We have leveraged technology to enable smooth and seamless customer experience. We have had our digital channels
such as internet banking and mobile banking since commencement of our SFB operations. We extensively use digital
technologies for the entire customer lifecycle in our inclusive finance business. As of December 31, 2020, 3,261
employees use tablets/ digital services for opening of savings account and for customer on-boarding. The use of handheld
devices has empowered our employees to provide assisted services to our unbanked and underbanked customer segments
that, we believe, has led to greater customer convenience and operational efficiency. As a result, we have been able to
significantly reduce the turn-around time for processing inclusive finance loans to five days in in the nine months ended
December 31, 2020. For opening Smile OD and savings accounts for existing inclusive customers, the process of opening
account is completely digital and accounts are typically opened within a day. We leverage fintech partnerships to provide
value added products and services to our customers. Towards this end we have built an enterprise integration layer which
facilitates integration with partner entities through APIs. We continue to invest in digital technologies to drive greater
customer experience and employee empowerment. In addition, we have made investments to strengthen our security
infrastructure given the paramount importance of information security.

Strong credit processes and robust risk management framework

We have a strong credit function that comprises a team of 83 individuals as of December 31, 2020, each of whom have
experience in the banking and financial services industry. We have implemented credit management models such as credit
history checks with various bureaus, fraud verification tools/ processes on customer profile and documentation, which
have enabled us to maintain a stable portfolio quality. Our credit underwriting practices include scorecard based
assessment for our retail asset products, segment-based and geography-based assessment policies. The introduction of a
credit risk unit to focus on underwriting errors has led to uniformity in policy implementation. We have entered into
partnerships with third parties and fintech companies to implement various enterprise-wide compliance and risk
management tools on our platform, enhance our product offerings and make our loan processes faster and convenient for
our customers. We have also streamlined our internal processes for credit evaluation, internal scoring and credit
decisioning and have integrated them with our technology platform. Our focus is primarily to build a secured loan
portfolio as part of our non-JLG businesses. We believe that our stringent credit processes have led to lower delinquency
in affordable housing finance and secured business loans segments.

Our use of data analytics has played a significant role in various business decisioning particularly in the inclusive finance
customer segment. Our business analytics team provides business insights and guidance to business teams based on
proprietary customer data and market data available from credit bureaus. Our analytics capabilities include determining
customer repayment behavior over the life cycle of a loan, estimating customer repayment capacity based on monthly
obligation payable to various lenders, pin code based analysis of market to identify potential growth markets, customer
behavior, customer’s leverage, delinquency analytics based on statistical methods including static pool, cohort analysis
and repayment behavior.

We have a quality assurance officer at each of our Banking Outlets that offer inclusive finance loans. The quality
assurance officer is responsible for implementation of processes for inclusive finance loans, customer visits and control
over cash at the Banking Outlet.

We have an established risk management framework to identify, assess, monitor and manage risk. Our framework is
driven actively by the Board through the Risk Management Committee of the Board (“RMCB”). The RMCB is
responsible for review of emerging risks, stress scenarios and their impact on our business, assessing risk mitigation
measures, reviewing CRAR and internal capital adequacy assessment processes, besides over-seeing the functioning of
the Asset Liability Management Committee and Risk Management Committee of Executives and implementation of the
risk management policies and processes. We also undertake continuous monitoring of delinquent accounts and take
measures for portfolio improvement from time-to-time.

As a part of our risk management process, we have maintained a higher capital adequacy ratio than the regulatory
requirement. As of March 31, 2018, 2019 and 2020 and as of December 31, 2020, our CAR was 43.40%, 40.22%, 35.44%
and 41.17% against the stipulated regulatory requirement of 15.00% and was the highest amongst SFBs in India as of
March 31, 2020 (Source: CRISIL Report). Our effective credit risk management is reflected in our portfolio quality
indicators such as our stable portfolio at risk and low rates of GNPA and NNPA. As of December 31, 2020, our GNPA
accounted for 0.78% of our gross advances, while our NNPAs accounted for 0.33% of our net advances. Our provision
coverage ratio (including technical write-offs) was 48.33%, 75.80%, 84.71% and 89.58% in Fiscal 2018, 2019 and 2020
and in the nine months ended December 31, 2020, respectively and was the second highest among SFBs in India in Fiscal
2020 (Source: CRISIL Report). Our risk management measures as well as our financial performance have also enabled
us to improve our credit ratings, which has allowed us to access capital at competitive rates, as reflected in our credit
ratings. Our certificate of deposit programme has the highest rating of Al+ by CRISIL and ICRA and our non-convertible
debentures and subordinated debt programmes have both been rated A (Stable) by ICRA.

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