9 (b) Loans granted by the Corporation are secured or partly secured by one or combination of the following securities;

• Registered / equitable mortgage of property;

• Hypothecation of assets;

• Bank guarantee, company guarantee or personal guarantee;

• Assignment of receivables;

• Lien on fixed deposit;

• Negative lien;

• Pledge of shares, units, other securities, assignment of life insurance policies;

• Non disposal undertakings in respect of shares;

• Liquidity support collateral [e.g. DSRA (Debt Service Reserve Account)].

9 (c) Loans including installment and interest outstanding due from related parties ' 19.31 Crore (Previous Year ' 23.91 Crore) [Refer Note 42].

9 (d) The Corporation has not granted any loans or advances in the nature of loans to promoters, directors, KMPs and the related parties (as defined under the Companies Act, 2013), either severally or jointly with any other person that are:

(a) repayable on demand; or

(b) without specifying any terms or period of repayment

9 (e) The Corporation have not advanced or loaned or invested funds to any other person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Corporation shall;

(a) d irectly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Corporation (Ultimate Beneficiaries) or

(b) d rovide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

9 (f) There were no loans given against the collateral of gold jewellery and hence the percentage of such loans to the total outstanding asset is Nil (Previous Year Nil).

9 (g) Loans including installment and interest outstanding amounts to ' 1,255.39 Crore (Previous Year ' 529.41 Crore) in respect of properties held for disposal under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [SARFAESI].

9 (h) Expected credit loss

For financial reporting, expected credit loss is a calculation of the present value of the amount expected not to be recovered on financial assets. Credit risk is the potential that the obligor and counterparty will fail to meet its financial obligations to the lender. This requires an effective assessment and management of the credit risk at individual and portfolio level.

The key components of Credit Risk assessment are:

• Probability of default (PD): represents the likelihood of default over a defined time horizon.

• Exposure at default (EAD): represents total amount outstanding including accrued interest as at the reporting date.

• Loss given default (LGD): represents the proportion of EAD, that is likely-loss post default.

The definition of default is taken as more than 90 days past due (DPD) for all loans, individual, corporate and others.

Delinquency buckets considered for the staging of loans:

• 0-30 days past due (DPD) and overdue up to one calendar month are classified as stage 1,

• E1-90 DPD and overdue more than one calendar month, but not stage 3; in addition, SICR accounts are classified as stage 2, and

• e 90 DPD Accounts identified by the Corporation as Non-Performing Accounts under regulatory guidelines objective evidence for impairment (Qualitative Overlay) are classified as stage 3.

EAD is the total amount outstanding including accrued interest as at reporting date. The ECL is computed as a product of PD, LGD and EAD.

Macro-economic Variables: The measurement of ECL should be forward looking in nature. In order to incorporate forward looking macro-economic characteristics into ECL, relationships with macroeconomic variables such as Gross Domestic Product, Inflation, Total investments, National Savings, etc. (relevant variables to the underlying loan portfolio) are analysed and modelled into estimates of Probability of Default (PD). Forecasted 12-months and Lifetime PDs are driven by IMF macroeconomic forecasts for India released as part of World Economic Outlook, October 2021.

COVID-19 Impact Analysis: Further, the Corporation has also evaluated its individual and non-individual portfolios to determine any specific category of customers which may reflect higher credit losses (e.g. based on specific sectors) or borrowers who have shown stress due to COVID like salary cut / loss of pay, job loss temporary / permanent, business closed, business related financial difficulty, increase in business expenditure, etc. Basis such determination, the Corporation has recognised provisions as management overlay for specific categories of customers. Cumulative COVID-19 provision as at March 31, 2022 stood at ' 1,242.02 Crore (Previous Year ' 843.57 Crore).

9.1 Individual loans

9.1.1 Credit quality of assets

For the purpose of computing PD, the Corporation classifies all individual loans at amortized cost and has assessed them at the collective pool level.

The individual loan book has been divided into the following segments -

- Housing and Non-Housing

- Salaried and Self Employed

- Geographical location (North, East, West and South)

The 12 months default rates have been forecasted to create the PD term structure which incorporates both 12 months (stage 1 Loans) and lifetime PD (stage 2 Loans). The historical 12 months default rates are modelled against relevant macro-economic variables to arrive at future 12 months point-in-time default rates. The forecasted default rates are then used to create point-in-time PD term structure.

The vintage analysis methodology has been used to create the LGD vintage. The LGD vintage takes into account the recovery experience across accounts of a particular portfolio post default. The recoveries are tracked and discounted to the date of default using the interest rate. The individual loans portfolio has been considered together for the LGD computation.

9.2 Non-individual loans

9.2.1 Credit quality of assets

Measurement of ECL for stage 1 and certain stage 2 non-individual / corporate loans is based on portfolio approach where PD and LGD is calculated based on historic performance of the portfolio further segmented into: i) Corporate Finance ii) Construction Finance iii) Lease Rental Discounting iv) Inter-Corporate Deposits. Certain loans classified as stage 2 and all the loans classified as stage 3 are assessed for ECL provisioning based on case to case approach by calculating probability weighted average cashflows under different recovery scenarios.

The vintage analysis methodology has been used to create the LGD vintage for measurement of ECL, based on a portfolio approach. The LGD vintage takes into account the recovery experience across accounts of a particular portfolio post default. The recoveries are tracked and discounted to the date of default using the effective interest rate.

The Corporation has identified certain non-individual accounts as Watch List under Stage 2 based on the following criteria:

• Builders' Cash flows are insufficient to service the loan due to slow sales or the project is stalled.

• Borrowers' operational cashflows are insufficient indicating possibility of further delayed payments.

• Security cover is insufficient for repayment of loans.

• Where the borrowing company has been proceeded upon under Insolvency and Bankruptcy Code (IBC) by creditors and such reference has been admitted by the National Company Law Tribunal (NCLT).

Such accounts identified as watchlist are upgraded by the Corporation, where the management is satisfied that the risks associated with the account has abated.

9.3 ECL Provision

In addition to the management overlays described above in relation to the impact of COVID 19, the management has recognised additional provisions towards overlay in relation to specific categories of individual customers e.g. loans associated with incomplete / delayed projects, reduction in collateral value, loans associated with specific stage 3 customers, loans associated with projects covered by subvention schemes.

Further, the Corporation has also applied point in time method for determining the probability of default in relation to computation of provision under the expected credit loss model for non-individual customers.

Note 10.1 HDFC Life Insurance Company Limited

During the year, the Board of Directors of HDFC Life Insurance Company Limited (HDFC Life), a subsidiary of the Corporation under Ind AS 110, had approved a share purchase and share swap agreement among HDFC Life, Exide Industries Limited and Exide Life Insurance Company Limited (Exide Life), in connection with the acquisition of 100% of the equity share capital and subsequent merger of Exide Life into HDFC Life for a total consideration of ' 6,687 Crore. Pursuant to the agreement and subsequent to receipt of regulatory approvals, on January 1, 2022, HDFC Life has paid ' 726 Crore and issued 8,70,22,222 equity shares at an issue price of ' 685 per share as consideration. Accordingly, Exide Life has become a wholly owned subsidiary of HDFC Life with effect from January 1, 2022. Further, the Board of Directors of HDFC Life has filed a scheme for amalgamation of Exide Life with and into HDFC Life and their respective shareholders and creditors under Sections 230 to 232 of the Companies Act, 2013 and Sections 35 to 37 of the Insurance Act, 1938 and other applicable laws and regulations to give effect to the said amalgamation, subject to receipt of requisite approvals from various regulatory and statutory authorities, their respective shareholders and creditors.

Note 10.2 HDFC ERGO General Insurance Company Limited

During the year, the Corporation has sold 44,12,000 equity shares of HDFC ERGO General Insurance Company Limited (HDFC ERGO) resulting in a pre tax gain of ' 208.85 crore. As at March 31, 2022, the Corporation's equity shareholding in HDFC ERGO stood at 49.98% which is in compliance with the RBI requirement to reduce its shareholding to 50 percent or below. Further, the

Board of Directors of the Corporation in Q1- FY22 had approved the sale of 3,55,67,724 equity shares of ' 10 each, representing 4.99% stake in HDFC ERGO to HDFC Bank Ltd., which is pending due to regulatory approvals.

