimated the Company about its status as
micro or small enterprises or its registration with the appropriate authority under MSMED.
40. There are no transactions in Specified Bank Notes (SBN) during the year ended March 31, 2018.

166

The disclosure on SBN held and transacted during the period from 8 November, 2016 to 30
December, 2016 pertain to financial year ended March 31, 2017 is given below:
a)
(` in crore)
Particulars SBNs Other Total
denomination
Notes
Closing cash in hand as on 29.95 14.91 44.86
November 8, 2016
(+) Permitted receipts (refer Note 13.32 2,168.33 2,181.65
1 below)
(-) Permitted payments (0.03) (1,495.05) (1,495.08)
(-) Amount deposited in Banks (138.84) (660.10) (798.94)
(refer Note 2 below)
Closing cash in hand as on - 28.09 28.09
December 30, 2016
Notes:
1. Represent collections in Specified Bank Notes made by the Company on behalf of a bank
against loan obligations of the bank, pursuant to a Business Correspondent arrangement,
of Rs.13.22 crores from November 9, 2016 to November 11, 2016 and Rs.0.03 crores on
November 14, 2016. Such collections were remitted to the corresponding bank in the
ordinary course of business.
2. In addition to the permitted receipts mentioned in the table above, Rs.95.59 crores was
received by the Company in Specified Bank Notes from its loan borrowers from November
9, 2016 to November 11, 2016 and Rs.0.01 crores on November 14, 2016. These amounts
were collected against the borrowers’ regular loan obligations which had fallen due in the
ordinary course of business and were deposited into bank accounts of the Company.
Such collections were made pending the outcome of the Company’s representation to the
Reserve Bank of India (RBI) on November 9, 2016 and November 11, 2016 seeking permission
for collecting loan repayments from its borrowers in specified bank notes in view of the
difficulties and operational challenges faced by NBFC-MFIs owing to the profile of their
borrowers. In absence of any response from the RBI, the Company discontinued further
collections in SBNs with effect from November 11, 2016 except Rs.0.01 crores received on
November 14, 2016.
b. Amounts received by the Company from November 9, 2016 to November 14, 2016
represents collection towards existing loan obligations of around 28.6 lakh borrowers across
1,220 branches. The maximum amount so collected against the scheduled loan instalment
from any single borrower is Rs.1,635 (average of Rs.575 per borrower against the scheduled
loan instalment). Such collections have been made in the ordinary course of business from
borrowers, in respect of whom the Company has obtained/maintained adequate record of
their KYC documents (comprising identification and address proof) as prescribed by RBI and
validated by independent credit bureau. The information mentioned in this note has been
certified by the management of the Company and relied upon by the auditors.

167
41. Details of CSR expenses:

March 31, 2018 March 31, 2017
a) Gross amount required to be spent by the 64,420,481 31,192,927
Company during the year
b) Amount spent during the year on purposes other
than construction/acquisition of any asset
Paid (Includes payment of Rs. 16,353,102 50,954,399 30,294,233
which were provided as on 31-Mar-17)
Yet to be paid 7,888,018 16,353,102
Total 58,842,417 46,647,335
42. The Board of Directors of the Company at its meeting held on October 14, 2017 had approved the
Composite Scheme of Arrangement (“Scheme”) between the Company, IndusInd Bank Limited
(“Bank”) and the proposed wholly owned subsidiary of the Bank (to be incorporated subject
to the receipt of approval from the Reserve Bank of India) (“Subsidiary”) and their respective
shareholders and creditors under Sections 230-232 of the Companies Act, 2013, subject to receipt
of applicable regulatory approvals.
In this regard, as on date of these financial statements, the amalgamation has been approved
by the Competition Commission of India on December 19, 2017 and the Reserve Bank of India
has conveyed to the Bank its “no objection” for the proposal for voluntary amalgamation of the
Company with the Bank subject to fulfilment of the other applicable statutory and regulatory
approvals. The necessary applications for the approval of Securities & Exchange Board of India
(SEBI), BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE”) (“BSE” and “NSE”
collectively referred to as the “Stock Exchanges”) have been submitted to the Stock Exchanges on
March 28, 2018 and the same are pending disposal as on the date of these financial statements.
As on date, the Scheme remains subject to the receipt of approval from SEBI/Stock Exchanges, the
National Company Law Tribunal, the respective shareholders and creditors of the Company and
the Bank and other applicable statutory and regulatory approvals.
Upon the Scheme becoming effective, all properties and liabilities of the amalgamating company,
i.e., BFIL shall become properties and liabilities of the amalgamated company, i.e., IndusInd Bank
Limited. The draft scheme submitted to the Stock Exchanges is available on the websites of the
Stock Exchanges and the Company.
43. A sum of Rs. 313,230 relating to unclaimed share application money of the Company’s initial public
offer (IPO) that were lying in IPO Escrow Account from August 27, 2010, has been transferred to
Investor Education and Protection Fund Account on March 15, 2018.

