Dear Members,

Your Board of Directors ("Board") is pleased to present the Seventeenth Annual Report on the business and operations of the Bank together with the Audited Financial Statements of the Bank and Independent Auditors' Report for the Financial Year ("FY") ended March 31, 2025.

The Bank's performance during the FY ended March 31, 2025, as compared to the previous FY is summarized below:

(H in Crores)

The Net Interest Income of the Bank for the year was H 1,106.1 Crores as compared to H 962.2 Crores in the previous year (YoY growth of 15%).

The Bank has achieved a Profit of H 115.0 Crores for the year ended March 31, 2025, as compared to Profit of H 216.0 Crores in the previous year.

The Gross Loan Portfolio witnessed a jump of 18.5% to H10,251.2 Crores and there was a substantial rise in deposits by 36% to H 10,579.6 Crores.

The Balance sheet size grew to H 15,614.4 Crores as on March 31, 2025, as compared to H 12,377.7 Crores as on March 31, 2024 (YoY growth of 26.1%).

The CASA constituted 20.9% of the overall deposits of the Bank.

The Capital Adequacy Ratio ("CRAR") was 25.8% as on March 31, 2025 (March 31, 2024: 28.4%) as compared to the statutory minimum required 15%.

The Provision Coverage Ratio ("PCR") as on March 31, 2025 was at 37.7% and including the CGFMU benefit, PCR was at ~100%.

Cost to Income ratio for the year ended March 31, 2025 was 70.6 % as compared to 61.6% for the previous year. The Return on Assets was at 0.9% in FY'25 as compared to 2.1% in FY'24.

The number of banking outlets increased from 695 as on March 31, 2024 to 710 as on March 31, 2025, including, 197 Unbanked Rural Centres.

In a challenging global macroeconomic and geopolitical environment, the Indian economy has displayed a sharp growth momentum, with resilience and financial stability. Despite several challenges and uncertainties, the Indian economy remained on a positive trajectory, positioning itself as a key player in the global economic landscape. With a prudent fiscal policy and a conducive business environment, India is poised to sustain its growth momentum and strengthened its position in global economy. The government's initiatives to boost manufacturing, infrastructure development, and digital transformation have propelled the economy forward, attracting both domestic and foreign investment.

The banking and financial sector played a crucial role in supporting this growth momentum, contributing to overall economic stability and development. The optimistic economic environment presents ample opportunities for small finance banks in India to contribute to financial inclusion and economic development.

During FY 2024-25, the Bank demonstrated consistent resilience in secured assets, however faced challenges in the Micro Finance sector due to a range of issues which impacted the whole sector. The Bank had been subscribing to the CGFMU (Credit Guarantee) scheme since FY 2022-23, which has helped the Bank to mitigate the challenge during the stress and helped protecting the capital. The Bank continued its growth momentum on key metrics, including Asset and Deposit growth, and digital products for higher engagement with Customers. The Bank also remained focused on sustainable growth, leveraging its strong regulatory compliance framework, with a focus on digital products and strategic partnerships to fortify its position in the market and deliver consistent returns to stakeholders.

The Bank shall be focussing on the following during FY 2025-26:

a) Individual Loans: Sustaining focus on Individual Loans with continued coverage under government-backed insurance schemes.

b) Focus on MSME segment: The Bank shall be capitalizing on the growth of the MSME segment.

c) Secured Products: Driving deeper market penetration and continued momentum of secured products like mortgage & CV, to achieve 55% secured mix for balanced, lower-risk, growth. Further, the Bank would be focussing on Asset quality during the year. The Bank's focus would continue in individual loans (both ETB as well as NTB) with 100% CGFMU Coverage. Further, the Bank would also be focussing on expanded reach for its Wheels business in new markets and products, targeting sustained CAGR with stable asset quality. Also, regarding the Mortgage business, the Bank would be maintaining momentum with a focused segment-wise approach and continued investments in the ecosystem.

d) Customer-related initiatives: The Bank offers a suite of deposit and loan products catering to various customer segments. During the year under review, the Bank has introduced the following products and collaborations:

Women Savings Account: Launched Women's Savings Account product with added benefits and better returns on savings account.

Double Joy Deposit: During the year the Bank launched ‘Double Joy Deposit', which is a distinctive long-term recurring deposit scheme designed to combine disciplined savings with assured returns. The 22-year product features an 11-year contribution period followed by an 11-year systematic withdrawal phase, offering customers a predictable income stream. At maturity, the deposit delivers 2x returns on the total invested amount—making it a compelling

In accordance with Section 124 and 125 of the Companies Act, 2013 ("Act") read with the Investor Education and Protection Fund ("IEPF") Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (as amended from time to time), all the equity shares of the Bank in respect of which dividend amounts have not been paid or claimed by the shareholders for seven consecutive years or more are required to be transferred to demat account of IEPF Authority. As, the Bank has not declared any dividend since its inception hence, there was no unclaimed/unpaid dividend or shares of the Bank liable to be transferred to IEPF during FY 2024-25.

solution for long-term financial planning and income stability. This innovative product reinforces the Bank's commitment to customer-centric solutions that promote long term financial security.

e) Digital Tie-Ups: The Bank shall work towards focused growth via segmented CA, digital SA, and a hybrid (digital & low-cost branch led) FD strategy. Further, the Bank shall be accelerating its digital journey to offer various products through partners like secured credit card & credit on UPI and positioning itself as the preferred banker for the aspiring middle class.