Note 10.3 Good Host Spaces Private Limited

During the year, the Corporation has sold its entire holding i.e. 47,75,241 equity shares representing 24.48% of the equity capital of Good Host Spaces Private Limited (Good Host) an associate (refer note 29.5.2).

Note 10.4 HDFC ERGO Health Insurance Limited

During the previous year, the National Company Law Tribunal has sanctioned the scheme of amalgamation for merger of HDFC ERGO Health Insurance Limited (formerly Apollo Munich Health Insurance Company Limited) (HDFC ERGO Health) with and into HDFC ERGO General Insurance Company Limited (HDFC ERGO), subsidiaries of the Corporation and Insurance Regulatory and Development Authority of India (IRDAI) had issued final approval for the merger. Consequently, HDFC ERGO Health had merged with HDFC ERGO from appointed date i.e. March 1, 2020.

Note 10.5 Debt Asset Swap

During the year, the Corporation has disposed off certain investment costing of ? 173.86 Crore which were acquired through debt asset swap in earlier years. The gross carrying value (fair value) of Investments under debt asset swap as at March 31, 2022 stood at ? 305.85 Crore (Previous Year ? 347.71 Crore).

11.1 During the previous year, the Government of India, Ministry of Finance, vide its notification dated October 23, 2020, had announced COVID-19 Relief Scheme for grant of ex-gratia payment of difference between compound interest and simple interest for six months to borrowers in specified loan accounts (‘the Scheme'), as per the eligibility criteria and other aspects specified therein and irrespective of whether the moratorium was availed or not. The Corporation had implemented the Scheme and credited an amount to the eligible borrowers loan account as per the Scheme and during the current year received reimbursement from SBI - Nodal office in accordance with the relief scheme.

12.3.1 The evaluation of uncertain tax positions involves an interpretation of relevant tax laws which could be subject to challenge by the tax authorities and an assessment of whether the tax authorities will accept the position taken. The Corporation does not currently consider that assumptions or judgements made in assessing tax liabilities have a significant risk resulting in a material adjustment within the next financial year. (Refer note 40.2).

13.1 The Corporation has entered into debt assets swap, wherein the net carrying amount of the investment properties including properties held for sale taken over stood at ' 2,631.31 Crore as at March 31, 2022 (Previous Year ' 910.50 Crore), the properties taken over by the Corporation are mix of residential and commercial properties located in key metro cities. The properties are being held for capital appreciation, which the Corporation will dispose off at an appropriate time in accordance with the applicable regulations.

The fair value of the Corporation's investment properties as at March 31, 2022 and March 31, 2021 has been arrived at on the basis of valuation by registered valuer as defined under rule 2 of Companies (Registered Valuers and Valuation) Rules, 2017 or internal valuation basis (Level 3) using valuation technique such as market approach (Direct sales comparison method), income approach (rent capitalization method) and net present value (NPV) of discounted cash flows (DCF) method.

The Corporation has leased out certain investment properties. The Corporation has classified these leases as operating leases, because they do not transfer substantially all risk and rewards incidental to the ownership of the assets. (refer Note 29.2)

13.3 The Corporation has entered in to agreement to sell / memorandum of understanding to sell certain Investment properties against which part consideration has been received as at the year end, accordingly the same has been classified as Non-Current Assets held for sale in compliance with the Ind AS 105 on 'Non Current assets held for sale and Discontinuing Operation'.

13.4 Investment property under construction represent rights acquired by the Corporation in properties under construction. These properties are part of the projects being developed by respective real estate developers and not by the Corporation. Accordingly, disclosures relating to investment property under development in terms of paragraph WB of general instructions for preparation of Balance Sheet prescribed in Division III of Schedule III to the Companies Act, 2013 are not applicable.

13.5 Title deed of all investment properties are held in name of the Corporation, however in respect of;

a) Farm House Located at Village Mehrauli, Tehsil Hauz Khas, New Delhi, gross carrying value amounting to ' 42.00 Crore, the Corporation has a duly executed agreement for sell in its favour. A suit for specific performance was successfully decreed in favour of the Corporation by the High Court in the month of January 2020 and in terms thereof the possession of the property was handed over to the Corporation. The Corporation has approached the High Court for execution of the sale deed and the same is expected to be undertaken at the soonest by the High Court through the Court Commissioner.

b) F lot No 4, Echelon Institutional Sector 32, Gurgaon, gross carrying value amounting to ' 72.10 Crore, the Corporation has acquired this property under a debt asset swap arrangement in the month of December 2015. The Corporation holds a duly executed agreement to sell (along with power of attorney) in its favour and is in possession of the property. The existing tenancy was duly attorned in favour of the Corporation as well. Necessary representation to the authority was made to enable execution of sale deed in favour of the Corporation. Since the relevant matter is at the Supreme Court presently, the Corporation has accordingly, made appropriate representation to enable the sale deed executed in its favour.

Further, the acquisition of these properties was in the normal course of business and none of the directors, or their relatives are associated with these transactions in any manner.

18.1 All secured debts are secured by negative lien on the assets of the Corporation and/or mortgage of property as the case may be, subject to the charge created in favour of its depositors pursuant to the regulatory requirements under Section 29B of the National Housing Bank Act, 1987.

18.2 Non-convertible debentures includes ' 4,274.10 Crore (Previous Year ' 4,076.00 Crore) held by related parties [refer note 42].

18.3 The Corporation had issued Synthetic Rupee Denominated Bonds of ' 11,100.00 Crore to overseas investors of which ' 1,800.00 Crore remains outstanding as at March 31, 2022 (Previous Year ' 2,800.00 Crore). The Corporation had also established a Medium Term Note Programme (MTN Programme) for USD 2,800 million so as to enable the Corporation to issue debt instruments in the international capital markets. The Corporation had raised ' 6,100.00 Crore under the MTN Programme in accordance with the RBI guidelines. The Corporation was the first Indian corporate issuer of such bonds. These bonds are listed on the London Stock Exchange. These bonds are unsecured and the currency risk is borne by the investor.

18.4 The Corporation has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the Corporation shall;

(a) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Corporation (Ultimate Beneficiaries) or

(b) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

18.5 The Corporation does not have any charges or satisfaction which are yet to be registered with Registrar of Companies beyond the statutory period. However, in the earlier years, the Corporation had redeemed in full, certain secured Non-convertible debentures (Series 2, 4, 5 and 6) aggregating to ' 365 Crore (Previous Year ' 365 Crore), which were issued in the financial year 1998-1999 and 1999-2000 and were secured by way of immovable property or any interest therein. Necessary forms for satisfaction of charges were filed for the said series within the prescribed time limits with the Registrar of Companies, Mumbai (ROC). However, the ROC has not taken such filings on records and the Corporation has not received any communication for the same.

19.1 All secured borrowings are secured by negative lien on the assets of the Corporation, subject to the charge created in favour of its depositors pursuant to the regulatory requirement under Section 29B of the National Housing Bank Act, 1987. The Corporation has no borrowings from banks or financial institutions only on the basis of security of current assets. The Corporation has not been declared as wilful defaulter by any bank or financial Institution or other lender.

19.2 The Corporation do not have any charges or satisfaction which is yet to be registered with Registrar of Companies beyond the statutory period for borrowings.

19.3 The Corporation has total external commercial borrowing (ECBs) of USD 1,400.00 million and JPY 53,200 million for financing prospective owners of low cost affordable housing units for on-lending towards green housing in accordance with the guidelines issued by the RBI. The borrowing has maturity of upto five years. In accordance with RBI guidelines, most of the borrowings have been swapped into rupees for the entire maturity by way of principal only swaps and forward contracts. The foreign currency exposure on interest has been partially hedged by way of forward contracts.

19.4 As at March 31, 2022, the Corporation has foreign currency borrowings of USD 1,404.28 million and JPY 53,200 million (Previous Year USD 1,377.45 million and JPY 53,200 million). The Corporation has undertaken currency swaps and forward contracts of a notional amount of USD 1,400.00 million and JPY 53,200 million (Previous Year USD 1,365.00 million and JPY 53,200 million) and foreign currency arrangements of USD 4.28 million (Previous Year USD 12.45 million) to hedge the foreign currency risk.

As a part of asset liability management, the Corporation has entered into INR interest rate swaps of a notional amount of ' 1,44,845.00 Crore (Previous Year ' 93,160.00 Crore) and USD Interest rate swaps of ' 9,563.00 Crore as on March 31, 2022 (Previous Year ' 8,722.00 Crore) for varying maturities, linked to various benchmarks.

