OUR BUSINESS

Some of the information in the following discussion, including information with respect to our plans and strategies,
contain forward-looking statements that involve risks and uncertainties. You should read the section “Forward-Looking
Statements” on page 21 for a discussion of the risks and uncertainties related to those statements. Our actual results may
differ materially from those expressed in or implied by these forward-looking statements. Also see “Risk Factors” and
“Management's Discussion and Analysis of Financial Condition and Results of Operations — Significant Factors
Affecting our Results of Operations” on pages 22 and 306, respectively, for a discussion of certain factors that may affect
our business, financial condition or results of operations.

 

Our Bank’s Fiscal commences on April 1 and ends on March 31 of the immediately subsequent year, and references toa
particular Fiscal are to the 12 months ended March 31 of that year. Unless otherwise indicated or the context otherwise
requires, the financial information included herein is based on or derived from our Restated Financial Statements
included in this Prospectus.

Unless otherwise indicated, industry and market data used in this section has been derived from the report “Report on
Small Finance Banks and various loan products” dated September 2020 (the ““CRISIL Report”) prepared and released
by CRISIL Limited and commissioned by us in connection with the Issue. Neither we, nor the BRLMs, any of their affiliates
or advisors, nor any other person connected with the Issue has independently verified such information. Unless otherwise
indicated, all financial, operational, industry and other related information derived from the CRISIL Report and included
herein with respect to any particular year refers to such information for the relevant fiscal year. For further information,
see “Certain Conventions, Presentation of Financial, Industry and Market Data and Currency of Presentation — Industry
and Market Data” on page 17.

Overview

We were among the leading SFBs in India in terms of net interest margins, return on assets, yields and deposit growth
and had the lowest cost-to-income ratio among SFBs in India in Fiscal 2020. (Source: CRISIL Report).

We have for over a decade been serving customers in the unbanked and underbanked segments in India and promoting
financial inclusion. Pursuant to receipt of the RBI Final Approval, we started operations as an SFB on January 23, 2017.
We were included in the second schedule to the RBI Act, as a scheduled bank pursuant to a notification dated July 24,
2017, issued by the RBI and published in the gazette of India dated September 2, 2017. Prior to commencement of
operations as an SFB, we operated as an NBFC — MFI carrying out microfinance operations and operated the joint liability
group-lending model for providing collateral-free, small ticket-size loans to economically active women belonging to
weaker sections. Our average “priority sector” loans, as a percentage of average ANBC for Fiscal 2018, 2019 and 2020
and nine months ended December 31, 2020 was 99.08%, 112.10%, 103.67% and 114.09%, respectively. Over the years,
we have diversified our loan portfolio to include non-micro banking loans thereby reducing our dependence on micro
banking business.

We commenced our microfinance operations in 2009 and have since expanded our operations across 13 states and union
territories, as of December 31, 2020. As of December 31, 2020, our customer base was 1.44 million and our employee
base comprised 4,770 employees and we operated 554 Banking Outlets including 153 Unbanked Rural Centres (“URCs”).
We have set up 661 customer service points (“CSPs”) as additional service or touch points during April 1, 2020 and
January 31, 2021 and intend to continue to expand our reach through the CSP model. Our delivery platform also includes
partnering with business correspondents (“BCs”) for sourcing both asset and liability business and have expanded our
network and presence through their reach to promote financial inclusion. We have arrangements with various payment
banks in India and have been able to leverage our relationship with such payment banks to grow our deposit base. Our
distribution network also comprises our ATMs, phone banking, mobile banking, tablet banking, unified payment
interface, CSPs, and internet banking services. Our operations are predominantly in urban and semi-urban locations due
to greater income earning capabilities and employment opportunities in such areas compared with rural regions. We
believe that our focus on urban and semi-urban locations also enables us to meet the financing requirements of
economically graduating customers including the provision of housing finance and working capital loans for small
businesses. As of December 31, 2020, 37.13%, 27.78% and 28.83% of our Gross Advances were from metropolitan,
urban and semi-urban areas (based on branch locations as classified by the RBI), respectively.

We currently offer a variety of asset and liability products and services designed for inclusive finance and general banking
customers. Our asset products consist of our inclusive finance portfolio (comprising loans to JLG customers), commercial
vehicle loans, affordable housing loans, micro business loans, unsecured micro and small enterprise and small and
medium enterprise loans, secured business loans, financial intermediary group loans and other loans. Our Gross Loan
Portfolio has grown at a CAGR of 46.98% from = 17,177.84 million as of March 31, 2018 to = 37,108.42 million as of
March 31, 2020 and was % 39,082.29 million as of December 31, 2020. On the liability side, our products comprise current

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