The Bank has formulated and implemented a Dividend Distribution Policy pursuant to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and RBI Requirements with an objective to appropriately reward shareholders through dividends for reposing their confidence in the Bank while retaining the capital required for supporting future business growth. The said Policy is available on the website of the Bank at:- https://www.suryodaybank.com/ assets/pdf/policies/suryoday-dividend-distribution-policy-fy-25-26-1.0.pdf

Considering the need to preserve capital to support growth and expansion plans of the Bank, the Board of Directors did not recommend a dividend for the FY ended March 31, 2025.

As per the requirements of the RBI Regulations and other applicable Regulations, the Bank has transferred to/ (Transfer from) the following amounts to various reserves during FY ended March 31, 2025:

There has been no change in the nature of business of the Bank during the year under review.

During the year under review, there was no change in the Authorised Share Capital of the Bank and as at March 31, 2025, the Authorised Capital of the Bank stood at H 150,00,00,000 (Rupees One hundred and Fifty Crores) divided into 15,00,00,000 (Fifteen Crores) Equity Shares of H 10 (Rupees Ten) each. b) Paid up Capital:

During the year under review, the Bank has issued and allotted 84,126 (Eighty Four Thousand One Hundred and Twenty Six only) Equity Shares of face value of H10/-(Rupees Ten) each pursuant to the exercise of Options by the employee(s) of the Bank under Employee Stock Option Scheme 2016 ("ESOP Scheme, 2016") and Suryoday ESOP Scheme-2019 ("ESOP Scheme, 2019"). Consequently, there has been increase in Paid- up capital of the Bank, from

H 1,06,20,06,980/-(Rupees One Hundred Six Crores Twenty Lakh Six Thousand Nine Hundred and Eighty Only) divided into 10,62,00,698 (Ten Crores Sixty-Two Lakh Six Hundred and Ninety-eight only) Equity Shares of H 10/- (Rupees Ten) each to H 106,28,48,240/- (Rupees One Hundred Six Crores Twenty Eight Lakh Forty Eight Thousand Two Hundred and Forty Only) divided into 10,62,84,824 (Ten Crores Sixty-Two Lakh Eighty Four Thousand Eight Hundred and Twenty Four only) Equity Shares of H 10/- (Rupees Ten) each fully paid-up as on March 31, 2025.

During the year under review, the Bank has neither issued any equity shares with differential rights nor any Sweat Equity shares.

As at March 31, 2025, the Bank had one series of Debentures issued on Private placement basis consisting of 1000 Nos. of 12.5% Rated, Listed, Unsecured, Subordinated, Redeemable Lower Tier II Bonds in the form of Non-Convertible Debentures having face value of H 10 Lakhs each, amounting to H 100 Crores which are listed on BSE.

The details of ratings assigned by ICRA/ and CRISIL for various instruments of the Bank are as under:

https://www.suryodaybank.com/assets/pdf/ssfb-mgt-7-2024-25.pdf

The composition of the Board is governed by the relevant provisions of the Act, and the rules made thereunder, the SEBI Listing Regulations, the Banking Regulation Act, 1949 (the "BR Act"), the guidelines/ regulations/circulars issued by the RBI, as amended, from time-to-time and all other applicable laws and the Articles of Association of the Bank.

As on March 31, 2025, the Board has an optimum combination of Executive and Non-Executive Directors with Independent Directors constituting more than one-half of its total strength. As on March 31, 2025, the Board of the Bank comprised of Eight (8) Directors, of which Five (5) were Independent Directors including One (1) Woman Independent Director, One Non-Executive Non-Independent Director ("Investor Director"), Two (2) Executive Directors including one Managing Director & Chief Executive Officer ("Managing Director & CEO").

The certificate pursuant to Regulation 34(3) and sub-clause (i) of Clause 10 of Part C of Schedule V of the SEBI Listing Regulations for the FY ended on March 31, 2025, issued by

I. CAPITAL ADEQUACY RATIO a) As per operating guidelines for Small Finance banks, the Bank is required to maintain a minimum Capital Adequacy Ratio ("CRAR") of 15% with minimum Common Equity Tier I (CET I) of 6%.

b) As at March 31, 2025, the CRAR of the Bank stood at 25.8% well above the regulatory minimum requirement of 15%. Tier I ratio of the Bank stood at 24.5% well above the regulatory requirement of 6% and Tier II capital was at 1.4%.

The Bank did not have any Subsidiary, Associate or Joint Venture Company during FY 2024-25. Accordingly, no statement is required to be reported in Form AOC-1.

The Annual Return as mandated under the provisions of Section 92(3) read with Section 134(3)(a) of the Act in prescribed Form MGT-7 is available on the website of the Bank and the same can be accessed at

Mr. Tushar Shridharani, Practicing Company Secretary, (FCS 2690 / COP 2190), confirming that none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as Directors of the Bank, is attached as Annexure 1 to this Report.

During the FY 2024-25 and after the end of financial year up to the date of this report, following changes took place in the Board of Directors of the Bank:

(i). The Shareholders of the Bank vide Special Resolution passed through Postal Ballot on April 28, 2024, accorded their approval for the appointment of Mrs. Swati Datye (DIN:06751552) as a Non-Executive Independent Director of the Bank to hold office for a period of Five (5) consecutive years effective from February 01, 2024, upto January 31, 2029 (both days inclusive), not liable to retire by rotation.

(ii). The Shareholders of the Bank vide Ordinary Resolution passed through Postal Ballot on April 28, 2024, accorded their approval for the appointment of Mr. Hemant Premchand Shah (DIN: 10548728), as Whole-time Director ("WTD" designated as Executive Director and Key Managerial Personnel) of the Bank for a period of Three (3) consecutive years commencing from the date of taking charge as WTD i.e. April 01, 2024.

(iii). The Shareholders of the Bank vide Special Resolution passed through Postal Ballot on July 08, 2024, accorded their approval for the appointment of Mr. Deepak Kumar Sharma (DIN:10575402) as a Non-Executive Independent Director of the Bank to hold office for a period of Five (5) consecutive years effective from April 11, 2024 upto April 10, 2029 (both days inclusive), not liable to retire by rotation.

