To the Members,


KOTAK MAHINDRA BANK LIMITED

Your Directors have pleasure in presenting the Thirty-Seventh Annual Report of Kotak
Mahindra Bank Limited ("Bank") together with the audited Financial Statements
for the financial year ("FY") ended 31st March, 2022.


FINANCIAL HIGHLIGHTS

(A) Consolidated*:

(Rs in crore)


  

    

    
FY 2021-22
    
FY 2020-21* 
  
  

    
Total Income
    
58,882.82
    
56,296.47
  
  

    
Total expenditure, excluding provisions and contingencies
    
42,162.87
    
40,275.70
  
  

    
Operating Profit
    
16,719.95
    
16,020.77
  
  

    
Provisions and contingencies, excluding provision for tax
    
771.65
    
2,852.43
  
  

    
Profit Before Tax
    
15,948.30
    
13,168.34
  
  

    
Provision for Taxes
    
4,016.43
    
3,265.44
  
  

    
Profit After Tax
    
11,931.87
    
9,902.90
  
  

    
Add: Share in Profit of Associates
    
157.52
    
87.30
  
  

    
Consolidated Profit for the Group
    
12,089.39
    
9,990.20
  
  

    
Earnings per equity share:
    

    

  
  

    
Basic (Rs)
    
60.76
    
50.53
  
  

    
Diluted (Rs)
    
60.73
    
50.49
  


*The Financial Statements of the subsidiaries and associates used for preparation of
the consolidated financial statements are in accordance with the Generally Accepted
Accounting Principles in India ("GAAP") specified under Section 133 and relevant
provisions of the Companies Act, 2013 ("Act"). The financial statements of
Indian subsidiaries (excluding insurance companies) and associates are prepared as per
Indian Accounting Standards in accordance with the Companies (Indian Accounting Standards)
Rules, 2015.

(B) Standalone:

(Rs in crore)


  

    

    
FY 2021-22
    
FY 2020-21*
  
  

    
Total Income
    
33,393.17
    
31,846.79
  
  

    
Total expenditure, excluding provisions and contingencies
    
21,342.30
    
20,084.76
  
  

    
Operating Profit
    
12,050.87
    
11,762.03
  
  

    
Provisions and contingencies, excluding provisions for taxes
    
689.56
    
2,459.04
  
  

    
Profit Before Tax
    
11,361.31
    
9,302.99
  
  

    
Provision for Taxes
    
2,788.62
    
2,338.15
  
  

    
Profit After Tax
    
8,572.69
    
6,964.84
  
  

    
Add: Surplus brought forward from the previous year
    
24,749.78
    
20,511.81
  
  

    
Amount available for appropriation
    
33,322.47
    
27,476.65
  
  

    
Appropriations:
    

    

  
  

    
Statutory Reserve under Section 17 of the Banking Regulation Act, 1949
    
2,143.18
    
1,741.21
  
  

    
Transfer to Capital Reserve
    
9.47
    
14.50
  
  

    
Transfer to Special Reserve
    
95.00
    
110.00
  
  

    
Transfer to Investment Fluctuation Reserve Account
    
400.00
    
820.66
  
  

    
Dividend paid **
    
218.96
    
40.50
  
  

    
Surplus carried to Balance Sheet
    
30,455.86
    
24,749.78
  


Notes:

**The Bank has paid interim dividend at the rate of Rs 0.405 per share on the Perpetual
Non-Cumulative Preference Shares ("PNCPS") for FY 2021-22 (Previous Year: Rs
0.405 per share), to all holders of PNCPS whose names appeared in the Register of Members
/ Beneficial holders' list on the book closure date of 18th March, 2022.
Further, the Reserve Bank of India ("RBI") has allowed banks to pay dividend on
equity shares from the profits for FY 2021 -22, subject to the quantum of dividend being
not more than the amount determined as per the dividend pay-out ratio prescribed in the
RBI circular dated 4th May, 2005 and subject to the banks complying with the
criteria laid down in the said circular. The Bank has complied with all the criteria
specified in the above RBI circular and the Board of Directors of the Bank have proposed a
dividend ofRs 1.10 per share (Face Value Rs 5/-) for FY 2021-22 (previous year Rs 0.90 per
share). As per the requirements of revised AS 4 - ‘Contingencies and Events Occurring
after the Balance Sheet Date, this dividend pay out has been appropriated from the amount
available for appropriation in the year of pay-out.

 

APrevious year amounts have been re-classified for consistency with the current
year presentation.


FINANCIAL PERFORMANCE

On a Standalone basis, Profit after Tax ("PAT") of the Bank was Rs 8,572.69
crore in FY 2021-22 compared to Rs 6,964.80 crore in FY 2020-21. Net Interest Income
("NII") of the Bank for FY 2021-22 was Rs 16,817.91 crore as against Rs
15,339.60 crore in FY 2020-21.

The Consolidated PAT was Rs 12,089.39 crore in FY 2021-22 compared to Rs 9,990.20 crore
in FY 2020-21. Further, the Group had Net Worth of Rs 96,634.08 crore as on 31st
March, 2022 (Rs 84,336.45 crore as on 31st March, 2021). The book value per
equity share was at Rs 486.90 as on 31st March, 2022 (Rs 425.55 as on 31st
March, 2021).

Further, details on the financial performance of your Bank are available in the
Management Discussion and Analysis Report.


CAPITAL

During the year, your Bank allotted 2,826,092 equity shares arising out of the exercise
of Employees Stock Options granted to the Whole-time Directors and Eligible Employees of
your Bank and its subsidiaries.

Post allotment of the aforesaid equity shares, the total issued, subscribed and paid-up
share capital of the Bank as at 31st March, 2022 stood at Rs 14,923,308,800
comprising 1,984,661,760 equity shares of Rs 5 each and 1,000,000,000 preference shares of
Rs 5 each.


CAPPING ON PROMOTERS' VOTING RIGHTS

The Reserve Bank of India ("RBI"), vide its press release and guidance dated
26th November, 2021, intimated acceptance of certain recommendations of the
Internal Working Group ("IWG") set up to review the Extant Ownership Guidelines
and Corporate Structure for Indian Private Sector Banks including, inter alia, a
recommendation to raise the cap of promoters' stake in banks to 26% of paid-up voting
equity share capital. Accordingly, the promoters' voting rights in the Bank have now been
capped at 26%, instead of 15% earlier.


DIVIDEND

The Board of Directors of the Bank have, at their meeting held on 4th May,
2022, recommended a dividend of Rs 1.10 per equity share for FY 2021-22. The dividend, if
approved by the members, would entail a payout of approximately Rs 218.40 crore based on
the capital as on 30th June, 2022 (Previous Year: Rs 178.46 crore). The
dividend would be paid to all the equity shareholders, whose names would appear in the
Register of Members / list of Beneficial owners on the Record Date fixed for this purpose
i.e. 12th August, 2022.

Further, the Board of Directors of the Bank, at their meeting held on 18th /
19th March, 2022, declared an interim dividend on the Perpetual Non-Cumulative
Preference Shares ("PNCPS") of the face value of Rs 5 each issued by the Bank,
carrying a dividend rate of 8.10% p.a., in respect of FY 2021-22, as per the terms of
issuance of PNCPS. This has entailed a payout of Rs 40.50 crore (Previous Year: Rs 40.50
crore). The members are requested to confirm the payment of the aforesaid interim dividend
on PNCPS at the ensuing Annual General Meeting ("AGM").

The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and
Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015 ("SEBI Listing Regulations") and as reviewed and adopted by the Board of
Directors of the Bank, is available on the Bank's website viz., URL:
https://www.kotak.com/content/kotakcl/en/investor-relations/qovernance/policies.html


DEBENTURES AND BONDS

During the year under review, your Bank has not issued any capital under Tier II.

As on 31st March, 2022, outstanding Unsecured, Redeemable Non-Convertible,
Subordinated Debt Bonds ("Bonds") aggregated Rs 306 crore and outstanding Senior
Unsecured Rated Listed Redeemable Long Term Bonds in the nature of Non Convertible
Debentures aggregated Rs 150 crore. These Bonds have been issued on a private placement
basis and are listed on the Stock Exchanges viz., BSE Limited and / or National Stock
Exchange of India Limited.


CAPITAL ADEQUACY RATIO

Your Bank has a Capital Adequacy Ratio ("CAR") of 22.69% as at 31st
March, 2022 under Basel III, with Tier I being 21.67% (of which, Common Equity Tier 1
("CET 1") being 21.51%).


RATINGS OF VARIOUS DEBT INSTRUMENTS

The details of all credit ratings obtained by the Bank for various debt instruments
outstanding as at 31st March, 2022, are disclosed in the Report on Corporate
Governance, forming part of this Report.


DEPOSITS

Being a banking company, the disclosures required under Rule 8(5)(v) and (vi) of the
Companies (Accounts) Rules, 2014, read with Sections 73 and 74 of the Act, are not
applicable to your Bank.


OPERATIONS

Your Bank organises its principal banking business activities into the following
business units viz., Consumer Banking, Commercial Banking, Corporate Banking, Treasury and
Other Financial Services. The Consumer, Commercial and Corporate Banking businesses
correspond to the key customer segments of the Bank. The Treasury offers specialised
products and services to these customer segments and also undertakes Asset Liability
Management as well as Proprietary Trading for the Bank.

In addition to the banking activities, the Kotak Group offers a significant array of
other financial products and services as well, which are operated through its
subsidiaries. These products and services include Banking, Financing through Non-Banking
Financial Companies ("NBFCs"), Asset Management, Insurance, Broking, Investment
Banking, Private Banking and Asset Reconstruction.


Consumer Banking

The Consumer Bank business services a wide spectrum of customers across domestic
individuals and households, non-residents, small and medium business segments for a range
of products from basic Savings and Current Accounts to Term Deposits, Credit Cards,
Unsecured and Secured Loans, Working Capital, Digital Payments and Investments.

