. prudential norms specified in respect of market discipline, classification, valuation and operation of our
investment portfolio, income recognition, asset classification and provisioning pertaining to advances (including
restructuring of credit facilities), RBI directives on permissible loans and advances, maintenance of regulatory
ratios (such as CRR, SLR, and LCR), authorization of Banking Outlets, permissible exposures, requisite
disclosures in financial statements, fraud classification and reporting, periodic disclosure requirements (including
in presentation of financial information and financial statements), and cyber security compliance. Further, the
Banking Regulation Act limits the flexibility of shareholders and management of an SFB in many ways, including
by way of specifying certain matters that require prior RBI approval. In addition, we are subject to periodic
inspections by the RBI. We are periodically inspected under the Banking Regulation Act and the RBI Act,
pursuant to which the RBI issues observations, directions and monitorable action plans, on issues related to
various operational risks and regulatory non-compliances. See “‘ — We are subject to supervision and inspection
by authorities such as the RBI. Any adverse observations from such regulators could have a material adverse
effect on our business, financial condition, results of operation and cash flows.” on pages 36-37.

. at least 25% of our total banking outlets have to be located in unbanked rural centres;

. the maximum loan size and investment limit exposure to a single and group obligor is to be restricted to 10% and
15% of our capital funds, respectively.

In addition, as an SFB, the RBI In-Principle Approval, RBI Final Approval, SFB Licensing Guidelines and SFB Operating
Guidelines require us to comply with certain conditions in order to operate our business, including but not limited to the
following:

. our Equity Shares were required to be mandatorily listed on the stock exchanges within three years from the date
of reaching a net worth (i.e. tier I capital as defined by the RBI) of = 5,000 million, (which in our case was
November 30, 2017), i.e., on or prior to November 29, 2020;

. we are required to be owned and controlled by Indian residents in accordance with FEMA, and at least 26.00% of
our paid up capital is required to be held by Indian residents in accordance with FEMA at all times from the date
of commencement of our operations;

. our Promoters are required to ensure that their shareholding in our Bank does not fall below 26.00% of the paid-
up Equity Share capital during the first five years from the date of commencement of our business operations as
an SFB, which was January 23, 2017;

° we are required to maintain a minimum net worth of Z 1,000 million at all times;

. any change in our shareholding by way of fresh issue or transfer of shares to a particular investor to the extent of
5% or more of our paid-up share capital requires prior RBI approval;

. at least 50% of our loan portfolio is required to constitute loans and advances of up to = 2.50 million on an ongoing
basis;

. we are required to extend 75% of our ANBC to sectors eligible for classification as PSL by the RBI;

. we are required to maintain a minimum capital adequacy ratio (“CAR”) of 15% of the weighted assets (“CRWAs”)

on a continuous basis subject to any higher percentage as may be prescribed by the RBI from time to time, with
Tier I capital maintained at a minimum of 7.5% of the CRWAs and Tier II capital maintained at not more than
100% of the Tier I capital.

Certain requirements that are applicable to SFBs in terms of the SFB Operating Guidelines and other banking laws and
regulations are more stringent in comparison to scheduled commercial banks and non-banking financial companies, and
have and will continue to impact our business and operations. For instance, the PSL requirements applicable to SFBs are
significantly higher than the PSL limits applicable to scheduled commercial banks, and any shortfall in meeting the PSL
targets at the end of a financial year based on the average of priority sector target/ sub-target achievement as at the end of
each quarter, would statutorily require us to place the shortfall amount in Rural Infrastructure Development Fund which
would typically generate a lower rate of interest compared to PSL advances. Similarly, the CAR thresholds for SFBs are
higher than the limits applicable to scheduled commercial banks.

In addition, uncertainty in the applicability, interpretation or implementation of the governing law, specifically due to the
absence of administrative or judicial precedent may be time consuming as well as costly for us to resolve. To ensure
compliance with the regulatory framework applicable to SFBs, we may need to allocate additional resources, which may
increase our regulatory compliance costs and divert management attention. Our inability to comply with laws and
regulations applicable to an SFB may have an adverse effect on our business, results of operations, financial condition and
cash flows. In case of any failure to comply with the applicable directives and reporting requirements or to meet the
prescribed prudential norms, the RBI may charge penalties, penalize our management, restrict our banking activities or
otherwise enforce increased scrutiny and control over our banking operations, including by way of withholding approvals,
or issuing conditional approvals in respect of any proposed actions for which we may seek approval in the future.

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