(iv). Basis the recommendation of the Nomination and Remuneration Committee (''NRC''), the Board of Directors of the Bank on January 21, 2025, subject to the approval of the Shareholders had appointed Mr. Vivek Anant Karve (DIN: 06840707) as an Additional Director (Non-Executive Independent category) on the Board of the Bank with effect from January 21, 2025. Subsequently, the Shareholders of the Bank vide Special Resolution passed through Postal Ballot on April 15, 2025, accorded their approval for appointment of Mr. Karve as a Non-Executive Independent Director of the Bank to hold office for a period of Five (5) consecutive years effective from January 21, 2025 upto January 20, 2030 (both days inclusive), not liable to retire by rotation. a) Re-appointments:

(i). Mr. Ranjit Jayant Shah (DIN: 00088405), Investor Director, was re-appointed at the Sixteenth (16^th) Annual General Meeting (''AGM'') of the Bank held on September 12, 2024, and is liable to retire by rotation at ensuing AGM.

(ii). Mr. John Arunkumar Diaz (DIN: 00493304) was reappointed as Independent Director of the Bank at the 16^th AGM of the Bank held on September 12, 2024, for the second term, effective from December 16, 2024 to August 08, 2026 (both days inclusive), i.e. until he attains the age of 75 years, as permissible under applicable Circulars and Regulations. Being an Independent Director, he is not liable to retire by rotation. b) Completion of Tenure / Retirement(s)

(i). Mr. Mrutunjay Sahoo (DIN: 00015715), a Non-Executive Independent Director of the Bank, who was re-appointed at the Thirteenth (13^th) AGM of the Bank held on September 20, 2021, as Non-Executive Independent Director of the Bank for a period of Three (3) years effective from September 22, 2021 to hold office upto September 21, 2024, retired from the position of the Independent Director of the Bank, effective from the close of business hours on September 21, 2024, on completion of his second term of Office as an Independent Director of the Bank.

(ii). Mr. Jyotin Kantilal Mehta (DIN:00033518) who was appointed as a Non-Executive Independent Director of the Bank w.e.f. February 13, 2017, completed his second term of office, as an Independent Director of the Bank on close of business hours on February 12, 2025 (i.e. on completion of total 8 years), retired from the position of the Independent Director of the Bank in accordance with the applicable provisions of the Banking Regulation Act, 1949, the Companies Act, 2013 and SEBI Listing Regulations.

The Board of Directors place on record their sincere appreciation and gratitude for the valuable contributionsmadebyMr.SahooandMr.Mehta,during their tenure as Independent Directors of the Bank. c) Others

(i). Mr. Ranjit Jayant Shah (DIN: 00088405), Non-Executive Non-Independent Director, being liable to retire by rotation at the ensuing AGM of the Bank and being eligible for re-appointment, the proposal for his re-appointment will be placed for approval of the Shareholders at ensuing AGM.

(ii). The current term of Mr. Baskar Babu Ramachandran (DIN: 02303132), the Managing Director & CEO of the Bank, would be expiring on January 22, 2026. The NRC and the Board of Directors at their respective meetings held on May 7, 2025, and May 8, 2025 respectively, had reviewed the fit & proper status of the Managing Director & CEO and found him fit & proper for re-appointment in accordance with the RBI Circulars & guidelines in this regard and various other factors like maximum term, performance rating, leadership etc. The Board would be making necessary recommendations to the Reserve Bank of India and the Shareholders for re-appointment of Mr. Baskar Babu Ramachandran (DIN: 02303132) as Managing Director & CEO of the Bank for a further period of 3 years with effect from January 23, 2026 to January 22, 2029 and these details shall be included in the Notice convening 17^th AGM of the Bank.

As of March 31, 2025, Mr. Baskar Babu Ramachandran (DIN: 02303132), Managing Director & CEO, Mr. Hemant Premchand Shah (DIN: 10548728) Whole-time Director (Executive Director), Mr. Kanishka Chaudhary, Chief Financial Officer and Mr. Krishna Kant Chaturvedi, Company Secretary & Compliance Officer, were the Key Managerial Personnel of the Bank in terms of Section 203(1) of the Act and Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Mr. Hemant Premchand Shah (DIN: 10548728) was appointed as Whole-time Director (Executive Director) of the Bank for a period of Three (3) years, effective from April 01, 2024 to March 31, 2027.

Pursuant to Regulation 17(5) of SEBI Listing Regulations, the Bank has implemented a Code of Conduct for Directors and Senior Management Personnel (SMPs). This code attempts to set forth the guiding principles on which the Directors and SMPs of the Bank shall operate and conduct the Bank's business with its various stakeholders. All the Directors and SMPs have affirmed their adherence to the Code for FY 2024-25 and a declaration by the Managing Director & CEO to this effect forms part of Report on Corporate Governance. The Bank's Code of Conduct for Directors and SMPs can be accessed on the website of the Bank at:- https://www. suryodaybank.com/assets/pdf/policies/suryoday-code-of-conduct-applicable-to-directors-&-sr-mgmt-of-the-bank-fy-25-26-1.0.pdf

During the year under review, Eleven (11) Meetings of the Board of Directors were held and the gap between any two meetings were well within the statutorily permissible limits as per the provision of the Act read with Rules made thereunder and Secretarial Standard 1 issued by the Institute of Company Secretaries of India, and SEBI Listing Regulations. The details of meetings of the Board and Board Committees together with the attendance for each Director, have been comprehensively disclosed in the Corporate Governance Report.

