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Our operations could be adversely affected by strikes, work stoppages or increased wage demands by our employees,
changes in labour laws, or any other change in the relationship we have with our employees.

As of December 31, 2020, we had 4,770 employees. Although our employees are not unionized and we have not
experienced any material labour unrest until the date of this Prospectus, we cannot assure you that we will not experience
disruptions in work due to disputes or other problems with our work force in the future. Any labour unrest directed against
us, including with respect to increased wage demands, could prevent or hinder our normal operating activities, and, if not
resolved in a timely manner, could lead to disruptions in our operations. In addition, the Supreme Court recently changed
the method of calculating the contribution towards provident fund of an employee which is expected to result in greater
provident fund deductions and lower take home salary for employees as well as an increase in employer’s share of
contributions towards provident fund to the employees’ account. While we have carried out appropriate adjustments in
compliance with the Supreme Court’s decision, we may not be able to comply with any such changes in the future in a
timely manner, which may expose us to greater scrutiny, inspections and potential penalties for non-payment of
contributions on allowances. These actions are impossible for us to predict or control and could adversely affect our
business, results of operations, financial condition and cash flows.

We have not declared any dividend in the past on our Equity Shares. Our ability to pay dividends in the future will
depend upon applicable regulations, future earnings, financial condition, cash flows, working capital requirements,
capital expenditures and lender consents and there can be no assurance that we will be able to pay dividends in the
future.

We have not declared any dividends on our Equity Shares since commencing our banking operations. The amount of our
future dividend payments, if any, will be at the discretion of the Board and guidelines as may be prescribed by the RBI
from time to time (including RBI circular DBOD.NO.BP.BC. 88 / 21.02.067 / 2004-05 dated May 4, 2005) and will depend
upon our dividend distribution policy, our future earnings, financial condition, cash flows, working capital requirements,
capital expenditures and restrictive covenants in our financing arrangements. There can be no assurance that we will be
able to pay dividends in the future. For further information on our dividend policy, see “Dividend Policy” on page 210.

Any future hedging strategies may not be successful in preventing losses.

We are currently not permitted to invest in certain financial instruments including derivatives, except for the purpose of
hedging activities. In the future, should the guidelines applicable to SFBs be modified, we may utilize a variety of financial
instruments for hedging different financial risks including undertaking the use of interest rate futures and derivatives for
proprietary hedging. While we may enter into such transactions to seek to reduce interest rate risks, or the risks posed by
the occurrence of certain other events, unanticipated changes in interest rates or the non-occurrence of other events being
hedged may result in our poorer overall performance than if we had not engaged in any such hedging transaction. In
addition, the degree of correlation between price movements of the instruments used in a hedging strategy and price
movements in the position being hedged may vary. Moreover, for a variety of reasons, we may not seek to establish a
perfect correlation between such hedging instruments and the positions being hedged. Such imperfect correlation may
prevent us from achieving the intended hedge or expose us to additional risk of loss.

A substantial portion of our loans have a tenor exceeding one year, exposing us to risks associated with economic cycles
and project success rates.

 

As of December 31, 2020, loans with a remaining tenor exceeding one year represented 35.10% of our Net Advances. The
long tenor of these loans may expose us to risks arising out of economic cycles. There can be no assurance that the
borrowers’ businesses/ income-generating activities will perform as anticipated or that they will be able to generate cash
flows as estimated to service commitments under the loans. While we have adopted procedures to monitor the repayment
abilities of our borrowers, these procedures may not be effective due to factors beyond our or such borrowers’ control,
including recession in the economy. As a substantial portion of our loans are susceptible to these uncertainties, the
occurrence of any of these events could lead to a rise in delinquency rates and, in turn, adversely impact our future financial
performance.

 

 

Our Promoters, certain of our Directors and Key Managerial Personnel have interests in us other than reimbursement
of expenses incurred and normal remuneration or benefits.

Our Promoters, certain of our Directors and Key Managerial Personnel may be regarded as having an interest in our Bank
other than reimbursement of expenses incurred and normal remuneration or benefits. Our Promoters, certain of our
Directors and Key Managerial Personnel may be deemed to be interested to the extent of Equity Shares held by them as
well as to the extent of any dividends, bonuses, or other distributions on such Equity Shares. We cannot assure you that
our Promoters, Directors and Key Managerial Personnel will exercise their rights as shareholders to the benefit and best
interest of our Bank. For further information, see “Our Management” beginning on page 188.

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