20.2 Public deposits as defined in paragraph 4.1.30 of Master Direction - Non-Banking Financial Company -Housing Finance Company (Reserve Bank) Directions, 2021 read with Paragraph 3 (xiii) of Master Direction - Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 2016, are secured by floating charge and lien in favour of the Trustee's for Depositors on the Statutory Liquid Assets maintained in terms of paragraph 42.2 of the Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 read with sub-sections (1) & (2) of Section 29B of the National Housing Bank Act, 1987.

21.2 These debentures are subordinated to present and future senior indebtedness of the Corporation and qualify as Tier II capital under National Housing Bank (NHB) guidelines for assessing capital adequacy. Based on the balance term to maturity as at March 31, 2022, 40% (Previous Year 45%) of the book value of the subordinated debt is considered as Tier II capital for the purpose of capital adequacy computation.

22.1 As required under Section 124 of the Companies Act, 2013 read together with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the Corporation has transferred ' 2.67 Crore (Previous Year ' 2.30 Crore) being unpaid dividend, underlying 86,465 equity shares of ' 2 each (Previous Year: 65,928 equity shares of ' 2 each) and ' 5.04 Crore (Previous Year ' 4.00 Crore) being unclaimed deposits to the Investor Education and Protection Fund (IEPF). As at March 31, 2022, no amount was due for transfer to the IEPF. However, 2,371 equity shares (Previous Year 2,148 equity shares) relating to such unclaimed dividend could not be transferred as the depositories informed that the aforesaid shares were not available in the demat accounts of the respective shareholders.

25.1 The Corporation had invested in 100 Crore equity shares of Yes Bank Limited at ' 10 each on March 14, 2020. Of these, 75% of the equity shares i.e. 75 Crore shares are locked in and not permitted to be sold within 3 years from the date of acquisition. Accordingly, the gain on initial recognition of ' 1,065.75 Crore, based on fair valuation of such locked in shares was deferred and amortised over the locked in period. For the purposes of subsequent measurement, these shares have been designated as FVOCI. During the current year, ' 355.25 Crore (Previous Year ' 355.25 Crore) has been recognised in accordance with Ind AS 109 on Financial Instruments.

26.2 There were no shareholder holding more than 5 percent shares in the Corporation as at March 31, 2022 and March 31, 2021.

26.3 Terms and rights attached to equity shares:

The Corporation has only one class of shares referred to as equity shares having face value of ' 2 each. Each holder of equity share is entitled to one vote per share.

The holders of equity shares are entitled to dividends, if any, proposed by the Board of Directors and approved by Shareholders at the Annual General Meeting.

26.5 The Corporation has not allotted any share pursuant to contracts without payment being received in cash or as bonus shares nor has it bought back any share during the preceding period of five financial years.

26.6 During the previous year, the Corporation had issued 5,68,18,181 equity shares at a price of ' 1,760.00 per share and 36,930 secured redeemable non-convertible debentures of face value of ' 10,00,000 at par, each due on August 11, 2023, carrying a coupon rate of 5.40% payable annually, aggregating ' 3,693 Crore simultaneously with 1,70,57,400 warrants at an issue price of ' 180.00 per warrant with a right to exchange one warrant with one equity share of ' 2 each of the Corporation, any time before the expiry of 36 months from the date of allotment, at an exercise price of ' 2,165.00 per equity share, to eligible qualified institutional buyers through Qualified Institutions Placement under Chapter VI of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 and other applicable regulations. Expenses incurred for issuance of equity share amounting to ' 22.34 Crore has been debited to securities premium account in accordance with the provisions of Companies Act, 2013 in financial year ended March 31, 2021.

The net proceeds of the funds raised through the issue has been utilised to augment the long term resources of the Corporation, to maintain sufficient liquidity in the uncertain economic environment driven by the outbreak of the COVID-19 pandemic, for general corporate purposes and to finance organic and / or inorganic business opportunities that may arise in financial services including housing finance and/or in areas where the subsidiaries of the Corporation operate.

26.9 Dividend

The Board of Directors have proposed dividend on equity shares at ' 30 per share at their meeting held on May 2, 2022 (Previous Year ' 23 per share), subject to the approval of shareholder at the ensuing Annual General Meeting.

27.1 Capital reserve: The Corporation had forfeited equity shares on non payment of call money, profit on reissue of those shares were credited as Capital Reserve.

27.2 Securities premium: Share premium is credited when shares are issued at premium and with the fair value of the stock options which are treated as expense, if any, in respect of shares allotted pursuant to Employee Stock Options Scheme. Share premium can be utilised only for limited purposes such as issuance of bonus shares or adjustment of share issue expenses, net of tax, as permissible under the Companies Act, 2013.

27.3 General reserve: It is a free reserve which is created by appropriation from profits of the current year and/ or undistributed profits of previous years, before declaration of dividend duly complying with any regulations in this regard.

27.4 Special reserve (I & II) has been created over the years in terms of Section 36(1)(viii) of the Income-tax Act, 1961 out of the distributable profits of the Corporation.

Special reserve no. I relates to the amounts transferred upto the Financial Year 1996-97 in terms of Section 36(1)(viii) of the Income-tax Act.

Special reserve no. II relates to the amounts transferred after Financial Year 1996-97 in terms of Section 36(1)(viii) of the Income-tax Act.

27.5 Statutory reserve: As per Section 29C of the National Housing Bank Act, 1987 (the “NHB Act"), the Corporation is required to transfer at least 20% of its net profits every year to a reserve before any dividend is declared and no appropriation from the statutory reserves except for the purpose as may be specified by the National Housing Bank (NHB) from time to time and every such appropriation shall be reported to the NHB. For this purpose any Special Reserve created by the Corporation under Section 36(1)(viii) of the Income-tax Act, 1961 is considered to be an eligible transfer. The Corporation has transferred an amount of ' 2,100 Crore (Previous Year ' 2,000 Crore) to Special Reserve No. II in terms of Section 36(1)(viii) of the Income-tax Act, 1961 and an amount of ' 700 Crore (Previous Year ' 500 Crore) to “Statutory Reserve (as per Section 29C of the NHB Act)".

27.6 Shelter assistance reserve: It represents funding various development and grassroot level organisations for the purposes as mentioned in Schedule VI to the Companies Act, 2013 and in accordance with the Corporation's policy.

277 Other comprehensive income:

Effective portion of cash flow hedge: It represents the cumulative gains/(losses) arising on revaluation of the derivative instruments designated as cash flow hedges through OCI.

Cost of hedge: It represent the cumulative charge for the derivative instrument, in the form of premium amortisation on option contracts and forward contracts taken, designated as cash flow hedges through OCI.

278 Share-based payment reserve:

The Corporation has Employee stock option schemes under which the eligible employees and key management personnel are granted stock options. Stock options granted are measured at fair value on the grant date using Black-Scholes model and amortised over the vesting period as share based payment with corresponding credit in share-based payment reserve. On exercise of the stock options, balance in share-based payment reserve is transferred to securities premium account.

28.1 The surplus on deployment in liquid instruments represents return on investments where underlying securities yield fixed income such as Government Securities / Treasury Bills, Commercial Paper and Certificate of Deposit.

28.2 In accordance with the RBI Circular No. RBI/2021-22/17 DOR.STR.REC.4/21.04.048/2021-22 dated April 7, 2021 and the methodology for calculation of interest on interest based on guidance issued by Indian Banks' Association, the Corporation had put in place a Board approved policy to refund / adjust interest on interest charged to borrowers during the moratorium period, i.e. March 1, 2020 to August 31, 2020. During the current year, the Corporation has credited the required amount to the customers account.

29.1 Dividend income

Dividend income includes ' 918.48 Crore (Previous Year ' 716.84 Crore) received from subsidiary companies and ' 562.00 Crore (Previous Year : Nil) received from an associate company.

29.2 Rental income

Rental income includes ' 56.53 Crore (Previous Year ' 52.13 Crore) from certain investment properties that were rented to external parties.

29.3 Fees and commission income

Fees and commission income includes ' 226.72 Crore (Previous Year ' 193.98 Crore) received from related parties.