* In accordance with the RBI Master Directions RBI/DOS/2024-25/118 DOS.CO.FMG.SEC.No.5/23.04.001/2024-25 dated July 15, 2024 and RBI/DoR/2024-25/122 DoR.FIN.REC.No.31/20.16.003/2024-25 dated July 30, 2024 and basis the recommendation of the NRC, the Board of Directors at their meeting held on December 12, 2024 approved the reconstitution of former Committee namely ‘Special Committee of Board for Monitoring & Follow-up of cases of Frauds and Review of Wilful Defaulters' ("SCBF & RWD") into two separate Committees with effect from December 12, 2024, as per the details given below:

Special Committee of the Board for monitoring and follow up of cases of frauds;

Board Committee for Review of Wilful Defaulters.

The details of composition, number of meetings held and date thereof and terms of reference of the above Committees are available in the Corporate Governance Report forming part of the Annual Report of the Bank for FY 2024-25.

Further, in order to facilitate the Board effectiveness, efficiency and faster decision making, the Bank has also constituted a few Management Level Committees for better governance and supervision. The Bank has constituted various Management Level Committees viz. Investment Committee (IC), Risk Management Committee of the Executives (RMCE), Vendor Management Committee (VMC), Asset Liability Management Committee (ALCO), Branch Level Customer Service Committees, Standing

The Board has constituted several Board Level Committees to deal with specific matters and the terms of reference of each Committee is defined. These Committees have been formed in compliance with the applicable provisions of the Act and relevant rules made thereunder, SEBI Listing Regulations, BR Act, RBI Circulars & Guidelines, Articles of Association of the Bank and other pertinent guidelines issued from time to time.

As at March 31, 2025, there were Ten (10) Committees of the Board as given below:

Committee on Customer Service, New Product Approval Committee, Executive Credit Committee, Management Committee for Staff Accountability, Information Security Steering Committee (ISSC), IT Steering Committee, Executive Committee (EXECOM), Internal Complaints Committee etc.

As per the requirement of Section 149(8) read with Schedule IV of the Act and Regulation 25 of the SEBI Listing Regulations, a meeting of the Independent Directors of the Bank is required to be held at least once a year in absence of non-independent directors and members of the management.

During the year under review, Two (2) meetings of Independent Directors of the Bank were held on May 07, 2024, and November 14, 2024 and various matters were discussed & reviewed at the meeting inter alia covering the following:

The quality, quantity, and timeliness of flow of information between the management of the Bank and the Board of Directors that is necessary for the Board of Directors to effectively and reasonably perform their duties;

Review of Performance of Non-Independent Directors, the Board of Directors as a whole, Chairperson of the Bank;

Whether adequate time is spent by the Board/ Committees on discussions on important issues.

Review of the existing corporate governance practices.

Review of the Report on directives and suggestions from the previous meeting of Independent Directors.

All the Independent Directors have submitted the required declarations that they meet the criteria of Independence as laid down under Section 149(6) and 149(7), Schedule IV of the Act and Regulation 16(1)(b) and Regulation 25(8) of the SEBI Listing Regulations. The Board had assessed the veracity of the confirmations submitted by the Independent Directors, as required under Regulation 25(9) of the SEBI Listing Regulations.

Pursuant to the Companies (Creation and Maintenance of Databank of Independent Directors) Rules, 2019 read with the Companies (Appointment and Qualifications of Directors) Rules, 2014, the Independent Directors of the Bank have successfully registered their names in the online databank of Independent Directors maintained & administered by the Indian Institute of Corporate Affairs. The Independent Directors have also confirmed that they were not aware of any circumstance or situation which existed or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence.

In the opinion of the Board, all the Independent Directors are independent of the Management.

During the year, there has been no change in the circumstances affecting their status as Independent Directors of the Bank and they are not debarred from holding the office of Director under any SEBI Order or any other statutory authority.

In the opinion of the Board, the Independent Directors are persons of integrity and possess the requisite experience, expertise and proficiency required under all applicable laws and the policies of the Bank.

As per the provisions of sub-section (3) of Section 178 of the Act, the Bank has a Policy on appointment of Directors and Senior Management employees which includes formulating criteria for determining qualifications, attributes and independence of a Director.

This Policy has been disclosed on the Bank's website at:- https://www.suryodaybank.com/assets/pdf/policies/ Suryoday_Compensation_Policy_FY23-24_4.0.pdf and https://www.suryodaybank.com/assets/pdf/policies/ policy-on-appointment-of-directors-and-senior-managerial-personnel-fy-25-26.pdf.

The Board has, in accordance with the RBI guidelines on compensation, formulated the Compensation Policy which became effective in FY 2020-21, as amended from time to time. The Compensation Policy institutes a mechanism for alignment of compensation of Whole-time Directors, Chief Executive Officer, Material Risk Takers, Control Function Staff and other Senior Managerial Personnel with the extent of risks taken. The Policy also establishes standards of compensation including fixed and variable, which are in alignment with the applicable rules and regulations including the RBI guidelines in this regard and which is based on the trends and practices of remuneration prevailing in the banking industry. The remuneration of Whole-time Directors, Material Risk Takers, Key Managerial Personnel and Senior Management is governed by the Compensation Policy of the Bank. This Policy has been disclosed on the Bank's website at https:// www.suryodaybank.com/assets/pdf/policies/Suryoday_ Compensation_Policy_FY23-24_4.0.pdf .

The Non-Executive Directors including Independent Directors are paid remuneration by way of sitting fees for attending the meetings of the Board and its Committees, which is determined by the Board based on applicable regulatory provisions. Further, expenses incurred by them for attending meetings of the Board and Committees, if any, are reimbursed at actuals.

