33.

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some of our operations, imposition of penalties and could materially and adversely affect our business, financial
performance and reputation.

In addition, we are required to obtain certain approvals, including shops and establishment licenses, trade licenses, contract
labour registration, employee provident fund and tax registrations. See “Government and Other Approvals” beginning on
page 341. Further, our approvals and licenses are subject to numerous conditions, some of which are onerous and may
require us to incur substantial expenditure in order to comply with such conditions. We may not, at all points of time, have
all approvals required for our business. Further, in relation to our branches and Banking Outlets, certain approvals,
including shops and establishment registrations for a few of our branches may have lapsed in their normal course and our
Bank has either made an application to the appropriate authorities for renewal of such registration or is in the process of
making such application. We cannot assure you that the approvals, licenses, registrations or permits issued to us will not
be suspended or revoked, or that applicable penalties will not be imposed on us in the event of non-compliance with any
terms and conditions. We may also incur substantial costs related to litigation if we are subject to significant regulatory
action, which may adversely affect our business, future financial performance and results of operations.

We are required to comply with certain restrictive covenants under our financing agreements. Any non-compliance
may lead to, amongst others, accelerated repayment schedule and enforcement of security, which may adversely affect
our business, results of operations, financial condition and cash flows.

Some of the borrowings and financing arrangements entered into by us include conditions that require our Bank to inform
and obtain consents from respective lenders and debenture trustees, prior to carrying out certain activities and entering
into certain transactions. Failure to meet these conditions including intimating lenders and debenture trustees, and/ or
obtaining these consents could have significant consequences on our business and operations. These covenants vary
depending on the requirements of the financial institution extending such loan and the conditions negotiated under each
financing arrangement. Some of the corporate actions that require prior consents from certain lenders include, amongst
others, changes to the capital structure and management control of our Bank, transfer of shares, reduction in the authorised
share capital of our Bank and changes in the MoA and AoA of our Bank in any material way. Further, under certain
borrowings and financing agreements, we are required to maintain specific minimum credit ratings, certain financial ratios
and covenants and ensure compliance with regulatory requirements such as maintenance of capital adequacy ratios,
minimum gross NPA ratio and debt to equity ratio. Failure to comply with such covenants may restrict or delay certain
actions or initiatives that we may propose to take from time to time. Some of our lenders and debenture trustees are also
entitled to appoint directors on the Board of our Bank. Our Bank has obtained consents from the relevant lenders, as
required under the relevant borrowing arrangements for the purposes of undertaking the Issue.

In addition, we also have unsecured borrowings which may be recalled at any time at the option of such lenders. As of
December 31, 2020, these unsecured borrowings amounted to = 12,626.00 million, and represented 26.14% of our total
funding. Certain of our secured borrowings may also permit the lenders to recall the loan on demand. Such recalls on
borrowed amounts are contingent upon happening of an event beyond our control and there can be no assurance that we
will be able to persuade our lenders to give us extensions or to refrain from exercising such recalls which may adversely
affect our operations and cash flows.

A failure to observe the covenants under our financing arrangements or to obtain necessary waivers may lead to the
termination of our credit facilities, acceleration of amounts due under such facilities and enforcement of security, either in
whole or in part, for the use of the facility. Pursuant to clauses in certain financing agreements, any defaults under such
facilities may also trigger cross default or cross acceleration provisions under our other financing agreements. If the
obligations under any of our financing documents are accelerated, we may have to dedicate a portion of our cash flow
from operations to make payments under such financing documents, thereby reducing the availability of cash for our
working capital requirements and other general corporate purposes. In addition, during any period in which we are in
default, we may be unable to raise, or face difficulties raising, further financing. We have been in breach of covenants in
relation to some of our debenture documentations in the past including breach with respect to compliance of gross non-
performing assets ratio and portfolio at risk and we have obtained adequate waivers to condone such breach, including due
to trigger of cross default provisions.

Our operations depend on the accuracy and completeness of information about customers and counterparties which,
if inaccurate or materially misleading, could adversely affect our business and results of operations.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on
information furnished to us by or on behalf of customers and/ or counterparties. Our business involves lending money to
smaller, relatively low income entrepreneurs and individuals who may not have any credit history and as a result we are
more vulnerable to customer default risks including default or delay in repayment of principal or interest on our loans.
Some lines of business, such as our inclusive finance (JLG) loans, principally focus on first time users who have limited
access to capital through formal banking channels. Advances in our inclusive finance (JLG) loan segment amounted to =
27,495.76 million and accounted for 70.35% of our total Gross Loan Portfolio, all as of December 31, 2020. NPA

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