SECTION IV: ABOUT OUR BANK
INDUSTRY OVERVIEW

Unless noted otherwise, the information contained in this section is obtained or derived from “Report on Small Finance
Banks and Various Loan Products” dated September 2020 (the “CRISIL Report") prepared and issued by CRISIL
Research, a division of CRISIL Limited, on our request. Neither we nor any other person connected with the Offer have
independently verified this information. The data may have been re-classified by us for the purposes of presentation.
Industry sources and publications generally state that the information contained therein has been obtained from sources
generally believed to be reliable, but that their accuracy, completeness and underlying assumptions are not guaranteed
and their reliability cannot be assured. Industry sources and publications are also prepared based on information as of
specific dates and may no longer be current or reflect current trends. Industry sources and publications may also base
their information on estimates, projections, forecasts and assumptions that may prove to be incorrect. Accordingly,
investors must rely on their independent examination of, and should not place undue reliance on, or base their investment
decision solely on this information. The recipient should not construe any of the contents in this report as advice relating
to business, financial, legal, taxation or investment matters and are advised to consult their own business, financial, legal,
taxation, and other advisors concerning the transaction.

COVID-19 PANDEMIC — WORLD AND INDIAN ECONOMY

Fiscal 2020 was volatile for the global economy. The first three quarters of Fiscal 2020 experienced trade protectionist
policies and disputes among major trading partners, volatile commodity and energy prices and economic uncertainties
arising due to Brexit. A broad-based recovery was expected in the last quarter of Fiscal 2020. However, the last quarter
witnessed the Novel Coronavirus (COVID-19) which has infected more than 28.2 million people in more than 200
countries (as of September 10, 2020 and counting), leading to considerable human suffering and economic disruption.
This disruption is set to intensify with massive dislocations in global production, supply chains, trade and tourism.
Growing restrictions on the movement of people and lockdowns in the affected countries will lead to demand, supply and
liquidity shocks. Falling commodity prices including crude oil, falling foreign exchange reserves and a substantial
increase in the risk of debt distress in public and private debt will impact real economic activity further through trade and
investment channels. An extended period of nationwide lockdown has caused economic costs to rise with a fall in
industrial production and contraction of services sector and exports.

According to CRISIL, the Indian economy is estimated to shrink by 9% in Fiscal 2021 on account of COVID-19
pandemic. If the pandemic peaks in September-October, GDP growth could turn positive marginally towards the end of
this fiscal. Despite some support from the rural economy, consumption is expected to decline this fiscal. The pandemic
has come at the most inopportune time as India was showing signs of recovery following a slew of fiscal/monetary
measures. A bounce-back in gross domestic product (GDP) growth to approximately 10% is expected in Fiscal 2022, and
of approximately 6.2% in Fiscal 2023.

GDP growth outlook for India has been severely impacted by the pandemic

 

& tn]
fem) 7% CAGR FY14-FY20 ~2% CAGR FY20-FY23P
180 15.0%
160 |
140 | 10.0%
120
7.4! )%
460 6.4% 5.0%
80
0.0%

60 |

40 5.0%
20

0 : : : -10.0%

FYi4. FY15 = FY16. = FY17,—ss F148 FY19.— FY20E.-«FY21P.—s FY22P-—FY23P

mma GDP (constant 2011-12 prices) _—e—GDP growth
Note: E - Estimated and P - Projected
Source: National Statistics Office (NSO), International Monetary Fund (IMF) and CRISIL Research estimates

SMALL FINANCE BANKING INDUSTRY
In order to promote financial inclusion, the Indian banking industry has seen several changes in recent years. NBFCs such

as, Bandhan and IDFC, received permission to set up universal banks. Further, a few microfinance companies, local area
banks and NBFCs have received permission to set up SFBs. SFBs are allowed to take deposits, which provide them an

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