Pursuant to Regulation 19(4) read with Part D of Schedule II of the SEBI Listing Regulations, as amended, the NRC and the Board of Directors of the Bank is required to devise a policy on diversity of Board of Directors. The Bank has formulated this Policy in compliance with the SEBI Listing Regulations and the same is available on the website of the Bank at https://www.suryodaybank.com/assets/pdf/ policies/suryoday-policy-to-promote-diversity-of-board-of-directors-fy-25-26-1.0.pdf .

The Bank has an effective mechanism for succession planning which focuses on orderly succession of the Chairperson, Directors, Key Management Personnel and Senior Management. The NRC implements this mechanism in concurrence with the Board of Directors.

Pursuant to the provisions of Section 178(2) read with Schedule IV of the Act and Regulation 19 of SEBI Listing Regulations and SEBI Guidance Note on the Board Evaluation dated January 05, 2017 and as per the performance evaluation framework approved by the NRC and also concurred by the Board, the Bank has carried out the performance evaluation of the Directors including Chairman, Managing Director & CEO, Board Level Committees and Board as a whole for FY 2024-25.

The criteria for the performance evaluation of the Board include various aspects, such as structure, meetings, appointments, agenda, discussions, roles and responsibilities, evaluation of risks, strategy, governance and compliance, conflict of interest, etc. Further, the criteria for performance evaluation of the Board Committees include various aspects, such as, mandate and composition, effectiveness, meetings, agenda, minutes, discussion and dissent, independence, etc.

The criteria for the performance evaluation of the Directors include various aspects, such as, knowledge and competence, skill sets, expertise, integrity, functioning, contribution towards Board deliberations & decision-making process, attendance, teamwork, corporate governance, etc., and in case of Independent Directors, additional parameters include fulfilment of the criteria of independence, integrity and their independence from the management.

All Directors provided their responses to the questionnaires based on the aforesaid criteria. Further, at a separate meeting of the Independent Directors, the performance of non-independent Directors and the performance of the Board as a whole were reviewed based on the abovementioned criteria. The report on Board Evaluation was placed before the NRC and then to the Board. The Chairman of the Board and the Chairman of the NRC and an Independent Director who chaired the meeting of the Independent Directors took the lead in the process of evaluation and shared the feedback to the Board. The Board deliberated upon the outcome of the evaluation report and found the performance of the Board as a whole, the Board Committees, the Chairman, the Managing Director & CEO and other individual Directors to be satisfactory. The suggestions and the outcome of the evaluation process was taken on record by the Board.

In accordance with the Regulation 25(7) of the SEBI Listing Regulations and RBI guidelines, the Bank has conducted various familiarisation programmes during FY 2024-25 for the Independent Directors to enable them to familiarise with the Bank, its Management, Bank's Business, and its operations for better understanding of their roles & responsibilities and rights for effective contribution in sustainable growth of the Bank. The Bank has also facilitated various Training programs from the eminent institutions for the Independent Directors of the Bank.

The details of the familiarisation programme(s) for the Independent Directors of the Bank have been provided separately in the Report on Corporate Governance forms part of the Annual Report and can be accessible on website of the Bank at https://www.suryodaybank.com/ assets/pdf/policies/ssfb-familiarization-programmes-independent-directors-till-april-2025.pdf

The Bank has, from time to time, been granting Stock Options to its employees to attract, hire and retain talented and experienced personnel from the industry, as well as to reward and motivate employees for their long association and in recognition of their dedicated service to the Bank, pursuant to the approval of its Members. Rewarding employees with stock options aligns with the long-term growth of the Bank and ensures active participation by a team of motivated employees in ensuring the desired growth of the organisation.

In this regard, the Stock Option Scheme with the name ‘ESOP Scheme 2016' was initially approved by the Members of the Bank at their Extra Ordinary General meeting ("EGM") held on December 22, 2016 and thereafter, the amended Scheme was approved by the members of the Bank at their AGM held on August 30, 2018. Thereafter, in order to modify and align the terms with the amended Regulations, the Bank had launched new Scheme Suryoday ESOP Scheme 2019 ("ESOP Scheme 2019"), which was initially approved by the Members at the AGM held on September 26, 2019 and thereafter amendments to the Scheme were approved by the Members at their EGM held on July 27, 2020. Further, in terms of Regulation 12(1) of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (the "SEBI SBEB Regulations"), as amended, the ratification to the ESOP Scheme 2019 was also approved by the Members of the Bank at their AGM held on September 20, 2021.

It may kindly be noted that after coming into effect of the ESOP Scheme 2019, the earlier Scheme i.e. ESOP Scheme 2016 was closed for the purpose of granting new Options, however, Options which were already granted under the ESOP Scheme 2016, but yet to vest and the Option granted and vested but has not exercised under ESOP Scheme 2016, were valid till their eligible exercise period under the scheme.

The grant of Options to employees under Suryoday ESOP Scheme 2019 is approved by the NRC, in alignment with the Bank's Compensation Policy, at the time of hiring, as part of the Annual Performance Review and also based on various factors such as scale, designation, performance, grades, period of service, role significance, and contribution to the Bank's overall performance when determining the number of options to be granted.

Further, pursuant to RBI Circular No. RBI/2019-20/89 DOR. Appt.BC.No.23/29.67.001/ 2019-20 dated November 4, 2019 read with RBI/2021-22/95 DOR.GOV.