29.5 Profit on sale of investments and investment property (net)

29.5.1 During the year, the Corporation has sold 44,12,000 equity shares of HDFC ERGO General Insurance Company Limited (HDFC ERGO) resulting in a pre tax gain of ' 208.85 Crore. As at March 31, 2022, the Corporation's equity shareholding in HDFC ERGO stood at 49.98% which is in compliance with the RBI requirement to reduce its shareholding to 50 percent or below.

29.5.2 During the year, the Corporation has sold its entire Investment in equity shares of Good Host Spaces Private Limited an associate, as a result pre tax profit on sale of investment of ' 54.17 Crore has been recognised.

29.5.3 During the previous year, the Corporation has sold 2,85,48,750 equity shares of HDFC Life Insurance Company Limited (HDFC Life), in two tranches in May 2020 and November 2020, to comply with the RBI direction to reduce the shareholding in HDFC Life to 50 percent or below. As a result, a pre tax profit on sale of investments of ' 1,397.69 Crore has been recognised.

29.5.4 During the year, the Corporation has sold certain Investment Property resulting in loss of ' 3.72 Crore (Previous Year ' 2.20 Crore).

29.6 Income on derecognised (assigned) loans

The Corporation has derecognised Individual loans of ' 28,455.26 Crore and Non-Individual loan of ' 1,500.00 Crore (Previous Year Individual loan of ' 18,979.78 Crore) (measured at amortised cost) on account of assignment transactions resulting in total income of ' 1,056.00 Crore (Previous Year ' 1,190.25 Crore) including upfront gains of ' 606.50 Crore (Previous Year ' 706.72 Crore).

As at March 31, 2022, the outstanding amount in respect of individual loans sold was ' 83,880.24 Crore (Previous Year ' 71,420.87 Crore). The Corporation continues to service these loans.

36. Segment reporting

The Corporation's main business is financing by way of loans for the purchase or construction of residential houses, commercial real estate and certain other purposes, in India. All other activities of the Corporation revolve around the main business. As such, there are no separate reportable segments, as per the Indian Accounting Standard (Ind AS) 108 on 'Segment Reporting'.

37. Employee benefit plan37.1 Defined contribution plan

The Corporation has recognised ' 15.07 Crore (Previous Year ' 14.36 Crore) for superannuation contributions in the Statement of Profit and Loss. The contributions payable to these plans by the Corporation are at rates specified in the rules of the schemes.

A separate trust fund is created to manage the superannuation plan and the contribution to the trust fund is done in accordance with Rule 87 of the Income Tax Rules, 1962.

37.2 Defined benefit plans Provident fund

The fair value of the assets of the provident fund and the accumulated members' corpus is ' 679.45 Crore and ' 666.06 Crore respectively (Previous Year ' 597.96 Crore and ' 583.60 Crore respectively). In accordance with an actuarial valuation, there is no deficit in the interest cost as the present value of the expected future earnings on the fund is more than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of 8.10%. The actuarial assumptions include discount rate of 7.25% (Previous Year 6.82%) and an average expected future period of 14 years (Previous Year 14 years). Expected guaranteed interest rate (weighted average yield) is 8.07% (Previous Year 8.83%).

The Corporation has recognised ' 30.01 Crore (Previous Year ' 25.79 Crore) for provident fund contributions in the statement of profit and loss. The contributions payable to these plans by the Corporation are at rates specified in the rules of the schemes.

Gratuity

The Corporation has a defined benefit gratuity plan in India for its employees (funded). The Corporation's gratuity plan requires contributions to be made to a separately administered fund. The fund is managed by a trust which is governed by the Board of Trustees. The Board of Trustees are responsible for the administration of the plan assets and for the definition of the investment strategy.

During the year, there were no plan amendments and curtailments.

A separate trust fund is created to manage the Gratuity plan and the contribution to the trust fund is done in accordance with Rule 103 of the Income Tax Rules, 1962.

Risks associated with defined benefit plan

Provident Fund and Gratuity is a defined benefit plan and Corporation is exposed to the following risks:

Interest rate risk: A fall in the discount rate, which is linked to the Government Securities rate, will increases the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset.

Salary risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level may increase the plan's liability.

Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities, and other debt instruments.

Asset liability matching (ALM) risk: The plan faces the ALM risk as to matching cash flow. Since the plan is invested in lines of Rule 101 of Income Tax Rules, 1962, it generally reduces ALM risk.

Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not have any longevity risk.

Other post retirement benefit plan

The details of the Corporation's post-retirement benefits plans for its employees including whole-time directors are given below which is as certified by the actuary and relied upon by the auditors:

The sensitivity analysis have been determined based on reasonably possible changes of the respective assumptions occurring at the end of the reporting period, while holding all other assumptions constant.

The sensitivity analysis presented above may not be representative of the actual change in the projected benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.

Furthermore, in presenting the above sensitivity analysis, the present value of the projected benefit obligation has been calculated using the projected unit credit method at the end of the reporting period, which is the same method as applied in calculating the projected benefit obligation as recognised in the balance sheet. There was no change in the methods and assumptions used in preparing the sensitivity analysis from prior years.

The weighted average duration of the Defined Benefit Obligation as at March 31, 2022 is 8 years (Previous Year : 8 years).

Funding arrangement and policy

The contribution by the Corporation to fund the liabilities of the plan has to be invested. The trustees of the plan are required to invest the funds as per the prescribed pattern of investments laid out in the income tax rules for such approved schemes. Due to the restrictions in the type of investments that can be held by the fund, it is not possible to explicitly follow an asset-liability matching strategy to actively manage liquidity risk.

Estimated amount of contribution expected to be paid to the fund during the annual period being after the Balance Sheet date is ' 23.87 Crore (Previous Year ' 12.95 Crore).

38.2 Method used for accounting for share based payment plan

The stock options granted to employees pursuant to the Corporation's Stock options Schemes, are measured at the fair value of the options at the grant date using Black-Scholes model for grants given and vested after the Ind AS transition date of April 1, 2017. The fair value of the options determined at grant date is recognised as employee compensation cost over the vesting period on straight line basis over the period of option, based on the number of grants expected to vest, with corresponding increase in equity.

40. Contingent liabilities and commitments

40.1 The Corporation is involved in certain appellate, judicial and arbitration proceedings (including those described below) concerning matters arising in the normal course of business including claims from revenue authorities, customers, contingencies arising from having issued guarantees to lenders or to other entities. The proceedings in respect of these matters are in various stages. Management has assessed the possible obligations arising from such claims against the Corporation, in accordance with the requirements of Indian Accounting Standard (Ind AS) 37 and based on judicial precedents, consultation with lawyers or based on its historical experiences. Accordingly, Management is of the view that based on currently available information, no provision in addition to that already recognised in its financial statements is considered necessary in respect of the above.

40.2 Given below are amounts in respect of claims asserted by revenue authorities and others:

(a) Contingent liability in respect of income-tax demands, net of amounts provided for and disputed by the Corporation, amounts to ' 2,581.56 Crore (Previous Year ' 2,064.18 Crore). The said amount has been paid/adjusted and will be received as refund if the matters are decided in favour of the Corporation.

(b) Contingent liability in respect of disputed dues towards wealth tax amounts to ' 0.11 Crore (Previous Year ' 0.13 Crore).

(c) Contingent liability in respect of disputed dues towards Service tax not provided for by the Corporation amounts to ' 17.26 Crore (Previous Year ' 0.80 Crore).

The Management is generally unable to reasonably estimate a range of possible loss for proceedings or disputes other than those included in the estimate above as plaintiffs / parties have not claimed an amount of money damages, the proceedings are in early stages and/or there are significant factual issues to be resolved.

The Management believes that the above claims made are untenable and is contesting them.

40.3 Contingent liability in respect of guarantees and undertakings comprise of the following:

a) Guarantees outstanding ' 367.83 Crore (Previous Year ' 299.50 Crore).

b) Corporate undertakings for securitisation and assignment of loans aggregated to ' 1,152.72 Crore (Previous Year ' 1,152.68 Crore). The outflows would arise in the event of a shortfall, if any, in the cash flows of the pool of the securitised and assigned loans.

In respect of these guarantees and undertaking, the Management does not believe, based on currently available information, that the maximum outflow that could arise, will have a material adverse effect on the Corporation's financial condition.

40.4 Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is ' 345.55 Crore (Previous Year ' 297.33 Crore).

40.5 Estimated amount of investment commitment on venture fund and alternative investment fund is ' 978.72 Crore (Previous Year ' 564.59 Crore).

