performance include, but are not limited to the following:

e — Significant decline in collection efficiencies as most of our collections are cash-based and involve physical presence
of our employees, which has not been possible due to the nation-wide lockdown and travel restrictions that have been
imposed. This decline in collections could persist through and beyond a recessionary period. The collection efficiency
is lower in three key states, namely, Maharashtra, Tamil Nadu and Odisha.

¢ Decline in disbursements due to reduced economic activity.

¢ Potential significant increase in our NPA levels due to deterioration in the credit quality of our customers, as our target
borrower segment primarily comprises small traders, individuals with micro-enterprises and others belonging to the
unorganized sector, who are most impacted due to the economic downturn caused by COVID-19 related measures
such as closure of non-essential services. While many borrowers had opted for the moratoriums available and most of
the customers started paying instalments after moratorium period was over, there can be no assurance that customers
impacted due to COVID-19 will continue to make payments on continuing basis. In the event our borrowers’ or their
enterprises have been unable to withstand the economic pressures caused by the COVID-19 pandemic, we may
experience higher NPAs than anticipated driven by deterioration in asset quality due to our borrower’s reduced ability
to make timely repayments.

As a result, we may be required to recognise higher loan loss provisions in future periods, on account of the uncertainty
in the external environment due to COVID-19, which may adversely impact our asset quality and profitability in future
periods.

e Adverse impacts to our interest income, EPS and growth rates — particularly if operating expenses do not decrease at
the same pace as revenue declines. Many of our expenses are less variable in nature and may not correlate to changes
in revenues, such as depreciation, employee benefit expenses and other costs associated with operating and
maintaining our Banking Outlets. As such, we may not be able to decrease them significantly in the short-term, or we
may choose not to significantly reduce them in an effort to remain focused on long-term outlook and investment
opportunities.

e The rapid shift to a remote working environment creates inherent productivity, connectivity, and oversight challenges.
For example, governmental lockdowns, restrictions or new regulations could significantly impact the ability of our
employees and service providers to work productively. The restrictions placed by the Government have been changing
based on the dynamic situation and it is not clear when a return to worksite locations or travel will be permitted or
what restrictions will be in place in those environments. The extent and/ or duration of ongoing workforce restrictions
and limitations could impact our ability to successfully introduce and grow our new products and services, comply
with various reporting requirements to the regulators in a timely manner, among others. In addition, the changed
environment under which we are operating could have an impact on our internal controls over financial reporting as
well as our ability to meet a number of our compliance requirements in a timely or quality manner.

e Implementation of cost control measures such as freeze in salary increases and cut back on variable costs including
travel, printing and stationary, consultancy fees and re-negotiation of rental arrangements.

e Reduction in policy rates may be passed on to customers, however, there may not be a corresponding reduction in
borrowing costs in-line with the reduction in policy rates.

In addition, the RBI has issued guidelines on March 27, 2020 and April 17, 2020 in an effort to contain the impact of the
COVID-19 pandemic on the financial services sector. Under these guidelines, all loans are eligible for moratoriums on
instalments due during a period of three months, i.e. from March 1, 2020 to May 31, 2020. This was subsequently extended
by another period of three months, i.e. until August 31, 2020. Accordingly, banks and other financial institutions were
permitted to provide a moratorium of three months that was extended for another three months for all term loan instalments
which are due for payment. In line with these guidelines, we have provided a moratorium to eligible borrowers, even if
overdue, as on February 29, 2020, on the payment of all principal amounts and/ or interest, as applicable, falling due
between March 1, 2020 to August 31, 2020, resulting in a decline in our collections during such period. Additionally, the
matter of declaring accounts as NPAs if such accounts were not declared as NPAs till August 31, 2020, has been kept on
hold by the Supreme Court of India vide orders dated September 3, 2020 and September 28, 2020 until further orders.

The RBI guidelines also require us to make provisions of up to 10% on loans that were overdue but standard as of February
29, 2020. In Fiscal 2020, these COVID-19 related provisions amounted to = 108.69 million. We have additionally made
specific provisions for the potential impact of the pandemic on our operations, amounting to = 551.22 million, and have
increased the floating provision of inclusive finance (JLG) loans from 1.5% to 2%, amounting to = 133.04 million. We
have drawn-down additional subordinated debt in September 2020 to strengthen our capital position. These and any other
measures taken by the RBI, the Supreme Court and other authorities that regulate our operations may impact our
operations. Any unexpected or onerous requirements or regulations resulting from the pandemic or any changes in laws,

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