PRIVATE & CONFIDENTIAL FOR PRIVATE CIRCULATION ONLYsmest.in/wp-content/uploads/2013/06/11.95kvb2029.pdf · private & confidential – for private circulation only this disclosure

Disclosure Document dated Private & Confidential

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PRIVATE & CONFIDENTIAL – FOR PRIVATE CIRCULATION ONLY THIS DISCLOSURE DOCUMENT IS NEITHER A PROSPECTUS NOR A STATEMENT IN LIEU OF PROSPECTUS. THIS DISCLOSURE DOCUMENT IS PREPARED IN CONFORMITY WITH SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF DEBT SECURITIES) REGULATIONS, 2008 ISSUED VIDE CIRCULAR NO. LAD-NRO/GN/2008/13/127878 DATED JUNE 06, 2008, BY SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF DEBT SECURITIES) (AMENDMENT) REGULATIONS, 2012 ISSUED VIDE CIRCULAR NO. LAD-NRO/GN/2012-13/19/5392 DATED OCTOBER 12, 2012 AND CIR/IMD/DF/18/2013 DATED OCTOBER 29, 2013) AND THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF DEBT SECURITIES) (AMENDMENT) REGULATIONS, 2014 ISSUED VIDE CIRCULAR NO. LAD-NRO/GN/2013-14/43/207 DATED JANUARY 31, 2014 THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE AND LISTING OF DEBT SECURITIES) (AMENDMENT) REGULATIONS 2015 ISSUED VIDE CIRCULAR NO. LAD-NRO/GN/2014-15/25/539 dated MARCH 24, 2015 AND RBI CIRCULAR DBR.NO.BP.BC.1/21.06.201/2015-16 DATED JULY 1, 2015, RBI CIRCULAR No. DBR.No.BP.BC.83/21.06.201/2015-16 DATED MARCH 1, 2016 AND RBI circular No. DBR.BP.BC.NO 50/21.06.201/2016-17 dated February 02, 2017 AND SECTION 42 OF THE COMPANIES ACT, 2013 AND THE COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014, AS AMENDED FROM TIME TO TIME.

Our Bank was incorporated as The Karur Vysya Bank Limited (the “Bank” or the “Issuer”) on June 22, 1916 under the Companies Act, 1913. Our Bank received the license to carry on banking business in

India under the Banking Regulation Act, 1949, from the Reserve Bank of India on December 20, 1958. Registered Office: Post Box No.: 21, Erode Road, Karur 639002

Tel: 04324-226520, 225521; Fax: 04324-225700 E-mail Id: [email protected]

Corporate Identification Number: L65110TN1916PLC001295

DISCLOSURE DOCUMENT PRIVATE PLACEMENT OF BASEL III COMPLIANT UNSECURED, REDEEMABLE NON CONVERTIBLE TIER II

BONDS IN THE NATURE OF DEBENTURE OF RS. 1.00 LAKH EACH FOR CASH AT PAR (“BONDS”) AGGREGATING

TO RS. 1,200 CRORES ON PRIVATE PLACEMENT BASIS TO BE ISSUED IN ONE OR MORE TRANCHES (the

“Issue”), BY THE KARUR VYSYA BANK LIMITED (“KVB”/the “Issuer”/ the “Bank”).

GENERAL RISK For taking an investment decision, investors must rely on their own examination of the Issuer and the Offer including the risks involved. The Bonds have not been recommended or approved by the Securities and Exchange Board of India (SEBI) nor does SEBI guarantee the accuracy or adequacy of this Disclosure Document The Bonds are capital instruments and not deposits of the Bank and they cannot be used as collateral for any loan made by the Bank or any of its Subsidiaries or Associates. The Bonds are different from Fixed Deposits and are not covered by Deposit Insurance. Unlike the Fixed Deposits where Deposits are repaid at the option of Deposit Holder, the Bonds are not redeemable at the option of the Bondholders or without prior consent of RBI. The Bonds are subject to features (including write off at the Bank’s PONV, as determined by RBI) as per RBI Guidelines on Basel III, which may impact payment of Interest and Principal

ISSUER’S ABSOLUTE RESPONSIBILITY The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this offer document contains all information with regard to the issuer and the issue, which is material in the context of the issue, that the information contained in the Disclosure Document is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect.

CREDIT RATING “IND A+ / Stable” by India Ratings & Research Pvt. Ltd. on February 18, 2019

Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.

“[ICRA] A(hyb) Stable” by ICRA Ltd. on February 18, 2019.

Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk. The Rating(s) are not a recommendation to buy, sell or hold securities and Investors should take their own decisions. The rating may be subject to revision or withdrawal at any time by the assigning Rating Agency on the basis of new information. Each rating should be evaluated independent of any other rating.

mailto:[email protected]


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LISTING Proposed to be listed on the Wholesale Debt Market (“WDM”) Segment of National Stock Exchange of India Limited (“NSE”)

DEBENTURE TRUSTEE TO THE ISSUE REGISTRAR TO THE ISSUE

Axis Trustee Services Ltd. Axis House, 02nd Floor, Bombay Dyeing Mills Compound, Pandurang Budhkar Marg, Worli Mumbai – 400 025 Tel: 022- 43255231 Fax:022-43253000 Email: [email protected] Website: www.axistrustee.com

Karvy Fintech Pvt. Ltd. (Formerly known as KCPL Advisory Services P Ltd) Karvy Selenium Tower B, Plot 31, 32, Gachibowli Financial District, Nanakaramguda, Hyderabad 500 032. Phone: 40 – 6716 2222 Fax: 40 – 2343 1551 Email: [email protected] Website: www.karvyfintech.com

ARRANGER TO THE ISSUE

TRUST INVESTMENT ADVISORS PVT. LTD. 109/110, 1st Floor, Balarama, Bandra Kurla Complex, Bandra (East), Mumbai 400 051 Tel.: 022 40845000 Fax.: 022 40845007 Email: [email protected] Website: www.trustgroup.in

ADVISOR TO THE ISSUE

TRUST INVESTMENT ADVISORS PVT. LTD. 109/110, 1st Floor, Balarama, Bandra Kurla Complex, Bandra (East), Mumbai 400 051 Tel.: 022 40845000 Fax.: 022 40845007 Email: [email protected] Website: www.trustgroup.in

ISSUE SCHEDULE Issue Opening Date DD MMM YYYY Issue Closing Date DD MMM YYYY

Issue Pay in Date DD MMM YYYY Issue Allotment Date DD MMM YYYY The Issuer reserves the right to pre pone the Issue earlier from the aforesaid date or post pone the Issue at its sole and absolute discretion without giving any reasons or prior notice. In the event of any change in the above issue programme, the Issuer will intimate the investors about the revised issue programme.


http://www.axistrustee.com/


http://www.karvyfintech.com/


http://www.trustgroup.in/


http://www.trustgroup.in/


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TABLE OF CONTENTS

S. N. INDEX Page No. * DEFINITIONS / ABBREVIATIONS 5 * DISCLAIMER (S) 8 * RISK FACTOR (S) 11 * DISCLOSURE (S) AS PER SEBI REGULATIONS 13 A ISSUER INFORMATION 14 B BRIEF SUMMARY OF BUSINESS/ ACTIVITIES OF ISSUER AND ITS LINE OF BUSINESS 16

(i) OVERVIEW 16 (ii) MANAGEMENT’S PERCEPTION OF RISK FACTOR (S) 22 (iii) CORPORATE STRUCTURE 31

(iv) KEY OPERATIONAL & FINANCIAL PARAMETERS FOR THE LAST 3 FINANCIAL YEARS ON STANDALONE BASIS AND NINE MONTHS ENDED DECEMBER 31, 2018

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(v) PROJECT COST AND MEANS OF FINANCING, IN CASE OF FUNDING OF NEW PROJECTS 33 (vi) SUBSIDIARIES 33

C BRIEF HISTORY OF ISSUER SINCE INCEPTION, DETAILS OF ACTIVITIES INCLUDING ANY REORGANIZATION, RECONSTRUCTION OR AMALGAMATION, CHANGES IN CAPITAL STRUCTURE, (AUTHORIZED, ISSUED AND SUBSCRIBED) AND BORROWINGS

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(i) DETAILS OF SHARE CAPITAL AS ON LAST QUARTER END 33 (ii) CHANGES IN ITS CAPITAL STRUCTURE AS ON LAST QUARTER END, FOR THE LAST FIVE YEARS 33 (iii) DETAILS OF ANY ACQUISITION OR AMALGAMATION IN THE LAST 1 YEAR 34 (iv) DETAILS OF ANY REORGANIZATION OR RECONSTRUCTION IN THE LAST 1 YEAR 35

D DETAILS OF THE SHAREHOLDING OF THE BANK AS ON THE LATEST QUARTER END 35

(i) SHAREHOLDING PATTERN OF THE BANK AS ON LASTEST QUARTER END 35

(ii) LIST OF TOP 10 HOLDERS OF EQUITY SHARES OF THE BANK AS ON THE LATEST QUARTER END

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E DETAILS REGARDING THE DIRECTORS OF THE BANK 37

(i) DETAILS OF THE CURRENT DIRECTORS OF THE BANK 37 (ii) DETAILS OF CHANGE IN DIRECTORS DURING LAST THREE YEARS 38

(iii) DISCLOSURE REGARDING INTEREST OF DIRECTORS, LITIGATION ETC. 39 F DETAILS REGARDING THE AUDITORS OF THE BANK 40

(i) DETAILS OF THE STATUTORY AUDITORS OF THE BANK 40 (ii) DETAILS OF CHANGE IN AUDITORS DURING LAST THREE YEARS 40

G DETAILS OF BORROWINGS OF THE BANK, AS ON THE LATEST QUARTER END 40

(i) DETAILS OF SECURED AND UNSECURED LOAN FACILITIES 40 (ii) DETAILS OF BONDS 40 (iii) LIST OF TOP 10 DEBENTURE HOLDERS (BOND HOLDERS) 41

(iv) THE AMOUNT OF CORPORATE GUARANTEE ISSUED BY THE ISSUER ALONG WITH NAME OF THE COUNTERPARTY (LIKE NAME OF THE SUBSIDIARY, JV ENTITY, GROUP BANK, ETC) ON BEHALF OF WHOM IT HAS BEEN ISSUED.

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(v) DETAILS OF CERTIFICATE OF DEPOSITS 41

(vi) DETAILS OF REST OF THE BORROWING (IF ANY INCLUDING HYBRID DEBT LIKE FCCB, OPTIONALLY CONVERTIBLE DEBENTURES / PREFERENCE SHARES

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(vii) DETAILS OF ALL DEFAULT/S AND/OR DELAY IN PAYMENTS OF INTEREST AND PRINCIPAL OF ANY KIND OF TERM LOANS, DEBT SECURITIES AND OTHER FINANCIAL INDEBTEDNESS INCLUDING CORPORATE GUARANTEE ISSUED BY THE BANK, IN THE PAST 5 YEARS

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(viii) DISCLOSURES PERTAINING TO WILFUL DEFAULT 41

(ix) DETAILS OF ANY OUTSTANDING BORROWINGS TAKEN/ DEBT SECURITIES ISSUED WHERE TAKEN / ISSUED (I) FOR CONSIDERATION OTHER THAN CASH, WHETHER IN WHOLE OR PART, (II) AT A PREMIUM OR DISCOUNT, OR (III) IN PURSUANCE OF AN OPTION

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H DETAILS OF PROMOTERS OF THE BANK 42

I ABRIDGED VERSION OF AUDITED STANDALONE FINANCIAL INFORMATION (PROFIT & LOSS STATEMENT, BALANCE SHEET AND CASH FLOW STATEMENT) FOR LAST THREE YEARS AND AUDITOR QUALIFICATIONS

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J ABRIDGED VERSION OF LATEST FINANCIAL INFORMATION AND AUDITOR’S QUALIFICATIONS 45


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K

ANY MATERIAL EVENT/ DEVELOPMENT OR CHANGE HAVING IMPLICATIONS ON THE FINANCIALS/CREDIT QUALITY (E.G. ANY MATERIAL REGULATORY PROCEEDINGS AGAINST THE ISSUER/PROMOTERS, TAX LITIGATIONS RESULTING IN MATERIAL LIABILITIES, CORPORATE RESTRUCTURING EVENT ETC) AT THE TIME OF ISSUE WHICH MAY AFFECT THE ISSUE OR THE INVESTOR’S DECISION TO INVEST / CONTINUE TO INVEST IN THE DEBT SECURITIES

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L

THE NAMES OF THE DEBENTURE TRUSTEE(S) STATEMENT TO THE EFFECT THAT DEBENTURE TRUSTEE(S) HAS GIVEN HIS CONSENT TO THE ISSUER FOR HIS APPOINTMENT UNDER REGULATION 4 (4) AND IN ALL THE SUBSEQUENT PERIODICAL COMMUNICATIONS SENT TO THE HOLDERS OF DEBT SECURITIES.

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M DETAILED RATING RATIONALE (S) ADOPTED (NOT OLDER THAN ONE YEAR ON THE DATE OF OPENING OF THE ISSUE)/ CREDIT RATING LETTER ISSUED (NOT OLDER THAN ONE MONTH ON THE DATE OF OPENING OF THE ISSUE) BY THE RATING AGENCIES

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N THE SECURITY BACKED BY A GUARANTEE OR LETTER OF COMFORT OR ANY OTHER DOCUMENT / LETTER WITH SIMILAR INTENT,

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O COPY OF CONSENT LETTER FROM THE DEBENTURE TRUSTEE 48

P NAMES OF ALL THE RECOGNISED STOCK EXCHANGES WHERE THE DEBT SECURITIES ARE PROPOSED TO BE LISTED CLEARLY INDICATING THE DESIGNATED STOCK EXCHANGE

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Q OTHER DETAILS 49

(i) DRR CREATION 49 (ii) ISSUE/INSTRUMENT SPECIFIC REGULATIONS - RELEVANT DETAILS 49 (iii) APPLICATION PROCESS 49 R PROCEDURE FOR APPLYING FOR DEMAT FACILITY 51 S HOW TO APPLY 52 T TERM SHEET TRANCHE A : ISSUE DETAILS 55 U DISCLOSURE OF CASH FLOWS 62 V OTHER TERMS OF OFFER 63 W MATERIAL CONTRACTS & AGREEMENTS INVOLVING FINANCIAL OBLIGATIONS OF THE ISSUER 71 X UNDERTAKING BY THE BANK 71 Y DECLARATION 72

ANNEXURES APPLICATION FORM

1 BOARD RESOLUTION 2 SHAREHOLDERS’ RESOLUTION 3 RATING LETTERS OF RATING AGENCIES 4 DEBENTURE TRUSTEE CONSENT LETTER 5 R&TA CONSENT LETTER 6 NSE IN PRINCIPLE APPROVAL LETTER


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* DEFINITIONS / ABBREVIATIONS

AY Assessment Year Allotment/ Allot/ Allotted The issue and allotment of the Bonds to the successful Applicants in the Issue Allottee A successful Applicant to whom the Bonds are allotted pursuant to the Issue, either in full

or in part Applicant/ Investor A person who makes an offer to subscribe the Bonds pursuant to the terms of this

Disclosure Document and the Application Form Application Form The form in terms of which the Applicant shall make acceptance of an offer to subscribe to

the Bonds and which will be considered as the application for allotment of Bonds in the Issue

ANBC Adjusted Net Bank Credit BASEL III Guidelines The Term Basel-III Guidelines in the DISCLOSURE DOCUMENT (Document) & Term Sheet

and notes to Term Sheet refers to Master Circular - Basel III Capital Regulations, RBI/2015-16/58 DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 and amendments thereof from time to time

Bondholder(s) Any person or entity holding the Bonds and whose name appears in the list of Beneficial Owners provided by the Depositories

Beneficial Owner(s)

Bondholder(s) holding Bond(s) in dematerialized form (Beneficial Owner of the Bond(s) as defined in clause (a) of sub-section of Section 2 of the Depositories Act, 1996)

Board/ Board of Directors

The Board of Directors of The Karur Vysya Bank Ltd. or Committee thereof, unless otherwise specified

Bond(s) Basel III Compliant Unsecured, Redeemable Non-Convertible Tier II Bonds of Rs. 1.00 Lakh each for cash at par (“BONDS”) aggregating to Rs. 1,200 crore on Private Placement basis to be issued in one or more tranches (the “Issue”), by The Karur Vysya Bank Limited in terms of this Disclosure Document

BR Act, 1949 Banking Regulation Act, 1949 BSE Bombay Stock Exchange Limited Rating Agency India Ratings & Research Pvt. Ltd. and ICRA Ltd. Record Date Reference date for payment of Interest & Beneficiary position CBLO Collateralized Borrowing and Lending Obligation CCIL Clearing Corporation of India Limited CDSL Central Depository Services (India) Limited Debt Securities Non-Convertible debt securities which create or acknowledge indebtedness and

include debenture, bonds and such other securities of a body corporate or any statutory body constituted by virtue of a legislation, whether constituting a charge on the assets of the Bank or not, but excludes security bonds issued by Government or such other bodies as may be specified by SEBI, security receipts and securitized debt instruments

Deemed Date of Allotment

The cut-off date declared by the Bank from which all benefits under the Bonds including interest on the Bonds shall be available to the Bondholder(s). The actual allotment of Bonds (i.e. approval from the Board of Directors or a Committee thereof) may take place on a date other than the Deemed Date of Allotment

Depository A Depository as defined in Depository Act, 1996 and registered with SEBI under the SEBI (Depositories and Participant) Regulations, 1996, as amended from time to time

Depositories Act The Depositories Act, 1996, as amended from time to time Depository Participant (DP) A Depository Participant as defined under Depositories Act, 1996 Disclosure Document Disclosure Document dated _________ for private placement of Basel III Compliant

Unsecured, Redeemable Non-Convertible Tier II Bonds of Rs. 1.00 Lakh each for cash at par (“BONDS”) aggregating to Rs. 1,200 crore on Private Placement basis to be issued in one or more tranches (the “Issue”), by The Karur Vysya Bank Ltd.

DRR Bond/ Debenture Redemption Reserve EPS Earnings Per Share FIs Financial Institutions FIIs Foreign Institutional Investors Financial Year/ FY Period of twelve months ending March 31, of that particular year FCD Finance & Control Department


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GOI / GoI Government of India/ Central Government Trustees Trustees for the Bondholders in this case are Axis Trustee Services Ltd India Ratings Indian Ratings and Research Private Limited ICRA ICRA Limited IND AS / IndAS Indian Accounting Standards Issuer / Bank The Karur Vysya Bank Limited ISIN International Securities Identification Number I.T. Act The Income Tax Act, 1961, as amended from time to time Listing Agreement Listing Agreement shall carry the same meaning as defined in SEBI (Listing Obligations

and Disclosure Requirements) Regulations, 2015. MD & CEO Managing Director & Chief Executive Officer MF Mutual Fund MoF Ministry of Finance MSMEs Micro, Small and Medium scale Enterprises NRI A person resident outside India, who is a citizen of India or a person of Indian origin and

shall have the same meaning as ascribed to such term in the Foreign Exchange Management Act, 1999 and regulations there under.

NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited NSE-EBP Electronic Book Provider mechanism for issuance of debt securities on private placement

basis (also known as Electronic Bidding Platform or Electronic Book Provider Platform or NSE-EBP) as guided by the SEBI through its circulars bearing no. SEBI/HO/ DDHS/ CIR/P/ 2018/05 issued on January 05, 2018 read with SEBI circular No. SEBI/HO/ DDHS/ CIR/P/2018/122 issued on August 16, 2018, and the NSE EBP Guidelines

PAN Permanent Account Number Private Placement An offer or invitation to subscription of Bonds on Private Placement Basis. PONV The Bonds, at the option of the Reserve Bank of India, can be permanently written off

upon occurrence of the trigger event, called the Point of Non-Viability Trigger (“PONV Trigger”)

PONV Trigger PONV Trigger Event, in respect of the Issuer or[ its group], means the earlier of:

(i) a decision that a conversion or principal write-down, without which the Issuer or its group (as the case may be) would become non-viable, is necessary, as determined by the RBI; and

(ii) the decision to make a public sector injection of capital, or equivalent support, without which the Issuer or its group (as the case may be) would have become non-viable, as determined by the relevant authority; For this purpose, a non-viable bank will be:

A bank which, owing to its financial and other difficulties, may no longer remain a going concern on its own in the opinion of the RBI unless appropriate measures are taken to revive its operations and thus, enable it to continue as a going concern. The difficulties faced by a bank should be such that these are likely to result in financial losses and raising the Common Equity Tier 1 Capital of the bank should be considered as the most appropriate way to prevent the bank from turning non-viable. Such measures would include a permanent write-off in combination with or without other measures as considered appropriate by the RBI.

A bank facing financial difficulties and approaching a point of non-viability shall be deemed to achieve viability if within a reasonable time in the opinion of the RBI; it will be able to come out of the present difficulties if appropriate measures are taken to revive it. The measures including a permanent write-off or public sector injection of funds are likely to:

a. restore confidence of the depositors/ investors;

b. improve rating/ creditworthiness of the bank and thereby improving its borrowing capacity and liquidity and reduce cost of funds; and

c. augment the resource base to fund balance sheet growth in the case of fresh


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injection of funds. (For details please refer RBI Master Circular dated July 01, 2015 under reference)

GIR General Index Registration Number RBI Reserve Bank of India RBI Norms/ RBI Guidelines Please refer to RBI Master Circular on Basel III Capital Regulations, RBI/2015-16/58

DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 & amendments thereof from time to time

RTGS Real Time Gross Settlement Registrar ( R&TA) Karvy Fintech Private limited SEBI The Securities and Exchange Board of India, constituted under the SEBI Act, 1992 SEBI Act Securities and Exchange Board of India Act, 1992, as amended from time to time SEBI Debt Regulations Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations,

2008 issued vide circular no. LAD-NRO/GN/2008/13/127878 Dated June 06, 2008, as amended, securities and exchange board of India (issue and listing of debt securities) (amendment) regulations, 2012 issued vide circular no. LAD-NRO/GN/2012-13/19/5392 dated October 12, 2012 and CIR/IMD/DF/18/2013 dated 29th October 2013, as amended and Securities And Exchange Board Of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2014 issued vide circular no. LAD-NRO/GN/2013-14/43/207 dated January 31, 2014 as amended and The Securities And Exchange Board Of India (Issue And Listing Of Debt Securities) (Amendment) Regulations, 2015 issued vide circular no. LAD-NRO/GN/2014-15/25/539 dated March 24, 2015 and Securities and Exchange Board of India circular no. CIR/IMD/DF1/48/2016 dated April 21, 2016. Securities And Exchange Board Of India (Listing Obligations And Disclosure Requirements) Regulations, 2015, issued vide circular no. SEBI/LAD-NRO/GN/2015-16/013 dated September 2 2015, Securities And Exchange Board Of India (Issue And Listing Of Debt Securities) (Amendment) Regulations, 2016 issued vide circular no SEBI/ LAD-NRO/GN/2016-17/004 dated May 25, 2016 and SEBI circular no. CIR/IMD/DF-1/122/2016 dated November 11, 2016

TDS Tax Deducted at Source Companies Act Companies Act, 1956 , as amended (without reference to the sections thereof that have

ceased to have effect upon notification of sections of the Companies Act, 2013) (the “Companies Act, 1956”) read with the applicable provisions of the Companies Act, 2013, to the extent notified and in effect (the “Companies Act, 2013”), and together with the Companies Act, 1956, the “Companies Act”)

The Issue/ The Offer/ Private Placement

Private Placement of Basel III Compliant Unsecured, Redeemable Non-Convertible Tier II Bonds of Rs. 1.00 Lakh each for Cash At Par (“TRANCHE A BONDS”) aggregating to Rs. 300 crore with an option to retain over subscription of upto Rs. 300 crore on Private Placement basis to be issued (the “Issue”), by The Karur Vysya Bank Ltd.


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* DISCLAIMER(S) 1. DISCLAIMER OF THE ISSUER:

This Disclosure Document is neither a Prospectus nor a Statement in Lieu of Prospectus and is prepared in accordance with Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular no. LAD-NRO/GN/2008/13/127878 dated June 06, 2008, (amendment) regulations, 2012 issued vide circular no. LAD-NRO/GN/2012-13/19/5392 dated October 12, 2012 and CIR/IMD/DF/18/2013 dated October 29, 2013, Securities and Exchange Board of India (issue and listing of debt securities) (amendment) regulations, 2014 issued vide circular no. LAD-NRO/GN/2013-14/43/207 dated January 31, 2014 and Securities and Exchange Board of India (issue and listing of debt securities) (amendment) regulations, 2015 issued vide circular no. LADNRO/GN/2014-15/25/539 dated March 24, 2015 and Securities and Exchange Board of India circular no. CIR/IMD/DF1/48/2016 dated April 21, 2016, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, issued vide circular no. SEBI/LAD-NRO/GN/2015-16/013 dated September 2 2015, Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2016 issued vide circular no SEBI/ LAD-NRO/GN/2016-17/004 dated May 25, 2016 and SEBI circular no. CIR/IMD/DF-1/122/2016 dated November 11, 2016 and Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) dated December 15, 2017 and RBI Master Circular No. RBI/2015–16/58 DBR.No. BP.BC.1/ 21.06.201/2015–2016 dated July 1, 2015 and RBI circular RBI/2015-16/285 DBR.No.BP.BC.71//21.06.201/2015-16 dated January 14, 2016, RBI circular No. DBR.BP.BC.NO 50/21.06.201/2016-17 dated February 02, 2017 and Section 42 of the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014, as amended from time to time. This Disclosure Document does not constitute an offer to public in general to subscribe for or otherwise acquire the Bonds to be issued by The Karur Vysya Bank Ltd. (“KVB”/the “Issuer”/ the “Bank”). This Disclosure Document is for the exclusive use of the addressee and restricted for only the intended recipient and it should not be circulated or distributed to third party (ies). It is not and shall not be deemed to constitute an offer or an invitation to the public in general to subscribe to the Bonds issued by the Issuer. This Bond Issue is made strictly on private placement basis. Apart from this Disclosure Document, no offer document or prospectus has been prepared in connection with the offering of this Issue or in relation to the Issuer.

This Disclosure Document is not intended to form the basis of evaluation for the prospective subscribers to whom it is addressed and who are willing and eligible to subscribe to the Bonds issued by the Bank. This Disclosure Document has been prepared to give general information regarding the Bank to parties proposing to invest in this issue of Bonds and it does not purport to contain all the information that any such party may require the Bank to believe that the information contained in this Disclosure Document is true and correct as of the date hereof. The Bank does not undertake to update this Disclosure Document to reflect subsequent events and thus prospective subscribers must confirm about the accuracy and relevancy of any information contained herein with the Bank. However, the Bank reserves its right for providing the information at its absolute discretion. The Bank accepts no responsibility for statements made in any advertisement or any other material and anyone placing reliance on any other source of information would be doing so at his own risk and responsibility. Prospective subscribers must make their own independent evaluation and judgment before making the investment and are believed to be experienced in investing in debt markets and are able to bear the economic risk of investing in Bonds. It is the responsibility of the prospective subscriber to have obtained all consents, approvals or authorizations required by them to make an offer to subscribe for, and purchase the Bonds. It is the responsibility of the prospective subscriber to verify if they have necessary power and competence to apply for the Bonds under the relevant laws and regulations in force. Prospective subscribers should conduct their own investigation, due diligence and analysis before applying for the Bonds. Nothing in this Disclosure Document should be construed as advice or recommendation by the Issuer or by the Arrangers to the Issue to subscribers to the Bonds. The prospective subscribers also acknowledge that the Arrangers to the Issue do not owe the subscribers any duty of care in respect of this private placement offer to subscribe for the Bonds. Prospective subscribers should also consult their own advisors on the implications of application, allotment, sale, holding, ownership and redemption of these Bonds and matters incidental thereto. This Disclosure Document is not intended for distribution. It is meant for the consideration of the person to whom it is addressed and should not be reproduced by the recipient and the contents of this Disclosure Document shall be kept utmost confidential. The securities mentioned herein are being issued on Private Placement Basis and this offer does not constitute a public offer/ invitation.