The Corporation has made provision towards loans and advances, trade receivable, investments, inter corporate deposits and other financial assets.

Impairment on loans arising during the years includes impairment of ' 335.00 Crore (Previous Year ' 468.00 Crore) relating to interest on stage 3 accounts (credit impaired assets), which is netted off from interest income in the Statement of Profit and Loss.

Key management personnel are those individuals who have the authority and responsibility for planning and exercising power to directly or indirectly control the activities of the Corporation and its employees. The Corporation includes the members of the Board of Directors which include independent directors (and its sub-committees) and Executive Committee to be key management personnel for the purposes of Ind AS 24 Related Party Disclosures.

Transactions with key management personnel of the Corporation

The Corporation enters into transactions, arrangements and agreements involving directors, senior management and their business associates, or close family members, in the ordinary course of business under the same commercial and market terms, interest and commission rates that apply to non-related parties.

The Corporation manages various risks associated with its business. These risks include liquidity risk, foreign exchange risk, interest rate risk and counterparty risk.

The Corporation manages the aforesaid risk, on an ongoing basis, in accordance with the framework under the Board approved policies such as Financial Risk Management policy, Asset Liability Management policy.

Liquidity risks are managed through a combination of strategies like managing tenors in line with the Asset Liability Management policy and adequate liquidity cover is maintained in line with the RBI's Liquidity Risk Management Framework. Interest rate risks are managed by entering into interest rate swaps. The currency risk on borrowings is actively managed mainly through a combination of currency swaps, forward contracts and option contracts. Counterparty risk is reviewed periodically to ensure that exposure to various counterparties is well diversified and within the limits fixed by the Derivative Committee. It is also managed by entering into collateralization arrangements with banking counterparties to the extent possible.

43.3.2 Valuation technique used to determine fair value

The fair value of a financial instrument on initial recognition is normally the transaction price (fair value of the consideration given or received). Subsequent to initial recognition, the Corporation determines the fair value of financial instruments that are quoted in active markets using the quoted bid prices (financial assets held) or quoted ask prices (financial liabilities held) and using valuation techniques for other instruments. Valuation techniques include discounted cash flow method, market comparable method, recent transactions and other valuation models.

The Corporation measures financial instruments, such as investments (other than equity investments in Subsidiaries, Joint Ventures and Associates) at fair value.

The Corporation uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Level 1 to Level 3, as described below:

Quoted prices in an active market (Level 1): Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments, units of mutual funds (open ended) and traded bonds that have quoted price. The fair value of all equity instruments (including bonds) which are traded in the stock exchanges is valued using the closing price as at the reporting period.

Valuation techniques with observable inputs (Level 2): The fair value of financial instruments that are not traded in an active market for example, Securities receipts, Mutual Funds (close ended) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2, this level of hierarchy includes financial assets, measured using inputs other than quoted prices included within Level 1 that are observable for the asset, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Valuation techniques with significant unobservable inputs (Level 3): This level of hierarchy includes financial assets measured using inputs that are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part, using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data, this level of hierarchy includes unlisted equity instruments, venture fund units and security receipts.

43.3.3 Valuation Process - Equity Instrument Level 3

When the fair value of equity investments cannot be measured based on quoted prices in active markets, their fair values are measured using valuation techniques including the Discounted Cash Flow (DCF) model, market comparable method and based on recent transactions happened in respective companies. The inputs to these models are taken from observable market where possible, but where this is not feasible, a degree of judgement is exercised in establishing fair values. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

For certain unquoted equity instruments, recent information is insufficient to measure fair value and cost, represents the best estimate of fair value. These investments in equity instruments are not held for trading.

43.3.6.1 The fair value of the financial assets and financial liabilities are considered at the amount, at which the instrument could be exchanged in current transaction between willing parties, other than in, forced or liquidation sale.

43.3.6.2 Loans

Substantially most of the loans are repriced frequently, with interest rates broadly in line with current interest rates, the carrying value of such loans amounting to ' 5,54,862.51 Crore (Previous Year ' 4,85,294.26 Crore) approximates their fair value.

43.3.6.3 Other Financial Assets and Liabilities

With respect to Bank balances and Cash and cash equivalents (Refer Notes 5 and 6), Trade receivables (Refer Note 8), Other financial assets (Refer Note 11), Trade payables (Refer Note 17) and Other financial liabilities (Refer Note 22), the carrying value approximates the fair value.

43.3.6.4 Fair value of Non Convertible Debentures has been computed using annualized Government bond yield provided by FBIL and corresponding fortnightly corporate bond spreads provided by FIMMDA.

43.4 Credit Risk

Credit risk is the risk of loss that may occur from the failure of any party to abide by the terms and conditions of any contract, principally the failure to make required payments of amounts due to the Corporation. In its lending operations, the Corporation is principally exposed to credit risk.

The credit risk is governed by various Product Policies. The Product Policy outlines the type of products that can be offered, customer categories, the targeted customer profile and the credit approval process and limits.

Credit Approval Authorities

The Board of Directors have delegated loan approving authority to branch sanctioning committees/ management committee/ committee of directors, depending upon the nature of loan (i.e. retail/non-individual) and also depending upon the value of the loan.

Credit Risk Assessment Methodology43.4.1 Corporate Portfolio

The Corporation has an established credit appraisal procedure which has been detailed in Corporate Loans Policy and Developer Loans Policy respectively. The policies outline appraisal norms including assessment of quantitative and qualitative parameters along with guidelines for various products. The policy also includes process for approval of Loans which are subject to review and approval by Sanctioning Committees.

The Corporation carries out a detailed analysis of funding requirements, including normal capital expenses, long-term working capital requirements and temporary imbalances in liquidity. A significant portion of Corporate Finance loans are secured by a lien over appropriate assets of the borrower.

Borrower risk is evaluated by considering:

• the risks and prospects associated with the industry in which the borrower is operating (industry risk);

• the financial position of the borrower by analysing the quality of its financial statements, its past financial performance, its financial flexibility in terms of ability to raise capital and its cash flow adequacy (financial risk);

• the borrower's relative market position and operating efficiency (business risk);

• the quality of management by analysing their track record, payment record and financial conservatism (management risk); and

• the risks with respect to specific projects, both pre-implementation, such as construction risk and funding risk, as well as post-implementation risks such as industry, business, financial and management risks related to the project (project risk).

Restructuring, ECLGS and Moratorium Guidelines issued by RBI are adopted for loans on a selective basis, after assessing the impact of COVID-19 pandemic on their businesses.

43.4.2 Lease Rental Discounting

Loan is given against assured sum of rentals/receivables.

The risk assessment procedure include:

• carrying out a detailed evaluation of terms of Lease / Leave and License Agreements such as lease rental receivables, term of the leases and periodicity of rentals.

• conducting due diligence on and appraisal of Borrowers / Lessors and Lessees including due diligence of project/property. These Loans are secured by project property and serviced from rentals/receivables.

43.4.3 Construction Finance

Loan given for construction of Residential/Commercial properties.

The Corporation has a framework for appraisal and execution of Construction finance transactions detailed in Developer Loans Policy. The Corporation believes that this framework creates optimal risk identification, allocation and mitigation and helps minimize residual risk.

The project finance approval process includes detailed evaluation of technical, commercial, financial, legal with respect to the projects and the Borrower Group's financial strength and experience.

As part of the appraisal process, a note is generated, which identifies each of the project risks, mitigating factors and residual risks associated with the project. After credit approval, an Offer Letter is issued to the borrower, which outlines the principal financial terms of the proposed facility, Borrowers/Security providers obligations, conditions precedent to disbursement, undertakings from and covenants on the borrower.

After completion of all formalities by the borrower, a loan transaction documents are entered into with the borrower.

Construction finance loans are generally fully secured and have full recourse against the borrower. In most cases, the Corporation has mortgage of Project financed. Security typically include project property and receivables of the project property, as well as other tangible assets of the borrower, both present and future. The Corporation also takes additional credit comforts such as corporate or personal guarantees and shortfall undertaking from one or more sponsors of the project.

The Corporation requires the borrower to submit periodic reports and continue to monitor the exposure until loans are fully repaid.

Further since both Lease Rental Discounting and Construction Finance Facilities are mostly serviced from receivables from the projects/property financed, all the cash flows are charged to the Corporation, and are ring fenced by way of Escrow mechanism. Under this mechanism all such receivables flow into Escrow Account from where amounts are directly credited into the Corporation's account.