As on 31st March, 2022, your Bank had 1,700 branches and 2,705 Automated
Teller Machines ("ATMs") and Recyclers. The Bank also has a branch at Dubai
International Financial Centre ("DIFC") and Gujarat International Finance
Tec-City ("GIFT City"). Due to the continued impact of the COVID-19 pandemic,
network expansion plans were gradual on the uptake.

Your Bank is always looking for innovative ways to add value to the services offered to
its customers. Keeping this in mind, Micro ATM, which would cut across geographies was
introduced. This enablement will widen your Bank's network presence for customers and
increase the touchpoints across India, thus ensuring your Bank's reach and enhanced
customer service. There were 5,020 Micro ATMs at end of March 2022.

The Privy League Program offered by your Bank is the premium banking service for the
High Net worth Customers. This flagship programme of your Bank has now been extended to
senior executives of premium corporates and to high ranking Defence and Police officials,
through an exclusive set of curated benefits. Your Bank continues to invest in the feature
enrichment of this program via introduction of a power packed premium credit card with
lifestyle benefits as well as a life time price waiver, available exclusively to programme
members.

Kotak Silk, your Bank's program designed especially for women, believes financial
independence leads to true empowerment for women. This International Women's Day, Silk
unveiled a unique sculpture #MeriUdaan as a tribute to Indian Women on their journey
towards becoming 'Aatmanirbhar'. Your Bank also offered an enhanced value proposition that
bundled a bouquet of product offers during this period and felicitated its women customers
at branches.

Kotak Grand, your Bank's program for senior citizens, tied up with Indian Health
Organization to provide a Health Card to the customers, which entitles them to discounts
on consultation, treatment and healthcare procedures.

Your Bank has improved the on-boarding experience for its Savings Accounts customers
during FY 2021-22 by migrating to a new platform for assisted Biometric based account
opening. The new platform offers seamless on-boarding experience to your Bank's customers
with an improved User Interface, instant responses and a capability to handle higher
business volumes. Your Bank has also rolled out biometric account opening facility for
Business Correspondent channel, in order to reach out and financially empower the unbanked
masses.

Your Bank was one of the few banks to be authorised for opening Salary Accounts and
Drawing and Disbursing Officer (DDO) accounts of Government departments across
Maharashtra. The Memorandum of Understanding ("MOU") was signed with Government
of Maharashtra and with the Indian Navy for offering salary accounts to all the Naval
personnel. A customised 'Veer Credit Card' was launched specially for the Armed Forces.
Further, MOUs were signed with Maharashtra State Forest Department for opening salary
accounts of their employees. Your Bank was the first private sector bank to sign an MOU
with Prasar Bharati, India's own broadcasting company, for opening salary accounts of
their employees PAN India. Apart from this, an MOU was signed with Food Safety and
Standard Authority of India (FSSAI) for opening salary accounts of its employees.

'Pay your Contact', a new feature on the Kotak App that enabled customers to send money
to a mobile number registered against any app was launched by your Bank this year. Being
just one of the three providers of this service, it brought immense value addition to your
Bank's digitally savvy customers. Further, product enhancements in this space would fuel
future growth in transactions and also ensure a more engaged and loyal customer base.

During FY 2021-22, your Bank rolled out many initiatives on the Deposit side under the
Financial Inclusion Program.

The 'My Team Image' cards in partnership with Indian Premier League (IPL) teams has
been a very successful initiative.

In partnership with PVR, your Bank launched a co-branded debit card i.e. Kotak PVR
Debit Card. This Debit Card comes with a host of exclusive privileges, such as customers
earn PVR reward points on every purchase carried out using their Kotak PVR Debit Card.
Reward Points earned can then be redeemed at PVR outlets for food, beverages or movie
tickets.

Education loan tie-up with leading NFBCs was started to provide lending for domestic
and international education.

One of the mandatory requirements of German education / employment Visa is to earmark
certain sustenance fund in a blocked account. Your Bank is the only Indian bank which has
been authorized to provide such facility. To ensure and enhance superior customer
experience, a German Portal has been launched to service this request, end to end
digitally. This would ensure more applications along with the new customer base.

Your Bank managed to break new grounds in the mobility product - 'FASTag'. Kotak FASTag
count is now over 2 million as at 31st March, 2022, with monthly toll payment
at more than Rs 145 crore. In FY 2021-22, your Bank has achieved best in industry growth
rate and has multiplied its user base by four times acquiring more than 10% of all FASTag
users added by the Industry. Your Bank is committed to ensuring seamless experience to
National Electronic Toll Collection (NETC) FASTag customers through comprehensive customer
portal, widest range of FASTag Recharge Options and proactive awareness and customer
education to help improve digitisation of tolling and parking payments in India. Your Bank
is also working closely with National Payments Corporation of India (NPCI) / Indian
Highway Management Company Limited (IHMCL) on New Technologies and Ecosystem Developments
to help improve and add new mobility related use cases to FASTag.

Your Bank has rebranded/repositioned its Current Account product as a business banking
solution account and has rolled out various initiatives for its business banking customers
to make onboarding convenient and easy. Introduction of Rs instaKit' for all business
banking constitutions has now enabled the customers to transact immediately once the
account is activated. A business banking customer can now be on-boarded on various value
added services with a tick on the account opening form. Your Bank provides connected
banking solutions to its Micro, Small and Medium Enterprises ("MSME") customers
enabling them to connect with various Enterprise Resource Planning (ERP) service providers
and Fintechs. Connected banking solutions would further enable a MSME to connect with
industry specific ecosystem and help in improving the overall customer ease and
experience. Your Bank has successfully integrated itself with multiple data source systems
and platforms digitally and now effectively uses publicly available information to cross
sell and upsell to its customers. Your Bank is one of the banking partners on the website
of Ministry of Corporate Affairs ("MCA").

On World MSME day, your Bank launched a campaign which celebrated the attitude of
India's young entrepreneurs with a series of inspiring videos - 'Empowering Business,
Empowering You', which garnered 21 million reach and 14 million views.

Your Bank has been rapidly growing its presence in Digital Payments. It launched
'Kotak.biz', an Android App targeted towards merchants, enabling them to accept digital
payments through cards, Bharat QR and Unified Payments Interface ("UPI"). The
App is live for existing Point of Service ("POS") Merchants and Current Account
customers of the Bank.

Looking at enhancing cash flows for merchants, your Bank has developed a new service
called 'Same Day Settlements', which enables a POS Merchant to receive transaction
settlements on the same day, instead of the next day.

In an effort to enhance the General Insurance product offering on the Insurance
platform, your Bank has made available two unique propositions for its customers this year
i.e. 'Cyber Insurance' and 'Kotak Protect'.

The Single Payment Protection Plan, 'Kotak Group Secure One' (KGSO), is a unique
solution, especially targeting the millennial and 811 Account Holders.

Your Bank has taken a big leap into creating a digital footprint in FY 2021-22. The Non
Resident Indian ("NRI") customers of your Bank can now open Investment Accounts
online. This is the most convenient and safe mode of opening Investment Accounts and to
start investing in mutual funds. This initiative has led to a three fold rise in NRI
Investment Accounts opening in FY 2021-22.

In early FY 2021-22, your Bank enabled National Pension System ("NPS") on
Mobile Platforms, both on Android and iOS and is currently, amongst the only two private
banks where such facility is being offered to the existing customers. With this
enablement, your Bank's individual NPS Account sourcing has moved to Mobile Banking, a big
leap in digital initiatives by your Bank.

Your Bank has a complete online mechanism to invest through Bank Application Supported
by Blocked Amount (ASBA) and UPI in Initial Public Offer ("IPO") / Further
Public Offer ("FPO") / Rights Issues / Issue of Non-Convertible Debentures (NCD)
/ Sovereign Gold Bond Scheme (SGB). This proposition has been further sweetened with the
introduction of instant online IPO Funding facility.

Kotak811 is India's first downloadable bank account. It offers instant and paperless
account opening in three minutes and full access to all banking products and services. It
has brought a full-fledged bank to the house of every Indian customer, digitally.
Initially, it was started as an Acquisition and Fulfilment engine to acquire customers at
scale, with Zero balance Savings Account and convenience as the core proposition. From
2021, Kotak811 operates as a 'Semi-Autonomous' Digital Bank within your Bank, with
additional focus on engagement and cross sell. As of FY 2021-22, Kotak811 had over 1.2
crore customers residing in more than 1,000 cities and towns across India. In FY 2021-22,
while the customer base grew by approximately 50% YoY, cross sell grew by approximately
120%.

Consumer Assets team scaled up business across Unsecured Lending, Credit Cards and Home
Loans / Loan against Property (LAP), in spite of the business impact in April-May 2022, on
account of COVID-19 2.0.

Home Loan business volumes grew YoY by 129%, backed by a strong campaign highlighting
your Bank's rate benefit. Your Bank's Credit Card business posted strong volume growth in
the second half of FY 2021-22, crossing 12 lakh cards for the year. The Credit Card
business launched a co-brand card, partnering with Indigo Airlines. The business also
launched 'Veer Card' dedicated to the armed forces on Rupay platform. Personal Loans
business also posted strong volume growth YoY from second half of FY 2021-22. Your Bank's
Consumer Finance Business is now clocking over an average 50,000 loans per month, with
focus on both online and offline business.

The Healthcare Finance vertical was launched with a targeted approach to meet the
financial needs of Business Banking Asset segment. Multiple digital journeys for customer
acquisition on assets and cards have been undertaken and will go live during FY 2022-23.


Commercial Banking

Your Bank's Commercial Banking business focuses on meeting the banking and financial
needs of various segments. This business has specialised units offering financial
solutions in the areas of Commercial Vehicles ("CV"), Construction Equipment
("CE") and Tractor and Agriculture Business. It services the priority sector by
providing finance for Tractors, Crop Loans to small enterprises and for Allied
Agricultural activities. This business plays a significant role in meeting the financial
inclusion goals and financing deep into 'Bharat'.