REC.44/29.67.001/2021-22datedAugust30,2021,theBank is under obligation to pay part of the overall compensation to certain categories of senior Management employees of the Bank in the form of share linked instruments as variable pay with a linkage to the overall performance of the Bank, performance of the concerned Business Unit and the Individual's Performance in accordance with the Compensation Policy of the Bank, with appropriate malus and claw-back arrangements. Taking into consideration the requirements of the abovementioned RBI Circulars and the growth plans of the Bank for coming years and in this regard to attract, hire and retain talented and experienced personnel from the industry, as well as to reward and motivate employees for their long association and in recognition of their dedicated service to the Bank, the NRC and the Board of Directors have recommended to increase the pool of Option by adding 40,00,000 (Forty Lakhs only) Options in the ESOP Scheme 2019 to be utilised for granting Options to the Employees for coming years for approval of its members, which was subsequently approved by the Members at their 16^th AGM of the Bank held on September 12, 2024. After adding the 40,00,000 (Forty Lakhs only) Options in Suryoday ESOP Scheme 2019, total pool size of Options in Suryoday ESOP Scheme 2019 would be 80,00,000 (Eighty Lakhs only) Options.

The Bank is currently granting Options only from the ESOP Scheme 2019.

The applicable disclosure with regard to Employee Stock Option granted during FY 2024-25 is provided in Annexure 2 to this report.

Pursuant to Section 186(11) of the Act, loans made, guarantees given, securities provided or acquisition of securities by a banking company in the ordinary course of its business are exempted from the disclosure requirement under Section 134(3) (g) of the said Act. Details of Investments are given in Schedule 8 to the Financial Statements forms part of the Annual Report.

During FY 2024-25, the Bank did not engage in any material significant transactions with related parties that could potentially create conflicts of interest between the Bank and these parties. The related party transactions, if any, during the year were carried out at arm's length basis and in the ordinary course of business operations.

During the year under review, there were no contracts or arrangements with related parties as referred to under Section 188(1) of the Act.

As per Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no related party transactions that are required to be reported in form AOC-2. The requisite disclosure has been made under Schedule 18 of the notes forming part of Audited Financial Statements for FY ended March 31, 2025.

The Related Party Transaction Policy as approved by the Board can be accessed on the website of the Bank at: https://www.suryodaybank.com/assets/pdf/policies/ suryoday-related-party-transaction-policy-fy-25-26-1.0.pdf.

The Bank is exposed to various risks which broadly fall under one or more of the categories of Credit Risk, Market Risk, Liquidity Risk, Operational Risk and Information and Cyber Security Risk etc. The Chief Risk Officer of the Bank is in-charge of the Risk Management functions under the oversight of the Risk Management Committee of the Board ("RMCB"). The Bank has a robust framework for risk management in the form of regular review of products and processes by the Compliance team, periodic internal audit of processes and operations, regular review of risk policies and periodic reporting to the RMCB and the Board. The RMCB overviews the nature of the relevant risks, impact thereof on the business of the Bank, implementation of the risk management policies and processes and reviewing of these Policies. Further details on the Risk Management are covered in the Management Discussion & Analysis, forming part of the Annual Report

The Board has reviewed the adequacy and effectiveness of the Bank's internal financial controls with reference to its financial statements. Internal controls are in place and were operating effectively for the period. There were no material or serious observations with respect to the inefficiency or inadequacy of such controls.

No material changes and commitments have occurred after the closure of FY 2024-25 till the date of this report, affecting the financial position of the Bank.

The Report on Management Discussion & Analysis for FY 2024-25, as stipulated in SEBI Listing Regulations forms part of the Annual Report.

The Bank is committed to establishing and adhering to the best Corporate Governance practices through transparency in disclosures, accountability, integrity, true & fairness, putting in place robust systems & processes and adhering to the compliance & governance policies framed in accordance with the rules and regulations applicable to the Bank. The Bank continuously endeavours enhancing the governance and assurance functions.

The Report on Corporate Governance along with the Certificate issued by Mr. Tushar Shridharani, Secretarial Auditors of the Bank confirming the compliance with the conditions stipulated in the SEBI Listing Regulations forms part of the Annual Report.

The Bank, as part of its social responsibility, endeavours to positively contribute towards the economic, environmental and social well-being of the unserved and underserved sections of the society, thereby contributing to achieving inclusiveness in their growth and improving the quality of their lives.

The Bank has in place a 3-tier governance structure for the CSR activities comprising of the Board of Directors of the Bank, the Corporate Social Responsibility & ESG Committee ("CSR & ESG Committee") and the Head-CSR. The Bank has been actively involved in implementing impactful CSR projects aimed at enhancing the livelihoods of marginalised communities. These projects primarily focus on financial, banking & digital literacy for women, adolescent children and their parents, preventive, and reproductive health, promoting employability skills, community development and other initiatives that bring positive change to the targeted communities. CSR activities and funds of the Bank are closely monitored by the CSR & ESG Committee.

During the year under review, the Bank undertook a major part of its CSR initiatives through an implementing agencies viz. Suryoday Foundation, Rotary Club of Madras, Delhi House Society & Kanavu Trust. The CSR activities undertaken during the year were Financial Literacy programs, Women Empowerment, Livelihoods, Health, and community engagement programs. The details of CSR activities in FY 2024-25 including those of ongoing projects are mentioned in the prescribed format and attached as Annexure 3 to this Report.

In terms of Regulation 34(2)(f) of the SEBI Listing Regulations, the top 1000 listed companies based on their market capitalisation as on March 31, every fiscal year, are mandatorily required to submit a Business Responsibility and Sustainability Report ("BRSR") on the environmental, social and governance disclosures as part of their Annual Report. The said Report describing the initiatives undertaken by the Bank from environmental, social and governance perspective has been uploaded on the website of the Bank and the same can be accessed at https://www. suryodaybank.com/assets/pdf/ssfb-brsr-fy-2024-25.pdf.

As stipulated in SEBI Listing Regulations, the Business Responsibility and Sustainability Report describing the initiatives undertaken by the Bank from environmental, social and governance perspective forms part of the Annual Report.