Restructuring of Accounts

The economic fallout on account of COVID-19 pandemic has led to significant financial stress for many borrowers. Considering the above, with the intent to facilitate revival and to mitigate the impact on ultimate borrowers, Reserve Bank of India (RBI) introduced measures under the Resolution Framework for COVID-19. As per the RBI Framework, the Corporation established a policy to provide resolution for eligible borrowers having stress on account of COVID-19 in line with the RBI Guidelines.

As advised under the said circular and Corporation's policy, the eligibility of customers was assessed, so as to understand the extent of financial stress caused due to COVID-19, i.e. delay in construction, sales and consequent cash flow mismatch, duly supported by the documentary evidence. In addition to assessing the impact of stress, the Resolution framework was discussed with the eligible borrower and existing lenders (in case of multiple lenders) prior to invocation of Resolution plan. The Resolution Framework offered to ensure that the servicing of the restructured loan is not likely to be impacted. The implementation of Resolution plan is under process for respective accounts in line with the timelines prescribed in the said Circular.

Emergency Credit Line Guarantee Scheme

During the previous year, the Government of India through Ministry of Finance, Department of Financial Services, had introduced the Emergency Credit Line Guarantee Scheme (ECLGS), for providing 100% guarantee coverage for additional working capital term loans (in case of Banks and FIs) and additional term loans (in case of NBFCs) upto 20% of their entire outstanding credit (upto limits specified under the Scheme) as on February 29, 2020.

ECLGS was offered to borrowers eligible as per the criteria specified in the scheme and Corporation's Board approved policy. The Corporation carried out credit assessment of eligible borrowers to assess the requirement of the borrower and the qualifying criteria as per criteria as specified by National Credit Guarantee Trustee Company Limited (NCGTC).

Moratorium

The RBI had announced Moratorium for 6 months on repayments for the period March 2020 to August 2020 for term loans and working capital facilities outstanding as on February 29, 2020. This was part of the regulatory measures adopted to mitigate the burden of debt servicing brought about by disruptions on account of Covid pandemic and to ensure continuity of viable businesses. As part of the scheme and as per Corporation's Board approved policy, the Corporation has provided moratorium to eligible borrowers.

43.4.4 Individual Loans

Our customers for retail loans are primarily low, middle and high-income, salaried and self-employed individuals. The Corporation's credit officers evaluate credit proposals on the basis of active credit policies as on the date of approval. The criteria typically include factors such as the borrower's income & obligations, the loan-to-value ratio and demographic parameters subject to regulatory guidelines. Any deviations need to be approved at the designated levels.

The various process controls such as PAN Number Check, CERSAI database scrubbing, Credit Bureau Report analysis are undertaken prior to approval of a loan. In addition External agencies such as field investigation agencies facilitate a comprehensive due diligence process including visits to offices and homes.

The Corporation analyses the portfolio performance of each product segment regularly, and use these as inputs in revising our product programs, target market definitions and credit assessment criteria to meet our twin objectives of combining volume growth and maintenance of asset quality. Individual loans are secured by the mortgage of the borrowers property.

Retail

During the previous year, additional Credit Checks were introduced in the Retail Policy in accordance with certain Regulatory measures announced by RBI to mitigate the burden of debt servicing as a result of disruptions in cash flow due to the COVID-19 pandemic.

Restructuring of Accounts

The eligibility of customers was assessed to understand the extent of financial stress caused due to the COVID-19 pandemic i.e. loss of jobs, pay cut, business shut down etc. In addition, the due diligence process was further strengthened to assess the impact of stress such as appraising income documents, bank statement and visits at work place etc. and ensured that Loan to Value ratios are not negatively impacted and underlying collateral is enforceable. The borrowers were counseled as regards the Resolution Framework to minimise the risk of default, post restructuring.

Emergency Credit Linked Guarantee Scheme (ECLGs)

Since the ECLGs facility was available to customers in business segment/MSME, the regular credit checks, as already in place for such customers, were used to assess the impact of stress in the borrower's books of account. The qualifying criteria as per NCGTC was strictly adhered to. In addition, borrower's income tax return/ books of account / Chartered Accountant certificate / Collection of GSTIN nos. end use certificate etc were appraised to assess and qualify under the norms. Such loans were appraised by a dedicated team to ensure that Loan to Value ratios are not negatively impacted / and underlying collateral is enforceable.

Credit Risk

The Corporation measures, monitors and manages credit risk at an individual borrower level and at the group exposure level for corporate borrowers. The credit risk for individual borrowers is being managed at portfolio level for both Housing Loans and Non Housing Loans. The Corporation has a structured and standardized credit approval process, which includes a well-established procedure of comprehensive credit appraisal. The Corporation has additionally taken the following measures:-

• Lower borrower group exposure limits.

• Establishment of a separate Policy Implementation & Process Monitoring (PIPM) team to enhance focus on monitoring of process implementation at the branches and to facilitate proactive action wherever required.

• Enhanced monitoring of Retail product portfolios through periodic review.

43.4.5 Risk Management and Portfolio Review

The Corporation ensures effective monitoring of credit facilities through a risk-based asset review framework under which the frequency of asset review is determined depending on the risk associated with the product. For both Corporate and Individual borrowers, the Operations team verifies adherence to the terms of the credit approval prior to the commitment and disbursement of credit facilities. The Operations team monitors compliance with the terms and conditions for credit facilities prior to disbursement. It also reviews the completeness of documentation, creation of security and compliance with regulatory guidelines.

The Credit Risk Management team of the Corporation, regularly reviews the credit quality of the portfolio and various sub-portfolios. A summary of the reviews carried out by the Credit Risk Management is submitted to the Branches & Management Team for its information. Exposure to non-individual entities in stress is reviewed frequently by a credit review committee consisting of senior management personnel.

The Chief Risk Officer (CRO) of the Corporation also reviews high value credit proposals and evaluates sources and mitigation for external and internal risks.

The Policy implementation and Process Monitoring team reviews adherence to policies and processes, carries out audit and briefs the Audit Committee and the Board periodically.

43.4.6 Collateral and other credit enhancements

The carrying amount of loans as at March 31 2022 is ' 5,68,363.29 Crore (Previous Year ' 4,98,298.03 Crore) which best represent the maximum exposure to credit risk, the related expected credit loss amount to ' 13,500.78 Crore (Previous Year ' 13,003.77 Crore). The Corporation has right to sell or pledge the collateral in case borrower defaults.

43.5 Liquidity Risk

Maturities of financial liabilities

The tables below analyse the Corporation's financial liabilities into relevant maturity groupings based on their contractual maturities for: all non-derivative financial liabilities and net and gross settled derivative financial instruments, for which the contractual maturities are essential for an understanding of the timing of the cash flows.

43.6 Market Risk43.6.1 Foreign Currency Risk

Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the company's functional currency i.e. INR. The Corporation has overseas foreign currency borrowings and is exposed to foreign exchange risk primarily with respect to the USD and JPY. The Corporation uses a combination of currency swaps, forward contracts and option contracts to hedge its exposure to foreign currency risk. The objective of the hedges is to minimize the volatility of the INR cash flows. The Corporation's risk management policy allows it to keep the foreign currency risk open upto 5% of the total borrowings.

The Corporation designates the intrinsic value of the forward and option contracts as hedging instruments. In case the hedge effectiveness is 100%, the change in the intrinsic value of the forward contracts and the change in carrying value of the underlying foreign currency liability are compared and the difference is recognized in cash flow hedge reserve. The changes in time value that relate to the forward and option contracts are deferred in the cost of hedging reserve and recognized against the related hedged transaction when it occurs. Amortization of forward points through cost of hedge reserve is recognized in the statement of profit and loss over life of the forward contracts. During the years ended March 31, 2022 and 2021, the Corporation did not have any hedging instruments with terms which were not aligned with those of the hedged items.

The spot component of forward contracts is determined with reference to relevant spot market exchange rates. The differential between the contracted forward rate and the spot market exchange rate is defined as the forward points.

The intrinsic value of foreign exchange option contracts is determined with reference to the relevant spot market exchange rate. The differential between the contracted strike rate and the spot market exchange rate is defined as the intrinsic value. Time value of the option is the difference between fair value of the option and the intrinsic value.