Currently, India's CE industry is the third largest in the world, which witnessed a
drop of 15% over the last financial year. The decline was primarily due to the impact of
the pandemic in the first half of the year, along with irregular cash flows from State
Government and its agencies. Major impact of cash flow was faced by retail and smaller
contractors. Your Bank's disbursement witnessed a 20% growth and improvement in market
share since the last financial year. With improvement in economy and tax collection, your
Bank is hopeful that cash flows in FY 2022-23 will improve significantly and so will
demand for CE equipments. Government of India's ("GOI") push on infrastructure
with increased budgetary allocation and key announcements like 'GATI SHAKTI', 'Ghar Ghar
Jal Mission' along with Road and Railways, are few things which will keep the industry
vibrant for future. Overall order flows are improving as well as the pace of work and
utilisation of equipments at ground level. The overall delinquencies percentage in CE
retail portfolio has marginally increased but major improvement was seen in Q4 FY2021 -
22.

Your Bank's CV business has witnessed a 54% disbursement growth, with increase of 26%
in the CV industry numbers. This has led to achieving higher market share in the CV
industry. The Passenger Car segment, comprising staff / school bus transportation, tour
and travel and public transport operation, has seen some recovery in Q4 FY2021- 22 and is
poised for stronger recovery going forward. The overall delinquency percentage of the CV
portfolio has come down along with reduction in Gross Non-Performing Assets (GNPA)
numbers.

The Agriculture business continued to show a growth despite a first quarter halt to
business activities, due to the COVID-19 2.0. The year saw inflationary rise in commodity
prices and a significant demand rise for all agro commodities, resulting into request for
incremental funding needs by all customers. In FY 2021-22, your Bank completed the
digitisation of the on-boarding and renewal experience for the customers, thus requiring
limited physical contact / presence of the customers at branches for their banking
activities. The business focus towards priority sector assets resulted in further increase
in Priority Sector Lending ("PSL") qualifying assets in the division's
portfolio. PSL assets now account for 80% of the division's portfolio. A spurt in demand,
recommencement of eateries and increased travel also saw an improvement in the turnover
and business activities of the clients. Due to late commencement of the physical Courts,
the recovery rate was delayed and lower. The business faced interest rate pressure due to
intense competition.

During the year, the division also focussed on a couple of new initiatives like the
Agri Infrastructure Fund / Agriculture Marketing Infrastructure ("AMI"), a
biometric oriented retail farmer on-boarding App and empanelment with government agencies
for Farmer Producer Organisations (FPO) lending. There was increasing traction on the
e-NAM platform.

The microfinance segment which had been severely impacted by the lockdowns and stoppage
of business due to COVID-19 for the past two years, witnessed a significant resurgence in
FY 2021-22, growing at over 60% on advances on YoY basis. There was an improvement in
collection efficiency to over 95% on a monthly basis and a return to almost normal status
of fresh loan disbursements.

Tractor industry had de-grown by 6% in FY 2021-22, mainly due to impact of increase in
price and very high growth in FY 2020-21. Your Bank's Tractor Financing business has grown
better than the industry on account of YoY growth in disbursement by 8%, improved market
share in new tractors and also focus on new products and customer segments. There was a
marginal impact on portfolio performance due to COVID-19 impact on cash flows of farmers.

Your Bank has Crop Loan business presence mainly in Punjab, Haryana and Western states
of India. During FY 2021-22, portfolio quality improved as compared to last year, due to
better resolution and collection focused manpower structure. Better monsoon and good crop
yields have also helped in resolution.

In FY 2021-22, your Bank expanded Gold loan branches to 400, with about 24% of the
branches being now active for Gold loan processing.


Corporate Banking

Your Bank's Corporate Banking business caters to a wide range of corporate customer
segments, including major Indian corporates, conglomerates, financial institutions, public
sector undertakings, multinational companies, new age companies, small and medium
enterprises and realty businesses.

This business offers a comprehensive portfolio of products and services to these
customers including working capital finance, medium term finance, trade finance, foreign
exchange services, other transaction banking services, custody services, debt capital
markets and treasury services. The core focus of this business has been to deepen existing
relationships and acquire new quality customers on a consistent basis, delivering
customised solutions through efficient technology platforms, backed by high quality
service and advice. Your Bank also aims to secure value addition through cross-selling of
varied products and services.

This year too, your Bank faced COVID-19 related challenges of the second and the third
wave. Your Bank was better prepared to face the COVID-19 challenges and navigated this
period with a suitable balance between growing the business and prudent risk management.
The pickup in economic activity was mixed across sectors. The working capital utilisations
remained muted during the year, led by the general approach of corporates to deleverage
and bring better efficiency in their working capital management. Companies were, by and
large, agile in increasing productivity and reducing costs. Significant long term fund
requirements arising out of capacity enhancements are yet to be seen. Strong capital
markets, both debt and equity, helped corporates raise funds which ensured that leverage
remained at comfortable levels on company balance sheets. Moreover, comfortable liquidity
in the banking system kept borrowing costs low for these corporates, in spite of interest
rates in the bond markets moving upwards.

Your Bank has addressed these growth challenges by remaining focused on adding new
customers in a profitable manner as increasing wallet share with existing customers. There
is a healthy addition of New-to-Bank customers in all segments, which in turn, sets a
strong foundation for future growth in the business.

Your Bank has focussed on the Small and Mid-Size Enterprises ("SME") segment
and grown in advances at 25.3% with minimal slippages by gaining market share and is well
poised to capture the growth opportunities in this segment. Several initiatives were taken
by your Bank to grow the Priority sector business, resulting in healthy growth in Priority
sector advances. Loans to NBFCs continued to grow while maintaining focus on quality.
Overall, your Bank ended the year with a well-diversified growth across all customer
segments.

Your Bank's share of credit substitutes increased significantly during FY 2021-22, as a
result of return of liquidity to debt capital markets and replacing of bank borrowings
with funds raised in the capital markets, by the corporates. Your Bank also assisted
several customers in raising debt through these markets, thus significantly growing its
Debt Capital Market and Loan Syndication revenue stream.

Income from other non-credit income streams including from Forex, Cash Management and
other Transaction Banking products too grew well.

There has also been greater focus on increasing the liability side of the business by
building core Current Account ensuring a better mix and other non-risk income streams.
Assets under custody grew substantially given IPO traction and huge Private Equity
inflows. Your Bank saw fund managers showing increased interest in setting up GIFT city
structures, across both, Alternate Investment Fund ("AIF") II and III
structures. Your Bank on-boarded a number of marquee Foreign Portfolio Investment (FPIs),
AIFs and Portfolio Management Services (PMS) clients during the year, who started using
the Custody, Clearing and Fund Accounting solutions.

In order to capitalise on market opportunities and offer holistic solutions to clients,
your Bank has taken steps to improve integration between its different businesses,
including Lending, Debt Capital Markets, Private Banking and Investment Banking. These
steps have resulted in an increase in cross divisional synergies and execution of complex
solutions, such as syndication of structured debt to Private Banking customers, referring
of Investment Banking solutions to Wholesale Banking clients and such others. As part of
this strategy, your Bank has an integrated Corporate and Investment Banking
("CIB") approach towards certain top conglomerates and large corporates. The CIB
model has ramped up well over the years for your Bank.

Improved customer service and product innovations have helped your Bank to increase
cross-sell and wallet share in non-credit businesses.

Your Bank has always had robust risk management practices and it is a testimony to
these practices that your Bank has been able to end the year again with low credit costs,
despite such a challenging environment. Across corporate segments, your Bank has been
proactive in rebalancing its portfolios to reflect economic situations and reducing
exposure to situations with heightened risk. Your Bank's focus on Risk management has
helped the business to optimise its Risk Weighted Assets as a percentage of Assets over
the past few years. The use of Risk Adjusted Return on the capital pricing model has
become ingrained in the way the Corporate Banking division conducts its business and has
helped to optimise pricing, better utilise capital, increase focus on non-capital
intensive income streams and improve return on equity.

Your Bank continues to target productivity and efficiency improvements. There is
greater focus on measuring and improving employee productivity, including of its Sales
force, through use of technology and digital tools. Given high focus in this area, costs
have been kept well in control, further improving profitability of the business.

Digital Initiatives and Robust Business Continuity Practices continue to remain the
focus of your Bank. Your Bank was also agile in implementing digital signatures and other
online platform solutions for execution of customer documentation. Various digital
platforms and initiatives across the customer lifecycle were taken live so as to enable
smoother and seamless customer experience, safety first for customer and employees,
compliances and improvement in turn-around-time. During the year, the Cash Management
Portal was upgraded along with mobile interface. Online trade portal went live with
positive initial feedback. Digital on boarding of custody end clients was started. Your
Bank has launched 'Kotak FYN', its new enterprise portal exclusive for Business Banking
and Corporate clients. Kotak FYN aims to provide customers with a seamless experience in a
unified view across all product platforms. The portal assures paperless transactions,
straight through processing and the facility to track transactions end-to-end.

Favourable risk-return metrics, strong growth in liability and non-risk fee income,
controlled credit costs and bounce back of growth across assets in this year, have ensured
that your Bank has been able to grow the profitability of the Corporate Banking business
and maintain a healthy Return on Equity.

Your Bank remains committed to build a high quality differentiated corporate franchise
and continued to focus on maintaining the health and profitability of the business. In FY
2021-22, your Bank significantly ramped up its income from debt syndication business.


Private Banking

Your Bank's private banking arm, caters to a number of distinguished Indian families
and is one of the oldest and the most respected Indian Private Banking firms, managing
wealth for more than half of India's top 100 families (Source: Forbes India Rich List
2021), with clients ranging from entrepreneurs to business families and professionals.