168

44. Additional disclosures required by the RBI
a. Capital to Risk Assets Ratio (‘CRAR’):

i) CRAR (%) 33.17% 33.51%
ii) CRAR – Tier I Capital (%) 32.64% 33.04%
iii) CRAR – Tier II Capital (%) 0.53% 0.47%
iv) Amount of subordinated debt raised as - -
Tier-II capital
v) Amount raised by issue of Perpetual - -
Debt Instruments
b. Investments:
(` in crore)
(1) Value of Investments
(i) Gross Value of Investments
(a) in India 0.20 0.20
(a) outside India, - -
(ii) Provisions for Depreciation
(a) in India - -
(a) outside India - -
(iii) Net Value of Investments
(a) in India 0.20 0.20
(a) outside India, - -
(2) Movement of provisions held towards
depreciation on investments
(i) Opening balance - -
(ii) Add : Provisions made during the - -
year
(iii) Less : Write-off / write-back of - -
excess provisions during the year
(iv) Closing balance - -
c. Derivatives:
The Company has no transactions / exposure in derivatives in the current and previous year.
The Company has no unhedged foreign currency exposure as on March 31, 2018 (March 31,
2017: Nil).

169
d. Disclosures relating to Securitisation:

During the year the Company has sold loans through securitization. The information on
securitization activity of the Company as an originator is as shown below:
(` in crore)
March 31, 2018 March 31, 2017
Total number of loans securitised 522,392 476,781
Total book value of loans securitised 1,018.49 991.08
Total book value of loans securitised including 1,114.49 1,075.86
loans placed as collateral
Sale consideration received for loans 1,018.49 991.08
securitised
Excess interest spread recognised in the 80.10 140.45
statement of profit and loss
(` in crore)
Particulars As at March As at March
31, 2018 31, 2017
Credit enhancements provided and outstanding (Gross):
Interest subordination 37.18 40.79
Principal subordination 105.54 144.64
Cash collateral 121.46 202.49
(` in crore)
Sr. No Particulars For the year For the year
ended March 31, ended March 31,
2018 2017
1. No. of SPVs sponsored by the NBFC 6 10
for securitisation transactions and
outstanding as on March 31, 2018
2. Total amount of securitised assets as per 813.24 823.38
the books of the SPVs sponsored by the
NBFC as on the date of balance sheet:
3. Total amount of exposures retained
to comply with minimum retention
requirement (‘MRR’) as on the date of
balance sheet:
a) Off balance sheet exposures
-First loss - -
-Others - -
b) On balance sheet exposures

170

(` in crore)
Sr. No Particulars For the year For the year
ended March 31, ended March 31,
2018 2017
-First loss 105.54 144.64
-Others - -
4. Amount of exposures to other than MRR:
a) Off-balance sheet exposures
i) Exposure to own securitisations
-First loss - -
-Others - -
ii) Exposure to third party
securitisations
-First loss - -
-Others - -
b) On-balance sheet exposures
i) Exposure to own securitisations
-First loss 158.64 243.28
-Others
ii) Exposure to third party
securitisations
-First loss - -
-Others - -
e. Details of financial assets sold to securitisation / reconstruction company for asset

reconstruction:
The Company has not sold financial assets to Securitisation / Reconstruction companies for
asset reconstruction in the current and previous year.
f. Details of assignment transactions undertaken:

(` in crore)
No. of accounts 1,948,653 565,929
Aggregate value (net of provision) of 3,161.91 739.19
accounts sold
Aggregate consideration 3,161.91 739.19
Additional consideration realised in respect of - -
accounts transferred in earlier years
Aggregate gain or loss over net book value - -

171
g. Details of non-performing financial assets purchased / sold:

The Company has not purchased / sold non-performing financial assets in the current and
previous year.
h. Asset Liability Management:

Maturity pattern of certain Assets and Liabilities as on March 31, 2018:
(` in crore)
Particulars Upto Over Over Over Over Over Over Over Total
30/31 1months 2 months 3 months 6 months 1 year 3 years 5
days upto upto upto upto upto upto years
2 months 3 months 6 months 1 year 3 years 5 years
Deposits - - - - - - - - -
Advances * 1,015.77 1,054.44 884.97 2,283.64 2,503.90 1,262.34 8.49 14.11 9,027.67
Investments - - - - - - - 0.20 0.20
Borrowings 444.90 496.33 567.71 1,342.47 2,379.42 2,385.82 - - 7,616.66
Foreign currency assets - - - - - - - - -
Foreign currency liabilities - - - - - - - - -
* net of provisions on NPA
Maturity pattern of certain Assets and Liabilities as on March 31, 2017:

(` in crore)
Particulars Upto Over Over Over Over Over Over Over Total
30/31 1months 2 months 3 months 6 months 1 year 3 years 5
days upto upto upto upto upto upto years
2 months 3 months 6 months 1 year 3 years 5 years
Deposits - - - - - - - - -
Advances * 756.97 809.48 711.68 1,659.40 2,042.12 1,009.47 185.34 9.94 7,184.40
Investments - - - - - - - 0.20 0.20
Borrowings 492.55 323.17 428.82 1,536.67 2,135.33 2,191.88 16.67 - 7,125.08
Foreign currency assets - - - - - - - - -
Foreign currency liabilities - - - - - - - - -
* net of provisions on NPA
i. Exposures:
The Company has no exposure to the real estate sector and capital market directly or
indirectly in the current and previous year.
j. Details of financing of parent company products:

This disclosure is not applicable as the Company does not have any holding / parent
company.

172

k. Unsecured Advances – Refer note 14.
l. Registration obtained from other financial sector regulators:

The Company is registered with following other financial sector regulators (Financial
regulators as described by Ministry of Finance):
i. Ministry of Corporate Affairs

ii. Ministry of Finance (Financial Intelligence Unit)
m. Disclosure of penalties imposed by RBI and other regulators:

No Penalties were imposed by RBI and other regulators during current and previous year
n. Ratings assigned by credit rating agencies and migration of ratings during the year:
(` in crore)
Deposits Name of the Date of Rating Valid Borrowing
Instrument rating agency rating assigned up to limit or
conditions
imposed
by rating
agency
MFI grading CARE Ratings 26-July-17 MFI 1 See Note-1
Bank Loan Rating
(Long-term CARE Ratings 24-Jan-18 CARE A+
facilities) See Note-2 7,500.00
Bank Loan Rating &3
(Short-term CARE Ratings 24-Jan-18 CARE A1+
facilities)
Long-term Debt CARE Ratings 24-Oct-17 CARE A+ See Note-2 400.00
(NCD)
Short-term Debt CARE Ratings 24-Oct-17 CARE A1+ See Note-2 200.00
(CP/NCD)
Short-term Debt 27-Feb-17 ICRA A1+ 26-May-18
See Note-2
ICRA 750.00^
Long-term Debt 27-Feb-17 ICRA A+ 26-May-18
See Note-2
Securitisation ICRA 10-Oct-16 AA (SO) 18-Apr-18 488.40
Upgraded
to AAA (SO)
Securitisation CARE 29-Nov-16 from AA 22-Jun-18 99.63
(SO) on 20-
Mar-18
Upgraded
to AAA (SO)
Securitisation CARE 20-Jun-17 from AA 20-Jan-19 204.43
(SO) on 20-
Mar-18