The Issuer reserves the right to withdraw the private placement of the Bond issue prior to the Issue closing date(s) in the


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event of any unforeseen development adversely affecting the economic and regulatory environment or any other force majeure condition including any change in applicable law. In such an event, the Issuer will refund the application money, if any, along with interest payable on such application money, if any.

2. DISCLAIMER OF THE SECURITIES & EXCHANGE BOARD OF INDIA:

This Disclosure Document has not been filed with Securities & Exchange Board of India (“SEBI”). The Bonds have not been recommended or approved by SEBI nor does SEBI guarantee the accuracy or adequacy of this Disclosure Document. It is to be distinctly understood that this Disclosure Document should not, in any way, be deemed or construed that the same has been cleared or vetted by SEBI. SEBI does not take any responsibility either for the financial soundness of any scheme or the project for which the Issue is proposed to be made, or for the correctness of the statements made or opinions expressed in this Disclosure Document. The Issue of Bonds being made on private placement basis, filing of this Disclosure Document is not required with SEBI. However SEBI reserves the right to take up at any point of time, with the Issuer, any irregularities or lapses in this Disclosure Document.

3. DISCLAIMER OF THE ARRANGER(S) TO THE ISSUE:

It is advised that the Issuer has exercised self-due diligence to ensure complete compliance of prescribed disclosure norms in this Disclosure Document. The role of the Arrangers to the Issue (collectively referred to as “Arrangers”/ “Arrangers to the Issue”) in the assignment is confined to marketing, and placement of the bonds on the basis of this Disclosure Document as prepared by the Issuer. The Arrangers have neither scrutinized/ vetted nor have they done any due-diligence for verification of the contents of this Disclosure Document. The Arrangers shall use this Disclosure Document for the purpose of soliciting subscription from a particular class of eligible investors in the Bonds to be issued by the Issuer on private placement basis. It is to be distinctly understood that the aforesaid use of this Disclosure Document by the Arrangers should not in any way be deemed or construed that the Disclosure Document has been prepared, cleared approved or vetted by the Arrangers; nor do they in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this Disclosure Document; nor do they take responsibility for the financial or other soundness of this Issuer, its promoters, its management or any scheme or project of the Issuer. The Arrangers or any of their directors, employees, affiliates or representatives do not accept any responsibility and/or liability for any loss or damage arising of whatever nature and extent in connection with the use of any of the information contained in this Disclosure Document.

4. DISCLAIMER OF THE STOCK EXCHANGE:

As required, a copy of this Disclosure Document has been submitted to the NSE for hosting the same on its website. It is to be distinctly understood that such submission of the document with NSE or hosting the same on its website should not in any way be deemed or construed that the document has been cleared or approved by NSE; nor does it in any manner warrant, certify or endorse the correctness or completeness of any of the contents of this document; nor does it warrant that the Issuer’s securities will be listed or continue to be listed on the Exchange; nor does it take responsibility for the financial or other soundness of the Issuer, its promoters, its management or any scheme or project of the Issuer. Every person who desires to apply for or otherwise acquire any securities of the Issuer may do so pursuant to independent inquiry, investigation and analysis and shall not have any claim against the NSE whatsoever by reason of any loss which may be suffered by such person consequent to or in connection with such subscription/ acquisition whether by reason of anything stated or omitted to be stated herein or any other reason whatsoever.

5. DISCLAIMER IN RESPECT OF JURISDICTION:

The private placement of Bonds is made in India to various classes of Investors. The Disclosure Document does not, however, constitute an offer to sell or an invitation to subscribe to securities offered hereby in any other jurisdiction to any person to whom it is unlawful to make an offer or invitation in such jurisdiction. Any person into whose possession this Disclosure Document comes is required to inform him about and to observe any such restrictions. Any disputes arising out of this issue will be subject to the exclusive jurisdiction of competent courts of Karur, Tamil Nadu. All information considered adequate and relevant about the Issuer has been made available in this Disclosure Document for the use and perusal of the potential investors and no selective or additional information would be available for a section of investors in any manner whatsoever.


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6. DISCLAIMER BY RESERVE BANK OF INDIA:

The Securities have not been recommended or approved by the Reserve Bank of India (RBI) nor does RBI guarantee the accuracy or adequacy of this document. It is to be distinctly understood that this document should not, in any way, be deemed or construed that the securities have been recommended for investment by the RBI. RBI does not take any responsibility either for the financial soundness of the Issuer, or the securities being issued by the Issuer or for the correctness of the statements made or opinions expressed in this document. Potential investors may make investment decision in the securities offered in terms of this Disclosure Document solely on the basis of their own analysis and RBI does not accept any responsibility about servicing of such investment. The Bonds, at the option of the Reserve Bank of India, can be permanently written off upon occurrence of the trigger event, called the Point of Non-Viability Trigger (“PONV Trigger”). The Bonds shall be subject to loss absorbency features applicable for non-equity capital instruments vide Master Circular No. DBR.No.BP.BC.1/21.06.201/2015-16 dated July 01, 2015 issued by the Reserve Bank of India on Basel III Capital Regulations covering terms and conditions for issue of debt capital instruments for inclusion as Tier II Capital (Annex 5 of the Master Circular) and minimum requirement to ensure loss absorbency of non-equity regulatory capital instruments at the Point of Non Viability (PONV) (Annex 16 of the Master Circular) to the extent applicable to Tier II Bonds.

7. DISCLAIMER IN RESPECT OF RATING AGENCIES:

Ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. The Rating Agencies have based its ratings on information obtained from sources believed by it to be accurate and reliable. The Rating Agencies do not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.

8. DISCLAIMER BY DEBENTURE TRUSTEE:

The Debenture Trustee ipso facto does not have the obligations of a borrower or a principal debtor or a guarantor as to the monies paid/invested by investors for the Bonds. Each Eligible Investor should make its own independent assessment of the merit of the investment in the Bonds and the Bank. Eligible Participants are required to make their own independent evaluation and judgment before making the investment and are believed to be experienced in investing in debt markets and are able to bear the economic risk of investing in such instruments. The debenture trustee is not a guarantor and will not be responsible for any non-payment of interest and redemption and/or any loss or claim.

9. FORWARD LOOKING STATEMENT:

The Bank has included statements in this Information Memorandum which contain words or phrases such as “will”, “would”, “aim”, “aimed”, “will likely result”, “is likely”, “are likely”, “believe”, “expect”, “expected to”, “will continue”, “will achieve”, “anticipate”, “estimate”, “estimating”, “intend”, “plan”, “contemplate”, “seek to”, “seeking to”, “trying to”, “target”, “propose to”, “future”, “objective”, “goal”, “project”, “should”, “can”, “could”, “may”, “will pursue”, “our judgment” and similar expressions or variations of such expressions, that are “forward-looking statements”. Actual results may differ materially from those suggested by the forward-looking statements due to certain risks or uncertainties associated with the Bank’s expectations with respect to, but not limited to, the actual growth in demand for banking and other financial products and services, its ability to successfully implement its strategy, including its use of the internet and other technology and its rural expansion, its ability to integrate recent or future mergers or acquisitions into its operations, its ability to manage the increased complexity of the risks the Bank faces following its rapid international growth, future levels of impaired loans, its growth and expansion in domestic and overseas markets, the adequacy of its allowance for credit and investment losses, technological changes, investment income, its ability to market new products, cash flow projections, the outcome of any legal, tax or regulatory proceedings in India and in other jurisdictions the Bank is or will become a party to, the future impact of new accounting standards, its ability to implement its dividend policy, the impact of changes in banking regulations and other regulatory changes in India and other jurisdictions on the Bank, including on the assets and liabilities of the Bank, , its ability to roll over its short-term funding sources and its exposure to credit,


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market and liquidity risks. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains, losses or impact on net interest income and net income could materially differ from those that have been estimated. In addition, other factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this Information Memorandum include, but are not limited to, the monetary and interest rate policies of India and the other markets in which the Bank operates, natural calamities, general economic, financial or political conditions, instability or uncertainty in India, southeast Asia, or any other country, caused by any factor including terrorist attacks in India or elsewhere, military armament or social unrest in any part of India, inflation, deflation, unanticipated turbulence in interest rates, changes or volatility in the value of the rupee, instability in the subprime credit market and liquidity levels in the foreign exchange rates, equity prices or other market rates or prices, the performance of the financial markets in general, changes in domestic and foreign laws, regulations and taxes, changes in the competitive and pricing environment in India, and general or regional changes in asset valuations.

* RISK FACTOR(S)

Prospective investors should carefully consider the risks and uncertainties described below, in addition to the other information contained in this Disclosure Document before making any investment decision relating to the debentures. The occurrence of any of the following events, or the occurrence of other risks that are not currently known or are now deemed immaterial, could cause our business, results of operations, cash flows, financial condition and prospects to suffer and, therefore, the value of the Bank’s Debentures could decline and/or the Bank’s ability to meet its obligations in respect of the Debentures could be affected. The Bank believes that the factors described below represent the principal risks inherent in investing in the Debentures, but does not represent that the statements below regarding the risks of holding the Debentures are exhaustive. The order of the risk factors is intended to facilitate ease of reading and reference and does not in any manner indicate the importance of one risk factor over another. More than one risk factor may have simultaneous effect with regard to the Debentures such that the effect of a particular risk factor may not be predictable. In addition, more than one risk factor may have a compounding effect, which may not be predictable. No prediction can be made as to the effect that any combination of risk factors may have on the value of the Debentures and/or the Bank’s ability to meet its obligations in respect of the Debentures. Potential investors should perform their own independent investigation of the financial condition and affairs of the Bank, and their own appraisal of the creditworthiness of the Bank. Potential investors should consult their own financial, legal, tax and other professional advisors as to the risks and investment considerations with respect to the Debentures. Potential investors should thereafter reach their own views prior to making any investment decision. Please note that unless specified or quantified in the relevant risk factors, the Bank is not in a position to quantify the financial or other implications of any risk mentioned herein below:

1. CREDIT RISK OF THE BANK

Potential investors should be aware that receipt of the Principal Amount along with coupon payable thereon and any other amounts that may be due in respect of the Debentures is subject to the credit risk of the Bank and the potential investors assume the risk that the Bank may not be able to satisfy their obligations under the Debentures. In the event that bankruptcy proceedings or composition, scheme of arrangement or similar proceedings to avert bankruptcy are instituted by or against the Bank, the payment of sums due on the Debentures may be substantially reduced or delayed.

2. RATING DOWNGRADE RISK

Credit rating for the Debentures has been assigned by the Rating Agency. In the event of deterioration in the financial health of the Bank, there is a possibility that the rating agency may downgrade the rating of the Debentures. In such cases, potential investors may incur losses on re-valuation of their investment or make provisions towards substandard/ non-performing investment as per their usual norms. The rating is not a recommendation to purchase, hold or sell the Debentures in as much as the ratings do not comment on the market price of the Debentures or its suitability to a particular investor. There is no assurance either that the rating will remain at the same level for any given period of time


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or that the rating will not be lowered or withdrawn entirely by the Rating Agency. In the event of deterioration of rating of the Debentures, the investors may have to take loss on revaluation of their investment.

3. DEBENTURES MAY BE ILLIQUID IN THE SECONDARY MARKET

We cannot assure you that our Debentures issued in this Private Placement will be listed on the Stock Exchanges in a timely manner or at all, which may restrict your ability to dispose of the Debentures. In accordance with Indian law and practice, permission for listing of the Debentures will not be granted by the Stock Exchanges until after the Debentures offered in this Issue have been allotted. There could be a failure or delay in listing the Debentures on the Stock Exchanges which would restrict your ability to dispose of the Debentures.

4. TAX AND LEGAL CONSIDERATIONS

Special tax considerations and legal considerations may apply to certain types of potential investors. Potential investors are urged to consult with their own financial, legal, tax and other professional advisors to determine any financial, legal, tax and other implications of this investment.

5. ACCOUNTING CONSIDERATIONS

Special accounting considerations may apply to certain types of taxpayers. Potential investors are urged to consult with their own accounting advisors to determine implications of this investment.

6. REGULATORY RISK

The Bank is subject generally to changes in Indian law, as well as to changes in government regulations and policies and accounting principles. Any changes in the regulatory framework could adversely affect the profitability of the Bank or its future financial performance, by requiring a restructuring of its activities, increasing costs or otherwise.

7. WE ARE NOT REQUIRED TO CREATE A DEBENTURE REDEMPTION RESERVE

Payments made on the Debentures will be subordinated to payments to secured creditors and certain tax and other liabilities preferred by law The Debentures will be unsecured and will be subordinated to all secured creditors of our Company as well as certain liabilities preferred by law such as to claims of the Govt. of India on account of taxes, and certain liabilities incurred in the ordinary course of our transactions. In particular, in the event of bankruptcy, liquidation or winding-up, our assets will be available to pay obligations on the Debentures only after all of those liabilities that rank senior to these Debentures have been paid. In the event of bankruptcy, liquidation or winding-up, there may not be sufficient assets remaining, after paying amounts relating to these proceedings, to pay amounts due on the Debentures. Further, there is no restriction on the amount of debt securities that we may issue that may rank above the Debentures. The issue of any such debt securities may reduce the amount recoverable by investors in the Debentures on our bankruptcy, winding-up or liquidation.


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* DISCLOSURES AS PER SEBI REGULATIONS The Disclosure Document is prepared in accordance with the provisions of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 as amended from time to time and Bank has disclosed the details required as per Schedule I of the SEBI Debt Regulations and additional disclosures pursuant to the provisions of the Companies (Prospectus and Allotment of Securities) Rules, 2014.

I. Documents Submitted to the Exchanges

The following documents have been / shall be submitted to NSE along with the listing application: (a) Memorandum and Articles of Association of the Issuer and necessary resolution(s) for the allotment of the

Debentures; (b) Copy of last 3 (Three) years audited Annual Reports; (c) Statement containing particulars of, dates of, and parties to all material contracts and agreements; (d) Copy of the Board / Committee Resolution authorizing the borrowing and list of authorized signatories;

(e) Copy of the resolution passed by the shareholders of the Company on 9th August 2018 authorizing the Board of Directors to issue Basel III compliant Tier II bonds in the nature non-convertible debentures on a private placement basis for a period of 1 year, up to an aggregate limit of Rs. 1,200 crore in one or more tranches (Rupees One thousand two hundred crore only);

(f) An undertaking from the Bank stating that the Debenture Trust Deed would be executed within the time frame prescribed in the relevant regulations/acts/rules, etc. and the same would be uploaded on the website of the NSE, where the Bonds are proposed to be listed, within 5 (five) working days of execution of the same; and

(g) Any other particulars or documents that the NSE may call for as it deems fit.

II. Documents Submitted to Debenture Trustee

The following documents have been / shall be submitted to the Debenture Trustee:

(a) Memorandum and Articles of Association of the Issuer and necessary resolution(s) for the allotment of the Debentures;

(b) Copy of last 3 (Three) years audited Annual Reports; (c) Statement containing particulars of, dates of, and parties to all material contracts and agreements; (d) Latest audited / limited review half yearly consolidated (wherever available) and standalone financial information

(profit & loss statement, balance sheet and cash flow statement) and auditor qualifications, if any; (e) An undertaking to the effect that the Issuer would, until the redemption of the debt securities, submit the details

mentioned in point above to the Trustee within the timelines as mentioned in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 issued by SEBI vide circular No. SEBI/LAD-NRO/GN/2015-16/013 dated September 2, 2015, as amended from time to time, for furnishing / publishing its half yearly/ annual result. Further, the Issuer shall within 180 (One Hundred and Eighty) days from the end of the financial year, submit a copy of the latest annual report to the Trustee and the Trustee shall be obliged to share the details submitted under this section with all Debenture Holders within 2 (Two) Business Days of their specific request.


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(A) ISSUER INFORMATION: NAME AND ADDRESS OF THE FOLLOWING:

S. N. PARTICULARS DETAILS

(i)

REGISTERED OFFICE OF THE ISSUER Name The Karur Vysya Bank Limited CIN L65110TN1916PLC001295 Address Post Box No. 21, Erode Road, Karur – 639 002. Tele No 04324-226520, 225521 Fax No 04324-225700 Email [email protected] Website www.kvb.co.in

(ii)

CORPORATE OFFICE OF THE ISSUER Name The Karur Vysya Bank Limited Address Post Box No. 21, Erode Road, Karur – 639 002. Tele No 04324-226520, 225521 Email [email protected]

(iii)

COMPLIANCE OFFICER FOR THE ISSUE Name Srinivasa Rao M Address Post Box No. 21, Erode Road, Karur – 639 002. Tele No 04324 – 269444, 95855 44940 Email [email protected]

(iv)

CHIEF FINANCIAL OFFICER OF THE ISSUER Name T Sivarama Prasad (General Manager and Chief Financial Officer) Address Post Box No. 21, Erode Road, Karur – 639 002. Tele No 04324-269326, 9943955789 Email [email protected]

(v)

ARRANGER(S) TO THE ISSUE Name TRUST INVESTMENT ADVISORS PVT. LTD. Address 109/110, 1st Floor, Balarama, Bandra Kurla Complex, Bandra (East), Mumbai 400 051 Tele No 022-40845000 Fax No 022-40845007 Email [email protected]

(vi)

TRUSTEE FOR THE ISSUE Name Axis Trustee Services Ltd

Address Axis House, II Floor, Bombay Dyeing Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai – 400 025

Tele No 022-43255231

Fax No 022-43253000 Email [email protected]

( vii)

REGISTRAR TO THE ISSUE Name Karvy Fintech Pvt. Ltd.

Address Karvy Selenium Tower B, Plot 31, 32, Gachibowli Financial District, Nanakaramguda, Hyderabad 500 032.

Tele No 40 – 6716 2222 Email [email protected]

(viii) CREDIT RATING AGENCY

A

Name India Ratings & Research Pvt. Ltd

Address Wockhardt Towers, Level 4, West Wing, Bandra Kurla Complex, Bandra (East), Mumbai 400051

Tele No 022 40006138 Email [email protected]

B

Name ICRA Ltd Address 1105, Kailash Building, 11th Floor, 26 Kasturba Gandhi Marg, New Delhi- 110001 Tele No 011 23357940 Email [email protected]


http://www.kvb.co.in/










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(ix)

AUDITORS OF THE ISSUER Name Walker Chandiok & Co. LLP Address 6th Floor, Modayil Centre point, Warriam road junction, M. G. Road, Kochi - 682016 Tele No 0484 4064541 Email [email protected], [email protected]

(x)

ADVOCATE OF THE ISSUER Name A K Mylsamy & Associates LLP Address 61, TTK Road, Alwarpet, Chennai - 600018 Tele No 044 24991947 Fax No 044 24660134 Email [email protected]



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(B) BRIEF SUMMARY OF BUSINESS/ ACTIVITIES OF BANK AND ITS LINE OF BUSINESS (i) OVERVIEW Karur Vysya Bank was started in the year 1916 in Karur, then a small textile town with a vast agricultural background, by two illustrious sons of the soil – Sri M.A. Venkatarama Chettiar and Sri Athi Krishna Chettiar. What started as a venture with a seed capital of Rs. 1 Lakh has grown into a leading financial institution that offers a gamut of financial services, under one roof, to millions of its customers. The Bank has completed 102 years of successful banking and currently has 779 branches with a presence in 19 states and 3 Union Territories and is known for its high quality of customer service. VISION: Delight customers continually by blending tradition with technology, to deliver innovative products and services at affordable rates, through a PAN India network

MISSION: Adapt technology to introduce innovative products and services as well as increase the value of products on an on-going basis and provide them at reasonable rates. Expand branch network to reach the top business centers, besides unbanked and under banked areas in the country. Strengthen the financials through effective deployment of funds and ensuring financial discipline while adhering to the regulator’s guidelines. Update the knowledge and skills of human capital to provide quality customer support. DIGITAL TRANSFORMATION JOURNEY KVB is one of the earliest banks in the country to achieve full networking of its branches under Core Banking Solutions. The bank has always been a front-runner in adopting and leveraging on technology to offer products and services to its customers. The bank was one of the pioneers in deploying ATMs, Bunch Note Recycler Machines, Fully Automated Passbook Printers & Cheque Deposit Kiosks as a move towards self-service banking. The bank also set a blazing trail in implementing Internet Banking and Mobile Banking to its customers. Indians are witnessing a transformational change in the digital environment / ecosystem. Aadhaar, an initiative of the Central Government, has been adopted to drive digital transformation in many states. This and other innovations at the State and Central level have created an environment in which banks can provide financial solutions entirely digitally. Not only can products and services be made available these medium, new technologies such as Machine Learning and Analytics are identifying and creating opportunities that did not exist in the past. These opportunities are uniquely suited for the new medium of delivery i.e., through the internet / phone. Our bank has a history of pro-actively engaging with new technologies ahead of most of competitors e.g., Lean branch, self-service kiosks and technology based products. Our Bank understands the opportunities and challenges that digitization brings. In order to ensure that Our Bank continues to remain at the cutting edge of technology, the following initiatives have been taken: a. Study tours to South East Asia to benchmark our capabilities vis-a-vis industry leaders; and b. Retaining Boston Consulting Group (BCG) - a leading consulting firm to provide advice and support as Our Bank transitions to a digital institution. Our Bank, with the assistance of BCG has launched a digital transformation project that has redefined the way in which customers’ are dealt with and the products / services offered. Our bank has started an exclusive digital centre of excellence, focused on developing digital customer solutions and also building digital skill set within the bank. We have embarked on an ambitious journey in digital transformation and have achieved the following milestones;

Paperless, fully digital Working Capital limits enhancement and new working capital and renewals for MSME customers;

Digital Home loan solution - sanction in 15 Minutes - end to end paperless / seamless process; Digital Loan against Property solution - sanction in 15 minutes; Digital 2 wheeler and 4 wheeler loans sanction in 15 minutes. Instant Unsecured Personal Lending - sanction in 10 minutes; and Digital Retail Banking application - 3 step online account opening.


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Customer response has been very encouraging. With the new tools, loans can be approved quickly with limited manual intervention enabling Our Bank to expand its business significantly. Our Bank is in the process of establishing the foundation of a strong digital architecture. Our Bank is supported in this endeavor by about 10 other companies specializing in Digital Technologies. This new initiative takes advantage of new technologies such as: first, the AGILE method of execution; second, iterative design and development sprints to deliver Minimum Viable Products (MVP); third, the use of decision science to improve decision quality and reduce human bias etc., At the same time appropriate risk management processes are being followed including security reviews and audits to ensure risk mitigation and business continuity. BUSINESS ACTIVITIES Branch Banking

Any Branch Banking.

Multi-City Account facilities for both Current and Savings Account customers.

Internet Banking

User-friendly Internet Banking.

Self-service modes to process internet banking user id registration activation, lock, unlock, reset password, etc.,

Real Time Gross Settlement (RTGS) and National Electronic Funds Transfer (NEFT), Immediate Payment Service (IMPS) funds transfer facilities through both Retail / Corporate Netbanking Login.

Facility to transfer funds of over Rs. 25 Lakhs per day through Internet Banking for retail customers and an unlimited amount for corporate customers.

Online payment of taxes.

Online utility bill payments and shopping facilities.

E-ASBA facility for applying IPOs / Rights Issue.

Direct debit facility for payment of Tamilnadu Electricity (TNEB) bills through Netbanking.

E-Commerce facilities.

Two factor authentication for retails and corporate modules for secured transactions.

Mobile Banking

Instant self-registration.

Mobile Banking through KVB DLite app with Immediate Payment Service (IMPS) enabled by NPCI.

Mobile app ‘KVB e-Book’ in all major platforms (Android, Windows, iOS, Blackberry) to have access to all non-financial transactions anytime, anywhere through mobile.

Missed call banking facility for balance enquiry, customer ID enquiry and account statement enquiry through mobile.

Utility bill payments, mobile recharge.

SMS based debit card hotlist.

Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. Unified payments Interface (UPI) and Bharat QR code is enabled in Dlite.

Details of CASA, fixed deposits, loan and recurring deposits can be viewed.

e-ASBA, Demat services, insurance details

Debit cards rewards points details.


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Cards

Over 4.5 million VISA, MasterCard and Rupay EMV chip-based Debit Card holders.

OTP-based authentication for debit cards E-Commerce transactions.

PIN-based debit transactions at POS.

Access to over 1803 KVB ATMs, 538 Cash Recyclers over 200000 domestic ATMs and over 1 million VISA / Master / DFS ATMs worldwide.

Card to Card and Card to Account transfer of funds through KVB ATMs.

VISA enabled Gift Card.

Rupay enabled KVB Centenary Prepaid Card.

VISA enabled reloadable Multi-currency Travel Cards in 8 currencies (US Dollar, Euro, Singapore Dollar, Canadian Dollar, British Pound, Japanese Yen, Swiss Francs, Swedish Kroner).

Co-branded KVB credit cards as add-on facility to our customers.

Anmol Rewardz for the use of KVB Debit card for POS and EPOS transactions.

RFID cards, an innovation from the bank that is issued to corporates / institutions / entities. It is a multipurpose card which can be used as an identity card, access card, as a normal debit card at ATM / POS / e-commerce transactions, and also in closed loop POS terminals within premises of the corporate / institution.

ATM E-receipt for KVB customers for ATM / Cash Recyclers successful transaction performed through debit card customers.

Green PIN

“Green PIN” is an initiative, through which Debit card physical PIN mailer issuance is stopped and customers are given option through KVB ATM/KVB Cash recyclers to set their PIN for Debit Cards with the help of OTP (One-Time Password) sent to their registered mobile number.

This facility can also be used for setting up new PIN when the customers have forgotten their debit card PIN.

E-Kiosks

Cash Recyclers for quick anytime cash remittance and withdrawals

Self Service Kiosks for updating passbook, knowing account balance and cheque status.

ATM for anytime cash withdrawal and other value added services.

Payment of institutional fees through ATMs.

Point of Sale Machines

Handheld GPRS and Mobile Point of Sale machines deployed at merchant establishments.

Digital POS or Green POS – Handheld GPRS POS machine without a printer. Digital POS has the facility of sending e-receipt to both customer and merchant through SMS and E-mail.

Help Desk

24x7 professional help desk services (in 6 languages) for all our transactions carried out through ATM, Internet Banking, Mobile Banking (KVB DLite), E-Commerce, Product Features, etc.,

Self-service banking with IVRS for fund transfer facilities.


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FASTag

The perfect solution for a hassle-free trip on national highways.

It is a simple, reloadable tag which enables automatic payment of toll charges and lets you pass the vehicle through the toll plaza without stopping for the cash transaction.

Separate modules for retail and corporate

Dealer module to handle multiple vehicle

Online recharge to onboard new vehicles at showroom itself through payment gateway from any bank account/ debit/ credit card.