Your Bank provides an open architecture proposition to its customers, offering a
plethora of Private Banking products. This business has a strong distribution capability
for private clients through distribution / referral model across equities, fixed income
and alternates catering to Ultra High Net worth Individuals and High Net worth Individual
("HNI") investors. In addition to comprehensive financial solutions that go
beyond investments, the division provides a strategic consolidated view on the client's
overall portfolio. These also include banking and credit, consolidated reporting, referral
for estate planning services and other various products and services to its Private
Banking clients. With an in-depth understanding of client requirements and expertise
across various asset classes, this business offers the widest range of financial
solutions. Your Bank has added approximately 700 new families in FY 2021-22.

Digital and Technology are key pillars of future growth. Delivering products and
services to the right set of clients in a smooth and efficient manner will require your
Bank to adopt new age technologies that enhance customer experience. Customer segregation
for customising their experience is also key to use of available resources in the most
optimal manner. Identifying, servicing and retaining clients at scale will require your
Bank to adopt best practices and help integrate the right technologies across various
functions - sales, products and service.


International Banking Units

Your Bank has two International Banking Units ("IBUs") based at GIFT City,
Gandhinagar, Gujarat and DIFC, Dubai, United Arab Emirates. The IBUs have their
independent treasuries which not only manage regulatory requirements and liquidity buffers
- viz., Liquidity Coverage Ratio (LCR), etc. but also offer banking services through
products like term credit facilities for various purposes, trade finance, foreign exchange
solutions, etc.

The GIFT City Branch is regulated by the International Financial Services Centre
Authority (IFSCA), which facilitates your Bank's participation in syndication of overseas
loans, lending to clients in international markets and providing External Commercial
Borrowing to eligible Indian corporates. Your Bank also undertakes offshore client's forex
and derivative transactions to help them with management of interest rate and currency
risks, in addition to investments in offshore bonds.

DIFC Branch is your Bank's first overseas branch at Dubai, regulated by the Dubai
Financial Services Authority ("DFSA"). This branch complements your Bank's
ability to advise and arrange global investment products, provide loans and accept
deposits from its overseas private banking customers that qualify under the Professional
client criteria of the DFSA. Your Bank has developed capabilities to advise and arrange
global investments through this Branch. The Branch also has tie-ups with some leading
names in the international investments space and arranges access to their services to
eligible customers of the Branch.


Asset Reconstruction

Your Bank's Asset Reconstruction Division (ARD) looks at opportunities and takes
exposure in distressed/ Non Performing Assets ("NPA") accounts through Security
Receipts ("SR") investments, Stressed / NPA portfolio buyout from other banks,
priority funding and working capital assistance with an aim to resolve and turn them
around. As a Qualified Institutional Buyer (QIB), your Bank also invests in SRs issued by
Asset Reconstruction Companies. Your Bank is actively participating in distressed asset
buyouts and investments space for almost two decades.

The resolution of several accounts was seriously impacted on account of lockdowns due
to COVID-19 pandemic and slowdown in the economy. It was impacted this year as well due to
disruption in functioning of various judicial forums like Debt Recovery Tribunals (DRTs),
Debt Recovery Appellate Tribunal (DRAT), High Courts, including National Company Law
Tribunal (NCLT) proceedings under Insolvency and Bankruptcy Code (IBC) which resulted in
piling of cases and delay in announcement of awards for various distressed accounts.

However, your Bank adapted to the pandemic situation and it diligently, closely
monitored and spared no efforts to resolve the stressed accounts with empathy and
compassion.

Now, the economy is exposed to global crises of War, with rise in commodity prices and
inflation. However, your Bank is monitoring the impact and will adopt various measures
thoughtfully and diligently to resolve the stressed and bad accounts with compassion.

We expect a lot of opportunities in the acquisition side, both corporate and retail
stressed loans, which your Bank will analyze. If the prices offered are reasonable and
attractive, your Bank shall be open to acquire several of them.


Treasury

Your Bank's Treasury actively contributes by way of:

i. Balance Sheet Management: The Balance Sheet Management Unit ("BMU")
ensures maintenance of regulatory reserves and adequate liquidity buffers and requisite
investments. The BMU also manages Interest Rate and Liquidity risk within the overall risk
appetite of your Bank.

ii. Proprietary Trading: The Proprietary Trading Desk actively trades in products such
as Fixed Income Securities, Money Markets, Derivatives, Foreign Exchange and Equity. The
Proprietary Desk also helps assist interbank access to teams servicing customer
requirements. The Primary Dealer Desk, which is a part of the Proprietary Trading Desk,
actively participates in primary auctions of Government Securities, makes market in
Government securities and engages in retailing of Government securities.

iii. Customer Transactions: The customer facing desks at the Treasury assist and manage
customer transactions across Foreign Exchange, Derivatives and Bullion products. The Forex
and Derivatives Desk facilitates customer access to foreign currency markets through cash
and derivatives products for remittances, trade transactions and for managing Foreign
Exchange and Interest Rate risks.

iv. Bullion: The Bullion desk provides efficient working capital solutions to domestic
jewellery manufacturers as per the prescribed rules of RBI. Your Bank also imports gold
and silver to meet the needs of customers, under a license received from the RBI.


RESPONSE TO COVID-19 PANDEMIC

India began the vaccination programme in January 2021 and has stood firmly to manage
the unprecedented challenge caused by COVID-19, which continued to test the Indian economy
this year as well. However, with lower number of infections and increasing vaccinations,
the economy has shown resilience and your Bank is confident that it will emerge out
stronger.

In these challenging times, your Bank has taken steps to help, protect and provide
relief to its customers, employees and society. The key approach taken by your Bank to
mitigate the impact of the pandemic for its customers, employees and society is summarised
below:


Well-being of employees

• Continuity with safety: Your Bank has taken all possible steps to protect the
workforce including rostering, working with minimal staff presence at branches and offices
physically, implementing COVID-19 appropriate behavior and protocols, without affecting
customer service.

• Emergency response: Your Bank has created a war room amongst 'Kotakites' who
volunteered and have put in place a series of emergency measures including tie-ups for
medical emergency response services, isolation facilities, doctor consultation and
telemedicine services.

• Financial support: Your Bank offered special financial assistance up to Rs 5
lakh per employee to needy COVID-19 infected employees and their immediate relatives, to
support emergency medical expenses, pending medical insurance approvals, on a case-to-case
basis.

• Your Bank introduced the Kotak Pandemic Benevolent Policy to secure the future
of families of those colleagues who lost their lives from 1st April, 2020 and
subsequently up to 31st March, 2022. Under this, family members / nominees of
those employees who lost their lives (irrespective of the cause of death), would receive
full monthly fixed salary for two years, beginning June 2021. The family members / nominee
of deceased employees, eligible for annual bonus, received the annual year-end bonus for
FY 2020-21.

• People balance sheet over financial balance sheet: Your Bank instituted
comprehensive remote working policy to protect employees during the pandemic. Also,
employees were permitted to work from locations different from their base location. Your
Bank introduced remote working allowance to cover wi-fi and other work-related furnishing
expenses and a fitness allowance through 'Health to the Power Infinity' program
(#HumFitKotakHit). Your Bank carried out a '828' program to ensure robust work-life
balance, announced special leave of 15 days for those who were COVID-19 positive,
reimbursed the cost of COVID-19 tests for employees and also waived off employees share in
the medical insurance premium.

• Kotak VaxShield: Your Bank conducted vaccination drives for employees and their
family members and reimbursed employees who paid for their vaccination.


Well-being of customers

• To bring a sharper focus to the healthcare sector with a targeted set of product
offerings, your Bank launched a tailored and holistic suite of healthcare financing
solutions ranging from healthcare infrastructure loans, medical equipment finance and
unsecured healthcare loans, catering to key stakeholders in the healthcare ecosystem
including hospitals, laboratories, diagnostic centres, nursing homes, clinics, doctors and
medical equipment manufacturers and dealers. Your Bank introduced a comprehensive bouquet
of offerings at attractive interest rates to meet the financing requirements of all the
key players. This included innovative lending facilities such as the Insta Program for
quick approval of loans up to Rs 50 lakh.

• To deliver essential banking services conveniently to a larger section of
consumers living in relatively far-off areas, your Bank launched Micro ATMs across the
country. Customers of all banks who possess a debit card can use a Kotak Micro ATM for key
banking services, such as cash withdrawals and checking account balances.

• Your Bank completed integration of its Net Banking platform with DigiLocker to
allow customers to instantly update their correspondence address with the Bank. With many
customers having relocated to their hometowns during the COVID-19 pandemic, this facility
gives customers one more option through which they can easily change their correspondence
address - instantly and completely online.

• Your Bank offered emergency personal loans exclusively for the treatment of
COVID-19. The loan covers expenses incurred for medical treatment of COVID-19 for self as
well as for family members. Further, your Bank tied up with leading healthcare brands to
provide a range of attractive healthcare offers for its debit and credit cardholders.


Well-being of society

• During the year, your Bank provided ambulances to provide better and timely
accessibility of medical services to people from different strata of the society. The
ambulances will continue to offer timely and easy access to medical facilities and cater
to the medical needs of local residents, largely from the lower socioeconomic background.

• Your Bank launched 'Aadhaar on Wheels' - a mobile Aadhaar Seva Kendra that
provides convenient Aadhaar services to citizens including senior citizens, the
differently abled, pregnant women and others. This initiative is inspired by Kotak's
successful project - ATM on Wheels, which was launched last financial year during the
pandemic to help customers with essential banking services during the lockdown period.


Key initiatives and focus areas of FY 2021-22

Kotak Edge - Key metrics reflecting scalability of the business:

• Focus on Digital and Technology has resulted in enhanced productivity and
improved customer experience from onboarding and transaction processing to servicing
perspective. The continuous engagement and feedback mechanism with all stakeholders has
led to on-going process improvement.

• 'Time to execution' and 'bespoke development' are the following two key pillars
of your Bank's execution strategy:

• Your Bank implemented low code platform and cloud based solutions to ensure
quick time execution and scalability.