M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration Number 001076N/N500013), who had been appointed for a period of Three (3) years, i.e. from the conclusion of Thirteenth (13^th) AGM until the conclusion of Sixteenth (16^th) AGM of the Bank, pursuant to the approval granted by the RBI vide letter Ref CO.DOS.RPD. No. S872 /08-62-005/2021- 2022, dated August 13, 2021, was retired upon the conclusion of the 16^th AGM of the Bank held on September 12, 2024.

Pursuant to the approval granted by RBI vide its letter no. Ref CO. DOS. RPD. No.S804/08.68.005/2024-25 dated May 02, 2024, basis the recommendation of Audit Committee and Board of Directors of the Bank, Shareholders of the Bank at 16^th AGM held on September 12, 2024 have accorded their approval for the appointment of M/s. Mukund M Chitale

& Co. Chartered Accountants (Firm Registration Number 106655W), as Statutory Auditors of the Bank to hold office for a period of Three (3) years from the conclusion of the Sixteenth (16^th) AGM until the conclusion of the Nineteenth (19^th) AGM of the Bank for the purpose of the audit of the Bank's Financial Statements for the Financial Years 2024-25 upto 2026-27 on such terms and conditions including remuneration as may be fixed by the Board of Directors (including the Audit Committee of the Board) of the Bank and further subject to the fulfilment of the eligibility norms, by the Statutory Auditors as per the RBI Guidelines, other applicable provisions and approval of the RBI, every year during their tenure.

Pursuant to para 6.1 of the RBI Circular No. RBI/2021-22/25 Ref.No.DoS.CO.ARG/SEC.01/08.91.001/2021-22 dt. April 27, 2021, the Audit Committee of the Board need to monitor and assess the independence of the Auditors and conflict of interest position in terms of relevant regulatory provisions, standards, and best practices. Accordingly, the Audit Committee and the Board of Directors at their respective meetings held on May 08, 2025, have reviewed the performance of M/s. Mukund M Chitale & Co. Chartered Accountants (Firm Registration Number 106655W), as a Statutory Auditors of the Bank and assessed their independence in terms of RBI Circular No. RBI/2021-22/25 Ref. No. DoS. CO. ARG/SEC.01/08.91.001/2021-22 dt. April 27, 2021 and found the same to be satisfactory and that they were acting independently without conflict of interest with the management.

Further, as per para 3.1 of the said RBI Circular, the Bank is required to take prior approval of the RBI for their continuation on an annual basis. Accordingly, the Bank will seek approval from the RBI for continuation of M/s. Mukund M Chitale & Co. Chartered Accountants (Firm Registration Number 106655W), as a Statutory Auditors of the Bank for their second year i.e. FY 2025-26.

Furthermore, as per para 4.1 of the said RBI Circular, the Bank is required to have minimum of two audit firms for conducting Statutory Audit, therefore, the Bank is required to appoint one more audit firm of Chartered Accountants as Joint Statutory Auditor. Accordingly, the Bank is taking necessary steps in this regard and will seek necessary approvals, including approval of the RBI for appointment of Joint Statutory Auditors.

The Report, provided by the Statutory Auditors, M/s. Mukund M Chitale & Co., Chartered Accountants (Firm Registration Number 106655W), on the financial statements of the Bank for FY ended March 31, 2025, forms part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report. Also, no offence of fraud was reported by the Auditors of the Bank under Section 143(12) of the Act.

Pursuant to the provisions of Section 204 of the Act, the Board has appointed Mr. Tushar Shridharani, Practising Company Secretary (FCS 2690/COP 2190) as Secretarial Auditor to conduct Secretarial Audit of the Bank for FY 2024-25. The Secretarial Audit Report for FY 2024-25 is annexed to this Report as Annexure 4. The report is self-explanatory and does not contain any qualification, reservation or adverse remark.

Pursuant to Section 204 of the Act read with Regulation 24A of SEBI Listing Regulations and basis the recommendation of Audit Committee of the Board, the Board of Directors at their meeting held on May 08, 2025, have approved and recommended the appointment of M/s. Tushar Shridharani

& Associates LLP, Practising Company Secretaries, LLPIN - ACL-9350 Unique Code: L2025MH018100) (Peer Review Certificate no. 6670/2025 dated April 28, 2025) as Secretarial Auditors of the Bank for a period of Five (5) consecutive years commencing from financial year 2025-26 till financial year 2029-30; subject to the approval of Shareholders of the Bank at the ensuing AGM.

During the year under review, the Bank has complied with the Secretarial Standards on meetings of the Board and its Committees (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India, and as amended from time to-time.

In accordance with the RBI circular RBI/2015-16/315 DBR. BP.BC. No.76/21.07.001/2015-16, dated February 11, 2016, regarding implementation of Indian Accounting Standards (Ind AS), the banks have been advised to follow the Indian Accounting Standards as notified under the Companies (Indian Accounting Standards) Rules, 2015, subject to any guideline or direction issued by the RBI in this regard. The Banks in India currently prepare their financial statements as per the guidelines issued by the RBI, the Accounting Standards notified under Section 133 of the Act and generally accepted accounting principles in India ("Indian GAAP"). In January 2016, the Ministry of Corporate Affairs ("MCA") issued the roadmap for implementation of new Ind AS, which were based on convergence with the International Financial Reporting Standards ("IFRS"), for scheduled commercial banks, insurance companies and non-banking financial companies ("NBFCs"). In March 2019, RBI deferred the implementation of Ind AS for banks till further notifications as the recommended legislative amendments were under consideration of Government of India. The Bank had undertaken preliminary diagnostic analysis of the GAAP differences between Indian GAAP visa-vis Ind AS and shall proceed for ensuring the compliance as per applicable requirements and directions in this regard.