Bharat QR

Bharat QR (BQR), a new initiative by National Payments Corporation of India (NPCI) in the payment system.

Bharat QR aims to increase the merchant based digital transaction by displaying their QR at their outlets.

The mobile application is available to facilitate both merchants and customers towards making the payments.

Banking Services

Several deposits and loan products are tailor-made to cater to the specific needs of customers.

NRE / FCNR deposits, remittance services and “KVB Gruhapravesh” Home loans and Mortgage Loans for NRIs.

A wide range of customized loan products to suit different industries under MSME clusters by way of its products like KVB MSME Pack, KVB Rice Plus, KVB Timber Plus, KVB Transport Plus, KVB Pharma Plus etc.,

A wide range of retail products like home loans, car loans, mortgage loans.

The entire range of products and services for Corporate Banking and Forex business.

Loan Opening Systems (LOS)

Automated workflow process will be beneficial to the bank in building a business, reducing cost, credit quality and increased compliance.

End to End paperless, automated process.

Rule-based systems.

Real-time basis.

Transaction Banking Services

An integrated transaction banking solution on an electronic platform.

Cash Management Services (Collections and Payments).

Virtual Account facility for collections.

Supply Chain Finance products (Vendor Finance and Dealer Finance).

Tie-ups with rated large auto majors for dealer funding.

Customer Front End (CBX – Customer Business Exchange).

Participating in Trade Receivable Discounting System (TReDS) platforms.

Can handle Dividend / Interest Warrants.

Customized MIS.


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Para Banking Services

All types of life insurance policies through a tie-up with M/s Birla Sun Life Insurance Company Ltd.

All types of general insurance policies through a tie-up with M/s Bajaj Allianz General Insurance Company Ltd.

Mutual Fund products of UTI, SBI MF, Reliance MF, Sundaram BNP Paribas MF, Birla Sun Life MF, Franklin Templeton MF and LIC MF.

The bank is a depository participant through NSDL, providing DP services.

ASBA and e-ASBA facility (through Internet banking).

The offline and online trading facility is available to the demat customers enabled through a tie-up with M/s Religare Securities Ltd and M/s IDBI Caps respectively.

KVB is one of the authorized banks to open accounts under the New Pension Scheme.

Prime Minister′s Pradhan Mantri Jeevan Jyothi Bima Yojna (Life Insurance scheme) Pradhan Mantri Suraksha

Bima Yojna (Non-Life Insurance scheme) Atal Pension Yojna (Pension scheme) implemented.

TREASURY OPERATION

The Treasury activities are guided by the principles of optimum management of funds and to earn through trading opportunities. The Bank has integrated its Treasury Operations, and it includes maintenance of required regulatory reserves, ensures liquidity management and compliance with the CRR & SLR requirement and optimizing profits from trading portfolio by taking advantage of the market opportunities. Further the treasury operations provide a range of products and services for corporate customers, such as forward contacts, foreign exchange products and services etc.

SERVICES TO NRIs: There are a wide range of deposit schemes for NRIs as well. It includes Non-Resident (Rupee) Account (NRE), Foreign Currency Non Resident (Bank) Scheme (FCNR (B)) and Non Resident (Ordinary) Account (NRO) with very attractive and highly competitive interest rates. Resident Foreign Currency (RFC) Account for returning Indians is also available. Apart from the loans against their deposits, the Bank has an exclusive housing loan product for its NRI customers at reasonably low rate. RISKS AND CONCERNS A robust risk management system will ensure long term financial security and success of the Bank. In order to ensure that the bank has a world class Risk Management Function, a Chief Risk Officer was hired in April 2018. He has been tasked with creating a contemporary Risk Management Department that has broad oversight of the various risks that the bank takes. Whilst the above activity is being undertaken, Our Bank is leveraging its existing Risk Management architecture to ensure that risks assumed by it are within the defined risk appetite and is closely monitored. The overall responsibility of setting the Bank’s risk appetite and effective risk management rests with the Board and apex level management of the Bank. The risk is managed through following Committees viz. Risk Management and Asset Liability Management Committee of the Board (RM&ALM), Credit Risk Management Committee (CRMC), Asset and Liability Management Committee (ALCO), Operational Risk Management Committee (ORMC) and Market Risk Management Committee (MRMC).These Committees work within the overall guidelines and policies approved by the Board. The Bank has Policies for identification, measurement and management of major risks - liquidity risk, market risk, credit risk and operational risk. These policies are reviewed and updated from time to time, keeping in view the dynamic business environment. Risk Management Department acts as a nodal centre for co-ordination with other Departments / operating units engaged in managing risk in their respective business areas. A comprehensive Asset Liability Management (ALM) System is in place for effective management of Liquidity Risk and Interests Rate Risk, which are identified, measured and monitored by the ALCO through the prescribed statements viz. Statement of Structural Liquidity, Liquidity Coverage Ratio Statement, Statement of Interest Rate Risk Sensitivity (Traditional and Duration Gap methods) and Stress Testing on Liquidity and Earnings etc., ALCO discusses these statements in detail and takes corrective action where necessary. As per the Bank’s ALM Policy, Contingency Funding Plan is reviewed on quarterly basis. Benchmark Prime Lending Rate (BPLR) / Base Rate (BR) / Marginal Cost of Lending Rate (MCLR) (Lending Rate) and Card Rates for Deposits are discussed and decided by ALCO on monthly basis.


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INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY A well-established independent audit system and structure is required to ensure, not only adequate internal control for safe and sound operations but also compliance to regulatory guidelines. Our Bank’s Inspection and Audit Department (IAD) performs independent and objective assessment to monitor adequacy, effectiveness and adherence to internal control systems and procedures laid down by the management and extant regulations. This function supports the Bank’s role in safeguarding its assets. The macro level guidance and direction on the control aspects is provided by the Audit Committee of the Board (ACB). The Committee takes an overall view on the internal control aspects and formulates the related policy guidelines. Internal Audit is carried out under Risk Based Internal Audit (RBIA) as envisaged under Risk Based Supervision of RBI with focus on assessment of risks on the basis of inherent business risk and internal control mechanism. RBIA lays greater emphasis on the internal auditor’s role in mitigating various risks while at the same time continuing the traditional risk management and control methods involving transaction testing etc. RBIA not only offers suggestions to the management for mitigating current risks but also on potential future risks, thus playing a vital role in the risk management process of the Bank. The IAD reports to the MD & CEO for day-to-day activities and to the Audit Committee for Audit Planning and Reporting. Our Bank had conducted the RBIA Audit of all the targeted branches & Divisional Offices for the year. CREDIT MONITORING GROUP (CMG) Our Bank has in place well-structured Credit Monitoring Group for continuous tracking of performance of loan assets. The core area and focus of CMG is to monitor the end use of credit facilities granted, besides ensuring the adherence to terms and conditions of sanctions. CMG is also ensuring for Regulatory Requirements. The Early Warning Signals are identified in the loan assets quickly to initiate prompt corrective remedial follow up action to prevent slippages, minimize credit risk and improve Asset Quality FUTURE OUTLOOK The bank has in place robust risk management systems and adheres to the tenets of corporate governance. The bank is well-equipped to boldly take up the challenges in the industry and emerge as a top-notch one-stop-shop techie financial supermarket. KVB will continue its endeavors to bring the best of products and services to its customers to emerge as the techie bank that provides the gateway to smart way to bank. AWARDS & ACCOLADES

Best Bank award among small Banks by IDBRT for "Banking Technology (Electronic Payment Systems)" for the 9th successive year.

Top Performer Award for number of Demat Accounts opened under Bank Category from National Securities Depository Limited (NSDL) – Second Place.

The Best Small Bank Runner Up, 2016 by Business World - PwC.

Award from Kamikaze Payments & Cards Summit 2017 for most disruptive payments technology of the year for FASTag.

Winner-up award given by National Payment Corporation of India at their national Excellence Awards 2017 towards the best performance in Cheque Truncation System (CTS) under small-sized Banks.

Best Payments Technology Initiative of the Year for application meant for turmeric mundy dealers issued by Kamikaze Payments & Cards Summit 2017


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(ii) MANAGEMENT’S PERCEPTION OF RISK FACTORS An investment in securities involves a high degree of risk. Investor should carefully consider all the information in this Information Memorandum, including the risks and uncertainties described below, before making an investment in our proposed Bonds. Further, the occurrence of any of the following events or as set out in the Basel III Guidelines could have a material adverse effect on our business, results of operations, financial condition and prospects of the Bank and you may lose all or part of your investment. Additionally, our business operations could also be affected by additional factors that are not presently relevant or not known to us or that we currently consider as immaterial to our operations. However, some of the risk factors associated with the Bank are detailed below: Risks Relating to our Business

1. Our financial performance may be materially and adversely affected by fluctuating interest rates. Our net interest income has moved from 71.85% of our total income (sum of net interest income and other income) in the fiscal year ended March 31, 2018 to 71.65% in the nine months period ended December 31, 2018. Net interest income represents the excess of interest earned from interest-earning assets (such as performing loans and investments) over the interest paid on interest-bearing customer deposits and borrowings. Our net interest margin for the fiscal year ended March 31, 2018 and the nine month period ended December 31, 2018 was 3.86% and 3.60%, respectively. Interest rates are sensitive to many factors beyond our Bank’s control, including the RBI’s monetary policy , deregulation of the financial sector in India, domestic and international economic and political conditions and other factors. Volatility and changes in market interest rates could disproportionately affect the interest we earn on our assets as compared to the interest we pay on our liabilities. The difference could result in an increase in interest expense relative to interest income leading to a reduction in net interest income. Accordingly, volatility in interest rates could materially and adversely affect our business and financial performance. An increase in interest rates may also adversely affect the rate of growth of important sectors of the Indian economy, such as the corporate, retail and agricultural sectors, which may materially and adversely impact our business. Our sources of funding have primarily been customer deposits, money market borrowings and reserves and surpluses. Our cost of funds is sensitive to interest rate fluctuations, which exposes us to the risk of a reduction in spreads. In addition, attracting customer deposits in the Indian banking industry is competitive. The rates that we must pay to attract deposits are determined by numerous factors such as the prevailing interest rate structure, competitive landscape, Indian monetary policy and inflation. If we fail to achieve or sustain continued growth of our deposit base, we may be forced to rely more heavily on more expensive sources of funding, such as the wholesale market, which could materially and adversely affect our profitability and business. In addition, interest-earning assets tend to re-price more quickly than interest-bearing liabilities. Increases in interest rates applicable to our liabilities, in particular our inter-bank wholesale funding, without concurrent corresponding increases in interest rates applicable to our interest-bearing assets, may result in a decline in net interest income, which could materially and adversely affect our business and financial results. Under RBI regulations, we are required to maintain a minimum specified percentage, currently 19.50%, of our net demand and time liabilities in Government Securities and other approved assets. Yields on these investments, as well as yields on our other interest-earning assets, are dependent to a large extent on interest rates. In a rising interest rate environment, especially if the increase is sudden or sharp, we could be adversely affected by a decline in the market value of our Government Securities portfolio and other fixed income securities and may be required to further provide for depreciation in the Available for Sale and Held for Trading categories. As on December 31, 2018, 81.25% of our total investments were in Government Securities for SLR. Returns on these investments are dependent to a large extent on interest rates. In a rising interest rate environment, especially if the increase is sudden or sharp, we could be materially and adversely affected by the decline in the market value of our government securities portfolio and may be required to provide for depreciation in the “Available for Sale” and “Held for Trading” categories. As on December 31, 2018, 33.47% of investments were held in the “Available for Sale” category and the securities outstanding in the “Held for Trading” category was “NIL”. For the securities in the “Available for Sale” and “Held for Trading” categories which are subject to market risk, we are required to mark to market at regular intervals and net depreciation is recognized and provided, while net appreciation is ignored. In respect of securities under the Held to Maturity category, we are not required to mark the same to market but are required to amortize the difference between


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acquisition cost and face value of the security over the residual maturity period of the security wherever the acquisition cost is greater than the face value. Furthermore, in the event of rising interest rates, our Bank’s borrowers may not be willing to pay correspondingly higher interest rates on their borrowings and may choose to repay/pre-pay their loans with our Bank, particularly if they are able to switch to more competitively priced loans offered by other banks. Any inability of our Bank to retain customers as a result of rising interest rates may adversely impact our Bank’s earnings in future periods. Similarly, in the event of falling interest rates, our Bank may face more challenges in retaining our customers if we are unable to offer competitive rates as compared to other banks in the market.

2. Any increase in our portfolio of NPAs, RBI-mandated provisioning requirements or restructured advances could materially and adversely affect our business and future financial performance.

For the years 2017-18, 2018-19 and the nine month period ended December 31, 2018, our gross non-performing assets (“Gross NPA”) represented 3.58%, 6.56% and 8.49% of our total gross advances respectively, and our NPAs (net of provisions) (“Net NPA”) represented 2.53%, 4.16% and 4.99% of net advances respectively. As at March 31, 2017 and 2018 and as at December 31, 2018, our provision coverage ratio including the technically written-off accounts was 57.83%, 56.50% and 56.09%, respectively. If there is any deterioration in the quality of our security or further ageing of the assets after being classified as non-performing, an increase in provisions will be required. This increase in provisions may adversely impact our financial performance. Our NPAs can be attributed to several factors, including inconsistent industrial growth, the high level of debt in the financing of projects and capital structures of companies in India and the high interest rates in the Indian economy, which reduced the profitability of some of our borrowers. Although we are increasing our efforts to improve recovery, we cannot assure you that we will be successful in our efforts or that the overall quality of our loan portfolio may not deteriorate in the future. If we are unable to successfully monitor and manage our portfolio, including during economic downturns, our asset quality and as a result, our financial condition and results of operation, could be materially and adversely affected.

3. The value of our collateral may decrease or we may experience delays in enforcing our collateral if borrowers default on their obligations, which may result in failure to recover the expected value of collateral security exposing us to a potential loss. This can adversely affect our business and the financial performance of our Bank.

A substantial portion of our loans are secured by collateral, including real estate assets such as property, plant, equipment, inventory, receivables, current assets and pledges of financial assets such as marketable securities and corporate guarantees. The loans to corporate customers also include working capital credit facilities that are typically secured by a first lien on inventory, receivables and other current assets. In certain cases, we may have taken further security of a first or second lien on fixed assets and a pledge of financial assets like marketable securities, corporate guarantees and personal guarantees. However, in the event of our borrowers defaulting on the repayment of the loans, we may not be able to realize the full value of the collateral due to various reasons, including a possible decline in the realisable value of the collateral, defective title, prolonged legal proceedings and fraudulent actions by borrowers. There can be no assurance that we will be able to realize the full value of the collateral, as a result of, among other factors, delays in bankruptcy and foreclosure proceedings etc. and failure to recover the expected value of collateral security could expose us to a potential loss and affect the ability to pay under the debt.

4. Regulations in India require us to extend a minimum level of advances to certain sectors. These may subject us to higher delinquency rates. Our inability to comply with Indian priority sector lending requirements may require us to invest in funds with a lower return than we would otherwise earn in the market.

We have substantial exposure to agriculture and MSMEs, which the GoI categorizes as “priority sectors”. As of March 31, 2018 and December 31, 2018, priority sector advances aggregated 44.44% to ANBC (Adjusted Net Bank Credit) and 42.18%, respectively. Any significant difficulty in a particular sector or industry, driven by events not within our control, such as regulatory action or policy announcements by government authorities or natural disasters, would adversely impact the ability of borrowers in that industry to service their debt obligations to us. As a result, we would experience increased delinquency risk, which may materially and adversely impact our business, prospects, financial condition and results of operations etc.


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5. Our risk management policies and procedures may not adequately address unanticipated risks. Inability

to develop and implement effective risk management policies may adversely affect our business, prospects, financial condition and results of operations.

We have devoted significant resources to developing our risk management policies and procedures and expect to continue to do so in the future. We have policies and procedures in place to measure, manage and control the various risks to which we are exposed, including an Integrated Risk Management Policy that articulates our approach to the identification, measurement, monitoring controlling and mitigation of various risks associated with our banking operations in addition to providing certain important guidelines for strict adherence. Our other important risk policies include our Integrated Treasury Policy, Credit Policy, Country Risk Management Policy, Operational Risk Management Policy, Business Continuity Planning & Disaster Recovery Policy, Policy on Credit Default Swaps for Corporate Bonds, Credit Risk Rating Policy, Stress Testing Policy and in compliance with the RBI’s guidelines on Basel II – Pillar 2 - Supervisory Review and Evaluation Process, Internal Capital Adequacy Assessment Process Policy. The Board reviews our risk management policies annually. As a result, these methods may not accurately predict future risk exposures which could be significantly greater than indicated by the historical measures. As we seek to expand the scope of our operations, we also face the risk of inability to develop risk management policies and procedures that are properly designed for those new business areas in a timely manner. Implementation and monitoring may prove particularly challenging with respect to businesses that we have recently initiated, such as mobile banking and online broking platform through third parties. Any inability to develop and implement effective risk management policies may adversely affect our business, prospects, financial condition and results of operations.

6. We have certain contingent liabilities which have not been provided for in our financial statements, which if they materialize, may adversely affect our financial condition.

As on March 31, 2018 and December 31, 2018, the position of contingent liabilities is give below. Most of these liabilities have been incurred during the normal course of our business.

(Rs. in crore)

Particulars As on

31.12.2018 As on

31.03.2018 1. Claims against the Bank not acknowledged as debts 12.10 2.30 2. Liability on account of outstanding

A) Forward exchange contracts 3,854.34 5,926.48 B) Derivatives (including Forex Derivatives) 0.00 0.00

3. Guarantees given on behalf of constituents a) In India 3463.68 3,765.21 b) Outside India 0.00 0.00 4. Acceptances, endorsements and other obligations 1,741.94 2,742.02 5. Other items for which the Bank is contingently liable 2,215.91 2,401.59

TOTAL 11,287.96 14,837.61 In the event of there being a crystallization of any of the contingent liabilities, we may be required to honour the demands raised. This may materially and adversely impact our business, financial conditions, result of operations and prospects.

7. There are operational risks associated with the banking industry, including the risk of fraud or other misconduct by employees etc., which when realised may have an adverse impact on our results.

We are vulnerable to many types of operational risks, including but not limited to the risk of fraud or other misconduct by employees or outsiders, technological failures, unauthorized transactions by employees or operational errors and any risk could adversely affect our reputation, operations, or otherwise have a material adverse effect on our business, financial condition or results of operation.

8. Tax Proceedings involving our Bank

The total disputed income tax liability as on December 31, 2018 was Rs. 255.56 crore. The Bank is hopeful of getting favourable decisions on these appeals, since the issues are already covered on the decision on Bank’s own case and other bank as well as other assessee’s case.


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9. Any non-compliance with mandatory AML and KYC policies could expose us to additional liability and harm our business and reputation.

In accordance with the requirements applicable to banks, we are mandated to comply with applicable Anti-Money Laundering (“AML”) and Know Your Customer (“KYC”) regulations in India. These laws and regulations require us, among other things, to adopt and enforce AML and KYC policies and procedures. While we have adopted policies and procedures aimed at collecting and maintaining all AML and KYC related information from our customers in order to detect and prevent the use of our banking networks for illegal money-laundering activities, there may be instances where we may be used by other parties in attempts to engage in money-laundering and other illegal or improper activities. Although, we believe that we have adequate internal policies, processes and controls in place to prevent and detect AML activity and ensure KYC compliance, and have taken necessary corrective measures, there can be no assurance that we will be able to fully control instances of any potential or attempted violation by other parties and may accordingly be subject to regulatory actions including imposition of fines and other penalties by the relevant government agencies to whom we report. Our business and reputation could suffer if any such parties use or attempt to use us for money-laundering or illegal or improper purposes and such attempts are not detected or reported to the appropriate authorities in compliance with applicable regulatory requirements.

10. We are exposed to various industry sectors. Deterioration in the performance of any of the industry sectors where we have significant exposure may adversely impact our business.

Our credit exposure to borrowers is dispersed across various sectors including, infrastructure, textile, engineering, cement, metal, automobile, iron and steel, gems, plastics, food and food products, chemicals and chemical products, construction and other industries. Despite monitoring our level of exposure to sectors and borrowers, any significant deterioration in the performance of a particular sector driven by events not within our control, such as natural calamities, regulatory action or policy announcements by central or state government authorities, would adversely impact the ability of borrowers within that industry to service their debt obligations to us. As a result, we would experience increased delinquency risk which may have a material adverse effect on our business, financial condition, results and cash flow.

11. We face income volatility from our fixed income operations. Any losses arising out of such volatility could adversely affect our business, financial condition and results of operations.

Our income from the treasury operations is subject to volatility due to, among other things, changes in interest rates and foreign currency exchange rates as well as other market fluctuations. For example, an increase in interest rates may have a negative impact on the value of certain investments such as Government securities and corporate bonds. There can be no assurance that we will not lose money in the course of our proprietary trading on our fixed income book held for trading and available for sale portfolio. Any such losses could adversely affect our business, financial condition and results of operations.

12. We have previously been penalized for not being in compliance with the RBI circulars and may face further penalties from the RBI and/or other regulatory bodies that govern us in cases of noncompliance in future.

During the current financial year, RBI has imposed penalty of Rs. 5 Crore and Rs. 1 crore on the Bank for non-compliance with its directions on "Income Recognition and Asset Classification (IRAC)” norms, reporting of frauds, on the need for discipline at the time of opening of current accounts, implementation & strengthening of SWIFT related operational controls as per their circular dated February 20, 2018, respectively.

13. Expansion of our fee based earning is dependent on our arrangements with third parties including insurance companies. Termination of these arrangements may adversely impact our results of operations.

For the year ended March 31, 2018, our fee-based income (Rs. 617.13 crore) constituted 9.35% of our total income (Rs. 6,599.58 crore). We intend to increase our fee-based income by expanding our third party product offerings and by increasing our fee-based services. We market the insurance products and mutual funds to our customers and we earn fees and commissions for the distribution and sale of these products.


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However, termination of distribution agreements entered into with the third party agencies with whom the Bank tied-up for insurance / mutual fund products or any weakening of our relationship with these third party associates may have an adverse impact on our fee based revenues and results of operations.

14. We could be adversely affected by the inability of our vendors to perform their contractual obligations. Failure to perform these obligations by our vendors may materially and adversely affect our business, financial condition and results of operations.

We are dependent on various vendors for certain non-core elements of our operations including implementing IT infrastructure and hardware, branch roll-outs, networking, managing our data center, and back-up support for disaster recovery. We have also outsourced certain activities, including the installation and management of our ATMs. Generally, we have agreements with only one service providers for each outsourced activity and such agreements are typically non-exclusive and short term. However, if such agreements are terminated or not renewed or replaced in a timely manner, this may result in a disruption of our operations. Failure to perform any of these functions by our vendors or service providers may materially and adversely affect our business, financial condition and results of operations.

15. Any downgrading in our credit rating could adversely affect our business, financial condition and results of operations.

India Ratings & Research Pvt. Ltd. & ICRA Ltd. have rated our unsecured non-convertible subordinated Basel III compliance Tier II instrument of Rs. 1,200 crore as “IND A+/Stable” & [ICRA] A(hyb) Stable respectively. Further, ICRA has rated our unsecured redeemable non-convertible subordinated (Lower Tier II) debt instruments of an amount of Rs. 300 crore as “[ICRA] A Stable”.

These ratings assess our overall financial capacity to pay our obligations and are reflective of our ability to meet financial commitments as they become due. Our current credit ratings are “CRISIL A1+” for Rs. 3,000 crore Certificate of Deposits Programme as given by CRISIL Ratings and “[ICRA] A1+” for the Bank’s Certificate of Deposits Programme for Rs. 3,000 crore as given by ICRA Limited. Any downgrading in our credit ratings in the future may adversely affect our ability to raise capital on reasonable commercial terms and mobilize deposits and therefore adversely affect our business.

16. Our business is highly dependent on our information technology systems, which require significant expenditure for regular maintenance, upgrades and improvements. Therefore, if we are unable to adapt to rapid technological changes, or if there is any breach of our information technology systems or any failure of such systems to perform as expected, our business, reputation and ability to service our customers could be adversely affected.

Our information technology systems are a critical part of our business that help us manage, among other things, our risk management, deposit servicing and loan origination functions, as well as our increasing portfolio of products and services in our personal banking (retail banking), commercial banking, corporate and institutional banking and agricultural banking business segments. In particular, the secure transmission of confidential information is critical to our operations. Any technical failures associated with our information technology systems or network infrastructure, including those caused by power failures and breaches in security caused by computer viruses and other unauthorized tampering, may cause interruptions or delays in our ability to provide services to our customers on a timely basis or at all, and may also result in costs for information retrieval and verification. Corruption of certain information could also lead to errors when we provide services to our customers. Any failure on the part of third party vendors under agreements with us to provide products and services, including software that enables our operations, or to appropriately maintain such products and services under annual maintenance contracts, may adversely affect our functioning and operations. In the event of failure on the part of these third party vendors, their liabilities towards us usually do not exceed a certain percentage of the total fee paid by us and they will not be liable to us for any loss of profits or revenue or any consequential or indirect loss, which in turn exposes us to higher risks in using these software and systems. In addition, we may be subject to liability as the result of any theft or misuse of personal information stored on our systems or on the systems of our outsourcing service providers. Any of these outcomes could adversely affect our business, our reputation and the quality of our customer service.


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Our networks and systems may be vulnerable to unauthorized access and other security problems. To address these issues and to minimize the risk of security breaches, we employ security systems, including firewalls, security information and event management (SIEM) and intrusion prevention and detection systems, conduct periodic penetration testing, vulnerability assessments and compliance audits for identification and assessment of potential vulnerabilities and use encryption technology for transmitting and storing critical data, such as passwords. Despite implementation of these systems, we cannot assure you that our existing security measures will prevent unforeseeable security breaches, including break-ins and viruses, or other disruptions such as those caused by defects in hardware or software and errors or misconduct of operators. Persons who circumvent our security measures could use our clients’ confidential information wrongfully or otherwise compromise the integrity of information stored in and transmitted through these computer systems and networks. There can be no assurance that our use of encrypted password-based protections and firewalls are adequate to prevent fraud or the invasion or breach of the network by an intruder. Any material security breach or other disruptions could expose us to losses and regulatory actions and could harm our reputation and may adversely affect our operations and future financial performance. We need to regularly upgrade and improve our information technology systems, including our software, back-up systems and disaster recovery operations, at substantial cost so that we remain competitive. Our success will also depend, in part, on our ability to respond to new technological advances and emerging banking, capital market and other financial services industry standards and practices on a cost-effective and timely basis. The development and implementation of such technology entails significant technical and business risks. The high cost to upgrade and improve our information technology systems, whether to comply with changes in regulatory requirements, to remain competitive or otherwise, could be prohibitive due to the relatively small size of our Bank. There can be no assurance that we will successfully implement new technologies or adapt our transaction processing systems to customer requirements or improving market standards. Any failure to improve or upgrade our information technology systems effectively or in a timely manner could materially and adversely affect our competitiveness, financial condition and results of operations.