43.6.1.3 Hedging Policy

The Corporation's hedging policy only allows for effective hedging relationships to be considered as hedges as per the relevant Ind AS. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. The Corporation enters into hedge relationships where the critical terms of the hedging instrument match with the terms of the hedged item.

43.6.1.4 Hedge Ratio

The foreign exchange forward, options and currency swap contracts are denominated in the same currency as the highly probable future foreign currency principal and interest payments, therefore the hedge ratio is 1:1. The notional amount of interest rate swap is equal to the portion of variable rate loans that is being hedged, and therefore the hedge ratio for interest rate swap is also 1:1.

43.6.2 Interest Rate Risk

The Corporation's core business is doing housing loans. The Corporation raises money from diversified sources like deposits, market borrowings, term loans and foreign currency borrowings amongst others. In view of the financial nature of the assets and liabilities of the Corporation, changes in market interest rates can adversely affect its financial condition. The fluctuations in interest rates can be due to internal and external factors. Internal factors include the composition of assets and liabilities across maturities, existing rates and re-pricing of various sources of borrowings. External factors include macroeconomic developments, competitive pressures, regulatory developments and global factors. The rise or fall in interest rates impact the Corporation's Net Interest Income depending on whether the Balance sheet is net asset sensitive or liability sensitive.

The Corporation uses traditional gap analysis report to determine the Corporation's vulnerability to movements in interest rates. The Gap is the difference between Rate Sensitive Assets (RSA) and Rate Sensitive Liabilities (RSL) for each time bucket. It indicates whether the Corporation is in a position to benefit from rising interest rates by having a positive gap (RSA > RSL) or whether it is in a position to benefit from declining interest rates by a negative gap (RSL > RSA). The Corporation also fixes tolerance limits for the same as per the ALM Policy.

43.6.2.2 Sensitivity

T he impact of 10 bps change in interest rates on financial assets and liabilities on the Profit after tax for the year ended March 31, 2022 is ' 9.41 Crore (Previous Year ' 29.87 Crore).

43.6.3 Price Risk

43.6.3.1 Exposure

The Corporation's exposure to equity securities price risk arises from investments held by the Corporation and classified in the balance sheet either as fair value through OCI or at fair value through profit or loss.

To manage its price risk arising from investments in equity securities, the Corporation diversifies its portfolio. Diversification of the portfolio is done in accordance with the limits set by the Corporation.

Some of the Corporation's equity investments are publicly traded and are included in the NSE Nifty 50 index.

43.6.3.2 Sensitivity

The table below summarises the impact of increases/decreases of the index on the Corporation's equity and profit for the period. The analysis is based on the assumption that the equity index had increased by 10% or decreased by 10% with all other variables held constant, and that all the Corporation's equity instruments moved in line with the index.

43.6.4 Interest Rate Benchmark Reform

As on March 31, 2022, the Corporation has foreign currency borrowings of USD 1,404.28 million and JPY 53,200 million, on which it pays USD LIBOR (London Inter-bank Offered Rate) and TONA (Tokyo Overnight Average Rate) respectively. The Corporation has undertaken currency swaps and forward contracts of notional amount of USD 1,423.53 million and JPY 53,200 million, Coupon Only Swaps of ' 1,063 Crore, USD Interest rate Swaps of ' 9,563 Crore, and foreign currency arrangements of USD 4.28 million to hedge the foreign currency and interest rate risks. The valuations of these hedges are impacted by, among other variables, changes in USD LIBOR.

Following the commencement of the LIBOR discontinuation process by the Financial Conduct Authority (FCA) and the directions from the Financial Stability Board, an international body that monitors and makes recommendations intended to promote financial stability, working groups led by central banks in the jurisdictions of the LIBOR currencies identified LIBOR replacement near risk free rates, and have been involved in designing plans for all market participants to use these rates across the derivative and cash markets. The ICE Benchmark Administration Limited (“IBA"), the authorized administrator of LIBOR, published on March 5, 2021 the decision to cease publication of overnight, one month, six month and twelve month USD LIBORs after June 30, 2023, and JPY LIBOR after December 31, 2021. The date for spread adjustment i.e. the median difference between the risk free rate and LIBOR over the previous five years, was March 5, 2021.

The Corporation has been taking steps to ease into the transition of its LIBOR linked loans. It has transitioned from JPY LIBOR to TONA effective from January 01, 2022 for its JPY 53,200 million ECB loan. The Corporation has already adhered to the International Swaps and Derivatives Association (ISDA) 2020 IBOR Fallbacks Protocol and the IBOR Fallbacks Supplement. The Protocol allows market participants to amend the terms of their legacy derivatives contracts to include these new cessation events, pre-cessation events, and fallbacks for legacy derivatives.

All the documentation for existing and forthcoming ECBs (External Commercial Borrowings) would follow the guidance by the Asia Pacific Loan Market Association (APLMA) to reflect these changes appropriately.

44.1 Outstanding as on March 31, 2021 on account of all loans where moratorium benefit was extended by the Corporation, that were in SMA/ overdue categories just before granting of Moratorium:

44.2 The Outstanding as on March 31, 2021 in respect of loans where in an asset classification benefit was extended due to Moratorium under the circular. The Corporation was required to carry an additional general provision for the purposes of regulatory submission in respect of such loans. Post the moratorium period, the movement of ageing has been at actuals. There are no accounts where asset classification benefit is extended till March 31, 2021.

44.3 The Corporation has made adequate provision for impairment loss allowance (as per ECL model) for the year ended March 31, 2021.

45. Disclosure of Penalties imposed by NHB and other regulators

During, FY 2021-22, the National Housing Bank imposed a monetary penalty of ' 4,75,000 plus GST for technical non-compliance with NHB circular NHB(ND)/DRS/Pol-No.58/2013-14 dated November 18, 2013 and NHB(ND)/DRS/Policy Circular No.75/2016-17 dated July 1, 2016 pertaining to the financial year 2015-16. The Corporation has paid the said penalty simultaneously holding on to its reservations with respect to merits. During FY 2020-21, the National Housing Bank (NHB) imposed a monetary penalty of ' 1,50,000 plus GST on the Corporation for non-compliance with two provisions of the Housing Finance Companies (NHB) Directors, 2010 pertaining to FY 2018-19. The Corporation has paid the said penalty.

46. Events after the reporting period

The Board of Directors of the Corporation at its meeting held on April 4, 2022 has approved a composite scheme of amalgamation for the amalgamation of: (i) HDFC Investments Limited and HDFC Holdings Limited, wholly-owned subsidiaries of the Corporation, into and with the Corporation and thereafter (ii) the Corporation into and with HDFC Bank Limited (“HDFC Bank") and their respective shareholders and creditors ('the Scheme') under Section 230 to 232 of the Companies Act, 2013 and other applicable laws and regulations, subject to requisite approvals from various regulatory and statutory authorities, respective shareholders and creditors. The share exchange ratio shall be 42 equity shares of face value of ' 1 each of HDFC Bank for every 25 equity shares of face value of ' 2 each of the Corporation.

The Appointed date for the amalgamation of the wholly-owned subsidiaries of the Corporation with and into the Corporation shall be the end of the day immediately preceding the Effective date and the Appointed date for the amalgamation of the Corporation with and into HDFC Bank shall be the Effective date.

In terms of the requirement as per RBI notification no. RBI/2019-20/170 DOR (NBFC).CC.PD. No.109/22.10.106/2019-20 dated March 13, 2020 on Implementation of Indian Accounting Standards, Housing Finance Companies (HFCs) are required to create an impairment reserve for any shortfall in impairment allowances under Ind AS 109 and Income Recognition, Asset Classification and Provisioning (IRACP) norms (including provision on standard assets). The impairment allowances under Ind AS 109 made by the corporation exceeds the total provision required under IRACP (including standard asset provisioning), as at March 31, 2021 and accordingly, no amount is required to be transferred to impairment reserve.

Provisions required as per IRACP norms amount to ' 8,247.03 Crore. The amounts tabulated above include ' 2,202.94 Crore towards unrealised interest on substandard accounts.

The Liquidity Risk Management Framework of the Corporation is managed in accordance with its Board approved Financial Risk Management and ALM Policy and prescribed guidelines. The policy framework and the operational parameters are also regularly reviewed by the Asset and Liability Management Committee (ALCO) in the context of regulations, expected financial market conditions and the performance of the Corporation.