173
Deposits Name of the Date of Rating Valid Borrowing

Instrument rating agency rating assigned up to limit or
conditions
imposed
by rating
agency
Securitisation CARE 08-Nov-17 AA (SO) 20-Apr-19 224.27
Securitisation ICRA 12-Mar-18 AA (SO) 15-Aug-19 387.35
Securitisation ICRA 21-Feb-18 AA (SO) 12-Nov-19 406.87
Note-1: MFI Grading is a one-time assessment of the Company and it is not kept under surveillance.
Note-2: The Rating is subject to annual surveillance till final repayment / redemption of rated facilities.
Note-3: Borrowing limit revised to Rs.7,500 crs from Rs.7,000 Cr. on 06 Apr-18 for borrowings
outstanding as on March 31, 2018 ^ subject to Long-term borrowings limit of Rs. 300 Crs
o. Provisions and Contingencies (shown under the head expenditure in Statement of Profit
and Loss)
(` in crore)
Provisions for depreciation on Investment - -
Provision made towards Income tax 78.92 109.43
Provision towards NPA (39.64) 240.52
Provision for standard Assets 19.00 19.73
Provision for securitised / managed portfolio (66.64) 58.83
Provision for leave benefits 4.58 4.44
Provision for gratuity 6.67 8.39
Provision for advances recoverable in cash or 2.28 0.51
kind
Provision for Impairment loss - 0.16
p. Draw down from Reserves:

There has been no draw down from reserves during the year ended March 31, 2017 (previous
year: Nil).
q. Concentration of Advances, Exposures and NPAs:
(` in crore)
Concentration of Advances
Total advances to twenty largest borrowers 0.57 0.12
(%) of advances to twenty largest borrowers 0.00% 0.00%
to total advances

174

(` in crore)
Concentration of Exposures
Total exposure to twenty largest borrowers/ 0.57 0.12
customers
(%) of exposure to twenty largest borrowers/ 0.01% 0.00%
customers to total exposure
Concentration of NPAs
Total exposure to top four NPA accounts 0.02 0.02
r. Sector-wise NPAs
Sector (%) of NPAs to (%) of NPAs to

total advances in total advances in
that sector as at that sector as at
March 31, 2018 March 31, 2017
Agriculture and allied activities 2.29% 6.48%
MSME - -
Corporate borrowers - -
Services 2.55% 5.24%
Unsecured personal loans - -
Auto loans - -
Other personal loans - -
s. Movement of NPAs
(` in crore)
(i) Net NPAs to Net Advances (%) 0.09% 2.70%
(ii) Movement of NPAs (Gross)
(a) Opening balance 428.05 4.14
(b) Additions during the year 119.44 435.50
(c) Reductions during the year (incl. loans of (336.39) (11.59)
Rs.207.7 crs which have been written off)
(d) Closing balance 211.11 428.05
(iii) Movement of Net NPAs
(b) Additions during the year 44.35 189.07
(c) Reductions during the year (221.66) (5.68)

175
(` in crore)
(iv) Movement of provisions for NPAs
(b) Provisions made during the year 75.09 246.43
(c) Write-off / write-back of excess provisions (114.72) (5.91)
t. Disclosure of Customer Complaints
(` in crore)
Particulars For the year For the year
ended March ended March
31, 2018 31, 2017
(i) No. of complaints pending at the beginning of 334 568
the year
(ii) No. of complaints received during the year 18,586 16,195
(iii) No. of complaints redressed during the year 18,647 16,429
(iv) No. of complaints pending at the end of the 273 334
year
The Company has a Customer Grievance Redressal Mechanism including an independent
ombudsman for convenience of customers to register their complaints and for the Company
to monitor and redress them.
u. Information on instances of fraud

Instances of fraud for the year ended March 31, 2018:
(` in crore)
Nature of fraud No. of cases Amount of Recovery Amount
fraud written-off
Cash embezzlement 203 1.33 1.03 0.31
Loans given against fictitious 98 1.22 0.72 0.50
documents
Instances of fraud for the year ended March 31, 2017