17. Non Compliance with RBI’s risk-based supervision framework and RBI Inspection/observations may have a material adverse effect on our business, financial condition or results of operation

The RBI conducts periodic on-site/off-site inspections on all matters addressing our banking operations and relating to, among other things, our Bank’s portfolio, risk management systems, credit concentration risk, counterparty credit risk, internal controls, credit allocation and regulatory compliance. During the course of finalizing their inspection, the RBI inspection team shares its findings and recommendations with us and provides us an opportunity to provide clarifications, additional information and, where necessary, justification for a different position, if any, than that observed by the RBI. The RBI incorporates such findings in its final inspection report and upon final determination by the RBI of the inspection results, we are required to take actions specified therein by the RBI to its satisfaction, including, without limitation, requiring us to make provisions, impose internal limits on lending to certain sectors and tighten controls and compliance measures and restricting our lending and investment activities. Any significant deficiencies identified by the RBI that we are unable to rectify to the RBI’s satisfaction could lead to sanctions and penalties imposed by the RBI, as well as expose us to increased risks. Bank has been subjected to the risk-based supervision model which is being implemented by the RBI across the banking industry in a phased manner. While the Bank fulfills the requirements of risk-based supervision process, we may be required to comply with additional requirements to improve various aspects of our operations. Any failure to meet regulatory requirements could materially and adversely affect our reputation, business, financial condition, cash flows, results of operations, pending applications or requests with the regulators and our ability to obtain the regulatory permits and approvals required to expand our business.

18. We operate in a highly competitive environment and our ability to grow depends on our ability to compete effectively. The grant of new banking licenses to private sector entities may materially and adversely affect our business, financial condition and results of operations.

We compete with public sector and major private sector Indian commercial banks as well as foreign commercial banks. Many of our competitors are large institutions, which may have much larger customer and deposit bases, larger branch networks and more capital than we have. Some of the banks with which we compete may be more flexible and better positioned to take advantage of market opportunities than us. The Government of India has expressed a preference for consolidation in the banking sector in India. Mergers among banks may result in enhanced competitive strengths in pricing and delivery channels for merged entities. We may face greater competition from larger banks which may have greater resources than us as a result of such consolidation. Further, liberalization of the Indian financial sector could lead to a greater presence or new entries of Indian and foreign banks, as well as banks promoted by private sector companies,


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including industrial houses and non-bank financial institutions meeting the RBI’s eligibility criteria, offering a wider range of products and services, which could adversely affect our competitive environment. We also compete with foreign banks with operations in India, including some of the largest multinational banks and financial institutions in the world, and, for certain products, with non-banking financial institutions. In addition, we compete with other banks operating in India for quality priority sector borrowers, particularly in the agricultural and housing finance sectors. Due to the Government of India’s focus on encouraging banks and other financial institutions to increase lending to the agricultural sector, there is a restricted scope for expanding our agricultural loan portfolio to corporate agricultural borrowers or agricultural borrowers with an established credit history. As a result, we are required to target individual farmers with unknown credit histories, which may increase the risk of delinquencies and increase NPAs. Historically, the housing finance industry in India was dominated by HFCs. Increased competition has resulted in the standardization of home loans and terms. For example, floating rate interest options, lower processing fees and monthly rest periods are becoming increasingly common in the housing finance industry in India. There can be no assurance that we will be able to respond effectively to these market developments or compete with existing or new players in this increasingly competitive industry. These competitive pressures affect the Indian and international banking industry as a whole, including us, and our future success will depend largely on our ability to respond in an effective and timely manner to these competitive pressures.

19. Our insurance coverage could prove inadequate to satisfy potential claims. If we were to incur a serious uninsured loss or a loss that significantly exceed the limits of our insurance policies, it could have a material adverse effect on our business, cash flows, results of operations and financial condition.

We do not carry insurance to cover all of the risks associated with our business, either because insurance coverage is not available or prohibitively expensive. We have taken out insurance within a range of coverage consistent with industry practice in India to cover certain risks associated with our business. We cannot assure you that our current insurance policies will insure us fully against all risks and losses that may arise in the future. In addition, even if such losses are insured, we may be required to pay a significant deductible on any claim for recovery of such a loss, or the amount of the loss may exceed our coverage for the loss. In addition, our insurance policies are subject to annual review and we cannot assure you that we will be able to renew these policies on similar or otherwise acceptable terms, if at all. If we were to incur a serious uninsured loss or a loss that significantly exceed the limits of our insurance policies, it could have a material adverse effect on our business, results of operations and financial condition.

20. We operate in a regulated industry and any changes in the regulations or enforcement initiatives may adversely affect our business, financial condition or results of operation.

The banking and financial sector in India is highly regulated and extensively supervised by authorities such as the RBI. Our business could be directly affected by any changes in laws, regulations and policies for banks. We are also subject to regular financial inspection by the RBI. In the event that we are unable to meet or adhere to the guidance or requirements of the RBI, the RBI may impose strict enforcement of its observations on us, and we may be subject to monetary fines and other penalties which may have an adverse effect on our business, financial condition and results of operations. Further, the RBI is empowered to supersede any decision of the board of directors of a bank and RBI may exercise such power where it is satisfied, in consultation with the Central Government that it is in the public interest to do so, to prevent the affairs of any bank from being conducted in a manner that is detrimental to the interest of the depositors, or for securing the proper management of any bank.

21. We may face maturity mismatch between assets and liabilities which may result in an adverse impact on our business and operations.

Most of our funding requirements are met through short-term and medium-term funding sources, primarily in the form of deposits. A portion of our assets have long-term maturities, creating a possibility for funding mismatches. In our experience, a substantial portion of our customer deposits have been rolled over on maturity and have been, over time, a stable source of funding. However, in the event that a substantial number of our depositors do not roll over deposits on maturity, our liquidity position and business could be adversely affected. If the depositors do not renew deposits or our


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Bank is unable to raise new deposits, our Bank may face a liquidity problem and may be required to pay higher interest rates to attract deposits, which may have an adverse impact on our Bank’s business and operations.

22. We are subject to implementation of IND AS method of accounting and additional capital may be required if IndAS is fully implemented.

As per the erstwhile roadmap given by Reserve Bank of India vide circular dated February 11, 2017, transition to “Indian Accounting Standards (IndAS)” in banks were to commence from the accounting period beginning April 1, 2018 onwards. However, the RBI vide its circular dated April 5, 2018, deferred the implementation of IND AS for Scheduled Commercial Banks by one year i.e. from the accounting period beginning April 1, 2019 and upon implementation, there will be additional capital requirements due to expected increase in the provisioning requirements based on revised computation methodology.

23. We are subject to capital adequacy norms and are required to maintain a CRAR at or above the minimum level required by the RBI for domestic banks.

We are required to maintain a minimum capital adequacy ratio as prescribed by the RBI from time to time and as on December 31, 2018, the CRAR stood at 14.59%. Although we are currently in compliance with the applicable capital adequacy requirements, certain adverse developments could affect our ability to satisfy these requirements in the future, including deterioration in our asset quality, decline in the value of our investments and our inability to meet any regulatory requirements or changes. We are exposed to the risk of the RBI increasing the applicable risk weight for different asset classes from time to time. If we fail to meet capital adequacy requirements, the RBI may take certain actions, including restricting our lending and investment activities, and the payment of dividends by us. Further, continued compliance requirements with Basel III or other capital adequacy requirements imposed by the RBI may result in the incurrence of substantial compliance and monitoring costs. RISKS RELATING TO THE ISSUE AND THE BONDS

24. We cannot assure you that our Bonds offered on the NSE-EBP will be listed on the NSE in a timely manner or at all, which may restrict your ability to dispose of the Bonds

In accordance with Indian law and practice, permission for listing of the Bonds will not be granted by a stock exchange, namely, NSE, until after the Bonds offered in this Issue have been allotted. There could be a failure or delay in listing the Bonds on the NSE within the timelines stipulated under the SEBI Debt Regulations, which would restrict your ability to dispose of the Bonds.

25. After this Placement, active trading market for our Bonds may not develop The Bonds are a new issue of securities for which there is currently no trading. No assurance can be given that an active trading market for the Bonds will develop, or as to the liquidity or sustainability of any such market, the ability of holders to sell their Bonds or the price at which holders of the Bond will be able to sell their Bond. If an active market for the Bonds fails to develop or be sustained, the trading price of the Bonds could fall. If an active trading market were to develop, the Bonds could trade at prices that may be lower than the initial offering price of the Bonds. Whether or not the Bonds will trade at lower prices depends on many factors, including: (i) prevailing interest rates and the market for similar securities; (ii) general economic conditions and; (iii) the Issuer’s financial condition, financial performance and future prospects.

26. Compounding of Risks on investment in our Bonds An investment in the Bonds involves multiple risks and such investment should only be made after assessing the direction, timing and magnitude of potential future changes in the interest rates, the risks associated with such investments and the terms and conditions of the Bonds. More than one risk factor may have simultaneous effects with regard to the Bonds such that the effect of a particular risk factor may not be predictable. In addition, more than one risk factor may have a compounding effect, which may not be predictable. No assurance can be given as to the effect that any combination of risk factors may have on the value of the Bonds.


30

27. The Bonds may not be a suitable investment for all purchasers Eligible Participants should ensure that they understand the nature of the Bonds and the extent of their exposure to risk, that they have sufficient knowledge, experience and access to professional advisers to make their own legal, tax, accounting and financial evaluation of the merits and risks of investment in the Bonds and that they consider the suitability of the Bonds as an investment in the light of their own circumstances and financial condition. It may not be a suitable investment for all types of investors and accordingly, investors may lose their money if the Bonds are not suitable for them.

28. Changes in interest rates may affect the price of the Bonds All securities where a fixed rate of interest is offered, such as the Bonds, are subject to price risk. Interest rates are highly sensitive and fluctuations thereof are dependent upon many factors which are beyond the Issuer’s control, including the monetary policies of the RBI, de-regulation of the financial services sector in India, domestic and international economic and political conditions, inflation and other factors. The price of such securities will vary inversely with changes in prevailing interest rates, i.e. when interest rates rise, prices of fixed income securities fall and when interest rates drop, the prices increase. The extent of fall or rise in the prices is a function of the existing interest, days to maturity and the increase or decrease in the level of prevailing interest rates. Increased rates of interest, which frequently accompany inflation and/or a growing economy, are likely to have a negative effect on the price of the Bonds.

29. The Bonds are subject to stamp duty requirements Potential purchasers and sellers of the Bonds should be aware that stamp duty in accordance with the laws and practices of India are required to be paid at the time of issuance of the Bonds by the Issuer.

30. We are not required to create a debenture redemption reserve As per the Company (Share Capital and Debentures) Rules, 2014, save and except certain companies governed by RBI and banking companies every company is required to create DRR for the purpose of redemption of debentures. Hence, we are not required to create DRR. Accordingly, we may not consider it necessary to create DRR. Consequently, the Bond Holder may not be able to recover, on a timely basis or at all, the full value of the outstanding amounts and/or the interest accrued thereon in connection with the Bonds.

31. Payments made on the Bonds will be subordinated to payments to secured creditors and certain tax and other liabilities preferred by law

The Bonds will be unsecured and will be subordinated to all claims of depositors, general creditors and subordinated debt of the Bank as well as certain liabilities preferred by law such as to claims of the GoI, on account of taxes, and certain liabilities incurred in the ordinary course of our transactions. The Bonds are neither secured nor covered by a guarantee of the Issuer nor related entity or other arrangement that legally or economically enhances the seniority of the claim of the Bond Holders vis-a-vis other creditors of the Issuers. Bond Holders will not be entitled to receive notice of or attend or vote at any meeting of shareholders of the Issuer or participate in the management of the Issuer.

32. Repayment of Bonds, principal and / or coupon thereon Default in respect of payment of coupon and / or repayment of principal in respect of these bonds will be in compliance of RBI guidelines vide their Master Circular on Basel III Guidelines (more specifically to the guidelines given in Annexure 5 and 16 to the same). The Bondholders shall have no rights to accelerate the repayment of future scheduled payments (coupon or principal) except in bankruptcy and liquidation, subject to RBI Guidelines/directions /instructions as the case may be.


31

(iii) CORPORATE STRUCTURE


32

(iv) KEY OPERATIONAL AND FINANCIAL PARAMETERS FOR THE LAST 3 FINANCIAL YEARS AND NINE MONTHS ENDED DECEMBER 31, 2018

(Rs. in Crore)

Particulars As on

31.12.2018 Unaudited

FY 2017-18 Audited

FY 2016-17 Audited

FY 2015-16 Audited

Paid-up Capital 160 145 122 122

Reserves & Surplus 6,203 6,119 4,914 4,451

Net worth 6,363 6,264 5,036 4,573

Total Deposits 58,624 56,890 53,700 50,079

Growth % 2.63 5.94 7.23 12.06

CASA Share in Total Deposits (%) 30.00 29.00 27.72 23.31

Gross Advances 47,766 45,973 41,435 39,476

Growth % 6.53 10.95 4.96 7.59

Net Investment 16,205 15,803 14,857 14,443

Total Borrowing 959 2,382 1,696 2,894

Net Fixed Assets 583 528 419 420

Interest Income 4,342 5,700 5,622 5,443

Interest Expenses 2,599 3,402 3,549 3,662

Total Income 5,033 6,600 6,405 6,150

Total Expenditure 3,787 4,822 4,834 4,847

Operating Profit 1,246 1,777 1,571 1,303

Provisions & Contingencies including Tax Expense

1,095 1,432 965 735

Net Profit (PAT) 151 346 606 568

Number of Branches 782 790 711 667

Number of ATMs + Cash recyclers 2,183 2,328 2,191 1,655

Key Performance Ratios (%)

Capital Adequacy Ratio - Basel III (%) 14.59 14.43 12.54 12.17

Of which Tier I Capital Adequacy Ratio (%) 14.08 13.92 11.85 11.26 Tier II Capital Adequacy Ratio (%) 0.51 0.51 0.69 0.91

Earnings Per Share (Rs.) 1.89 4.98 9.95* 46.59

Book Value Per Share (Rs.) 79.61 85.49 79.51* 375.25

Return on Average Assets (%) 0.29 0.53 1.00 1.03

Gross NPA Ratio (%) 8.49 6.56 3.58 1.30

Net NPA Ratio (%) 4.99 4.16 2.53 0.55

Provision Coverage Ratio (%) 56.09 56.50 57.83 82.46

* During Financial Year 2016-17, one equity share face value of Rs. 10/- each was subdivided into five equity shares of face value of Rs. 2/- each

GROSS DEBT: EQUITY Ratio of the Bank

Before the issue of Debt securities (31.12.2018) 0.11 After the issue of Proposed Debt Securities (Rs. 600 crore )

0.21


33

Profits of the Bank, before and after making provision for tax, for the three financial years immediately preceding the date of circulation of Information Memorandum:

(Rs. in crore) Particulars 2017-18 2016-17 2015-16

Profits before tax 503.65 883.47 911.63 Profits after tax 345.67 605.98 567.63

Dividends declared by the Bank in respect of the said three financial years; interest coverage ratio for last three years (Cash profit after tax plus interest paid/interest paid):

Particulars 2017-18 2016-17 2015-16

Dividends (incl. Tax on Dividend) (Rs. in crore) 52.47 190.67 205.34 Dividend Payout Ratio (percentage) 15.18 31.47 36.18 Interest Coverage Ratio (times) 1.14 1.25 1.25

Any change in accounting policies during the last three years and their effect on the profits and the reserves of the company. There were no changes in the accounting policies during the last three years period.

(v) PROJECT COST AND MEANS OF FINANCING, IN CASE OF FUNDING OF NEW PROJECTS:

The funds being raised by the Bank through present issue of Bonds are not meant for financing any particular project. The objects of the Issue are to augment Bank’s Capital base to meet the future requirements arising out of the implementation of Basel III standards and the growth in its Assets, primarily its loans and investment portfolios and for other general corporate purposes.

(vi) SUBSIDIARIES OF THE BANK (If any): The Bank does not have any subsidiaries.

(C) A BRIEF HISTORY OF THE ISSUER SINCE ITS INCORPORATION GIVING DETAILS OF IT’S FOLLOWING ACTIVITIES:

(i) DETAILS OF EQUITY SHARE CAPITAL AS ON LAST QUARTER ENDED DECEMBER 31, 2018:

Equity Share Capital Amount (Rs. in Crore) Authorized Share Capital 200 Issued, Subscribed and Paid-up Equity Share Capital 160 (ii) CHANGES IN BANKS CAPITAL STRUCTURE AS ON LAST QUARTER ENDED DECEMBER 31, 2018,

FOR THE LAST FIVE YEARS:-

Particulars of change Amount

(Rs. in crore) Date of change

(AGM/EGM) Issue of 1,34,12,015 equity shares of Rs.10 each under QIP 13.41 26.08.2014

Issue of 12,43,074 equity shares of Rs.10 each under ESOP 1.24 01.04.2014 to

29.04.2015 Sub-division of shares of face value Rs.10 each into face value of Rs.2 each

- 27.10.2016

Rights issue of 11,73,17,101 equity shares of Rs. 2 each 23.46 22.11.2017 Bonus issue of 7,27,26,149 equity shares of Rs.2 each 14.55 09.08.2018


34

EQUITY SHARE CAPITAL HISTORY OF THE BANK AS ON LAST QUARTER ENDED DECEMBER 31, 2018, FOR THE LAST FIVE YEARS:-

Date of Allotment

No of Equity Shares

Face Value (Rs.)

Issue Price

(In Rs.)

Consideration (Cash,

other than Cash, etc.)

Nature of Allotment

Cumulative

No. of Equity Shares

Equity Share Capital (Rs)

Equity share premium

(in Rs.)

Opening Balance

01.04.2013 107,181,106 10 - - - 107,181,106 1,071,811,060 5,531,442,618

02.05.2014 151 10.00 70.00 Cash Abeyance Allotment

107,181,257 1,071,812,570 5,531,451,678

02.05.2014 60 10.00 0.00 - Abeyance Allotment

107,181,317 1,071,813,170 5,531,451,078

02.05.2014 252 10.00 150.00 Cash Abeyance Allotment

107,181,569 1,071,815,690 5,531,486,358

02.05.2014 6,250 10.00 150.00 Cash Abeyance Allotment

107,187,819 1,071,878,190 5,532,361,358

02.05.2014 11,402 10.00 275.00 Cash ESOP

Allotment# 107,199,221 1,071,992,210 5,553,025,171

02.05.2014 45,152 10.00 275.00 Cash ESOP

Allotment# 107,254,517 1,072,545,170 5,558,243,296

29.05.2014 10,144 10.00 275.00 Cash ESOP

Allotment# 107,209,365 1,072,093,650 5,562,885,698

29.05.2014 39,212 10.00 275.00 Cash ESOP

Allotment# 107,293,729 1,072,937,290 5,580,831,070

05.07.2014 100,085 10.00 275.00 Cash ESOP

Allotment# 107,393,814 1,073,938,140 5,626,634,970

26.08.2014 13,412,015 10.00 466.00 Cash Qualified

Institutional Placement @

120,805,829 1,208,058,290 11,664,736,100

23.09.2014 56,780 10.00 275.00 Cash ESOP

Allotment # 120,862,609 1,208,626,090 11,690,721,467

06.11.2014 44,340 10.00 275.00 Cash ESOP

Allotment # 120,906,949 1,209,069,490 11,711,013,668

09.12.2014 77,575 10.00 275.00 Cash ESOP

Allotment # 120,984,524 1,209,845,240 11,746,515,867

05.01.2015 80,230 10.00 275.00 Cash ESOP

Allotment # 121,064,754 1,210,647,540 11,783,233,127

29.01.2015 92,500 10.00 275.00 Cash ESOP

Allotment # 121,157,254 1,211,572,540 11,825,565,752

27.02.2015 207,080 10.00 275.00 Cash ESOP

Allotment # 121,364,334 1,213,643,340 11,920,335,914

23.03.2015 265,275 10.00 275.00 Cash ESOP

Allotment # 121,629,609 1,216,296,090 12,041,739,018

29.04.2015 234,845 10.00 275.00 Cash ESOP

Allotment # 121,864,454 1,218,644,540 12,149,215,832

18.11.2016 Bank has Sub-divided Equity shares having a face value from

Rs. 10 to Rs. 2.00 each 609,322,270 1,218,644,540 12,149,215,832

22.11.2017 117,317,101 2.00 76.00 Cash Rights Issue -

2017 726,639,371 1,453,278,742 20,798,843,912

20.08.2018 72,663,937 2.00 - - Bonus Issue -

2018 799,303,308 1,598,606,616 20,653,516,038

28.09.2018 510.00 2.00 12.00 Cash Abeyance Allotment

799,303,818 1,598,607,636 20,653,521,138

28.09.2018 510.00 2.00 0.00 - Abeyance Allotment

799,304,328 1,598,608,656 20,653,520,118

28.09.2018 1,530.00 2.00 12.00 Cash Abeyance Allotment

799,305,858 1,598,611,716 20,653,538,478

28.09.2018 1,020.00 2.00 0.00 - Abeyance Allotment

799,306,878 1,598,613,756 20,653,536,438


799,309,448 1,598,618,896 20,653,608,398


799,310,947 1,598,621,894 20,653,719,324

Closing Balance

31.12.2018

799,310,947 1,598,621,894 20,653,719,324

@ After netting of QIP Expenses of Rs. 7,77,77,710

# Shares were allotted pursuant to exercise of options granted under ESOS of the Bank. The Allotment price Rs.457.65 includes bank contribution of Rs.192.65 * After netting of rights issue expenses Rs.3,18,37,394/-

(iii) DETAILS OF ANY ACQUISITION OR AMALGAMATION IN THE LAST ONE YEAR None


35

(iv) DETAILS OF ANY REORGANIZATION OR RECONSTRUCTION IN THE LAST ONE YEAR None

(D) DETAILS OF THE SHAREHOLDING OF THE BANK AS ON THE LATEST QUARTER ENDED DECEMBER 31, 2018

(i) SHAREHOLDING PATTERN OF THE BANK AS ON LATEST QUARTER ENDED DECEMBER 31, 2018:

Sr. No.

Particulars Total No.

of Equity Shares No. of shares in

Demat Form

Total shareholding as %

of total no. of equity shares

A. Promoters 1 Promoters & Promoters Group 16,830,188 16,830,188 2.11

B. Other Institutions 2 Financial Institutions & Banks 958,873 958,873 0.12 3 Mutual Funds 146,791,838 146,791,598 18.36 4 Insurance Companies 33,504,681 33,504,681 4.19

5 Foreign Financial Institutions/ Banks

226,306 226,246 0.03

6 Foreign Portfolio Investors - Corporate

138,684,621 138,684,621 17.35

7 Alternate Investment Funds 6,544,091 6,544,091 0.82 C. Other Non-Institutions / Individuals / Others

8 Bodies Corporate 29,795,185 29,733,934 3.73 9 Non-Resident Indians 9,371,989 9,362,210 1.17

10 Clearing Members 2,123,304 2,123,304 0.27 11 Hindu Undivided Families 11,019,619 11,019,619 1.38 12 Trusts 353,020 353,020 0.04 13 Directors & Relatives 397,141 397,141 0.05 14 Resident Individuals 401,821,649 380,901,453 50.27 15 IEPF 701,762 701,762 0.09

16 Unclaimed or Suspense Escrow Account

186,680 186,680 0.02

Total 799,310,947 778,319,421 100


36

(ii) LIST OF TOP 10 HOLDERS OF EQUITY SHARES OF THE BANK AS ON DECEMBER 31, 2018

Sr. No.

Name Address

Number of shares held

in demat form

% Shareholding

1 FRANKLIN INDIA MUTUAL FUND (UNDER VARIOUS MUTUAL FUND SCHEMES)

DEUTSCHE BANK AG, DB HOUSE, HAZARIMAL SOMANI MARG, POST BOX NO. 1142, FORT MUMBAI – 400 001.

37,374,395 4.676

2 ICICI PRUDENTIAL MUTUAL FUND (UNDER VARIOUS MUTUAL FUND SCHEMES)

HDFC BANK LTD, CUSTODY SERVICES, LODHA - I THINK TECHNO CAMPUS, OFF FLR 8, NEXT TO KANJURMARG STN, KANJUR MARG EAST, MUMBAI - 400042

34,417,884 4.306

3 OLYMPUS INDIA HOLDINGS LIMITED

STANDARD CHARTERED BANK, CRESCENZO, SECURITIES SERVICES, 3RD FLOOR, C-38/39 G-BLOCK, BKC BANDRA (EAST), MUMBAI – 400051.

23,327,768 2.918

4 HDFC TRUSTEE COMPANY LTD (UNDER VARIOUS SCHEMES)

HDFC BANK LTD, CUSTODY SERVICES, LODHA - I THINK TECHNO CAMPUS, OFF FLR 8, NEXT TO KANJURMARG STN, KANJUR MARG EAST, MUMBAI - 400042.

22,257,675 2.785

5 JHUNJHUNWALA RAKESH RADHESHAYAM

151-155, 15TH FLOOR, NARIMAN BAHVAN, NARIMAN POINT, MUMBAI – 400021.

20,033,516 2.506

6 RELIANCE CAPITAL TRUSTEE COMPANY (UNDER VARIOUS SCHEMES)

DEUTSCHE BANK AG, DB HOUSE, HAZARIMAL SOMANI MARG, P.O.BOX NO. 1142, FORT, MUMBAI – 400001.

19,623,003 2.455

7 SAIF ADVISORS MAURITIUS LIMITED A/C SAIF INDIA IV

HSBC SECURITIES SERVICES, 11TH FLR, BLDG NO.3, NESCO – IT PARK, NESCO COMPLEX, W E HIGHWAY, GOREGAON EAST, MUMBAI – 400 063.

18,515,729 2.316

8 NTASAIN DISCOVERY MASTER FUND

DEUTSCHE BANK AG, DB HOUSE, HAZARIMAL SOMANI MARG, P.O.BOX NO. 1142, FORT, MUMBAI - 400001

16,369,935 2.048

9 HDFC STANDARD LIFE INSURANCE COMPANY LIMITED (UNDER VARIOUS SCHEMES)

DEUTSCHE BANK AG, DB HOUSE, HAZARIMAL SOMANI MARG, P.O.BOX NO. 1142, FORT MUMBAI, PIN – 400 001.

15,007,250 1.878

10 RAKESH JHUNJHUNWALA (RARE ENTERPRISES)

151-155, 15TH FLOOR, NARIMAN BAHVAN, NARIMAN POINT, MUMBAI – 400021.