The cash flow requirements of the Corporation are monitored and managed on a daily basis. The Corporation regularly monitors the gap between maturing assets and liabilities across all time buckets. While regulatory gaps are periodically monitored, the Corporation also maintains internal thresholds to monitor these gaps across tenors while planning for future funding requirements. The Corporation, at all times, maintains adequate surplus liquidity in various asset classes, to meet all its scheduled obligations, fund new business requirements and mitigate risks of any unexpected developments in the financial markets.

The Corporation has in place a well-defined front-mid and back office mechanism with specific roles and responsibilities defined for each function. Further, as per Guidelines released by RBI, NBFC-HFCs are required to maintain the Liquidity Coverage Ratio (LCR) effective from December 1, 2021. To maintain liquidity buffers to withstand potential liquidity disruptions by ensuring that it has sufficient High Quality Liquid Assets (HQLA) to survive any acute liquidity stress scenario lasting for 30 days. As per the guidelines, the weighted values of the net cash flows are calculated after the application of respective haircuts for HQLA and considering stress factors on inflows at 75% and outflows at 115%. For all Deposit taking NBFC-HFCs there is a phased transition towards meeting the minimum LCR, with the requirement as on December 1, 2021 being 50%. Thereafter, the requirement increases from December 1, 2022 onwards in a graded manner. The Corporation has put in place a liquidity risk management framework so as to adhere to the said LCR guidelines and timelines.

50. Disclosure in terms of in accordance with Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 dated February 17, 2021 issued by the Reserve Bank of India read with RBI Circular No. RBI/DNBS/2016-17/49 Master Direction DNBS. PPD.01/66.15.001/2016-17 on Monitoring of frauds in NBFCs.

There were 128 cases (Previous Year 12 cases) of frauds reported during the year where amount involved was ' 32.79 Crore (Previous Year ' 3.07 Crore) as on the date of identification of fraud.

51. Disclosure in terms of RBI Circular No. RBI/2021-22/17 D0R.STR.REC.4/21.04.048/2021-22 dated April 7, 2021 on Asset Classification and Income Recognition following the expiry of COVID-19 regulatory package.

In accordance with the RBI Circular No. RBI/2021-22/17 DOR.STR.REC.4/21.04.048/2021-22 dated April 7, 2021 and the methodology for calculation of interest on interest based on guidance issued by Indian Banks' Association, the Corporation had put in place a Board approved policy to refund / adjust interest on interest charged to borrowers during the moratorium period, i.e. March 1, 2020 to August 31, 2020. The Corporation has credited the required amount to the customers account.

RBI vide Circular No. RBI/2019-20/88 DOR.NBFC (PD) CC. No.102/03.10.001/2019-20 dated November 4, 2019 issued guidelines on liquidity risk framework for NBFCs/HFCs. Apart from various process related aspects of the Liquidity risk management framework, the regulations require NBFCs/HFCs to maintain a manadated Liquidity Coverage Ratio (LCR). The objective of the LCR is to promote short-term resilience in the liquidity risk profile of NBFCs/HFCs. It does this by ensuring that the Corporation has adequate stock of unencumbered high-quality liquid assets (HQLA) that can be converted easily and immediately into cash to meet its liquidity needs for a 30 calendar day liquidity stress scenario. Further, RBI vide Circular No. RBI/2020-21/60 DOR. NBFC (HFC).CC.No.118/03.10.136/2020-21 dated October 22, 2020, provided HFCs with time extension for minimum liquidity coverage ratio (LCR) of 50% to be maintained by December 2021, to be gradually increased to 100% by December 2025. The Corporation's Board approved Liquidity, Financial Risk Management & ALM Policy covers its Liquidity Risk Management policies and processes, LCR, stress testing, contingency funding plan, maturity profiling, Liquidity Risk Measurement - Stock approach, Currency Risk, Interest Rate Risk and Liquidity Risk Monitoring Tools.

The Corporation had LCR of 75% as of March 31, 2022 and 120% as of December 31, 2021, as against the LCR of 50% mandated by RBI. The monthly average LCR for the quarter ended March 31, 2022 was at 80%. The Corporation regularly reviews the maturity position of assets and liabilities and liquidity buffers, and ensures maintenance of sufficient quantum of High Quality Liquid Assets, most of which is in the form of government securities as of March 31, 2022.

53.3.4.2 Exchange Traded Interest Rate (IR) Derivative

The Corporation has not entered into any exchange traded derivative.

53.3.4.3 Disclosures on Risk Exposure in Derivatives A. Qualitative Disclosure

Financial Risk Management

The Corporation has to manage various risks associated with the lending business. These risks include liquidity risk, exchange risk, interest rate risk and counterparty risk.

The Financial Risk Management and ALM Policy as approved by the Board sets limits for exposures on currency and other parameters. The Corporation manages its interest rate and currency risk in accordance with the guidelines prescribed therein.

Liquidity risk and Interest rate risks arising out of maturity mismatch of assets and liabilities are managed through regular monitoring of maturity profiles. As a part of Asset Liability Management, the Corporation has also entered into interest rate swaps wherein it has converted a portion of its fixed rate rupee liabilities into floating rate linked to various benchmarks. The currency risk on borrowings is actively managed mainly through a combination of currency swaps and forward contracts. Counter party risk is reviewed periodically to ensure that exposure to various counter parties is well diversified and is within the limits fixed by the Derivative Committee. Credit Support Agreements (CSAs) are progressively entered into with banking counterparties to mitigate counterparty credit risk.

Constituents of Hedge Management Framework

Financial Risk Management of the Corporation constitutes the Audit & Governance Committee, Asset Liability Committee (ALCO), Derivative Committee and the Risk Management Committee.

The Corporation periodically monitors various counter party risk and market risk limits, within the risk architecture and processes of the Corporation.

Hedging Policy

The Corporation has a Liquidity and Financial Risk Management framework and ALM policy approved by the Board of Directors. For derivative contracts designated as hedges, the Corporation documents at inception, the relationship between the hedging instrument and hedged item. Hedge effectiveness is ascertained periodically on a forward looking basis and is reviewed by the Derivative Committee at each reporting period. Hedge effectiveness is measured by the degree to which changes in the fair value or cashflows of the hedged item that are attributed to the hedged risk are offset by changes in the fair value or cashflows of the hedging instrument.

Measurement and Accounting

All derivative contracts are recognised on the balance sheet and measured at fair value. Hedge accounting is applied to all the derivative instruments as per IND AS 109. Gain/loss arising on account of fair value changes are recognised in the Statement of Profit and Loss to the extent of ineffective portion of hedge instruments and hedged items. The gains/losses of effective portion of hedge instrument are offset against gain/losses of hedged items in Other Comprehensive Income.

The Corporation has entered into fair value hedges like interest rate swaps on fixed rate rupee liabilities as a part of the Asset Liability management whereby a portion of the fixed rate liabilities are converted to floating rate. The Corporation has a mark to market loss of ' 3,043.96 Crore on outstanding fair value hedges.

Foreign exchange forward contracts outstanding at the Balance Sheet date, are recorded at fair value. The premium or discount arising at the inception of such forward exchange contract is amortised as expense or income over the life of the contract.

The Corporation has entered into cashflow hedges to hedge currency risk on certain foreign currency loans and to cover future interest on foreign currency borrowings. Under the cashflow hedge, the hedging instrument is measured at fair value and any gain or loss that is determined to be an effective hedge is recognized in equity i.e., Cash flow Hedge reserve. The outstanding notional of cashflow hedges to cover currency risk on foreign currency loans and future interest on foreign currency borrowings is ' 16,634.46 Crore (Previous Year ' 16,387.00 Crore)

(ii) The Corporation is in compliance with number of layers of companies, as prescribed under clause (87) of Section 2 of the Act read with the Companies (Restriction on number of Layers) Rules, 2017.

(iii) During the year, no scheme of arrangements in relation to the Corporation has been approved by the competent authority in terms of Sections 230 to 237 of the Companies Act, 2013. Accordingly, aforesaid disclosure are not applicable, since there were no such transaction (refer note 46).

(iv) The Corporation does not have any transactions which were not recoded in the books of accounts, but offered as income during the year in the income tax assessment.

(v) The Corporation has not traded or invested in Crypto currency or Virtual Currency during the financial year

58. Approval of financial statements

The financial statements were approved by the Board of Directors of the Corporation on May 02, 2022. The accompanying notes are an integral part of the standalone financial statements