• Working with both, fintechs and wealthtechs, ensures that your Bank can fulfil
both bespoke developments as well as adapt to technological trends and functionalities.

• Green channeling the servicing of / for the Private Banking clients through soft
skills and functional trainings. All complaints are addressed on priority.


HUMAN RESOURCES

During FY 2021-22, your Bank witnessed the peak of the COVID-19 outbreak and then the
subsequent decrease in cases and relaxation of lockdown norms. The Human Resources
("HR") Department of your Bank implemented various initiatives to transform the
HR processes, policies and systems and various employee touchpoints for smooth functioning
and business continuity in the new normal scenario. From making great strides in engaging
with employees, numerous health and wellness drives, to centralising various HR Processes
for aligning employee experience, there have been quite a few measures taken to enhance
the experience of employees. It was indeed a proud moment for your Bank to have been
certified as 'One of India's Best Employers Among Nation-Builders' by the Great Place to
Work? Institute, in 2021.

Key HR Initiatives taken by your Bank were:

i. Health and Wellness: Various health and wellness related initiatives were launched
through online and onsite interactions such as Emotional Assistance Program, Employee
Outreach program, Covid test reimbursements for employees and their families, Special
Leave for employees tested COVID-19 positive and online wellness initiatives such as yoga,
meditation, zumba, quiz sessions, etc.

ii. Kotak DNA: Your Bank revamped the Kotak DNA. Also, Kotak DNA microsite and
mandatory learning module were launched to create awareness amongst employees.

iii. Leadership and Manager Connect: Your Bank remains heavily invested in regional
initiatives like Leadership Connect / Town Hall, Webcast, Meet forums for building manager
connect and skip level and also strengthens the platform for top down communication.

iv. Diversity and Inclusion: Building diverse and inclusive culture has been a focus
for your Bank over few years. Your Bank has framed the Diversity and Inclusion Statement
and also launched policies such as New Mother Benefit Policy for Kotak Wonder Women, to
promote gender equity. The policy aims to provide assistance to Kotak Wonder Women
returning to work, to help set up a reliable support system for them to take care of their
infants.

v. Hum Fit Kotak Hit: Your Bank has launched a monthly Fitness allowance, with effect
from 1st December, 2020, thereby creating a culture of fitness for Kotak
employees by encouraging them to update their fitness goals online, driving focus on their
health and well-being.

vi. Kotak Worklife Mobile App: Your Bank focused on automation and enhancing the
employee experience in FY 2021-22 with regards to HR processes and transactions. Your Bank
moved away from the old employee intranet portal and launched the Kotak Worklife Mobile
App which is also available in web format portal and provides functionalities such as
attendance, leave, chat groups, chatbot and others on the same platform. Through this App,
the aim is to provide all employee services at work and collaboration in a simple and
effective manner. Employees are now able to mark their attendance, create and interact
with workgroups like WhatsApp, raise and resolve queries on the intuitive chatbot besides
various other linkages such as to HRMS, Payroll, Reimburse, Travel, Mediclaim, Fast Track
(Internal Job Postings), book a seat (office hot desking), vaccination declaration and
booking, IT helpdesk and many more, while employees are on the go.

vii. Employee Volunteering Policy: Your Bank launched the Employee Volunteering Policy
in FY 2021-22 to enable and inspire employees to utilize their time and skills in socially
impactful volunteering activities, thereby driving a positive change in your Bank's
communities through physical / virtual volunteering and payroll giving.

viii. Kotak Young Leaders Council: Your Bank actively engages with young talent through
this flagship initative where young Kotakites become change makers and thinkers. It is a
valuable learning opportunity where the chosen few who become the council get to interact
with the leadership team and work as a cohort with them.

ix. Eureka: Your Bank has revamped the innovation, idea generation portal where
employees can submit open ideas or for specific business problems. Your Bank evaluates the
ideas submitted and rewards the best ideas and makes them part of the selected idea
implementation process. The platform is also available on the Kotak Worklife Mobile App,
on the go for all employees.

x. My Kotak My Say: Your Bank has been strengthening the platform for top down
communication. At the same time, your Bank has created a listening opportunity for
Kotakites to voice through, 'My Kotak My Say', a bi-annual employee engagement survey
engaging with the 'Great Place to Work? Institute'. 'My Kotak My Say' Survey was
conducted for the second time in August 2021, with an overall 76.15% response rate
organisation wide. 77% of employees today believe that Kotak is a Great Place to Work
(increased from 72% in previous year). Your Bank has been certified as 'One of India's
Best Employers Among Nation-Builders' by Great Place to Work? Institute.

xi. Employee Development: Your Bank increased focus on e-learning for delivering
programs at various stages of employee lifecycle. Programs such as 'Learning A-fair'
focused on seven themes, which spanned across 73 sessions. The event had over 10,000
unique employee registrations and cumulative attendance for these 73 sessions was over
35,000. Your Bank also framed External Learning Courses Policy, to encourage employees to
take up relevant courses and training and upskill themselves.

xii. Talent Acquisition: Your Bank has launched 'Kotak Fast Track Plus', an exclusive
Internal Job Posting portal for Grade M8 and above roles, where senior employees can
explore available internal career opportunities across the Kotak group and advance their
careers. To have a diverse workforce and promote women participation, your Bank has made
the Internal Job Posting program more attractive for women employees to promote internal
talent mobilization and has identified roles that can be filled with a woman candidate
only. To bridge the skill gap for roles specially in IT, Digital and Business Intelligence
Unit (BIU), your Bank introduced Science, Technology, Engineering and Math (STEM) and
Critical to Quality (CTQ) parameters during the candidate screening process to ensure it
hires candidates with right skillsets to meet the future demand.

xiii. Your Bank has launched K-Applaud, Rewards and Recognition platform. Through this
platform, your Bank has been promoting a culture of appreciation via monetary and
non-monetary reward programs. The platform is available to employees on Kotak Worklife
Mobile App / Portal. Employees can appreciate their peers and can also avail discounts on
various brands on the platform.

xiv. Talent Management: Your Bank continues to review talent at a leadership level.
Various interventions have been rolled out for future leadership capability building for
key talent.

xv. Kotakathon@Eureka: Your Bank launched a hackathon named Kotakathon@Eureka, with the
single most critical objective of creating the highest levels of Customer Obsession in our
minds, which helps deliver real value to customers. This was a challenge for the Branch
Banking Business of Consumer Bank in identifying problem areas and proposing solutions to
issues that your Bank's customers are facing.

xvi. Your Bank launched DREAM (Digital Readiness Enabler and Awareness Measure), an
opportunity to ensure that Bank employees in select grades are exposed to personalized
digital awareness learning journeys, after having assessed their Digital Quotient. This is
an attempt to prepare employees for the ongoing transformation.

xvii. Digi Q [in partnership with Catallyst Executive Education Institute (CEEI)]:
Kotak DigiQ is a customized intervention for the senior leaders of your Bank, designed to
instill a sense and urgency to lead in the Indian banking sector through rapid
transformation and focused disruption pivoting on Digital initiatives. About 100 plus
leaders have been covered so far.


EMPLOYEES

As on 31st March, 2022, the full time employee strength of the Group was
over 90,000. The Statndalone Bank had over 66,000 full time employee.

In terms of the proviso to Section 136(1) of the Act, the Directors' Report is being
sent to all members, excluding the annexure with respect to employees employed throughout
the year who were in receipt of remuneration of Rs 102 lakh or more per annum and
employees employed for part of the year who were in receipt of remuneration of Rs 8.5 lakh
or more per month. The annexure is available for inspection by any member on request. Any
member interested in obtaining a copy of the said annexure, may write an email to the
Company Secretary at KotakBank.Secretarial@kotak.com.


INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION
AND REDRESSAL) ACT, 2013

Your Bank continues with the belief of zero tolerance towards sexual harassment at
workplace and continues to uphold and maintain itself as a safe and non-discriminatory
organisation. To achieve the same, your Bank reinforces the understanding and awareness of
Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
("POSH"). Your Bank has formulated a central Steering Board Committee and
Internal Committee at three regions for reporting any untoward instance of sexual
harassment. Any complaints pertaining to sexual harassment are diligently reviewed and
investigated and treated with great sensitivity. The Internal Committee members have been
trained in handling and resolving complaints and have also designed an online e-learning
POSH Awareness module, which covers the larger employee base.

As on 1st April, 2021, eight complaints were pending for disposal. All these
complaints were disposed off during FY 2021-22.

The following is a summary of sexual harassment complaints received and disposed off
during FY 2021-22:


  

    
Number of complaints received during FY 2021-22
    
33
  
  

    
Number of complaints disposed off as on 31st March, 2022
    
26
  
  

    
Number of complaints pending as on 31st March, 2022
    
7
  


All the seven complaints pending as on 31st March, 2022, were disposed off
as on the date of this Report.


CODE FOR PREVENTION OF INSIDER TRADING

The Bank has adopted the Kotak Mahindra Bank Limited - Insider Trading Code of Conduct
("Code") for the prevention of insider trading in the securities of the Bank as
well as in other listed and proposed to be listed companies and the Code of Practices and
Procedures for Fair Disclosure of Unpublished Price Sensitive Information
("UPSI"). The Code, inter alia, prohibits dealing in securities by insiders
while in possession of UPSI. The said Code has been amended, from time to time, to give
effect to the various notifications / circulars of SEBI with respect to the SEBI
(Prohibition of Insider Trading) Regulations, 2015.

The Bank has also formulated and adopted the Policy for Determination of Materiality of
Events or Information of the Bank, in terms of Regulation 30 of the SEBI Listing
Regulations. The Policy for Determination of Materiality of Events / Information and the
Code of Practices and Procedures for Fair Disclosure of UPSI of the Bank, is available on
the Bank's website viz., URL:
https://www.kotak.com/en/investor-relations/qovernance/policies.html, in compliance with
the SEBI Listing Regulations.