13,050,000 1.633


37

(E) DETAILS REGARDING THE DIRECTORS OF THE BANK:- (i) DETAILS OF THE CURRENT DIRECTORS OF THE BANK AS ON JANUARY 31, 2019

NAME DESIGNATION DIN DOB AGE ADDRESS DIRECTOR

OF THE BANK SINCE

DETAILS OF OTHER DIRECTORSHIP

SHRI P. R. SESHADRI

MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

07820690 28.06.1963 55

B7, SIRUVANI NAGAR, KOVAIPUDUR, COIMBATORE - 641042

04.09.2017 NIL

SHRI N. S. SRINATH

NON-EXECUTIVE INDEPENDENT DIRECTOR

01493217 10.05.1952 66

302, “RASHMI RISE”, 149-150, DOUBLE ROAD, BEML LAYOUT, 4TH STAGE, RAJARAJESHWARI NAGAR, BANGLORE – 560098

29.06.2012 NIL

DR. V. G. MOHAN PRASAD


00002802 27.09.1958 60

316, G V RESIDENCY, SOWRIPALAYAM, COIMBATORE – 641028

15.06.2014

1. MADHURA PHARMACEUTICALS PRIVATE LIMITED 2. VGM HEALTHCARE PRIVATE LIMITED 3. HOLISTIC HEALTH CARE FOUNDATION LLP

SHRI M. K. VENKATESAN

NON-EXECUTIVE NON-INDEPENDENT DIRECTOR

00032235 01.01.1957 62 14, VASAVI NAGAR, LNS POST, KARUR – 639002

09.12.2014 NIL

SHRI A. K. PRABURAJ


07004825 31.12.1970 48

“SUBENDRA”, NO 7, VASAVI NAGAR, LNS POST, KARUR – 639002

09.12.2014 NIL

SMT CA. K. L. VIJAYALAKSHMI


07116809 05.03.1965 53

530, KESAVAN CHAMBERS, 2ND FLOOR, VYSYAL STREET, COIMBATORE – 641001

22.03.2015 NIL

SHRI M. V. SRINIVASAMOORTHI


00694618 24.06.1963 55

5/70, LRG NAGAR, ANDANKOIL EAST, KOVAI MAIN ROAD, KARUR – 639002

27.08.2015 NIL

DR. K. S. RAVICHANDRAN


00002713 09.04.1962 56

1C, BLOCK – E, CYPRUS OAKS, PULIYAKULAM ROAD, COIMBATORE – 641037

26.05.2016

1. QUANTUM MANAGEMENT CONSULTANTS PRIVATE LIMITED 2. INDUS CORPORATE SERVICES PRIVATE LIMITED 3. KSR & CO., COMPANY SECRETARIES LLP

SHRI R. RAMKUMAR


00275622 14.10.1982 36 1, RAJAJI STREET, KARUR - 639002

25.06.2018 NIL

SHRI SRIRAM RAJAN

ADDITIONAL DIRECTOR (NON-EXECUTIVE INDEPENDENT DIRECTOR)

02162118 01.10.1972 46

FLAT B7-802, L&T SOUTH CITY, ARAKERE, MICO LAYOUT, BENGALURU - 560076

19.01.2019

NIL

Note - None of the current directors of the Bank appear in the RBI’s defaulter list or ECGC’s default list.


38

(ii) DETAILS OF CHANGE IN DIRECTORS SINCE LAST THREE YEARS:-

Sr. No. Name, Designation

DIN

Date of Appointment/ Resignation/Completion

Remarks From

(DD/MM/YYYY) To

(DD/MM/YYYY)

1

Shri P. R. Seshadri Managing Director and Chief Executive Officer DIN: 07820690

04.09.2017

Appointment as Additional Director u/s 161 of Companies Act, 2013 and appointed as MD & CEO of the Bank and his appointment as a Director was confirmed by the shareholders at the 99TH AGM held on 09.08.2018.

2

Shri Sriram Rajan Additional Director (Non-Executive Independent Director) DIN: 02162118

19.01.2019

Appointment as Additional Director u/s 161 of Companies Act, 2013.

3

Shri M. K. Venkatesan Non-Executive Non-Independent Director DIN: 00032235

09.08.2018

Re-appointed as a Non-Executive Non-Independent Director at the 99th AGM.

21.07.2016 Re-appointed as a Non-Executive Non-Independent Director at the 97th AGM.

4

Shri M. V. Srinivasamoorthi Non-Executive Non-Independent Director DIN: 00694618

09.08.2018


21.07.2016 Re-appointed as a Non-Executive Non-Independent Director at the 97th AGM.

5

Shri R. Ramkumar Non-Executive Non-Independent Director DIN: 00275622

25.06.2018


09.08.2018 Appointed as a Non-Executive Non-Independent Director at the 99th AGM.

6

Dr. V. G. Mohan Prasad Non-Executive Independent Director DIN: 00002802

23.07.2017

Re-appointed as a Non-Executive Independent Director at the 98th AGM further period to hold office upto 14.06.2022.

7

Shri N. S. Srinath Non-Executive Independent Director DIN: 01493217

23.07.2017

Re-appointed as a Non-Executive Independent Director at the 98th AGM further period to hold office upto 28.06.2020.

8

Shri A. K. Praburaj Non-Executive Non-Independent Director DIN: 07004825

21.07.2017


9

Smt CA. K. L. Vijayalakshmi Non-Executive Independent Director DIN: 07116809

21.07.2016

Appointed as a Non-Executive Independent Director at the 97th AGM for a period of 3 years

10

Dr. K. S. Ravichandran Non-Executive Independent Director DIN: 00002713

26.05.2016


21.07.2016

Appointed as a Non-Executive Independent Director at the 97th AGM for a period of 3 years.

11

Shri B. Swaminathan Non-Executive Independent (Part-Time) Chairman DIN: 00245189

20.01.2016 19.01.2019

Appointed as Part-time Chairman in the Board meeting held on 23.11.2015 and taken charge on 20.01.2016. Shri B. Swaminathan, demitted office at the close of office hours on 19.01.2019 consequent to completion of his three (3) years tenure.

12

Shri G Rajasekaran Non-Executive Non-Independent Director DIN: 00035582

20.06.2010 19.06.2018 Retired upon completion of period of 8 years as per Banking Regulation Act.

13

Shri A. J. Suriyanarayana Non-Executive Non-Independent Director DIN: 02251823

27.10.2010 26.10.2018 Retired upon completion of period of 8 years as per Banking Regulation Act.

14

Shri K Venkataraman Managing Director And Chief Executive Officer DIN: 02443410

01.06.2011 31.08.2017 Shri K Venkataraman, demitted office at the close of office hours on 31.08.2017 consequent to completion of his tenure.

Note-None of the current directors of the Bank appear in the RBI’s defaulter list or ECGC’s default list.


39

(iii) Disclosure with regard to interest of directors, litigation etc.:

Any financial or other material interest of the directors, promoters or key managerial personnel in the Offer/Issue and the effect of such interest in so far as it is different from the interests of other persons

Nil

Details of any litigation or legal action pending or taken by any Ministry or Department of the Government or a statutory authority against any promoter of the Bank during the last three years Immediately preceding the year of the circulation of this offer letter and any direction issued by such Ministry or Department or statutory authority upon conclusion of such litigation or legal action.

Nil

Details of remuneration paid to Directors during current year and last three financial years

(Rs. in crore)

Particulars

Current Year

(upto Dec 31, 2018)

2017-18 2016-17 2015-16

Gross Salary paid to MD & CEO

0.97 1.07 0.80 0.79

Gross Salary paid to Chairman

0.07 0.09 0.09 0.06

Sitting fee paid to Directors

1.00 1.30 1.37 1.62

Related party transactions entered during the last three financial years immediately preceding the year of circulation of offer letter including with regard to loans made or, guarantees given or securities provided.

There are no material related party transactions entered during the last three financial years.

Summary of reservations or qualifications or adverse remarks of auditors in the last five financial years immediately preceding the year of circulation of offer letter and of their impact on the financial statements and financial position of the company and the corrective steps taken and proposed to be taken by the company for each of the said reservations or qualifications or adverse remark

Nil

Details of acts of material frauds committed against the company in the last three years, if any, and if so, the action taken by the company (Gist of frauds committed against the Bank in the last three years and reported to RBI as per the extant guidelines issued by RBI)

(Rs. in Crore)

Year No of cases* Amount

involved* 2015-16 22 181.69 2016-17 22 13.43 2017-18 14 19.43

* includes accounts held under consortium. The Bank has filed Police complaints in the cases and has initiated suitable recovery/other legal proceedings including appropriate action against erring staff members.


40

(F) DETAILS REGARDING THE AUDITORS OF THE BANK:-

(i) DETAILS OF THE STATUTORY AUDITOR OF THE BANK:-

Name & Address Auditors Since Walker Chandiok & Co LLP

6th Floor, Modayil Centre Point, Warriam Road Junction, M.G. Road,

Kochi - 682016

09.08.2018

(ii) DETAILS OF CHANGE IN AUDITORS DURING LAST THREE YEARS:-

Name & Address Date of

Appointment/ Resignation

Year of appointment

Tenure up to and inclusive

Reason

Abarna & Ananthan, No: 521, 3rd Main Road, 6th Block, 2nd Stage, BSK III Stage, Bengaluru-560085

23.07.2014 - 08.08.2018

2014 4 years Retired upon completion of

tenure

Walker Chandiok & Co LLP 6th Floor, Modayil Centre Point,

Warriam Road Junction,

M.G. Road, Kochi - 682016

09.08.2018 2018 1 year New Appointment

(G) DETAILS OF BORROWINGS OF THE BANK, AS ON THE LATEST QUARTER ENDED DECEMBER 31, 2018

(i) DETAILS OF SECURED & UNSECURED BORROWINGS FACILITIES AS ON DECEMBER 31, 2018

(a) SECURED BORROWINGS FACILITIES AS ON DECEMBER 31, 2018

Lender's

Name Type of Facility

Amount Sanctioned(in Cr)

Principal Amount Outstanding (in Cr)

Repayment Date /Schedule

Security

RBI Market REPO

N/A 107 01/01/2019 Govt. Securities

CCIL CBLO N/A Nil N/A Govt. Securities

(b) UNSECURED BORROWINGS FACILITIES AS ON DECEMBER 31, 2018

Lender's

Name Type of Facility

Amount Sanctioned

Principal Amount Outstanding (Rs. Crore)

Repayment Date Schedule

NABARD Refinance 100.00 20.00 Half Yearly NHB Refinance 232.95 112.33 Quarterly SIDBI Refinance 500.00 444.00 Monthly

(ii) DETAILS OF OUTSTANDING BONDS AS ON DECEMBER 31, 2018:-

Series Type ISIN No Date of Issue

Tenor (Months)

Date of redemption

Amount (Rs. in crore)

Coupon (%)

Rating

Tier II

UNSECURED NON CUM

SUB LOWER TIER II NCB

INE036D09013

25/09/2009

120 25/09/20

19 150 9.86 ICRA A

Note: All of the above outstanding Bond are unsecured in nature.


41

(iii) LIST OF TOP 10 DEBENTURE (BOND) HOLDERS AS ON DECEMBER 31, 2018: Sr. No. Holder Name Face Value (Rs. in crore)

01 Life Insurance Corporation of India 140 02 Lakshmi Vilas Bank Ltd 10

(iv) THE AMOUNT OF CORPORATE GUARANTEE ISSUED BY THE ISSUER ALONG WITH NAME OF THE

COUNTERPARTY (LIKE NAME OF THE SUBSIDIARY, JV ENTITY, GROUP BANK, ETC) ON BEHALF OF WHOM IT HAS BEEN ISSUED -

The Issuer has not issued any corporate guarantee in favour of any counterparty. (v) DETAILS OF CERTIFICATE OF DEPOSITS THE TOTAL FACE VALUE OF CERTIFICATE OF DEPOSITS RAISED & OUTSTANDING TO BE PROVIDED AND ITS BREAKUP AS ON DECEMBER 31, 2018

Deal Date Maturity Face Value

Rate Date Rs. in crore

NIL Nil Nil Nil

(vi) DETAILS OF REST OF THE BORROWING (IF ANY INCLUDING HYBRID DEBT LIKE FCCB,

OPTIONALLY CONVERTIBLE DEBENTURES / PREFERENCE SHARES) AS ON DECEMBER 31, 2018

Party Name (in case of

Facility) / Instrument

Name

Type of Facility /

Instrument

Amount Sanctioned

/ Issued

Principal Amount

Outstanding

Repayment Date/ Schedule

Credit Rating

Secured / Unsecured

Security

None None None None None None None None

(vii) DETAILS OF ALL DEFAULT/S AND/OR DELAY IN PAYMENTS OF INTEREST AND PRINCIPAL OF ANY

KIND OF TERM LOANS, DEBT SECURITIES AND OTHER FINANCIAL INDEBTEDNESS INCLUDING CORPORATE GUARANTEE ISSUED BY THE BANK, IN THE PAST 5 YEARS.

a) The main constituents of the Issuer’s borrowings are generally in the form of deposits, loans from

Reserve Bank of India, other banks and institutions, bonds, etc.

b) The Issuer has been servicing all its principal and interest liabilities on time and there has been no instance of delay or default since inception.

c) The Issuer has neither defaulted in repayment/redemption of any of its borrowings nor affected any

kind of roll over against any of its borrowings in the past.

d) The Issuer has not defaulted in any of its payment obligations arising out of any corporate guarantee issued by it to any counterparty including its joint entities, group companies, etc. in the past.

(viii) DISCLOSURES PERTAINING TO WILFUL DEFAULT Name of the

bank declaring

the entity as a wilful

defaulter

The year in which the entity is

declared as a wilful

defaulter

Outstanding amount when the entity is declared

as a wilful defaulter

Name of the entity

declared as a wilful

defaulter

Steps taken, if any, for the

removal from the list of wilful

defaulters

Other disclosures, as deemed fit by the issuer in order to

enable investors to take informed

decisions

Any other disclosure as specified by

the Board

NIL NIL NIL NIL NIL NIL NIL


42

(ix) DETAILS OF ANY OUTSTANDING BORROWINGS TAKEN/ DEBT SECURITIES ISSUED WHERE TAKEN / ISSUED (I) FOR CONSIDERATION OTHER THAN CASH, WHETHER IN WHOLE OR PART, (II) AT A PREMIUM OR DISCOUNT, OR (III) IN PURSUANCE OF AN OPTION

The Issuer confirms that other than and to the extent mentioned elsewhere in this Disclosure Document, it has not issued any debt securities or agreed to issue any debt securities or availed any borrowings for a consideration other than cash, whether in whole or in part, at a premium or discount or in pursuance of an option since inception.

(H) DETAILS OF PROMOTERS OF THE BANK DETAILS OF PROMOTER HOLDING IN THE BANK AS ON THE LATEST QUARTER ENDED DECEMBER 31, 2018

Sl. No.

Name of the Shareholders

Total No. of Equity

Shares

No. of shares in

Demat Form

Total shareholding

as % of total no. of equity shares

No. of Shares

Pledged

% of Shares pledged with

respect to shares owned

1 A J SURIYANARAYANA 2,746,292 2,746,292 0.344 1,470,975 53.562

2 SURIYANARAYANA A J (HUF)

2,198,807 2,198,807 0.275 - -

3 A S SUDHA 545,647 545,647 0.068 - - 4 JAYANTHKRISHNA A S 324,802 324,802 0.041 - - 5 VARUNPRASAD A S 324,802 324,802 0.041 - - 6 A J VIJAYA 606,015 606,015 0.076 - - 7 NIRMALA 534,355 534,355 0.067 88,000 16.468 8 ANURADHA C B 366,997 366,997 0.046 - - 9 G RAJASEKARAN 1,645,272 1,645,272 0.206 946,000 57.498

10 G RAJASEKARAN (HUF) 422,242 422,242 0.053 - - 11 R NAGESWARI 1,178,343 1,178,343 0.147 66,000 5.601 12 R RAMKUMAR 405,702 405,702 0.051 66,000 16.268 13 R RAMKUMAR (HUF) 454,723 454,723 0.057 - - 14 R ARCHANA 656,533 656,533 0.082 - - 15 SRIMATHI E 100,039 100,039 0.013 84,700 84.667 16 G MANI 1,102,444 1,102,444 0.138 - - 17 G MANI (HUF) 419,485 419,485 0.052 - - 18 SHYAMALA A 9,666 9,666 0.001 - - 19 MUNUGOOR K VENKATESAN 379,643 379,643 0.047 132,000 34.770 20 M K VENKATESAN (HUF) 389,761 389,761 0.049 - - 21 M V USHA 294,292 294,292 0.037 132,000 44.853 22 ISWARRYA V 35,747 35,747 0.004 - - 23 PRAJEETH M V 287,824 287,824 0.036 88,000 30.574 24 M K SRINIVASAN 489,236 489,236 0.061 244,964 50.071 25 NIRMALA B 10,008 10,008 0.001 - - 26 SUGUNA LEELA K 176 176 0.000 - - 27 M V SRINIVASAMOORTHY 214,368 214,368 0.027 213,950 99.805 28 S NIRUPAMA 357,068 357,068 0.045 356,268 99.776 29 SHRUTHI M S 57,400 57,400 0.007 - - 30 A K PRABURAJ 89,866 89,866 0.011 85,542 95.188 31 A P PREETHA 63,740 63,740 0.008 27,742 43.524 32 A P NETRA PRIYADHARSHINI 220 220 0.000 - - 33 A P MITRA PRIYAMVATHA 220 220 0.000 - - 34 A V KANDASWAMY 62,796 62,796 0.008 - - 35 A K KASTHURI 55,657 55,657 0.007 - -


43

(I) ABRIDGED VERSION OF AUDITED STANDALONE FINANCIAL INFORMATION (LIKE PROFIT & LOSS STATEMENT, BALANCE SHEET AND CASH FLOW STATEMENT) FOR AT LEAST LAST THREE YEARS AND AUDITOR QUALIFICATIONS, IF ANY. ABRIDGED VERSION OF AUDITED STANDALONE FINANCIAL INFORMATION BALANCE SHEET FOR THE LAST THREE YEARS (Rs. in crore)

Particulars December 31, 2018

March 31, 2018

March 31, 2017

March 31, 2016

CAPITAL AND LIABILITIES

Capital 160 145 122 122 Reserves & Surplus 6,203 6,119 4,914 4,451 Deposits 58,624 56,890 53,700 50,079 Borrowings 959 2,382 1,696 2,894 Other Liabilities & Provisions 1644 1,393 1,376 1,439

TOTAL CAPITAL AND LIABILITIES 67,590 66,929 61,808 58,985 ASSETS

Cash and Balances with Reserve Bank of India 3,194 2,960 2,790 2,529 Balances with Banks Money at call & short notice 27 1,337 1,555 363 Investments 16205 15,803 14,857 14,443 Advances 46,005 44,800 40,908 39,084 Fixed Assets 583 528 419 420 Other Assets 1,576 1,501 1,279 2,149

TOTAL ASSETS 67,590 66,929 61,808 58,985 PROFIT & LOSS ACCOUNT FOR THE LAST 3 YEARS (Rs. in crore)

Particulars December 31, 2018

March 31, 2018

March 31, 2017

March 31, 2016

INCOME Interest earned 4,342 5,700 5,622 5,443

Other Income 691 900 782 707 TOTAL INCOME 5,033 6,600 6,404 6,150 EXPENDITURE

Interest expended 2,599 3,401 3,459 3,662 Operating Expenses 1,188 1,421 1,285 1,185 Provisions & contingencies 1,095 1,432 965 735

TOTAL EXPENDITURE 4,882 6,254 5,799 5,582 PROFIT/LOSS 151 346 606 568 Net Profit for the Year 151 346 606 568 Add: Profit Brought forward from previous Year 2 193 2 1 Add: Drawings from Investment Reserve TOTAL 153 539 608 569 APPROPRIATIONS

Transfer to Statutory Reserve - 87 152 145 Transfer to Capital Reserve - 12 74 5 Transfer to Revenue Reserve - 160 164 182 Transfer to Special Reserve - 35 25 30 Transfer to Investment Reserve - Proposed dividend (Equity) - 158 - 49 Tax on Dividend - 33 - 10 Interim Dividend & Tax on Interim Dividend - - 147 Balance carried over to Balance Sheet - 54 193 2

TOTAL 153 539 608 569


44

* CASH FLOW STATEMENT FOR THE LAST 3 YEARS STATEMENT OF CASH FLOW FOR THE LAST 3 YEARS (Rs. in crore)

Particulars March 31, 2018 March 31, 2017 March 31, 2016 A. Cash Flow From Operating Activities: Income Interest received during the year from advances, investments etc.

5,700 5,622 5,443

Other Income 900 782 707

Less: Expenditure & Provisions Interest Paid during the year on Deposits and Borrowings

3,401 3,549 3,662

Operating Expenses 1,421 1,285 1,185 Provisions & Contingencies 1,432 965 735

Net Increase In Cash due to Increase of Income over Expenses

346 606 568

Add : Non-Cash Items & Items Considered Separately

Provisions & Contingencies 1,444 992 694 Depreciation on Fixed Assets 85 86 83 Profit/Loss on sale of Investments (101) (205) (94) Amortization of HTM securities 40 27 23 Interest on Bonds, PCPS and IPDI 15 15 15

Total 1,829 1,521 1,288 Less: Direct Taxes Paid (Net) 200 215 175 Cash Profit Generated From Operations (I) 1,629 1,306 1,113

Increase / (Decrease) of Operating Liabilities: Deposits 3,190 3,621 5,389 Borrowings 686 (1,199) (7) Other Liabilities & Provision 69 130 118 Total of Increase of Operating Liabilities 3,945 2,552 5,500

Less: Increase / (Decrease) of Operating Assets Investments (976) (277) (1,999) Advances (4,906) (2,228) (3,264) Other Assets (229) 258 (771) Total of Increase of Operating Assets (6,111) (2,247) (6,034) Net Increase Of Operating Liabilities Over Operating Assets (II)

(2,166) 305 (534)

Cash Flow From Operating Activities (A) = (I+II) (537) 1,611 580

B. Cash Flow From Investing Activities Sale of Fixed Assets (19) 1 Purchase of Fixed Assets (175) (85) (92) Investment made in Associates Net Cash Flow From Investing Activities (B) (194) (84) (92) C. Cash Flow From Financing Activities: i) Issue/ (Redemption) of Subordinated Bonds ii) Dividend on Equity & PNCPS (including DDT) (190) (59) (337) iii) Interest on Bonds, PCPS and IPDI (15) (15) (15) iv) Issue of Equity Shares including share premium 888 - 6 Cash Flow From Financing Activities (C) 683 (74) (346)

Total Cash Flow During The Year (A+B+C) (48) 1,453 142


45

Represented By Cash and Cash equivalents at the beginning of the year

4,345 2,892 2,749

Cash & Balance with RBI Balances with Banks & Money at Call & Short notice

Cash and Cash equivalents at the end of the year 4,297 4,345 2,891 Cash & Balances with RBI Balance with banks & money at call & Short notice

Total Cash Flow During The Year (48) 1,453 142

* AUDITOR QUALIFICATIONS

Financial Year Auditors’ Qualifications

2015-16 NIL

2016-17 NIL

2017-18 NIL

(J) ABRIDGED VERSION OF LATEST AUDITED/ LIMITED REVIEW STANDALONE FINANCIAL INFORMATION

(LIKE PROFIT & LOSS STATEMENT, AND BALANCE SHEET) AND AUDITORS QUALIFICATIONS, IF ANY.

AUDITED FINANCIAL RESULTS FOR THE QUARTER/ NINE MONTHS ENDED DECEMBER 31, 2018

(Rs. in Crore)

S.N. PARTICULARS

QUARTER ENDED 9 MONTHS ENDED YEAR ENDED

31-12-2018 30-09-2018 31-12-2017 31-12-2018 31-12-2017 31-03-2018 31-03-2017

(Reviewed) (Reviewed) (Audited) (Audited)

1 Interest earned (a+b+c+d) 1,443 1,457 1,422 4,342 4,209 5,700 5,623

a) Interest / discount on advances / bills

1,142 1,160 1,117 3,435 3,316 4,421 4,402

b) Income on Investment 292 287 281 869 829 1,123 1,106

c) Interest on balances with Reserve Bank of India & other interbank funds

6 7 21 28 55 77 88

d) Others 3 3 3 10 9 79 27

2 Other Income 260 175 225 690 691 900 782

3 TOTAL INCOME (1+2) 1,703 1,632 1,647 5,032 4,900 6,600 6,405

4 Interest Expended 862 878 861 2,598 2,553 3,401 3,549

5 Operating Expenses (i+ii) 416 393 365 1,188 1,049 1,421 1,285

i) Payments to and provisions for employees

198 172 153 549 460 639 608

ii) Other operating expenses (All

items exceeding 10% of the total expenditure excluding interest expenditure may be shown separately)

218 221 212 639 589 782 677

6 TOTAL EXPENDITURE (excluding Provisions and Contingencies) (4+5)

1,278 1,271 1,226 3,786 3,602 4,822 4,834

7 OPERATING PROFIT (before Provisions and Contingencies) (3-6)

425 361 421 1,246 1,298 1,778 1,571

8 Provisions (other than tax) and Contingencies

400 213 325 1,036 880 1,274 687

9 Exceptional Items - - - - - - -

10 Profit (+) / Loss(-) from Ordinary Activities before tax (7-8-9)

25 148 96 210 418 504 884

11 Tax Expense 4 64 25 59 123 158 277

12 NET PROFIT(+) / LOSS(-) from 21 84 71 151 295 346 607


46

Ordinary Activities after tax (10-11)

13 Extraordinary items (net of tax expense)

- - - - - - -

14 NET PROFIT(+) / LOSS(-) for the period(12-13)

21 84 71 151 295 346 607

15 Paid-up equity share capital (Equity shares of face value Rs. 10.00 each)

160 160 145 160 145 145 122

16 Reserves excluding revaluation reserves as per Balance Sheet of previous year

6,119 4,451

17 Analytical ratios

i) Percentage of shares held by Government of India

0 0 0 0 0 0 0

ii) (a) Capital Adequacy Ratio (%) Basel - II

(b) Capital Adequacy Ratio (%) Basel - III

14.59 14.22 13.92 14.59 13.92 14.43 12.54

iii) Earnings per share (in Rupees) (Basic and Diluted EPS before and after Extraordinary items, net of tax expense - not annualized for quarter)

0.27 1.05 0.95 1.89 4.03 4.78 9.29

iv) NPA Ratios

a) Gross NPA 4,056 3,707 2,663 4,056 2,663 3,016 1,484

b) Net NPA 2,296 2,052 1,699 2,296 1,699 1,863 1,033

c) % of Gross NPA 8.49 7.70 5.94 8.49 5.94 6.56 3.58

d) % of Net NPA 4.99 4.41 3.88 4.99 3.88 4.16 2.53

v) Return on Assets (annualized) (%)

0.12 0.49 0.43 0.29 0.62 0.53 1.00

AUDITOR QUALIFICATION: NIL Note - Figures have been regrouped wherever necessary; amounts reported in Rs. crore / Rs. lakh as applicable; totals in columns / rows may not agree due to rounding off.