The Bank has adopted a Policy for Prevention of Sexual Harassment ("POSH Policy") at the workplace under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee ("ICC") has been constituted in compliance with the provisions of the Act and the POSH Policy to review, investigate and take suitable action on complaints. An Appellate Committee has also been constituted under the Policy before whom a complainant who is not satisfied with the decision of the ICC can prefer an appeal.

Details of complaints received and resolved by the ICC during FY 2024-25 are as follows:

During the year, there were no appeals filed under the said Policy.

Further, the Annual Report under Sexual Harassment of Women at workplace (Prevention, Prohibition and Redressal) Act, 2013, of the Internal Complaints Committee, for the Calendar year ended December 31, 2024 had been filed with the District Collector, Thane within the prescribed timeline.

No disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI's supervisory process for the year ended March 31, 2025, in terms of the requirements prescribed in RBI circular.

The Bank has in place a Whistle Blower Policy which has been formulated as part of corporate governance norms and transparency where employees, customers and other stakeholders of the Bank including Non-Governmental Organizations ("NGOs") are encouraged to voice genuine concerns of grievances about unprofessional conduct without the fear of reprisal to the person raising the concern.

The Policy provides a framework to promote responsible and secure whistle blowing with respect to any breach or violation of the Bank's Code of Conduct on any matter.

Please refer:-

https://www.suryodaybank.com/assets/pdf/policies/ suryoday-whistle-blower-policy-fy24-25_1.0.pdf for text of the Policy. The functioning of the Whistle Blower mechanism is subject to review by the Audit Committee.

During the year under review, no complaints were received under this Policy.

The Bank has been actively pursuing various initiatives aimed at achieving its goal of reducing power consumption. The Bank closely monitors the usage of desktops, laptops and other electronic devices, ensuring that those are switched off when not in use. The use of LED lighting continues as part of Bank's ongoing efforts to improve energy efficiency. Through installation of energy efficient appliances like Sensor-based lighting for close monitoring of the usage and imparting consistent awareness on mindful consumption among employees and staff members.

There was foreign exchange outgo of H0.17 Crores for the FY'25. Further, there were no earnings in foreign exchange.

The Bank remains committed to technology-driven business initiatives to simplify and enhance the banking experience for customers. Throughout Financial Year 2025, several efforts were made to further bolster the Bank's technological capabilities through continuous innovation and adoption. The Bank has automated various processes to improve turnaround time and reduce manual dependencies. Regulatory-focused processes were automated to ensure timely, consistent execution and adherence to guidelines.

These achievements underscore the Bank's strategic focus on digital transformation through intelligent automation, delivering business value year over year.

Being a banking company, the disclosures relating to deposits as required pursuant to Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014, read with Section 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014. are not applicable to the Bank. The details of the deposits received and accepted by the Bank as a Banking company have been disclosed in the financial statements for FY ended March 31, 2025 forming part of the Annual Report for FY 2024-25.

Being a banking company, the cost records as specified by the Central Government under Section 148(1) of the Act, are not applicable to the Bank.

During the year under review, no frauds have been reported by the Statutory Auditors or the Secretarial Auditors under Section 143(12) of the Act.

During the year under review, no significant or material orders passed by the Regulators or Courts or Tribunals, which would impact the going concern status of the Bank or its future operations.

During the year under review, the Bank was recognised in various ways/by several institutes. Some of the key achievements and awards won by the Bank are listed below:

a) Best Digital First Bank of the Year: The Bank has been recognized at Bharat Fintech Summit 2025 for demonstrating excellence in financial services.

b) Infosys Finacle Innovation Awards 2025: The Bank has been recognized as Ecosystem-Led Innovation-Platinum Winner for driving digital transformation to modernise new-age-banking.

c) State Bank of India (SBI) Awards (Sambalpur District, Odisha): The Bank has been recognised as ‘Top Performing Small Finance Bank' under the Annual Credit Plan for the FY 2024-25.

d) Ambition Box Employee Choice Awards 2025: The Bank has been recognized for creating a workplace that prioritizes employees and fosters success.

The Bank has been recognised as Persistancy Warrior for FY 2024-25.

f) Chief Information Officer of the Year - Banking:

Mr. Vishal Singh, the Chief Information Officer & Head- Digital Banking has been recognised for his contribution for technological prowess & strategic vision at Bharat Fintech Summit 2025.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Act, the same would be available for inspection during working hours at the Registered Office of the Bank. A copy of this statement may be obtained by the Members by writing to the Company Secretary of the Bank.

The ratio of the remuneration of each Director and employees of the Bank as required under the provisions of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report as Annexure 5.

Pursuant to Section 134(3)(c) read with Section 134(5) of the Act, the Board of Directors of the Bank hereby confirms that:

a) in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Bank as on March 31, 2025 and of the profit of the Bank for the year ended on that date; c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

d) the annual accounts are prepared on a going- concern basis;

e) the requisite internal financial controls followed by the Bank are adequate and were operating effectively;

f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and were operating effectively.

The Board of Directors of your Bank would like to place on record their sincere gratitude for the guidance and co-operation received from the RBI, SEBI, Stock Exchanges, MCA, Depositories and other statutory and regulatory authorities and thank all the stakeholders of the Bank including the investors, customers, bankers, shareholders, debenture holders, vendors, trustees, Registrars and all other valued partners for their continued support. The Board also would like to express their appreciation for the sincere and dedicated efforts put in by all the employees of the Bank at all levels for their teamwork and continued commitment towards growth of the Bank, its customers and other stakeholders and look forward to their continued contribution in building this ‘Bank of Smiles' into a world class organization.

For and on behalf of the Board