(` in crore)
Nature of fraud No. of cases Amount of Recovery Amount
fraud written-off
Cash embezzlement 81 0.67 0.51 0.16
Loans given against fictitious 66 0.77 0.47 0.30
documents

176

v. Information on Net Interest Margin:

March 31, 2018 March 31, 2017
Average interest (a) 17.74% 18.96%
Average effective cost of borrowing (b) 9.88% 10.79%
Net interest margin (a-b) 7.86% 8.17%
44. Previous year’s figures have been regrouped where necessary to conform to this
year’s classification.
ICAI Firm Registration (Formerly known as ‘SKS Microfinance Limited’)
Number: 116231W/W-100024 CIN: L65999MH2003PLC250504

DIN: 03276291

ACS: 13346
Date: 23-April-18 Date: 23-April-18


(Formerly known as 'SKS Microfinance Limited')
CIN: L65999MH2003PLC250504
Registered Office:
Bandra-Kurla Complex, Bandra (East), Mumbai - 400 051, Maharashtra, India.
Email: [email protected] | www.bfil.co.in
Phone: 022-2659 2375 | Fax No: 022-2659 2375

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72.

Kirana Point 2.8 Lakh

REGISTRAR & SHARE HEAD OFFICE

REGISTRAR & SHARE HEAD OFFICE

Our Board of Directors

P. H. Ravikumar M. R. Rao Ashish Lakhanpal

S. Balachandran Geoffrey Tanner K. G. Alai

Dr. Punita Kumar-Sinha R. M. Malla Dr. Tarun Khanna

BHARAT FINANCIAL INCLUSION LIMITED

Our Core Executive Team

Ashish Damani Ashish Pipaliya J. S. Sai

Kanchan Pandhre Pratap R Rajendra Patil

Ritesh Chatterjee Shalabh Saxena Srinivas Peddada

Srinivas Reddy Vudumula Vikas Muttoo

Annual Report 2017-18

We have established ourselves in the industry Our Mission

`12,594.4 Crore 72.7 Lakh 1,567

19.75% `2,998.8 Crore `85,179 Crore

`20,316 95% 33.2%

BHARAT FINANCIAL INCLUSION LIMITED

FY2013 FY2014 FY2015 FY2016 FY2017 FY2018

Assets Under Management (` Crore)

Our Market Differentiators

Operational Efficiency Credit Quality Financial Efficiency Balance Sheet

*On & Off Balance Sheet borrowings, including processing fees

Annual Report 2017-18

Our Growth Momentum

Building world-class technology driven operations is the key to sustainable

One of the Lowest Lending

Oct-10 Jan-11 Oct-14 Jul-15 Oct-15 Dec-15

Cost to Income Ratio (%) Marginal Cost of Borrowing* (%)

*On & Off Balance Sheet loans, including processing fees

BHARAT FINANCIAL INCLUSION LIMITED

Towards Technology Upgradation:

Mobile / digital / Refractoring of

Biometric All branch connectivity

Moving up the Value Chain in Technology

Installed Ushered in Refractored Equipped Progressed

Annual Report 2017-18

Balanced Geographical Mix (As on March 31, 2018)

Our Competitive Landscape

UNIQUE PAN - INDIA EXTENSIVE REACH

BHARAT FINANCIAL INCLUSION LIMITED

LOWEST COST EXTERNAL

Annual Report 2017-18

How Are We Building

Total Branches = 1,567

Rajasthan Uttar Pradesh Assam

BHARAT FINANCIAL INCLUSION LIMITED

Annual Report 2017-18

Performing with Passion

Networth (` Crore) Capital Adequacy Ratio (%)

FY2014 FY2015 FY2016 FY2017 FY2018 FY2016 FY2017 FY2018

Drawdowns* (` Crore) Cost to Income Ratio (%)

BHARAT FINANCIAL INCLUSION LIMITED

Disbursements (` Crore) Net Interest Income (` Crore)

Opex to Gross Loan Portfolio (%) Gross Loan Portfolio (` Crore)

Profit After Tax (` Crore) Reducing Interest Rates (%)

Annual Report 2017-18