(K) ANY MATERIAL EVENT/ DEVELOPMENT OR CHANGE HAVING IMPLICATIONS ON THE FINANCIALS/CREDIT QUALITY (E.G. ANY MATERIAL REGULATORY PROCEEDINGS AGAINST THE ISSUER/PROMOTERS, TAX LITIGATIONS RESULTING IN MATERIAL LIABILITIES, CORPORATE RESTRUCTURING EVENT ETC.) AT THE TIME OF ISSUE WHICH MAY AFFECT THE ISSUE OR THE INVESTOR’S DECISION TO INVEST / CONTINUE TO INVEST IN THE DEBT SECURITIES. The Issuer hereby confirms that there has been no material event, development or change having implications on the financials/credit quality of the Issuer (e.g. any material regulatory proceedings against the Issuer/promoters of the Issuer, tax litigations resulting in material liabilities, corporate restructuring event etc.) at the time of Issue which may affect the Issue or the investor’s decision to invest/continue to invest in the debt securities of the Issuer. Details of default, if any, including therein the amount involved, duration of default and present status, in repayment of – Statutory Dues NIL Debentures and interest thereon NIL Deposits and interest thereon NIL Loan from any bank or financial institution and interest thereon NIL Details of any default in annual filing of the Bank under Companies Act, 2013 or the rules made thereunder: NIL


47

(L) THE NAMES OF THE DEBENTURE TRUSTEE(S) SHALL BE MENTIONED WITH STATEMENT TO THE EFFECT THAT DEBENTURE TRUSTEE(S) HAS GIVEN HIS CONSENT TO THE ISSUER FOR HIS APPOINTMENT UNDER REGULATION 4 (4) AND IN ALL THE SUBSEQUENT PERIODICAL COMMUNICATIONS SENT TO THE HOLDERS OF DEBT SECURITIES. In accordance with the provisions of (i) Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular no. LAD-NRO/GN/2008/13/127878 dated June 06, 2008, as amended, (ii) Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2012 issued vide circular no. LAD-NRO/GN/2012-13/19/5392 dated October 12, 2012, as amended, and (iii) Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, the Issuer has appointed Axis Trustee Services Ltd. to act as Trustees (“Trustees”) for and on behalf of the holder(s) of the Bonds. The address and contact details of the Trustees are as under: Debenture Trustee:

Name : Axis Trustee Services Ltd

Address :

Axis House, II Floor, Bombay Dyeing Mills Compound, Pandurang Budhkar Marg, Worli, Mumbai – 400 025

Tele No : 022- 43255231,

Fax No : 022-43253000 Email : [email protected] Website : www.axistrustee.com The Bank hereby undertakes that a Trust Deed shall be executed by it in favour of the Trustees within sixty days of the closure of the Issue. The Trust Deed shall contain such clauses as may be prescribed under Schedule IV of the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993. Further the Trust Deed shall not contain any clause which has the effect of (i) limiting or extinguishing the obligations and liabilities of the Trustees or the Bank in relation to any rights or interests of the holder(s) of the Bonds, (ii) limiting or restricting or waiving the provisions of the Securities and Exchange Board of India Act, 1992 (15 of 1992); Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 and circulars or guidelines issued by SEBI, (iii) indemnifying the Trustees or the Bank for loss or damage caused by their act of negligence or commission or omission. The Bond holder(s) shall, without further act or deed, be deemed to have irrevocably given their consent to the Trustees or any of their agents or authorized officials to do all such acts, deeds, matters and things in respect of or relating to the Bonds as the Trustees may in their absolute discretion deem necessary or require to be done in the interest of the holder(s) of the Bonds. Any payment made by the Bank to the Trustees on behalf of the bond holder(s) shall discharge the Bank pro tanto to the bond holder(s). The Trustees shall protect the interest of the bond holders in the event of default by the Bank in regard to timely payment of interest and shall take necessary action at the cost of the Bank. No bond holder shall be entitled to proceed directly against the Bank unless the Trustees, having become so bound to proceed, fail to do so. The Trustees shall perform its duties and obligations and exercise its rights and discretions, in keeping with the trust reposed in the Trustees by the holder(s) of the Bonds and shall further conduct itself, and comply with the provisions of all applicable laws, provided that, the provisions of Section 20 of the Indian Trusts Act, 1882, shall not be applicable to the Trustees. The Trustees shall carry out its duties and perform its functions as required to discharge its obligations under the terms of SEBI Debt Regulations, the Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993, the Debenture Trusteeship Agreement, Disclosure Document and all other related transaction documents, with due care, diligence and loyalty. The Trustees shall be vested with the requisite powers for protecting the interest of holder(s) of the Bonds including but not limited to the right to appoint a nominee director on the Board of the Issuer in consultation with institutional holders of such Bonds. The Trustees shall ensure disclosure of all material events on an on-going basis.


http://www.axistrustee.com/


48

(M) THE DETAILED RATING RATIONALE(S) ADOPTED (NOT OLDER THAN ONE YEAR ON THE DATE OF OPENING OF THE ISSUE)/ CREDIT RATING LETTER ISSUED (NOT OLDER THAN ONE MONTH ON THE DATE OF OPENING OF THE ISSUE) BY THE RATING AGENCIES “IND A+ / Stable” by India Ratings & Research Pvt. Ltd. on February 18, 2019


“[ICRA] A(hyb) Stable” by ICRA Ltd. on February 18, 2019.


Other than the credit ratings mentioned hereinabove, Issuer has not sought any other credit rating from any other credit rating agency (ies) for the Bonds offered for subscription under the terms of this Disclosure Document. The above ratings are not a recommendation to buy, sell or hold securities and investors should take their own decision. The ratings may be subject to revision or withdrawal at any time by the assigning rating agencies and each rating should be evaluated independently of any other rating. The ratings obtained are subject to revision at any point of time in the future. The rating agencies have the right to suspend, withdraw the rating at any time on the basis of new information etc. Copies of Rating Letter(s) and Rating rationale(s) are enclosed elsewhere in this Disclosure Document.

(N) IS THE SECURITY BACKED BY A GUARANTEE OR LETTER OF COMFORT OR ANY OTHER DOCUMENT / LETTER WITH SIMILAR INTENT? (COPY OF THE SAME SHALL BE DISCLOSED). IF THE DOCUMENT DOES NOT CONTAIN DETAILED PAYMENT STRUCTURE (PROCEDURE OF INVOCATION OF GUARANTEE AND RECEIPT OF PAYMENT BY THE INVESTOR ALONG WITH TIMELINES), THE DETAILS ARE AS UNER NOT APPLICABLE

(O) COPY OF CONSENT LETTER FROM THE DEBENTURE TRUSTEE

Copy of letter from Axis Trustee Services Ltd. conveying their consent to act as Trustee for the current issue of Bonds is enclosed elsewhere in this Disclosure Document.

(P) NAMES OF ALL THE RECOGNISED STOCK EXCHANGES WHERE THE DEBT SECURITIES ARE PROPOSED TO BE LISTED CLEARLY INDICATING THE DESIGNATED STOCK EXCHANGE The Bonds are proposed to be listed on the Wholesale Debt Market (WDM) Segment of the NSE. The Bank shall obtain an in-principle approval from the NSE for listing of said Bonds on its Wholesale Debt Market (WDM) Segment. Making listing application to NSE within 20 days from the Deemed Date of Allotment of Bonds in pursuance of SEBI Debt Regulations. (In the event of a delay in listing of the Bonds beyond 20 days of the Deemed Date of Allotment, the Issuer will pay to the investor penal interest of 1% per annum over the Coupon Rate commencing on the expiry of 30 days from the Deemed Date of Allotment until the listing of the Bonds.) In connection with listing of Bonds with NSE, the Bank hereby undertakes that:

(i) It shall comply with conditions of listing of Bonds as may be specified in the Listing Agreement with NSE; (ii) Ratings obtained by the bank shall be periodically reviewed by the credit rating agencies and any

revision in the rating shall be promptly disclosed by the Bank to NSE;


49

(iii) Any change in rating shall be promptly disseminated to the holder(s) of the Bonds in such manner as NSE may determine from time to time;

(iv) The Bank, the Trustees and NSE shall disseminate all information and reports on Bonds including compliance reports filed by the Bank and the Trustees regarding the Bonds to the holder(s) of Bonds and the general public by placing them on their websites;

(v) Trustees shall disclose the information to the holder(s) of the Bonds and the general public by issuing a press release in case of revision of rating assigned to the Bonds;

(vi) The information referred to in para (e) above shall also be placed on the websites of the Trustees, Bank and NSE.

(Q) OTHER DETAILS:

1. DRR CREATION

Ministry of Corporate Affairs, Government of India has vide circular no. 11/02/2012-CL-V(A) dated February 11,2013, clarified that no Debenture Redemption Reserve is required for debentures issued by Banking Companies for both public as well as well as privately placed debentures. Further “Section 71 of the Companies Act, 2013 and Rule 18(7) (b) (i) of Companies (Prospectus and Allotment of Securities) Rules, 2014, clarified that no Debenture Redemption Reserve is required for both Public as well as

privately placed Bonds by the Banking Companies. Bank has appointed a trustee to protect the interest

of the Bondholders.

2. ISSUE/INSTRUMENT SPECIFIC REGULATIONS - RELEVANT DETAILS (RBI GUIDELINES, ETC). a. Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular no. LAD-NRO/GN/2008/13/127878 dated June 06, 2008, as amended from time to time read with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. b. The present issue of Bonds is being made in pursuance of the RBI Master Circular - Basel III Capital Regulations, RBI/2015-16/58 DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 (hereinafter referred to as RBI Circular) & amendments thereof from on time to time, to the extent applicable to Tier II Bonds. The terms of the Bonds, definitions, abbreviations or other terms wherever used shall have the same meaning as defined in the RBI circular governing the issue of these Bonds. In case of dispute, the terms of issue of Tier II Bonds shall be governed by these circulars and the interpretations and explanations as made therein shall be the basis for resolving the dispute.

c. The provisions of Income Tax Act, 1961 & Income Tax Rules, 1962, to the extent applicable.

3. APPLICATION PROCESS.

WHO CAN APPLY The following categories of investors, when specifically contacted, are eligible to invest in these NCDs: 1. Mutual Funds; 2. Public Financial Institutions specified in Section 2(72) of the Companies Act 2013; 3. Scheduled Commercial Banks; 4. State Industrial Development Corporations; 5. Insurance Companies registered with the Insurance Regulatory and Development Authority; 6. Provident Funds, Pension Funds, Gratuity Funds and Superannuation Funds authorised to invest in the

Issue; 7. National Investment Funds set up by resolution no. F. No. 2/3/2005- DDII dated November 23, 2005 of

the Government of India published in the Gazette of India; 8. Companies and Bodies Corporate authorized to invest in bonds/debentures; 9. Insurance funds set up and managed by Army, Navy or Air Force of the Union of India; 10. Co-operative Banks and Regional Rural Banks authorized to invest in bonds/debentures; 11. Societies authorized to invest in bonds/debentures;


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12. Trusts authorized to invest in bonds/debentures; 13. Foreign Portfolio Investors (Refer Clause 1.11 of Annexure V of RBI Master Circular RBI/2015-16/58,

DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015); 14. Non Resident Indians (Refer Clause 1.11 of Annexure V of RBI Master Circular RBI/2015-16/58,

DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015); 15. Statutory Corporations/ Undertakings established by Central/ State legislature authorized to invest in

bonds/ debentures; 16. Domestic Venture Capital Funds; 17. Alternative Investment Funds; 18. Infrastructure Investment Trusts All investors are required to comply with relevant regulations/ guidelines applicable to the, for investing in the issue of Bonds/ Debentures as per the norms approved by Government of India, Reserve Bank of India or any other statutory body from time to time Prospective subscribers must make their own independent evaluation and judgment regarding their eligibility to invest in the issue. * APPLICATION BY VARIOUS APPLICANT CATEGORIES *

APPLICATION UNDER POWER OF ATTORNEY OR BY LIMITED COMPANIES In case of applications made under a Power of Attorney or by a Limited Company or a Body Corporate or Registered Society or Mutual Fund, and scientific and/or industrial research organizations or Trusts etc., the relevant Power of Attorney or the relevant resolution or authority to make the application, as the case may be, together with the certified true copy thereof along with the certified copy of the Memorandum and Articles of Association and/or Bye-Laws as the case may be must be attached to the Application Form or lodged for scrutiny separately with the photocopy of the application form, quoting the serial number of the application form and the Bank’s branch where the application has been submitted, at the office of the Registrars to the Issue after submission of the application form to the Bankers to the issue or any of the designated branches as mentioned on the reverse of the Application Form, failing which the applications are liable to be rejected. Such authority received by the Registrars to the Issue more than 10 days after closure of the subscription list may not be considered.

APPLICATIONS UNDER POWER OF ATTORNEY A certified true copy of the power of attorney or the relevant authority as the case may be along with the names and specimen signature(s) of all the authorized signatories and the tax exemption certificate/ document, if any, must be lodged along with the submission of the completed Application Form. Further modifications/ additions in the power of attorney or authority should be notified to the Bank or to its Registrars or to such other person(s) at such other address(es) as may be specified by the Bank from time to time through a suitable communication.

APPLICATION BY PROVIDENT FUNDS, SUPERANNUATION FUNDS AND GRATUITY FUNDS The applications must be accompanied by certified true copies of

1. Trust Deed / Bye Laws /Resolutions 2. Resolution authorizing Investment 3. Specimen Signatures of the Authorized Signatories

Those desirous of claiming tax exemptions on interest payments, such certificates have to be submitted periodically.


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APPLICATIONS BY COMPANIES/ BODIES CORPORATE/ FINANCIAL INSTITUTIONS/ STATUTORY CORPORATIONS The applications must be accompanied by certified true copies of (i) Memorandum and Articles of Associations / Constitution / Bye-Law(s) (ii) certified true copy of the resolution authorizing investment and containing operating instructions (iii) specimen signatures of authorized signatories and (iv) relevant certificate(s) in the prescribed form(s) under Income Tax Rules, 1962, if exemption is sought from deduction of tax at source on interest income.

APPLICATION BY REGIONAL RURAL BANKS The Reserve Bank of India has permitted, vide its circular no. RPCD.RRB.BC. 882/03.05.34/ 96-97 dated December 13, 1996, the RRBs to invest their non-SLR surplus resources in bonds of public sector undertakings. The RBI has vide circular no. RPCD (H)/04.03.06/98-99 dated November 02, 1998 clarified that single exposure norms would be applicable in respect of investment in debentures and bonds of public sector undertakings. The application must be accompanied by certified true copies of (i) Government notification/ Certificate of Incorporation / Memorandum and Articles of Association/ other documents governing the constitution (ii) resolution authorizing investment and containing operating instructions (iii) specimen signatures of authorized signatories (iv) Form 15H for claiming exemption from deduction of tax at source on income from interest on application money and (v) Form 15AA for claiming exemption from deduction of tax at source on the interest income.

APPLICATION BY MUTUAL FUNDS In case of applications by Mutual Funds, a separate application must be made in respect of each scheme of an Indian Mutual Fund registered with SEBI and such applications will not be treated as multiple applications, provided that the application made by the Asset Management Company/ Trustees/ Custodian clearly indicate their intention as to the scheme for which the application has been made.

SUBMISSION OF DOCUMENTS Investors need to submit the certified true copies of the following documents, along-with the Application Form, as applicable:

Memorandum and Articles of Association/ Constitution/ Bye-laws/ Trust Deed;

Government notification/ Certificate of incorporation(in case of Primary Co-operative Bank and RRBs);

SEBI Registration Certificate, if applicable;

Board Resolution authorizing investment along with operating instructions;

Power of Attorney/ relevant resolution/ authority to make application;

Necessary forms/document for claiming exemption from deduction of Tax at source (TDS) on interest on application money ,wherever applicable

Copy of Permanent Account Number Card (“PAN Card”) issued by the Income Tax Department;

Specimen signatures of the authorized signatories (ink signed), duly certified by an appropriate authority.

(R) PROCEDURE FOR APPLYING FOR DEMAT FACILITY

1. The applicant must have at least one beneficiary account with any of the Depository Participants (DPs) of

NSDL/ CDSL prior to making the application.

2. The applicant must necessarily fill in the details (including the beneficiary account number and Depository Participant’s ID appearing in the Application Form under the heading ‘Details for Issue of Bonds in Electronic/ Dematerialized Form’.)

3. Bonds allotted to an applicant will be credited directly to the applicant’s respective Beneficiary Account(s) with the DP.


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4. For subscribing the Bonds names in the application form should be identical to those appearing in the account details in the depository. In case of joint holders the names should necessarily be in the same sequence as they appear in the account details in the depository.

5. Non-transferable allotment advice/refund orders will be directly sent to the applicant by the Registrars to the Issue.

6. If incomplete/incorrect details are given under the heading ‘Details for Issue of Bonds in Electronic/ Dematerialized Form’ in the application form it will be deemed to be an incomplete application and the same may be held liable for rejection at the sole discretion of the Issuer.

7. For allotment of Bonds the address, nomination details and other details of the applicant as registered with his/her DP shall be used for all correspondence with the applicant. The Applicant is therefore responsible for the correctness of his/her demographic details given in the application form vis-à-vis those with his/her DP. In case the information is incorrect or insufficient the Issuer would not be liable for losses, if any.

8. It may be noted that Bonds will be issued in electronic form. The same can be traded only on the Stock Exchanges having electronic connectivity with NSDL/ CDSL. The NSE where the Bonds of the Bank are proposed to be listed has connectivity with NSDL/ CDSL.

9. Payment of interest would be made to those Bond holders whose names appear on the list of beneficial owners given by the Depositories to the Issuer as on Record Date/ Book Closure Date. In case of those Bond for which the beneficial owner is not identified by the Depository as on the Record Date/ Book Closure Date, the issuer would keep in abeyance the payment of interest, till such time that the beneficial owner is identified by the Depository and conveyed to the Issuer, whereupon the interest or principal would be paid to the beneficiaries, as identified, within a period of 30 (thirty) days.

10. The Bonds shall be directly credited to the Beneficiary Account as given in the Application Form and after due verification, allotment advice/ refund order, if any, would be sent directly to the applicant by the Registrars to the Issue but the confirmation of the credit of the Bonds to the applicants Depository Account will be provided to the applicant by the Depository Participant of the applicant.

(S) HOW TO APPLY:

This being a private placement offer, investors who are established/ resident in India and who have been addressed through this communication directly only are eligible to apply. All eligible Investors should refer the operating guidelines for issuance of debt securities on private placement basis through an electronic book mechanism as available on the website of NSE. Investors will also have to complete the mandatory know your customer verification process. Investors should refer to the NSE EBP Guidelines in this respect. The Application Form will be filled in by each Investor and uploaded in accordance with the SEBI regulatory and operational guidelines. Applications for the Bonds must be in the prescribed form (enclosed) and completed in BLOCK LETTERS in English as per the instructions contained therein.

a) The details of the Issue shall be entered on the NSE – EBP Platform by the Issuer at least 2 (two) Business Days prior to the Issue opening date, in accordance with the Operational Guidelines.

b) The Issue will be open for bidding for the duration of the bidding window that would be communicated through the Issuer’s bidding announcement on the NSE– EBP Platform, at least 1 (one) Business Day before the start of the Issue opening date.

Some of the key guidelines in terms of the current Operational Guidelines on issuance of securities on private placement basis through an EBP mechanism are as follows: a. Modification of Bid - Investors may note that modification of bid is allowed during the bidding period /

window. However, in the last 10 (ten) minutes of the bidding period / window, revision of bid is only allowed for improvement of coupon / yield and upward revision of the bid amount placed by the Investor.

b. Cancellation of Bid - Investors may note that cancellation of bid is allowed during the bidding period /

window. However, in the last 10 minutes of the bidding period / window, no cancellation of bids is permitted.


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c. Multiple Bids - Investors are permitted to place multiple bids on the EBP platform in line with EBP Guidelines vide SEBI circular SEBI/HO/DDHS/CIR/P/2018/122 dated August 16, 2018.

d. Withdrawal of Issue - The Issuer may, at its discretion, withdraw the issue process on the following conditions : (a) non-receipt of bids upto the Issue Size; (b) bidder has defaulted on payment towards the allotment, within the stipulated time frame, due to which the Issuer is unable to fulfil the Issue Size. Provided that the Issuer shall accept or withdraw the Issue on the NSE–EBP platform within 1 (one) hour of the closing of the bidding window, and not later than 6 PM on the Issue/Bidding Closing Date.

However, Investors should refer to the Operational Guidelines prevailing as on the date of the bid. Payment Mechanism Applicants shall make remittance of application money by way of electronic transfer of funds through RTGS/electronic fund mechanism for credit by the pay-in time in the bank account of the NSE Clearing Ltd. appearing on the NSE EBP platform in accordance with the timelines set out in the EBP Guidelines and the relevant rules and regulations specified by SEBI in this regard. All payments must be made through RTGS as per the Bank details mentioned in the application form /NSE-EBP platform. The Bank assumes no responsibility for any Applications lost in mail. The entire amount of Rs.1 lakh per Bond is payable on application. 1. Funds pay-out on XXXXXX would be made by NSE Clearing Ltd. to the following bank account of the Issuer:

Banker The Karur Vysya Bank Limited

Beneficiary A/c Name Karur Vysya Bank Basel III Tier II March 2019 Escrow

Beneficiary A/c Number 1152107000000015

IFSC Code KVBL0001152

Bank Branch Name & Address LNS Road, Karur Branch 68, Erode Road, L.N.S. Post, Karur, Tamilnadu 639002

2. Cash, Money Orders, Demand draft, Postal Orders shall not be accepted. The Issuer assumes no

responsibility for any applications lost in mail. The entire amount of Rs.1 lakh per Bond is payable on application.

3. All Application Forms duly completed (along with all necessary documents as detailed in this Disclosure

Document) must be delivered before the closing of the issue to the Issuer. While forwarding the application form, applicants must ensure that the relevant UTR number/ or any other evidence of having remitted the application money is obtained. Detailed instructions for filling up the application form are provided elsewhere in this Disclosure Document.

4. Applications for the Bonds must be in the prescribed form (enclosed) and completed in BLOCK LETTERS in

English and as per the instructions contained therein. Applications should be for the number of Bonds applied by the Applicant. Applications not completed in the prescribed manner are liable to be rejected. The name of the applicant’s bank, type of account and account number must be filled in the Application Form. This is required for the applicant’s own safety and these details will be printed on the refund orders and interest/ redemption warrants.

5. The applicant or in the case of an application in joint names, each of the applicant, should mention his/her

Permanent Account Number (PAN) allotted under the Income-Tax Act, 1961 or where the same has not been allotted, the GIR No. and the Income tax Circle/ Ward/ District. As per the provision of Section 139A (5A) of the Income Tax Act, PAN/GIR No. needs to be mentioned on the TDS certificates. Hence, the investor should


54

mention his PAN/GIR No. if the investor does not submit Form 15G/15AA/other evidence, as the case may be for non-deduction of tax at source. In case neither the PAN nor the GIR Number has been allotted, the applicant shall mention “Applied for” and in case the applicant is not assessed to income tax, the applicant shall mention ‘Not Applicable’ (stating reasons for non-applicability) in the appropriate box provided for the purpose. Application Forms without this information will be considered incomplete and are liable to be rejected.

6. All applicants are requested to tick the relevant column “Category of Investor” in the Application Form.

Public/ Private/ Religious/ Charitable Trusts, Provident Funds and Other Superannuation Trusts and other investors requiring “approved security” status for making investments. No separate receipts shall be issued for the application money. However, the Issuer receiving the duly completed Application Form(s) will acknowledge the receipt of the applications by stamping and returning the acknowledgment slip to the applicant. Applications shall be deemed to have been received by the Issuer only when submitted to it or on receipt by the Registrar as detailed above and not otherwise.

7. For further instructions about how to make an application for applying for the Bonds and procedure for

remittance of application money, please refer to the Term Sheet and the Application form carefully. ISSUE/INSTRUMENT SPECIFIC REGULATIONS - RELEVANT DETAILS (COMPANIES ACT, RBI GUIDELINES, ETC). The Issue is made in accordance with Form PAS-4 prescribed under Section 42 of Companies Act, 2013 and Rule 14(1) of Companies (Prospectus and Allotment of Securities) Rules, 2014 as amended from time to time; Securities and Exchange Board of India (Issue And Listing Of Debt Securities) Regulations, 2008, as amended vide Securities And Exchange Board Of India (Issue And Listing Of Debt Securities) (Amendment) Regulations, 2012 issued vide circular no. LAD-NRO/GN/2012-13/19/5392 dated October 12, 2012 & Securities and Exchange Board of India (Issue and Listing of Debt Securities) (Amendment) Regulations, 2014 issued vide circular no. LAD-NRO/GN/2013-14/43/207 dated January 31, 2014, RBI Master Circular RBI/2015-16/58 DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 on Basel III Capital Regulations covering criteria for inclusion of Debt Capital Instruments as Tier II Capital (Annex 5) and Minimum Requirements to ensure loss absorbency of Additional Tier I instruments at pre-specified trigger and of all non-equity regulatory capital instruments at the PONV (Annex 16). The present Issue of Bonds is being made pursuant to the approval by the Board of Directors at its meeting held on June 25, 2018 and the delegation provided there under. The current issue of bonds is within the overall borrowing limits. POST-ALLOCATION DISCLOSURES BY THE EBP

Upon final allocation by the Issuer, the Issuer shall disclose the Issue Size, coupon rate, ISIN, number of successful bidders, category of the successful bidder(s), etc., in accordance with the Operational Guidelines. The EBP shall upload such data, as provided by the Issuer, on its website to make it available to the public. Guidelines issued by the NSE with regard to NSE-EBP are detailed hereafter. Eligible Participants are requested to ensure that they have login-id and password from the NSE-EBP for participating on the NSE-EBP. * INVESTOR GRIEVANCE AND REDRESSAL SYSTEMS Arrangements have been made to redress investor grievances expeditiously as far as possible, the Issuer endeavors to resolve the investor’s grievances within 30 days of its receipt. All grievances related to the issue quoting the Application Number (including prefix), number of Bonds applied for, amount paid on application and details of collection centre where the Application was submitted, may be addressed to the Compliance Officer at the Registered Office of the Issuer. All investors are hereby informed that the Issuer has appointed a Compliance Officer who may be contacted in case of any pre-issue/ post-issue related problems such as non-credit of letter(s) of allotment/ bond certificate(s) in the demat account, non-receipt of refund order(s), interest warrant(s)/ cheque(s) etc. Contact details of the Compliance Officer are given elsewhere in this Disclosure Document.


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Investor Relations Officer Srinivasa Rao M Designation/ Dept. Company Secretary Address Post Box No. 21, Erode Road, Karur – 639 002 Phone 04324 – 269444, 95855 44940 Email [email protected] Website www.kvb.co.in

(T) TERM SHEET FOR TRANCHE A: ISSUE DETAILS

1 Security Name KVB 032019 BASEL III TIER II BOND – TRANCHE A 2 Issuer The Karur Vysya Bank Ltd 3 Instrument Unsecured, Non-Convertible, Redeemable Tier II Bond which will qualify as

Tier II Capital under BASEL III (the “Bonds”). 4 Issue Size Rs. 300 crore with green shoe option (additional Rs. 300 crore, aggregating

Rs. 600 crore) 5 Objects of the Issue /

Details of the utilization of the proceeds

Augmenting Tier II Capital (as the term is defined in the Basel III Guidelines) and overall capital of the Issuer for strengthening its capital adequacy and for enhancing its long-term resources. The Issuer will utilize the proceeds of the Issue for its regular business activities.

6 Nature and status of Bonds And Seniority of Claim

Unsecured, Non-Convertible, Tier II Bond (as the term is defined in the Basel III Guidelines under pertinent RBI Circular, to the extent applicable.) The claims of the investors in instruments shall be

(1) senior to the claims of investors in instruments eligible for inclusion in Tier 1 capital;

(2) subordinate to the claims of all depositors and general creditors of the bank; and

(3) is neither secured nor covered by a guarantee of the issuer or related entity or other arrangement that legally or economically enhances the seniority of the claim vis-à-vis bank creditors.

(4) paripassu without preference amongst themselves and other debt instruments classifying as Tier II Capital in terms of Basel III Guidelines;

7 Listing Proposed on the Wholesale Debt Market (WDM) Segment of NSE within 20 days from the Deemed Date of allotment.

8 Option to retain over subscription (Amount)

Not Applicable

9 Step up/Step Down Coupon Rate

Not Applicable

10 Default Interest Rate In case of a default in payment of interest and/or principal redemption on the respective due dates (except under circumstances as mentioned in the RBI Norms /RBI Guidelines / Basel III Guidelines), additional interest @ 2.00% per annum over the documented Coupon Rate will be payable by the Bank (subject to prevailing regulatory environment) for the defaulting period i.e. from the date of occurrence of such default up to the date on which the defaulted amounts together with default interest is paid. The Bank will notify the Reserve Bank of India in case of non-payment of coupon as guided by the RBI Master Circular referred in this Information Memorandum.