WHISTLE BLOWER POLICY / VIGIL MECHANISM

Your Bank is committed to its 'Vision Statement' of upholding its Global Indian
Financial Services Brand, creating an ethos of trust across all constituents, developing a
culture of empowerment and a spirit of enterprise thereby becoming the most preferred
employer in the financial services sector.

Consistent with the Vision Statement, your Bank is committed to maintain and provide to
all its employees and directors, the highest standards of transparency, probity and
accountability. The Kotak Group endeavours to develop a culture where it is safe and
acceptable for all employees and directors to raise / voice genuine concerns in good faith
and in a responsible as well as effective manner.

A vigil mechanism has been implemented through the adoption of a Whistle Blower Policy
with an objective to enable employees / directors / suppliers / vendors / service
providers / all other applicable stakeholders, raise genuine concern or report evidence of
activity by the Bank or its employee or director or vendor that may constitute instances
of corporate fraud, unethical business conduct, a violation of Central or State laws,
rules, regulations and / or any other regulatory or judicial directives, any unlawful act,
whether criminal or civil, irregularities like alteration, forgery or fabrication of
documents, impropriety, abuse or wrong doing, misuse of office / position, theft /
embezzlement, misappropriation of asset, bribery / corruption, collusion with vendor /
customers, deliberate breaches and non-compliance with the Bank's policies, processes,
data leakage, questionable accounting / audit matters / financial malpractice, ethics
violation, conflict of interest, dual employment and unauthorized disclosure of
confidential information about the Bank or any of its customers. The concerns can be
reported online on the following websites viz., URL: https://cwiportal.com/kotak and / or
https://www.speakup.co.in/ which are managed by independent third parties. Safeguards to
avoid discrimination, retaliation or harassment and confidentiality have been incorporated
in the said policy.

All employees and Directors have access to the Chairman of the Audit Committee in
appropriate and exceptional circumstances. Further, the Chairman of the Audit Committee
has access rights to the whistle blower portals. The Audit Committee reviews a synopsis of
the complaints received and the resolution thereof, every quarter under the said Policy.

Your Bank is taking several initiatives to encourage employees to blow the whistle and
report incidences of any fraud or unusual events. During the year under review, your Bank
has initiated periodic email campaigns for educating employees on the process of whistle
blowing, creating awareness and encouraging employees to blow the whistle and report
incidences of any concerns. In addition, the same has been reiterated and made an integral
part of your Bank's Code of Conduct and training.

The Policy is available on the Bank's intranet as well as website viz., URL:
https://www.kotak.com/en/investor-relations/qovernance/policies.html


EMPLOYEE STOCK OPTIONS AND STOCK APPRECIATION RIGHTS SCHEMES

The Bank has formulated and adopted the Kotak Mahindra Share Based Employee Benefit
Scheme 2015 to:

• provide means to enable the Bank, its subsidiaries and associate companies, as
applicable, to attract and retain appropriate human talent in the employment of the Bank,
its subsidiaries and associate companies, as applicable;

• motivate the employees of the Bank, its subsidiaries and associate companies, as
applicable, with incentives and reward opportunities;

• achieve sustained growth of the Bank, its subsidiaries and associate companies,
as applicable and to create shareholder value by aligning the interests of the employees
with the long term interests of the Bank; and

• create a sense of ownership and participation amongst the employees of the Bank,
its subsidiaries and associate companies, as applicable.

The Employee Stock Options ("ESOPs") and the Stock Appreciation Rights
("SARs") granted to the employees of the Bank and its subsidiaries currently
operate under the following Schemes:

i. Kotak Mahindra Equity Option Scheme 2015 ("ESOP Scheme")

ii. Kotak Mahindra Stock Appreciation Rights Scheme 2015 ("SARs Scheme").

During the year, the Bank granted ESOPs and SARs to the eligible employees of the Bank
and its subsidiaries, in accordance with the respective Schemes and as approved by the
Nomination and Remuneration Committee ("NRC") .

SEBI has repealed the SEBI (Share Based Employee Benefits) Regulations, 2014
("SEBI (SBEB) Regulations, 2014") and brought in force the SEBI (Share Based
Employee Benefits and Sweat Equity) Regulations, 2021 ("SEBI (SBEB&SE)
Regulations, 2021"), with effect from 13th August, 2021. The provisions of
SEBI (SBEB&SE) Regulations, 2021 do not apply to cash settled SARs Scheme. As the
Bank's SARs Scheme provides only for cash settlement on stock appreciation, the provisions
of SEBI (SBEB&SE) Regulations, 2021, are no longer applicable.

The aforesaid Schemes complied with the SEBI (SBEB) Regulations, 2014 and SEBI
(SBEB&SE) Regulations, 2021, to the extent applicable. During the year under review,
no material changes were made to the Schemes.

The relevant details of the aforesaid Schemes, as required under the SEBI (SBEB&SE)
Regulations 2021, are available on the Bank's website viz., URL:
https://www.kotak.com/en/investor-relations/financial-results/annual-reports.html These
details, along with the certificates from the Secretarial Auditor, as required under the
SEBI (SBEB&SE) Regulations 2021, stating that the ESOP Scheme and the SARs Scheme have
been implemented in accordance with the SEBI (SBEB&SE) Regulations, 2021 and the
resolution passed by the members, would be placed and available for inspection by the
members during the AGM.


ENVIRONMENT, SOCIAL AND GOVERNANCE PRACTICES AND CORPORATE SOCIAL RESPONSIBILITY

In accordance with the provisions of Section 135 of the Act read with the Companies
(Corporate Social Responsibility Policy) Rules, 2014, as amended from time to time, your
Bank has constituted a Board level Corporate Social Responsibility and Environmental
Social and Governance Committee ("CSR & ESG Committee").

Your Bank's CSR & ESG Committee is responsible to:

i. identify, execute and monitor CSR projects, to assist the Board in fulfilling its
CSR objectives, to ensure compliance of CSR regulations and to oversee reporting and
disclosure of CSR activity;

ii. oversee the development and implementation of the Group's ESG framework, to assist
the Board in defining and fulfilling its ESG goals and objectives, to ensure compliance of
ESG regulations and to oversee the reporting and disclosure of the Group's ESG
performance; and

iii. review / approve donations by the Bank, to the not for profit organisations, as
per authorisation matrix approved by the Board from time to time.


Environment, Social and Governance Practices

Keeping pace with the increased global focus on Environment, Social and Governance
("ESG"), your Bank strives to improve its performance on ESG aspects. The ESG
practice in the Bank is guided by a curated ESG policy framework which articulates ESG
focus areas. Adherence to high standards of corporate ethics and transparency are
cornerstones of your Bank's ESG approach. Current policies and processes have been updated
to reflect this renewed focus on strengthening systems from a stakeholder perspective, of
which, details have been covered in the profile section of this Report. On the social
dimension, your Bank continues to focus on customer experience, data privacy, employee
well-being and development, financial inclusion and community focused interventions. With
regard to environmental performance, your Bank has elevated its focus on its operational
and financing footprints. Details of your Bank's operational environmental footprint and
climate risk assessment have been covered in the profile section of the Report.


Corporate Social Responsibility

Your Bank's Corporate Social Responsibility ("CSR") Policy sets out your
Bank's vision, mission, governance and CSR focus areas to fulfil its inclusive agenda
across many geographies of India. The Policy also highlights your Bank's intent to
contribute towards the economic, environmental and social growth of the nation and also
reflects the organization's commitment to contribute towards United Nation's
("UN") Sustainable Development Goals ("SDGs"). Your Bank has enhanced
its CSR footprint in FY 2021-22 in accordance with the guidelines led out in the CSR
Policy, by focusing on sustainable, scalable and perceptible CSR Projects, spreading in
focused geographies and aligning to SDGs and the national narrative.

Your Bank's CSR Policy is available on the Bank's website viz., URL:
https://www.kotak.com/en/about-us/corporate-responsibility.html

Your Bank's CSR Projects and CSR Project Expenditure for FY 2021-22 are compliant with
the CSR mandate as specified under Sections 134 and 135 read with Schedule VII of the Act,
along with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended
from time to time and in line with MCA's notifications issued from time-to-time.

The CSR expenditure for FY 2021-22, required as per Section 135 of the Act and the
Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended from time to
time was Rs 161.83 crore. After setting off Rs 0.72 crore from the excess CSR spent of the
previous FY 2020-21, your Bank's total CSR obligation for FY 2021-22 was Rs 161.11 crore.

The actual CSR Expenditure for FY 2021-22 was Rs162.00 crore, which is more than the
prescribed CSR expenditure requirement stipulated under Section 135 of the Act. The Bank
spent Rs 62.07 crore as CSR Project Expenditure of FY 2021-22, Rs 3.87 crore as CSR
Administrative Overheads Expenditure for FY 2021-22 and the balance Rs 96.06 crore,
towards ongoing CSR Projects of FY 2021-22, remained unspent and has been accordingly
transferred to the 'Kotak Mahindra Bank Limited Unspent CSR Account FY 2021-22', in April
2022. Your Bank is committed to spend the unutilised CSR Expenditure of ongoing CSR
Projects of FY 2021-22 within three years i.e. between 1st April, 2022 and 31st
March, 2025.

The excess CSR expenditure spend of Rs 0.88 crore for FY 2021-22 is being carried
forward to three succeeding financial years and would be available for set-off in those
financial years. A separate Annual Report on CSR activities for FY 2021-22 is annexed to
this Report.

Your Bank had transferred an amount of Rs 63.59 crore to 'Kotak Mahindra Bank Limited
Unspent CSR Account FY 2020-21Rs in April 2021, against Board approved ongoing CSR
Projects of FY 2020-21. Out of this, your Bank spent an amount of Rs 40.02 crore during FY
2021-22 and balance amount was Rs 23.57 crore as on 31st March, 2022. Your Bank
is committed to utilise the balance amount towards completion of Board approved ongoing
CSR Projects from 1st April, 2022 to 31st March, 2024.