11 Tenor 10 years & 3 months 12 Redemption Date 10 years & 3 months from the deemed date of allotment 13 Redemption Amount At par 14 Redemption

Premium/Discount Not Applicable


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15 Discount at which security is issued and the effective yield as a result of such discount

Not Applicable

16 Convertibility Non-Convertible 17 Face Value/ Issue Price Rs. 1, 00,000/- (Rupees One Lakh only) per Bond. 18 Rating of the Instrument “IND A+ / Stable” by India Ratings & Research Pvt. Ltd.

“[ICRA] A(hyb) Stable” by ICRA Ltd. 19 Mode of Issue Private Placement 20 Security Unsecured 21 Coupon XX.XX % 22 Coupon Reset Not Applicable 23 Coupon Type Fixed 24 Coupon Payment

Frequency Annual

25 Coupon Payment Dates On the Anniversary of Deemed Date of Allotment 26 Interest on application

money Since the application process is governed by the NSE-EBP, whereby the pay-in and allotment dates are same, interest is not payable on application money.

27 Record Date Reference date for payment of coupon shall be the date falling 15 calendar days prior to the relevant Coupon Payment Date, Issuer Call Date, Tax Call Date or Regulatory Call Date (each as defined later) on which interest is due and payable. In the event the Record Date for Coupon Payment date falls on a day which is not a business day, the next business day will be considered as the Record Date.

28 Date Count Basis Actual/ Actual as per SEBI guidelines 29 Put Option Date Not Applicable

Put Notification Time Not Applicable Put Option Price Not Applicable

30 Call Option

i) Issuer Call in normal course

The Issuer may at its sole discretion, subject to prior approval of Reserve Bank of India (Department of Banking Regulation), the instrument has run for at least five years and having notified the Trustee not less than 21 days prior to the date of exercise of such Issuer Call (which notice shall specify the date fixed for exercise of the Issuer Call (the "Issuer Call Date")), may exercise a call on the outstanding Bonds. The Issuer Call, which is discretionary, may or may not be exercised on the fifth anniversary from the Deemed Date of Allotment i.e. the fifth Coupon Payment Date or on any Coupon Payment Date thereafter. The Issuer shall not exercise a Call unless: Issuer has replaced the Bond with Capital of the same or better quality and the replacement of this Capital is done at conditions which are sustainable for the income capacity of the Bank. Here, replacement of the capital can be concurrent with but not after the instrument is called. or the Issuer demonstrates that its capital position is well above the minimum capital requirements (as per Basel III guidelines) after the call option is exercised.

ii) Tax Call or Variation

If a Tax Event (as described below) has occurred and continuing, then the Issuer may, having notified the Trustee not less than 21 calendar days prior to the date of exercise of such Tax Call or Variation (which notice shall specify the date fixed for exercise of the Tax Call or Variation “Tax Call Date”), may exercise a call on the Bonds or substitute the Bonds or vary the terms of the Bonds so that the Bonds have better classification. A Tax Event has occurred if, as a result of any change in, or amendment to, the laws affecting taxation (or regulations or rulings promulgated there under) of India or any change in the official application of such laws, regulations or rulings the Issuer will no longer be entitled to claim a deduction in respect of computing its taxation liabilities with respect to


57

coupon on the Bonds. The exercise of Tax Call by the Issuer is subject to requirements set out in the Applicable RBI Guidelines (as defined below). RBI will permit the Issuer to exercise the Tax Call only if the RBI is convinced that the Issuer was not in a position to anticipate the Tax Event at the time of issuance of the Bonds

iii) Regulatory Call or Variation

If a Regulatory Event (as described below) has occurred and continuing, then the Issuer may, having notified the Trustee not less than 21 calendar days prior to the date of exercise of such Regulatory Call or Variation (which notice shall specify the date fixed for exercise of the Regulatory Call or Variation (the “Regulatory Call Date”)), may exercise a call on the Bonds or substitute the Bonds or vary the terms of the Bonds so that the Bonds have better classification. A Regulatory Event is deemed to have occurred if there is a downgrade of the Bonds in regulatory classification i.e. Bonds is excluded from the consolidated capital of the Issuer. The exercise of Regulatory Call by the Issuer is subject to requirements set out in the Applicable RBI Guidelines (as defined below). RBI will permit the Issuer to exercise the Regulatory Call only if the RBI is convinced that the Issuer was not in a position to anticipate the Regulatory Event at the time of issuance of the Bonds.

31

Call Option Price ( in case of point 30 ii & iii mentioned above)

Rs. 1, 00,000/- (Rupees One Lakh only) per Bond.

Call Notification Time ( in case of point 30 ii & iii mentioned above)

10 calendar days prior to the date of exercise of Call

32 Depository National Securities Depository Limited and Central Depository Services (India) Limited

33 Cross Default Not Applicable 34 Issuance Only in dematerialized form 35 Trading Only in dematerialized form Issue Schedule 36 Issue Opening Date 37 Issue Closing Date 38 Pay-In-Date 39 Deemed Date of

Allotment

40 Minimum Application and in multiples of Debt securities thereafter

1 Bond and in multiples of 1 bond thereafter

41 Settlement Payment of interest shall be made by way of credit through direct credit/RTGS/ NEFT/DD mechanism.

42 Loss Absorption feature (PONV Trigger)

(a) The bonds shall be subjected to loss absorbency features applicable for non-equity capital instruments vide RBI Master Circular on Basel-III Capital Regulations vide circular No. RBI/2015-16/58 DBR.No.BP.BC.1 /21.06.201/ 2015-16 dated July 01, 2015 read with Clarification issued by RBI vide circular RBI/2015-16/285 DBR.No.BP.BC.71//21.06.201/2015-16 dated January 14, 2016 and RBI Circular no. DBR.BP.BC.No 50/21.06.201/2016-17 dated February 02, 2017. Accordingly, the Bonds may at the option of RBI be written off on the occurrence of the trigger event called the ‘Point of Non Viability’ (PONV). PONV trigger event shall be as defined in the aforesaid RBI Circular and shall be determined by the RBI. PONV Trigger Event is the earlier of: 1. a decision that a permanent write-off without which the Bank would become non-viable, is necessary as determined by the RBI; and 2. the decision to make a public sector injection of capital, or equivalent support, without which the Bank would have become nonviable, as


58

determined by the relevant authority. (b) The amount of non-equity capital to be written-off will be determined by RBI. (c) The order of write-off of the Bonds shall be as specified in the order of Seniority as per this Information Memorandum and any other regulatory norms as may be stipulated by the RBI from time to time. (d) The write-off consequent upon the PONV Trigger Event shall occur prior to any public sector injection of capital so that the capital provided by the public sector is not diluted. The Bondholders shall not have any residual claims on the Bank (including any claims which are senior to ordinary shares of the Bank), following the PONV Trigger Event and when write-off is undertaken. (e) For these purposes, the Bank may be considered as non-viable if: The Bank which, owing to its financial and other difficulties, may no longer remain a going concern on its own in the opinion of the RBI unless appropriate measures are taken to revive its operations and thus, enable it to continue as a going concern. The difficulties faced by the Bank should be such that these are likely to result in financial losses and raising the CET 1 capital of the Bank should be considered as the most appropriate way to prevent the Bank from turning non-viable. Such measures would include write-off of non-equity regulatory capital into common shares in combination with or without other measures as considered appropriate by the RBI. (f) The Bank facing financial difficulties and approaching a PONV will be deemed to achieve viability if within a reasonable time in the opinion of RBI; it will be able to come out of the present difficulties if appropriate measures are taken to revive it. The measures including augmentation of equity capital through write off of Bonds/ public sector injection of funds are likely to: (i) Restore depositors’/investors’ confidence; (ii) Improve rating /creditworthiness of the Bank and there by improve its borrowing capacity and liquidity and reduce cost of funds; and (iii) Augment the resource base to fund balance sheet growth in the case of fresh injection of funds. (g) Criteria to Determine the PONV The above framework will be invoked when the Bank is adjudged by RBI to be approaching the point of non-viability, or has already reached the point of non-viability, but in the views of RBI: (i) there is a possibility that a timely intervention in form of capital support, with or without other supporting interventions, is likely to rescue the bank; and (ii) if left unattended, the weaknesses would inflict financial losses on the bank and, thus, cause decline in its common equity level. (h) RBI would follow a two- stage approach to determine the non-viability of the Bank. The Stage 1 assessment would consist of purely objective and quantifiable criteria to indicate that there is a prima facie case of the Bank approaching non-viability and, therefore, a closer examination of the Issuer’s financial situation is warranted. The Stage 2 assessment would consist of supplementary subjective criteria which, in conjunction with the Stage 1 information, would help in determining whether the Bank is about to become non-viable. These criteria would be evaluated together and not in isolation. Once the PONV is confirmed, the next step would be to decide whether rescue of the Bank would be through write-off alone or write-off in conjunction with a public sector injection of funds. (i) The PONV Trigger Event will be evaluated both at consolidated and solo level and breach at either level will trigger write-off. (j) As the capital adequacy is applicable both at solo and consolidated levels,


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the minority interests in respect of capital instruments issued by subsidiaries of banks including overseas subsidiaries can be included in the consolidated capital of the banking group only if these instruments have pre-specified triggers (in case of AT1 capital instruments) / loss absorbency at the PONV (for all non-common equity capital instruments). In addition, where a bank wishes the instrument issued by its subsidiary to be included in the consolidated group’s capital in addition to its solo capital, the terms and conditions of that instrument must specify an additional trigger event. This additional trigger event is the earlier of: (1) a decision that a write-off, without which the Bank or the subsidiary would become non-viable, is necessary, as determined by the Reserve Bank of India; and (2) the decision to make a public sector injection of capital, or equivalent support, without which the Bank or the subsidiary would become nonviable, as determined by the Reserve Bank of India. Such a decision would invariably imply that the write-off consequent upon the trigger event must occur prior to any public sector injection of capital so that the capital provided by the public sector is not diluted. In such cases, the subsidiary would obtain its regulator’s approval/no objection for allowing the capital instrument to be written-off at the additional trigger point referred to in paragraph above.

43 Treatment in Bankruptcy/ Liquidation

The Bondholders must have no rights to accelerate the repayment of future scheduled payments (coupon or principal) of the Bonds except in case of bankruptcy and liquidation of the Bank.

44 Other Events or Treatment in the event of Winding-up, Amalgamation, Acquisition, Re-constitution etc., of the Bank

Treatment of Bonds in the event of Winding-Up: a. If the Bank goes into liquidation before the Bonds have been

permanently written-off, these Bonds will absorb losses in accordance with the order of Seniority indicated in the Information Memorandum and as per usual legal provisions governing priority of charges;

b. If the Bank goes into liquidation after the Bonds have been permanently written-off, the holders of these instruments will have no claim on the proceeds of liquidation.

Amalgamation of a banking company (section 44A of the Banking Regulations Act, 1949):

a. If the Bank is amalgamated with any other bank before the Bonds have been permanently written-off, the Bonds will become part of the corresponding categories of regulatory capital of the new bank emerging after the merger.

b. If the Bank is amalgamated with any other bank after the Bonds have been written-off permanently, these cannot be written-up by the amalgamated entity.

Scheme of reconstitution or amalgamation of a banking company If the relevant authorities decide to reconstitute the Bank or amalgamate the Bank with any other bank under the Section 45 of BR Act, 1949, the Bank will be deemed as non-viable or approaching non-viability and both the pre-specified trigger and the trigger at the point of non-viability for write-off of the Bonds will be activated. Accordingly, the Bonds will be fully written-off permanently before amalgamation / reconstitution in accordance with these rules. The Order of write-off of the present Tier II Bonds vis-à-vis other capital instruments which the Bank has already issued or may issue in future, will be in accordance with the order of “Seniority of the Bonds” as mentioned earlier in the Information Memorandum and as per usual legal provisions


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governing priority of charges. 45 Transaction Documents The Issuer shall execute the documents including but not limited to the

following in connection with the issue: (i) Letter appointing Trustees to the Bond Holders. (ii) Bond trustee agreement; (iii) Bond trustee deed (iv) Rating agreement with Rating agency; (v) Letter appointing Registrar and agreement entered into between

the Issuer and the Registrar. (vi) Listing Agreement with NSE Limited in terms of SEBI (LODR),

Regulations, 2015. (vii)Disclosure Document

46 Conditions precedent to subscription of Bonds

The subscription from investors shall be accepted for allocation and allotment by the Issuer subject to the following:

(i) Rating letter(s) from the aforesaid rating agencies not being more than one month old from the issue opening date;

(ii) Letter from the Trustees conveying their consent to act as Trustees for the Bondholder(s);

(iii) (iii) Letter to NSE for seeking its In-principle approval for listing and trading of Bonds

47 Conditions subsequent to subscription of Bonds

The Issuer shall ensure that the following documents are executed/ activities are completed as per time frame mentioned below:

(i) Credit of Demat account(s) of the Allottee(s) by number of Bonds allotted on the Deemed Date of Allotment

(ii) Making listing application to NSE within 20 days from the Deemed Date of Allotment of Bonds in pursuance of SEBI Debt Regulations;

(In the event of a delay in listing of the Bonds beyond 20 days of the Deemed Date of Allotment, the Issuer will pay to the investor penal interest of 1% per annum over the Coupon Rate commencing on the expiry of 30 days from the Deemed Date of Allotment until the listing of the Bonds.)

48 Business Day Convention “Business Day” shall be all days (excluding Sundays, Public Holidays and Saturdays on which the Bank is not open) on which commercial banks are open for business in the city of Mumbai, Maharashtra.

49 Events of Default A default is deemed to have occurred if the issuer has defaulted in the payment of coupon or repayment of principal in respect of these bonds but not if the same is in compliance of RBI guidelines vide their Master Circular on Basel III Guidelines (more specifically to the guidelines given in Annexure 5 and 16 to the same). The Bondholders shall have no rights to accelerate the repayment of future scheduled payments (coupon or principal) except in bankruptcy and liquidation, subject to RBI Guidelines/directions /instructions as the case may be.

50 Effect of Holiday If any Coupon Payment Date falls on a day which is not a Business Day, the payment of coupon shall be made by the Bank on the immediately succeeding Business Day, however interest will not be paid for extended period. Please note (i) the dates of the future coupon payments would be as per the schedule originally stipulated at the time of issuing the Bonds. In other words, the subsequent coupon schedule would not be disturbed merely because the payment date in respect of one particular Coupon payment has been postponed earlier because of it having fallen on a day which is not a Business Day; and (ii) the amount of interest to be paid would be computed as per the schedule originally stipulated at the time of issuing the security. If the Redemption Date (also being the last Coupon Payment Date) of the Bonds falls on a day that is not a Business Day, the redemption proceeds


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shall be paid by the Bank on the immediately preceding Business Day along with interest accrued on the Bonds until but excluding the date of such payment.

51 Eligible Investors The following categories of investors, when specifically contacted, are eligible to invest in these NCDs:

1. Mutual Funds, 2. Public Financial Institutions specified in Section 2(72) of the

Companies Act 2013; 3. Scheduled Commercial Banks; 4. State Industrial Development Corporations; 5. Insurance Companies registered with the Insurance Regulatory and

Development Authority; 6. Provident Funds, Pension Funds, Gratuity Funds and

Superannuation Funds authorised to invest in the Issue 7. National Investment Funds set up by resolution no. F. No.

2/3/2005- DDII dated November 23, 2005 of the Government of India published in the Gazette of India;

8. Companies and Bodies Corporate authorized to invest in bonds/debentures;

9. Insurance funds set up and managed by Army, Navy or Air Force of the Union of India

10. Co-operative Banks and Regional Rural Banks authorized to invest in bonds/debentures;

11. Societies authorized to invest in bonds/debentures; 12. Trusts authorized to invest in bonds/debentures; 13. Foreign Portfolio Investors (Refer Clause 1.11 of Annexure V of RBI

Master Circular RBI/2015-16/58, DBR.No.BP.BC.1/21.06.201 /2015-16 dated July 1, 2015);

14. Non Resident Indians (Refer Clause 1.11 of Annexure V of RBI Master Circular RBI/2015-16/58, DBR.No.BP.BC.1/21.06.201 /2015-16 dated July 1, 2015);

15. Statutory Corporations/ Undertakings established by Central/ State legislature authorized to invest in bonds/ debentures.

16. Domestic Venture Capital Funds 17. Alternative Investment Funds 18. Infrastructure Investment Trusts

All investors are required to comply with relevant regulations/ guidelines applicable to the, for investing in the issue of Bonds/ Debentures as per the norms approved by Government of India, Reserve Bank of India or any other statutory body from time to time

52 Prohibition on Purchase/ Funding of Bonds

Neither the Bank nor a related party over which the Bank exercises Control or significant influence (as defined under relevant Accounting Standards) shall purchase the Bonds, nor shall the Bank directly or indirectly fund the purchase of the Bonds. The Bank shall also not grant advances against the security of the Bonds issued by it.

53 Governing Law and Jurisdiction

The Bonds are governed by and shall be construed in accordance with the existing laws of India. Any dispute arising thereof shall be subject to the jurisdiction of competent courts of Karur, Tamilnadu.

54 Applicable RBI Guidelines

Master Circular No. DBR.No.BP.BC.1/21.06.201/2015-16 dated July 01, 2015 on Basel III capital regulations covering terms and conditions for issue of debt capital instruments for inclusion as Tier II Capital (Annex 5 of the Master Circular) and minimum requirement to ensure loss absorbency of non-equity regulatory capital instruments at the Point of Non Viability (PONV) (Annex 16 of the Master Circular) and amendment thereof if any, to the extent applicable to Tier II Bonds. In the case of any discrepancy or inconsistency between the terms of the Bonds or any other Transaction Document and the Basel III Guidelines, the


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provisions of the Basel III Guidelines shall prevail. The issue of Bonds and the terms and conditions of the Bonds will primarily be subject to and govern by the applicable guidelines issued by the Reserve Bank of India from time to time and the Regulations of Securities and Exchange Board of India as amended from time to time.

55 Applicable SEBI guidelines

Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 issued vide circular no. LAD-NRO/GN/2008/13/127878 dated June 06, 2008, as amended from time to time read with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations, 2015).

56 Trustees Axis Trustee Services Ltd 57 Role and Responsibility

of Trustee The Trustees shall perform its duties and obligations and exercise its rights and discretions, as mentioned in Trust deed and also as per Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993 as amended upto date.

58 Registrar Karvy Fintech Pvt. Limited 59 Additional Covenants Delay in Listing: The Issuer shall complete all formalities and seek listing

permission within 20 days from the Deemed Date of Allotment. In the event of delay in listing of Bonds beyond 20 days from the Deemed Date of Allotment, the Issuer shall pay penal interest of 1.00% per annum over the Coupon Rate from the expiry of 30 days from the Deemed Date of Allotment till the listing of Bonds to the Bondholder(s). Refusal of Listing: If listing permission is refused before the expiry of 20 days from the Deemed Date of Allotment, the Issuer shall forthwith repay all money received from the applicants in pursuance of the Disclosure Document along with penal interest of 1.00% per annum over the Coupon Rate from the expiry of 20 days from the Deemed Date of Allotment till the date the bonds are listed on the Debt segment of the NSE. Modification of Issue schedule: The Bank reserves its sole and absolute right to modify (pre-pone/ postpone) the above issue schedule without giving any reasons or prior notice. The Bank also reserves its sole and absolute right to change the deemed date of allotment of the above issue without giving any reasons or prior notice. Consequent to change in Deemed Date of Allotment, the Coupon Payment Dates and/or Redemption Date may also be changed at the sole and absolute discretion of the Issuer. The Bank reserves the right to close the Issue earlier than the stipulated issue closing date and it is further clarified that the Bank need not wait for any minimum subscription amount to the Bonds before closing the Issue.

* * The Issuer reserves its sole and absolute right to modify (pre-pone/ postpone) the above issue schedule without giving any reasons or prior notice. In such a case, investors shall be intimated about the revised time schedule by the Issuer. The Issuer also reserves the right to keep multiple Deemed Date(s) of Allotment at its sole and absolute discretion without any notice. Incase if the Issue Closing Date/ Pay in Date is/are changed (preponed/ postponed), the Deemed Date of Allotment may also be changed accordingly (preponed/ postponed) by the Issuer at its sole and absolute discretion. Consequent to change in Deemed Date of Allotment, the Coupon Payment Dates and may also be changed at the sole and absolute discretion of the Issuer.

(U) DISCLOSURE OF CASH FLOWS (as per SEBI Circular No: CIR/IMD/DF/18/2013 dated October 29, 2013) Company The Karur Vysya Bank Tenure 10 Years & 3 Months Face Value (per security) Rs. 1,00,000/- per bond (Rupees One Lakh only) Deemed Date of Allotment

First Call date Subsequent Call date Redemption 10 Years & 3 Months from deemed date of allotment


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Coupon Rate Frequency of the interest payment with specified dates

Annual (On the Anniversary of Deemed Date of Allotment as mentioned under cash flows)

Day count Convention Actual/Actual Cash flow till redemption:

Schedule Due Date Actual Date Day

Actual No. of Days from Last

IP date / allotment date

Cash flow

1st Coupon

2nd Coupon

3rd Coupon

4th Coupon

5th Coupon

6th Coupon

7th Coupon

8th Coupon

9th Coupon

10th Coupon

11th Coupon on maturity

Redemption on Maturity at par (FV)

Cash flow till Call Option date, in case Call is exercised:

Schedule Due Date Actual Date Day

Actual No. of Days from Last

IP date / allotment date

Cash flow

1st Coupon

2nd Coupon

3rd Coupon

4th Coupon

5th Coupon

Call Option Proceeds

(V) OTHER TERMS OF OFFER

Apart from “terms of the offer” mentioned in the detailed term sheet, additional “terms of the offer” are as given below:

AUTHORITY FOR THE ISSUE The present issue of Bonds is being made pursuant to the board resolution dated June 25, 2018 of the Board of Directors of the Bank, and the delegation provided there under. The present issue of Bonds is being made in pursuance of RBI Master Circular no. RBI/2015-16/58 DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 & amendments thereof on time to time issued by the


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Reserve Bank of India on Basel III Capital Regulations covering terms and conditions for issue of debt capital instruments for inclusion as Tier II capital. (Annex 5) and minimum requirements to ensure loss absorbency of additional Tier 1 instruments at pre-specified trigger and of all non-equity regulatory capital instruments at the PONV (Annex 16) and Master Circular on Basel III capital regulations Clarification issued by RBI vide circular RBI/2015-16/285 DBR.No.BP.BC.71//21.06.201/2015-16 dated January 14, 2016 and RBI Circular No. DBR.BP.BC.No 50/21.06.201/2016-17 dated February 02, 2017 The Bank can issue the Bonds proposed by it in view of the present approvals and no further internal or external permission/ approval(s) is/ are required by it to undertake the proposed activity. The Bonds offered are additionally subject to provisions of the Securities Contracts( Regulation) Act, 1956, Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, terms of this Disclosure Document, Instructions contained in the Application Form and other terms and conditions as may be incorporated in the Trustee Agreement and Bond Trust Deed. Over and above such terms and conditions, the Bonds shall also be subject to the applicable provisions of the Depositories Act 1996 and the laws as applicable, guidelines, notifications and regulations relating to the allotment & issue of capital and listing of securities issued from time to time by the Government of India (GoI), Reserve Bank of India (RBI), Securities & Exchange Board of India (SEBI), concerned Stock Exchange or any other authorities and other documents that may be executed in respect of the Bonds. Any disputes arising out of this issue will be subject to the exclusive jurisdiction of competent courts of Karur, Tamilnadu.

OBJECTS OF THE ISSUE To augment Tier II Capital and overall capital of the bank for strengthening the capital adequacy as per BASEL III requirements and for enhancing the long term resources

UNDERWRITING The present Issue of Bonds on private placement basis has not been underwritten.

AN UNDERTAKING THAT THE ISSUER SHALL USE A COMMON FORM OF TRANSFER The Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/ CDSL/ Depository Participant of the transferor/ transferee and any other applicable laws and rules notified in respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his Depository Participant (DP). The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with the Bank. The Bank undertakes that it shall use a common form/ procedure for transfer of Bonds issued under terms of this Disclosure Document. Transfer of Bonds to and from NRI / OCBs, in case they seek to hold the Bonds and are eligible to do so, will be governed by the then prevailing guidelines of RBI.

TERMS AND CONDITIONS OF THE ISSUE This is a confidential Disclosure Document setting out the terms and conditions pertaining to issue of Basel III Compliant Unsecured, Redeemable, Non-Convertible Tier II Bonds in the nature of Debenture of Rs. 1.00 Lakh each for cash at par (“TRANCHE A BONDS”) aggregating to Rs. 300 crore with an option to retain over subscription of upto Rs. 300 crore on private placement basis to be issued in various tranches (the “Issue”) by


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the BANK. Participation is subject to the completion and submission of Application Form along with application money and acceptance of the offer by the Bank.

TERMS OF PAYMENT The full face value of the Bonds applied for is to be paid along with the Application Form. Investor(s) need to send in the Application Form and the cheque(s)/ NEFT/ RTGS for the full face value of the Bonds applied for.

Face Value Per Bond Minimum Application for Amount Payable on

Application per Bond

Rs. 1,00,000/- (Rupees One Lakh Only)

1 Bond and in multiple(s) of 1 Bond thereafter

Rs. 1,00,000/- (Rupees One Lakh Only)

DEEMED DATE OF ALLOTMENT Interest on Bonds shall accrue to the Bond holder(s) from the Deemed Date of Allotment. All benefits relating to the Bonds will be available to the Bond Holders / Applicants from the Deemed Date of Allotment. The actual allotment of Bonds may take place on a date other than the Deemed Date of Allotment. The Bank reserves the right to keep multiple allotment date(s)/ deemed date(s) of allotment at its sole and absolute discretion without any notice. In case if the issue closing date is changed (preponed/ postponed), the Deemed Date of Allotment may also be changed (preponed/ postponed) by the Bank at its sole and absolute discretion.

MINIMUM SUBSCRIPTION In terms of the SEBI Debt Regulations, the Bank may decide the amount of minimum subscription which it seeks to raise by issue of Bonds and disclose the same in the Disclosure Document. The Bank has decided not to stipulate any minimum subscription for the present Issue and therefore the Bank shall not be liable to refund the issue subscription(s)/ proceed(s) in the event of the total issue collection falling short of issue size or certain percentage of issue size.

MANNER OF BIDDING The Issue will be through open bidding on the EBP platform in line with EBP Guidelines vide SEBI circular SEBI/HO/DDHS/CIR/P/2018/122 dated August 16, 2018.

MANNER OF SETTLEMENT Settlement of the Issue will be done through the escrow account of the Issuer and the account details are given in the section on „Payment Mechanism‟ of this Information Memorandum.

PROVISIONAL OR FINAL ALLOCATION

Allocation shall be made on a “first come first serve‟ basis in the multiples of the bidding lot size, i.e., in multiples of Rs. 1,00,000/- (Rupees One Lakh Only). Post completion of bidding process, the Issuer will upload the provisional allocation on the NSE-EBP platform. Post receipt of details of the successful bidders, the Issuer will upload the final allocation file on the NSE-EBP platform.

BASIS OF ALLOCATION / ALLOTMENT Beginning from the Issue Opening Date and until the day immediately prior to the issue closing date, full and firm allotment against all valid applications for the Bonds will be made to applicants on a first-come-first-served basis, subject to the limit of the Issue size, in accordance with applicable laws. If and to the extent, the Issue is fully subscribed prior to the issue closing date, no allotments shall be accepted once the Issue is fully subscribed.


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Allotment will be done on “day-priority basis”. In case of oversubscription over and above the issue size, the allotment of such valid applications received on the closing day shall be on pro rata basis to the applicants in the ratio in which they have applied regardless of category of investors The issuer reserves the right to reject any/all applications fully or partially at its sole discretion, without assigning any reason whatsoever.

MARKET LOT The market lot will be one Bond of the face value of Rs. 1 lakh (Rupees One lakh only) (“Market Lot”). Since the Bonds are being issued only in dematerialised form, the odd lots will not arise either at the time of issuance or at the time of transfer of Bonds.

TRADING OF BONDS The marketable lot for the purpose of trading of Bonds shall be 1 (one) Bond of face value of Rs. 1 Lakh each. Trading of Bonds would be permitted in demat mode only in standard denomination of Rs. 1 Lakh and such trades shall be cleared and settled in recognized stock exchange(s) subject to conditions specified by SEBI. In case of trading in Bonds which has been made over the counter, the trades shall be reported on a recognized stock exchange having a nationwide trading terminal or such other platform as may be specified by SEBI. EFFECT OF HOLIDAYS: - As per SEBI Circular No. CIR/IMD/DF-1/122/2016 dated November 11, 2016

If any Coupon Payment Date falls on a day that is not a Business Day, the payment may be made on the following Business Day (‘Business Day’ being a day on which Commercial Banks are open for business in Mumbai). However the dates of the future coupon payments shall be as per the schedule originally stipulated at the time of issuing Bonds. Thus the subsequent coupon schedule shall not be disturbed merely because the payment date in respect of one particular coupon payment has been postponed earlier because of it having fallen on a holiday. If the Redemption Date/Call Option Due Date (also being the last Coupon Payment Date) of the Bonds falls on a day that is not a Business Day, the Redemption Price/ Call Option Price shall be paid by the Bank on the immediately preceding Business Day along with interest accrued on the Bonds until but excluding the date of such payment.

REDEMPTION The face value of the Bonds shall be redeemed at par, on _______ i.e. the Redemption Date. The Bonds will not carry any obligation, for interest or otherwise, after the Redemption Date. The Bonds shall be taken as discharged on payment of the redemption amount by the Issuer on the Redemption Date to the registered Bondholders whose name appear in the register of Bondholders on the Record Date. Such payment will be a legal discharge of the liability of the Issuer towards the Bondholders. If the Redemption Date (also being the last Coupon Payment Date) of the Bonds falls on a day that is not a Business Day, the redemption proceeds shall be paid by the Bank on the immediately preceding Business Day along with interest accrued on the Bonds upto but excluding the date of such payment. Payment of interest and repayment of principal amount shall be made by the Bank by way of cheque(s)/ interest/redemption warrant(s)/ demand draft(s)/ credit through direct credit/ NECS/ RTGS/ NEFT mechanism or any other online facility allowed by the RBI in the name of the Bondholders whose name appear on the List of Beneficial Owners given by Depository to the Issuer as on the Record Date. The Issuer’s liability to the Bondholders towards all their rights including for payment or otherwise shall cease and stand extinguished from the due date of redemption in all events. Further the Issuer will not be liable to pay any interest or compensation from the Redemption Date. On the Issuer’s dispatching/ crediting the amount to the Beneficiary (ies) as specified above in respect of the Bonds, the liability of the Issuer shall stand extinguished.

DEPOSITORY ARRANGEMENTS


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The Bank has appointed as Registrar& Transfer Agent for the present issue of Bonds. The Bank shall make

necessary arrangements with National Securities Depository Ltd. (NSDL) and Central Depository Services

(India) Ltd. (CDSL) for issue and holding of Bond/s in dematerialized form. In this context the Bank shall sign

two tripartite agreements as under:

Tripartite Agreement between Issuer Bank, RTA and National Securities Depository Ltd. (NSDL) for offering depository option to the investors.

Tripartite Agreement between Issuer Bank, RTA and Central Depository Services (I) Ltd. (CDSL) for offering depository option to the investors.

Investors can hold the Bonds only in dematerialized form and deal with the same as per the provisions of Depositories Act, 1996 as amended from time to time.

LIST OF BENEFICIAL OWNERS The Bank shall request the Depository to provide a list of Beneficial Owners as at the end of the Record Date. This shall be the list, which shall be considered for payment of interest & principal amount on maturity, as the case may be.

LETTER OF ALLOTMENT AND BOND CERTIFICATE The beneficiary account of the investor(s) with National Securities Depository Limited (NSDL)/ Central Depository Services (India) Limited (CDSL)/ Depository Participant will be given initial credit within 2 days from the Deemed Date of Allotment. The initial credit in the account will be akin to the Letter of Allotment. On completion of the all statutory formalities, such credit in the account will be akin to a Bond Certificate.

ISSUE OF BOND CERTIFICATE(S) Subject to the completion of all statutory formalities within time frame prescribed in the relevant regulations/ act/ rules etc., the initial credit akin to a Letter of Allotment in the Beneficiary Account of the investor would be replaced with the number of Bonds allotted. The Bonds since issued in electronic (dematerialized) form, will be governed as per the provisions of The Depository Act, 1996, Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996, rules notified by NSDL/ CDSL/ Depository Participant from time to time and other applicable laws and rules/ bye laws notified in respect thereof. The Bonds shall be allotted in dematerialized form only.

DISPATCH OF REFUND ORDERS The Bank shall ensure dispatch of Refund if any as per the applicable mode of remittance.

JOINT-HOLDERS Where two or more persons are holders of any Bond(s), they shall be deemed to hold the same as joint tenants with benefits of survivorship subject to other provisions contained in the Regulations applicable to Nationalised Banks.

SHARING OF INFORMATION The Bank may, at its option, use on its own, as well as exchange, share or part with any financial or other information about the Bond holders available with the Bank, with its subsidiaries and affiliates and other banks, financial institutions, credit bureaus, agencies, statutory bodies, as may be required and neither the Bank or its subsidiaries and affiliates nor their agents shall be liable for use of the aforesaid information.

MODE OF TRANSFER OF BONDS Bonds shall be transferred subject to and in accordance with the rules/ procedures as prescribed by the NSDL/ CDSL/ Depository Participant of the transferor/ transferee and any other applicable laws and rules notified in


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respect thereof. The normal procedure followed for transfer of securities held in dematerialized form shall be followed for transfer of these Bonds held in electronic form. The seller should give delivery instructions containing details of the buyer’s DP account to his Depository Participant. Transfer of Bonds to and from NRIs/ OCBs, in case they seek to hold the Bonds and are eligible to do so, will be governed by the then prevailing guidelines of RBI. The transferee(s) should ensure that the transfer formalities are completed prior to the Record Date. In the absence of the same, interest will be paid to the person, whose name appears in the records of the Depository. In such cases, claims, if any, by the transferee(s) would need to be settled with the transferor(s) and not with the Bank.

SUCCESSION In the event of the demise of the sole/first holder of the Bond(s) or the last survivor, in case of joint holders for the time being, the Bank shall recognize the executor or administrator of the deceased Bond holder, or the holder of succession certificate or other legal representative as having title to the Bond(s). The Bank shall not be bound to recognize such executor or administrator, unless such executor or administrator obtains probate, wherever it is necessary, or letter of administration or such holder is the holder of succession certificate or other legal representation, as the case may be, from a Court in India having jurisdiction over the matter. The Bank may, in its absolute discretion, where it thinks fit, dispense with production of probate or letter of administration or succession certificate or other legal representation, in order to recognize such holder as being entitled to the Bond (s) standing in the name of the deceased Bond holder on production of sufficient documentary proof or indemnity. Where a non-resident Indian becomes entitled to the Bond by way of succession, the following steps have to be complied with:

Documentary evidence to be submitted to the Legacy Cell of the RBI to the effect that the Bond was acquired by the NRI as part of the legacy left by the deceased holder.

Proof that the NRI is an Indian National or is of Indian origin.

Such holding by the NRI will be on a non-repatriation basis.

RIGHT TO ACCEPT OR REJECT APPLICATIONS The Bank reserves full, unqualified and absolute right to accept or reject any application, in part or in full, without assigning any reason thereof. The rejected applicants will be intimated along with the refund warrant, if applicable, to be sent. Interest on application money will be paid from the date of realization of the cheque(s)/ demand drafts(s)/RTGS till one day prior to the date of refund. The application forms that are not complete in all respects are liable to be rejected and would not be paid any interest on the application money. Application would be liable to be rejected on one or more technical grounds, including but not restricted to:

Number of Bonds applied for is less than the minimum application size;

Applications exceeding the issue size;

Bank account details not given;

Details for issue of Bonds in electronic/ dematerialized form not given;

PAN/GIR and IT Circle/Ward/District not given;

In case of applications under Power of Attorney by Limited Companies, Corporate Bodies, Trusts, etc. relevant documents not submitted;

In the event, if any Bond(s) applied for is/ are not allotted in full, the excess application monies of such Bonds will be refunded, as may be permitted.

FICTITIOUS APPLICATIONS Attention of the Applicants is specifically drawn to the provisions of sub-section (1) of Section 38 of the Companies Act, 2013 which is reproduced below:


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“Any person who— (a) makes or abets making of an application in a fictitious name to a company for acquiring, or subscribing for, its securities; or (b) makes or abets making of multiple applications to a company in different names or in different combinations of his name or surname for acquiring or subscribing for its securities; or (c) otherwise induces directly or indirectly a company to allot, or register any transfer of, securities to him, or to any other person in a fictitious name.

shall be liable for action under section 447.”

FUTURE BORROWINGS The Bank shall be entitled, from time to time, to make further issue of bonds and / or Bonds and other such instruments to the public / members of the Bank / banks / financial institutions / bodies corporate /mutual funds and / or any other person(s) and /or to raise further loans, advances and/or avail of further financial and / or guarantee facilities from all or any of the above without obtaining the approval of the Bondholders and/or the Trustee.

RIGHTS OF BOND HOLDER(S) The Bond holders will not be entitled to any rights and privileges of shareholders other than those available to them under statutory requirements. The Bonds shall not confer upon the holders the right to receive notice, or to attend and vote at the general meetings of the shareholders of the Bank. The principal amount and interest, if any, on the Bonds will be paid to the sole holder only, and in the case of joint holders, to the one whose name stands first in the Register of Bond holders. The Bonds shall be subject to other usual terms and conditions incorporated in the Bond certificate(s) that will be issued to the allottee (s) of such Bonds by the Bank and also in the Trustee Agreement / Trust Deed.

MODIFICATION OF RIGHTS The rights, privileges, terms and conditions attached to the Bonds may be varied, modified or abrogated with the consent, in writing, of those holders of the Bonds who hold at least three fourth of the outstanding amount of the Bonds or with the sanction accorded pursuant to a resolution passed at a meeting of the Bondholders, provided that nothing in such consent or resolution shall be operative against the Bank where such consent or resolution modifies or varies the terms and conditions of the Bonds, if the same are not acceptable to the Bank.

BONDHOLDER NOT A SHAREHOLDER The bondholders will not be entitled to any of the rights and privileges available to the shareholders. If, however, any resolution affecting the rights attached to the Bonds is placed before the members of the Bank, such resolution will first be placed before the bondholders through the Trustees for their consideration.

NOTICES All notices required to be given by the Issuer or by the Trustees to the Bondholders shall be deemed to have been given if sent by email/ ordinary post/ courier to the original sole/ first allottees of the Bonds and/ or if published in one All India English daily newspaper and one regional language newspaper. All notices required to be given by the Bondholder(s), including notices referred to under “Payment of Interest” shall be sent by registered post or by hand delivery to the Issuer or to such persons at such address as may be notified by the Issuer from time to time.


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ADDITIONAL COVENANTS 1. DELAY IN LISTING: In case of delay in listing of the debt securities beyond 20 days from the deemed date of allotment, the issuer will pay penal interest of at least 1 % p.a. over the coupon rate from the expiry of 30 days from the deemed date of allotment till the listing of such debt securities to the investor 2. REFUSAL OF LISTING: If listing permission is refused before the expiry of the 20 days from the Deemed Date of Allotment, the Issuer shall forthwith repay all monies received from the applicants in pursuance of the Supplemental Disclosure Document along with penal interest of 1.00% per annum over the Coupon Rate from the expiry of 20 days from the Deemed Date of Allotment. If such monies are not repaid within 8 days after the Issuer becomes liable to repay it (i.e. from the date of refusal or 20 days from the Deemed Date of Allotment, whichever is earlier), then the Issuer and every director of the Issuer who is an officer in default shall, on and from the expiry of 8 days, will be jointly and severally liable to repay the money, with interest at the rate of 15 per cent per annum on application money.

PAN/GIR NUMBER All applicants should mention their Permanent Account Number or the GIR Number allotted under Income Tax Act, 1961 and the Income Tax Circle/ Ward/ District. In case where neither the PAN nor the GIR Number has been allotted, the fact of such a non-allotment should be mentioned in the Application Form in the space provided.

TAX DEDUCTION AT SOURCE Tax as applicable under the Income Tax Act, 1961, or any other statutory modification or re-enactment thereof will be deducted at source. Tax exemption certificate/ document, under Section 193 of the Income Tax Act, 1961, if any, must be lodged at the registered office of the Bank or at such other place as may be notified by the Bank in writing, at least 30 (thirty) calendar working days before the interest payment dates. Tax exemption certificate/ declaration of non-deduction of tax at source on interest on application money, should be submitted along with the application form. Where any deduction of Income Tax is made at source, the bank shall send to the Bondholder(s) a Certificate of Tax Deduction at Source. Regarding deduction of tax at source and the requisite declaration forms to be submitted, prospective investors are advised to consult their own tax consultant(s). Tax Deducted at source will paid to Income tax authorities on accrual or payment whichever is earlier basis.

TAX BENEFITS TO THE BOND HOLDERS OF THE BANK The holder(s) of the Bonds are advised to consider in their own case, the tax implications in respect of subscription to the Bonds after consulting their own tax advisor/ counsel.

INTEREST ON APPLICATION MONEY

Since the application process is governed by the NSE-EBP, whereby the pay-in and allotment dates are same, interest is not payable on application money.

SIGNATURES Signatures should be made in English or in any of the Indian Languages. Thumb impressions must be attested by an authorized official of a Bank or by a Magistrate/ Notary Public under his/her official seal.


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ACKNOWLEDGEMENTS No separate receipts will be issued for the application money. However, the Bankers to the Issue receiving the duly completed Application Form will acknowledge receipt of the application by stamping and returning to the applicant the acknowledgement slip at the bottom of each Application Form.

THE DISCOUNT AT WHICH SUCH OFFER IS MADE AND THE EFFECTIVE PRICE FOR THE INVESTOR AS A RESULT OF SUCH DISCOUNT The bonds are being issued at face value and not at discount to offer price.

(W) MATERIAL CONTRACTS & AGREEMENTS INVOLVING FINANCIAL OBLIGATIONS OF THE ISSUER By very nature of its business, the Issuer is involved in a large number of transactions involving financial obligations and therefore it may not be possible to furnish details of all material contracts and agreements involving financial obligations of the Issuer. However, the contracts referred to in Para A below (not being contracts entered into in the ordinary course of the business carried on by the Issuer) which are or may be deemed to be material have been entered into by the Issuer. Copies of these contracts together with the copies of documents referred to in Para B may be inspected at the Registered Office of the Issuer between 10.00 a.m. and 2.00 p.m. on any working day until the issue closing date. 1. MATERIAL CONTRACTS: a. Copy of letter appointing Registrar and Transfer Agents and copy of Agreement entered into between the

Bank and the Registrar. b. Copy of letters appointing Arranger(s) to the Issue c. Copy of letter appointing Trustees to the Bondholders. 2. DOCUMENTS: a. The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, as amended from time to

time. b. Board Resolution dated June 25, 2018 authorizing issue of Bonds offered under terms of this Disclosure

Document. c. Letter of consent from Axis Trustee Services Ltd. for acting as Trustee for and on behalf of the holder(s) of

the Bonds. d. Letter of consent from the Karvy Fintech Private Limited for acting as Registrars to the Issue. e. In-principle approval of NSE for listing of Bonds. f. Letter from India Ratings & Research Pvt. Ltd. & ICRA Limited conveying the credit rating for the Bonds. g. Tripartite Agreement between the Issuer, NSDL and Registrars for issue of Bonds in dematerialized form. h. Tripartite Agreement between the Issuer, CDSL and Registrars for issue of Bonds in dematerialized form.

(X) UNDERTAKING BY THE BANK The Bank hereby undertakes that: The complaints received in respect of the Issue shall be attended to by the Bank expeditiously and

satisfactorily; It shall take all steps for timely completion of formalities for listing and commencement of trading at all the

concerned stock exchange(s) where securities are to be listed; The funds required for refund if applicable shall be made available by the Bank; Necessary co-operation to the credit rating agency(ies) shall be extended in providing true and adequate

information till the debt obligations in respect of the instrument are outstanding.


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(Y) DECLARATION We hereby certify that: a) The Bank has complied with the provisions of the Act and the rules made thereunder; b) The compliance with the Act and the rules does not imply that payment of dividend or interest or repayment

of debentures, if applicable, is guaranteed by the Central Government; c) The monies received under the offer shall be used only for the purposes and objects indicated in the

Information Memorandum; We are authorized by the Committee of Directors of the Company vide resolution dated ………………. to sign this Information Memorandum and declare that all the requirements of Companies Act, 2013 and the rules made there under in respect of the subject matter of this form and matters incidental thereto have been complied with. Whatever is stated in this Information Memorandum and in the attachments thereto is true, correct and complete and no information material to the subject matter of this form has been suppressed or concealed and is as per the original records maintained by the promoters subscribing to the Memorandum of Association and Articles of Association. The Bank accepts no responsibility for the statement made otherwise than in the Disclosure Document or in any other material issued by or at the instance of the Bank and that anyone placing reliance on any other source of information would be doing so at his/her own risk. It is further declared and verified that all the required attachments have been completely, correctly and legibly attached to this form. T. Sivarama Prasad Srinivasa Rao M General Manager & CFO Company Secretary and Compliance Officer for the issue * ANNEXURE(S):

1) BOARD RESOLUTION dated June 25, 2018 2) SHARE HOLDER RESOLUTION dated August 09, 2018 3) RATING LETTERs 4) DEBENTURE TRUSTEE CONSENT LETTER 5) R&T AGENT CONSENT LETTER 6) IN PRINCIPLE APPROVAL LETTER of NSE


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For Office Use Only Date of Receipt of Application

/ / 1 9

Date of Clearance of Funds

/ / 1 9

The Karur Vysya Bank Ltd. Central Office: Post Box No.21, Erode Road, Karur – 639 002

Tel: (04324)- 226520, 225521; Fax: (04324) - 225700 Website: www.kvb.co.in; E-mail: [email protected]

APPLICATION FORM FOR BASEL III COMPLIANT UNSECURED, REDEEMABLE, NON CONVERTIBLE TIER II BONDS

To, The Karur Vysya Bank Dear Sir/ Madam, Having read, understood and agreed to the contents and terms and conditions of The Karur Vysya Bank’s Disclosure Document dated ________________________,I/we hereby apply for allotment to me/us, of the under mentioned Bonds (hereinafter referred to as “Bonds”), out of the Private

Placement Issue. I/We irrevocably give my/ our authority and consent to Axis Trustee Services Ltd., to act as my/our Trustees and for doing such acts and signing such documents as are necessary to carry out their duties in such capacity. The amount payable on application as shown below is remitted herewith. I/We note that the Bank is entitled in its absolute discretion to accept or reject this application in whole or in part without assigning any reason whatsoever.

APPLICANT’S DETAILS SOLE/FIRST APPLICANT’S NAME IN FULL SIGNATORY/AUTHORISED SIGNATORY

SECOND APPLICANT’S NAME

THIRD APPLICANT’S NAME

ADDRESS (Do not repeat name) (Post Box No. alone is not sufficient)

PIN CODE TEL FAX E-MAIL: SOLE/ FIRST APPLICANT CATEGORY (Tick one) INVESTMENT DETAILS Scheduled Commercial Bank Face Value/ Issue Price Rs. 1,00,000/- (Rupees One Lakh Only) per

Bond Public Financial Institution Minimum Application 1 Bond and in multiples of 1 Bond thereafter Insurance Company Tenure 10 Years & 3 Months

Primary/ State/ District/ Central Co-operative Bank Coupon Rate

Regional Rural Bank Interest Payment Annual

Mutual Fund Amount payable per Bond (i) Rs. 1,00,000/- Company/ Body Corporate No. of Bonds Applied For (ii)

Provident/ Gratuity/ Superannuation Fund Total Amount Payable (Rs.) (in fig) (i) x (ii) Others (please specify)

PAYMENT DETAILS

Total Amount Payable UTR No.

(Rs. in figures) (Rs. in words) RTGS Dated

Name & Branch of the Bank

SOLE/ FIRST APPLICANT’S BANK DETAILS (Ref. Instructions) INCOME TAX DETAILS (Ref. Instructions)

Bank Name Sole/ First Applicant

Second Applicant

Third Applicant

Branch PAN/ GIR NO. (enclosed copy)

City Account Number

I.T. Circle/ Ward/ District No.

RTGS /IFSC Code

Type of Account Savings Current Others


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TAX DEDUCTION STATUS (PLEASE TICK ONE)

I / We undertake that the remittance of application money against our subscription in the issue as per application form has been remitted from a Bank Account in my/ our own name.

TO BE FILLED IN ONLY IF THE APPLICANT IS AN INSTITUTION DETAILS FOR ISSUE OF BONDS IN ELECTRONIC/ DEMATERIALISED FORM APPLICANT’S SIGNATURE(S)

Depository Name (please tick) NSDL CDSL

Sole/ First Applicant

Depository Participant Name DP-ID Number

Client-ID Second Applicant

Beneficiary Account Number

Name of the Applicant

Third Applicant

-------------*-------------*-----------*-----------*-------------*------------*-----------*-----------(Tear Here)-----------*-------------*-------------*-----------*-----------*-----------* -------------

ACKNOWLEDGEMENT SLIP

The Karur Vysya Bank Head Office: Post Box No.21, Erode Road, Karur – 639 002 Tel: (04324)- 226520, 225521; Fax: (04324) - 225700 Website: www.kvb.co.in E-mail: [email protected]

Received From (Name & Address) ____________________________________________________________________________________________________________________ An application for Basel III Compliant Unsecured, Redeemable, Non-Convertible Tier II Bonds issue vide cheque/ UTR no: __________________________dated:______________________ drawn on (Name of the Bank & Branch)_________________________________________________________________ for Rs.________________________________________________________(cheque& DD are subject to realization). For Further Correspondence please contact The Karur Vysya Bank Post Box No.21, Erode Road, Karur – 639 002 Tel: (04324)- 226520, 225521

(PLEASE READ CAREFULLY THE INSTRUCTIONS ON THE NEXT PAGE BEFORE FILLING UP THIS FORM)

Fully exempt (Please furnish exemption certificate) Tax to be deducted at source

Name of the Authorised Signatory(ies)

Designation Signature

1. 1.

2. 2.

3. 3.

4. 4.

Branch Seal

http://www.kvb.co.in/


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I N S T R U C T I O N S

1. Application forms must be completed and full in BLOCK LETTERS IN ENGLISH. A blank space must be left between two or more parts of the name:

A B C D W X Y Z

2. Signatures should be made in English or in any of the Indian languages. Thumb impressions must be attested by an

authorized official of a Bank or by a Magistrate / Notary Public under his/her official seal. 3. Funds pay-out on XXXXXX would be made by NSE Clearing Ltd. to the following bank account of the Issuer: Banker The Karur Vysya Bank Limited

Beneficiary A/c Name Karur Vysya Bank Basel III Tier II March 2019 Escrow

Beneficiary A/c Number 1152107000000015 IFSC Code KVBL0001152

Bank Branch Name & Address LNS Road, Karur Branch 68, Erode Road, L.N.S. Post, Karur, Tamilnadu - 639 002

4. Cash, Stock Invest, outstation cheques, money orders, postal orders, etc. will NOT be accepted. 5. Minimum application is of 1 (One) Bond and in multiple(s) of 1 (One) Bond thereafter. 6. Receipt of application will be acknowledged by Bankers stamping the “Acknowledgement Slip” appearing below the

Application Form. No separate receipt will be issued. 7. All applicants should mention their Permanent Account Number or the GIR number allotted under Income-Tax Act, 1961

and the Income –Tax Circle/ Ward/ District. In case where neither the PAN nor GIR number has been allotted, the fact of non-allotment should be mentioned in the application form in the space provided.

8. The application would be accepted as per the terms outlined in the Disclosure Document of Private Placement dated 22.06.2016.

9. All communications will be addressed to the applicant whose name appears first in the application form. 10. Those desirous of claiming tax exemptions on interest on application money are compulsorily required to submit a

certificate issued by the Income Tax Officer/relevant declaration forms (as per Income Tax Act, 1961) along with the Application Form. In case the above documents are not enclosed with the application form, TDS will be deducted on interest on application money. For subsequent interest payments, such certificates have to be submitted periodically.

11. Applicant desirous of receiving bonds in dematerialized form should mention their Depository Participant’s name, DP-ID and Beneficiary Account Number in the appropriate place in the Application Form. The Issuer will take necessary steps to credit the Depository Account of the allottee (s) with the number of Bonds allotted.

12. Please give the Complete Bank details like Bank Account Number, IFSC Code, Name of the Bank and Branch and Branch Code in the Column of Bank details.

13. As a matter of precaution against possible fraudulent encashment of interest warrants due to loss / misplacement, applicants are requested to mention the full particulars of their bank account, as specified in the Application Form. Interest warrants will then be made out in favour of the sole / first applicant’s account. Cheques will be issued as per the details in the register of Bondholders at the risk of the sole / first applicant at the address registered with Issuer

14. The applications would be scrutinized and accepted as per the provisions of the terms and conditions of the Private Placement, and as prescribed under the other applicable statues / guidelines etc. Issuer is entitled, at its sole and absolute discretion, to accept or reject any application, in part or in full, without assigning any reason whatsoever. An application form, which is not complete in any respect, is liable to be rejected.

15. Attention of the Applicants is specifically drawn to the provisions of sub-section (1) of Section 38 of the Companies Act, 2013 which is reproduced below:

“Any person who—

(a) makes or abets making of an application in a fictitious name to a company for acquiring, or subscribing for, its securities;

(b) makes or abets making of multiple applications to a company in different names or in different combinations of his name or surname for acquiring or subscribing for its securities; or

(c) otherwise induces directly or indirectly a company to allot, or register any transfer of, securities to him, or to any other person in a fictitious name.

Shall be liable for action under section 447.”

Documents to be provided by applicants: Applicants need to submit the following documentation, along with the application form, as applicable: Memorandum and Articles of Association/ Constitutional Documents/ Bye-laws/ Trust Deed; Board Resolution authorizing the investment and containing operating instructions; Power of Attorney/ relevant resolution/ authority to make application; Specimen signatures of the authorized signatories (ink signed), duly certified by an appropriate authority; Government Notification (in case of Primary Co-operative Bank and RRBs); Copy of Permanent Account Number Card (“PAN Card”) issued by the Income Tax Department; Necessary forms for claiming exemption from deduction of tax at source on interest on application money, wherever applicable.


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