The implementation of the CSR projects in FY 2021-22 had been done either directly and
/ or through implementing partner organisations, having proven track record. Also, your
Bank's employees have been actively volunteering and providing on the ground support for
the Bank's various CSR initiatives, including specific COVID-19 relief operations.

Your Bank, under various CSR Projects, has provided support for upgrading healthcare
infrastructure across various hospitals, access to vaccination and supported frontline
workers like doctors, nurses, policemen via various means such as contributing masks, face
shields, sanitizers, etc. during the COVID-19 pandemic.

A brief outline of the CSR Policy, including the overview of the CSR Projects
undertaken, the composition of the CSR & ESG Committee, CSR Project Expenditure during
the year under review, have been provided in the Annual Report on CSR activities annexed
to this Report and also in the Business Responsibility and Sustainability Report
("BRSR") section of the Annual Report for FY 2021-22.


Business Responsibility and Sustainability Report

In May 2021, SEBI made an amendment to Regulation 34(2)(f) of the SEBI Listing
Regulations, by introducing enhanced disclosure requirements regarding ESG parameters
through a revised format called BRSR. The BRSR format replaced the previous Business
Responsibility Report. The revised disclosures were introduced to increase transparency in
reporting and enable market participants to identify and assess sustainability-related
risks and opportunities. BRSR is voluntary for FY 2021-22 and mandatory from FY 2022-23.
Your Bank endeavours to be at the forefront of sustainability reporting by being an early
adopter of BRSR.

The BRSR discloses an overview of an entity's material ESG risks and opportunities,
goals and targets related to sustainability and performance against them.

The Bank's disclosure on environmental performance covers aspects such as resource
usage (energy and water), Greenhouse Gas (GHG) emissions and waste generated. Disclosure
on social aspects covers the workforce diversity (by gender and differently abled
employees), turnover rates, median wages, occupational health and safety, trainings,
community development and customer centric approach, etc.

BRSR for FY 2021-22 is available on the Bank's website viz., URL:
https://www.kotak.com/en/investor-relations/financial-results/annual-reports.html Any
member interested in obtaining a copy of this Report may write to the Company Secretary of
the Bank at KotakBank.Secretarial@kotak.com or submit a written request to the Registered
Office of the Bank.


TECHNOLOGY AND DIGITISATION

The COVID-19 crisis has created an imperative for your Bank to reconfigure its
operations and an opportunity to transform them. As during the pandemic, consumers have
moved dramatically towards online channels and your Bank has responded well in turn. In
this situation, an area that has seen tremendous growth is digitisation, meaning
everything from online customer service to remote working to supply-chain reinvention to
the use of artificial intelligence ("AI") and machine learning has taken front
seat to improve the operations and overall experience. Your Bank has ensured the speedup
in creating digital or digitally enhanced offerings.

Before embarking on the Digitisation journey, your Bank's strategy has addressed the
four core questions only to achieve the digital roadmap:

i. Does the existing infrastructure and platform architecture enable the efficient
extension of Application services, rollout of innovations and the achievement of
processing scale and efficiencies?

ii. Can the platform decouple legacy workflows, augmenting them with new workflows
powered by AI, blockchain, deep learning, and Internet of Things ("IoT")?

iii. Will the modern architecture, operating model and business strategy operate and
scale across established open standards and connect to Application Programming Interfaces
("APIs")?

iv. Can the current infrastructure adapt to regulatory and institutional changes in the
next few years in response to new initiatives i.e. real-time payments, new messaging
standards, more stringent requirements governing risk, security, fraud and privacy?

By considering the above points, your Bank has further accelerated the digitisation of
Customer Experience and Digital Channels, Future Ready- Technology and Capability
Building, so that it could address:

i. Seamless connected journeys across the products / platforms

ii. Applications with a better user experience i.e. Personalization

iii. 24/7 access and frictionless service

iv. Innovation by including data protection and security.

Your Bank introduced Supply Chain Finance by leveraging its state of the art technology
for the convenience of its customers. Operations gateway supply chain will strengthen the
relationship of your Bank with the Corporate World by financing their supply chain
partners.

For participating in the Account Aggregation (AA) Ecosystem, your Bank has built
technical framework for Financial Information Providers (FIP) and Financial Information
Users (FIU). These modules seamlessly connect a company's existing solution to the AA
ecosystem and act as a single point to handle all the comprehensive and tedious
integration architectures, helping FIPs and FIUs save time in their integrations.

Your Bank has implemented following initiatives from the automation perspective:

i. Document to document comparison

ii. Goods and Service Tax (GST) workflow to streamline process which includes General
Ledger tally

iii. Customer on-boarding journey for existing Current Account and Savings Account HNI
customers to apply for Cash Management Services (CMS), Trade, loans, and other corporate
products

iv. Consent Management system.

Open Credit Enablement Network (OCEN) is a framework of APIs for interaction between
small borrowers, lenders, loan service providers and account aggregators. The APIs will
act as a common language connecting marketplaces to use and create innovative financial
credit products. Your Bank has implemented this framework which will enable digital cash
flow based lending for MSME.

Being focussed on customer first, it has been your Bank's constant endeavour to provide
the most attractive proposition which meets the aspirations and preferences of customers.
With travel taking off in a big way, your Bank has partnered with IndiGo to help customers
go places with 'Ka-ching'. Kotak-Indigo 'Ka-ching' has been designed to deliver a magical
experience to the customers who love to travel. The Kotak-IndiGo Credit Card is a valuable
addition to your Bank's growing portfolio of cards and will be the preferred card in the
customer's wallet.

Government Business Module (GBM) was implemented to ensure the timely rolling out of
the government schemes to the customers.

Your Bank has partnered with Online PSB Loans Limited, a fintech company to provide
online credit market place to various financial aspirations of borrower MSMEs and
individuals, in a simple, quick and hassle-free way through Business Loan or Working
Capital products.

Your Bank has also implemented IKosmos BlockID, a Multi Factor Authentication Solution
(SAAS offering), which provides below functionalities for the customer:

• Open Authorization (Oauth) compliant

• Time based One Time Password (TOTP) option, which works offline after activation

• SMS and Email One Time Password (OTP).

Cheque Clearing being a core function, your Bank has implemented a robust application
on a licensed model. This application, will in turn be provided to multiple Business
Process Outsourced (BPO) vendors across geographies for processing, thereby ensuring
localised continuity and faster processing.

Technology refreshes are no longer about replacing old kit with faster and slicker
machines, but about creating agile, on-demand platforms that ensure your business is ready
for change. Hence, your Bank has ensured that to cater to internal as well as external
customer's network, devices and middleware has been upgraded. Also, contact centre
software version upgrade was carried out successfully. As the importance of information
has increased, the attacks in years have shown exponential growth. To counter the attacks,
your Bank has implemented Machine Learning ("ML") algorithms that are used in
applications to detect and respond to attacks. This is achieved by analysing big data sets
of security events and identifying patterns of malicious activities. ML works so that when
similar events are detected, they are automatically dealt with by the trained ML model.

The changing customer preferences is driving your Bank to provide 24x7 connectivity and
increasingly digitized processes, creating new expectations and new risks. Further, your
Bank is continuously evolving operational resilience to deliver critical operations
through disruption.

Even though Business Continuity Planning has been an integral part of all functions
across your Bank due to COVID-19, the rapid shift to remote working was seamlessly catered
by Information Technology for the majority of the staff and business associates. Further,
the IT operations were being carried out remotely i.e. end of day / beginning of day,
backup, application support, end-user support, etc.

Apart from the above, your Bank's technology direction has been formulated to address
six areas of strategic importance viz., Platform Building, Modernization and Refresh of
Legacy, Analytics and Reporting, Cyber Security and Regulatory, Technology Operations
Automation and Adoption of Emerging Technologies.

Cyber Security and Fraud Detection is a continuous evolving space. Your Bank invests
significantly in technologies to be at the forefront to prevent, detect and act in
situations arising from it.

The technology platforms used by your Bank have adequate level of component / system
level redundancy built into the production systems. Critical technology platforms /
systems have a Disaster Recovery ("DR") set up at a DR site, which can be
utilised in the case of any major outages in the corresponding production system.


SUBSIDIARIES AND ASSOCIATES

As at 31st March, 2022, your Bank had nineteen subsidiaries in various
businesses, as listed below:


  

    
Sr. No. Name of the subsidiary
    
Business activity
  
  

    
Kotak Mahindra Prime Limited
    
Car Finance and other Lending
  
  

    
ii. Kotak Mahindra Investments Limited
    
Investments, Lending
  
  

    
iii. Kotak Infrastructure Debt Fund Limited
    
Infrastructure Financing
  
  

    
iv. Kotak Securities Limited
    
Stock Broking, E-Broking, Distribution
  
  

    
v. Kotak Mahindra Capital Company Limited
    
Investment Banking
  
  

    
vi. Kotak Mahindra Life Insurance Company Limited
    
Life Insurance
  
  

    
vii. Kotak Mahindra General Insurance Company Limited
    
General Insurance
  
  

    
viii. Kotak Mahindra Asset Management Company Limited
    
Mutual Fund
  
  

    
ix. Kotak Mahindra Trustee Company Limited
    
Trustee Company
  
  

    
x. Kotak Mahindra Pension Fund Limited
    
Pension Fund
  
  

    
xi. Kotak Investment Advisors Limited
    
Alternate Asset Management
  
  

    
xii. Kotak Mahindra Trusteeship Services Limited
    
Trusteeship Services
  
  

    
xiii. Kotak Mahindra (UK) Limited
    
Distribution of financial products and dealing in securities
  
  

    
xiv. Kotak Mahindra (International) Limited
    
Advisory Services, Investments
  
  

    
xv. Kotak Mahindra Inc.
    
Broker / Dealer
  
  

    
xvi. Kotak Mahindra Asset Management (Singapore) Pte. Limited
    
Asset Management
  
  

    
xvii. Kotak Mahindra Financial Services Limited
    
Advisory services for Middle East
  
  

    
xviii. IVY Product Intermediaries Limited
    
-
  
  

    
xix. BSS Microfinance Limited
    
Banking Correspondent
  



Kotak Mahindra Prime Limited and Kotak Mahindra Investments Limited:

The Passenger Car market in India grew by 12.7% for FY 2021-22 compared to 1.6%
de-growth in FY 2020-21. Profits of Kotak Mahindra Prime Limited and Kotak Mahindra
Investments Limited in FY 2021-22 increased primarily due to higher disbursements,
COVID-19 provision reversal, lower losses and profit from investments. Further, during FY
2021-22, KMPL acquired car finance portfolio of Volkswagen Finance Private Limited and
Ford Credit India Limited.


Kotak Securities Limited and Kotak Mahindra Capital Company Limited:

In FY 2021-22, the Indian Equity Capital Markets witnessed a record fundraising year
completing 53 IPOs, 1 FPO, 29 Qualified Institutional Placement ("QIP"), 22
Offer for Sale ("OFS") and 10 Rights Issues. FY 2021-22 saw exceptional response
in IPOs and ensured successful completion of some of the marquee IPOs in the New Age Tech
sector and other sectors such as consumer, financial, healthcare, real estate and
speciality chemicals also witnessed strong investor response. Domestic Institutional
Investors continued to support the markets with an inflow of US$ 29 billion versus an
outflow of US$ 17 billion from FIIs. The market average daily volumes (excluding the
proprietary segment) has shown a growth in the cash, NSE equity options and NSE equity
futures segment from Rs 48,523 crore to Rs 51,293 crore, from Rs 1,401,457 crore to Rs
3,412,246 crore and from Rs 79,698 crore to Rs 88,948 crore, respectively, in FY 2021-22
as compared to the FY 2020-21. Accordingly, Kotak Securities Limited and Kotak Mahindra
Capital Company Limited reported higher profits compared to the previous year.


Kotak Mahindra Life Insurance Company Limited:

Kotak Mahindra Life Insurance Company Limited ("KLI") has recorded a growth
of 17.3% on the gross written premium, mainly coming from renewal premium and group new
business. KLI has solvency ratio of 2.73 against a regulatory requirement of 1.50. The Net
worth of KLI increased by 8.5% from Rs 4,045.50 crore as on 31st March, 2021 to
Rs 4,389.20 crore as on 31st March, 2022. On individual Adjusted Premium
Equivalent ("APE") Basis (Single 1/10), KLI was posted 8th rank
within the private industry. KLI has registered a growth of 16.2% against insurance
industry growth of 15.7%. KLI's market share for Individual New Business premium (APE
terms) was 3.8% for FY 2021-22 amongst private insurers. On group APE Basis (Single 1/10),
KLI was posted 3rd rank within the private industry. KLI's market share for
Group New Business premium (APE terms) was 12.2% for FY 2021-22 amongst private insurers.
KLI saw an increase in its Assets Under Management ("AUM") (including
shareholders) by 19.4% YoY to Rs 55,562.61 crore in FY 2021-22. Further, Operating expense
ratio has improved to 12.8% as against 13.6% in previous year. This was possible by a
17.3% YoY growth in total premium in FY 2021-22 and is also attributed to improved
productivity in addition to increase in distribution strength.


Kotak Mahindra Asset Management Company Limited:

The Mutual Fund industry registered a YoY growth of 20% YoY in Q4 FY 2021-22 over Q4 FY
2020-21 with the Quarterly Average Assets under Management ("QAAUM") for Q4 FY
2021-22 at Rs 38.84 lakh crore. During the same period, on the basis of percentage growth
in QAAUM, Kotak Mahindra Asset Management Company Limited ("KMAMC") was amongst
the fifth fastest growing Mutual Fund House and ranked No. 5 in industry. The QAAUM of
Kotak Mahindra Mutual Fund which stood at Rs 286,478 crore for January - March 2022 has
seen growth of around 22% in Q4 FY 2021-22 over Q4 FY 2020-21. Market Share in QAAUM has
grown to 7.37% in Q4 FY 2021-22 from 7.25% in Q4 FY 2020-21 and 6.86% in Q4 FY 2019-20.
The annual AAUM of KMAMC for FY 2021-22 was Rs 272,938 crore against Rs 202,826 crore for
FY 2020-21, a growth of 35%.


Kotak Mahindra Pension Fund Limited

During the year under review, your Bank acquired 13,080,000 equity shares (46.7% of the
issued and paid up equity share capital) of Kotak Mahindra Pension Fund Limited from KMAMC
on 17th May, 2020. Post-acquisition of equity shares, KMPFL has now become a
direct subsidiary with the Bank now holding 51%.

KLI is a material subsidiary of the Bank. The Bank's Policy for determining material
subsidiaries, in line with the SEBI Listing Regulations, is available on the Bank's
website viz., URL:
https://www.kotak.com/content/kotakcl/en/investor-relations/governance/policies.html

The various activities of the subsidiaries and the performance and financial position
of the subsidiaries and associate companies are outlined in the Management Discussion and
Analysis section appended to this Report. Pursuant to the provisions of Section 129(3) of
the Act, the Statement containing the salient features of the Financial Statements of the
said subsidiary companies of the Bank, in Form AOC-1, is annexed to this Annual Report.

As at 31st March, 2022, your Bank had the following Associate companies:

i. Infina Finance Private Limited

ii. Phoenix ARC Private Limited.

ECA Trading Services Limited is in the process of voluntary liquidation, pursuant to
resolution passed by its shareholders on 18th December, 2021 and hence, ceased
to be an associate from that date.

Further, pursuant to the provisions of Section 136(1) of the Act, the Annual Report of
the Bank, containing the standalone and consolidated financial statements and all other
relevant documents required to be annexed thereto are available on the Bank's website
viz., URL: https://
www.kotak.com/en/investor-relations/financial-results/annual-reports.html and the separate
audited financial statements in respect of each of the subsidiaries, are available on the
Bank's website viz., URL: https://
www.kotak.com/en/investor-relations/financial-results/annual-reports.html

The financial statements of the subsidiaries used for consolidation of the Bank's
consolidated financial statements are special purpose financial statements prepared in
accordance with GAAP specified under Section 133 of the Act read with relevant
notifications.


DESPATCH OF ANNUAL REPORT

The MCA has issued General Circular No. 20/2020 dated 5th May, 2020,
Circular No. 02/2021 dated 13th January, 2021 and Circular No. 02/2022 dated 5th
May, 2022 and the Securities and Exchange Board of India ("SEBI") of India has
issued Circular No. SEBI/HO/CFD/ CMD1/CIR/P/2020/79 dated 12th May, 2020,
Circular No. SEBI/HO/ CFD/CMD2/CIR/P/2021/11 dated 15th January, 2021 and
Circular No. SEBI/HO/CFD/CMD2/CIR/P/2022/62 dated 13th May, 2022 in relation to
'Relaxation from compliance with certain provisions of the SEBI Listing Regulations in
view of the prevailing situation and owing to the difficulties involved in dispatching of
physical copies of the Annual Report and the Notice convening the AGM. Members who wish to
have physical copy may write to the Company Secretary of the Bank at
KotakBank.Secretarial@kotak.com or submit a written request to the Registered Office of
the Bank. In accordance with the aforesaid circulars, the weblink of the Annual Report and
the Notice convening the AGM of the Bank is being sent in electronic mode only to members
whose e-mail address is registered with the Bank or the Depository Participant(s). Those
members, whose email address is not registered with the Bank or with their respective
Depository Participant(s) and who wish to receive the Notice of the AGM and the Annual
Report for the financial year ended 31st March, 2022, can get their email
address registered by following the steps as detailed in the Notice convening the AGM. The
Annual Report of your Bank and its subsidiaries are available on your Bank's website viz.,
URL.: https://www.kotak.com/en/investor-relations/financial-results/annual-reports.html


BOARD OF DIRECTORS Board Composition

The composition of the Board of Directors of the Bank is governed by the Act, the BR
Act and Regulation 17 of the SEBI Listing Regulations and is in conformity with the same.
As on 31st March, 2022, the Board of Directors comprised a combination of
twelve Directors viz., Mr. Prakash Apte, Independent Non-Executive Part-time Chairman, Mr.
Uday Chander Khanna, Ms. Farida Khambata, Mr. Uday Shankar, Dr. Ashok Gulati and Ms. Ashu
Suyash, Independent Directors, Mr. C. Jayaram and Mr. Amit Desai, both Non-Executive
Directors, Mr. Uday Kotak, Managing Director & CEO, Mr. Dipak Gupta, Joint Managing
Director, Mr. KVS Manian and Mr. Gaurang Shah, both Whole-time Directors. The size of the
Board is commensurate with the size and business of the Bank. The Board mix provides a
combination of professionalism, knowledge and experience required in the banking industry
and also meets the criteria prescribed under the Board Diversity Policy adopted by the
Board.


Change in composition of the Board during the year

At the 36th AGM of the Bank held on 25th August, 2021, the
members approved the re-appointment of Mr. Uday Chander Khanna as an Independent Director
of the Bank, for a second term of three years, with effect from 16th September,
2021.

At the meeting of the Board of Directors of the Bank held on 10th / 11th
December, 2021, the Board had approved the appointment of Ms. Ashu Suyash as an
Independent Director for a term of five years, with effect from 24th January,
2022 up to 23rd January, 2027 (both days inclusive), subject to the approval of
the members of the Bank. Further, the members of the Bank had granted their consent to the
aforesaid appointment of Ms. Suyash by way of Postal Ballot on 19th January,
2022.

Further, at the meeting of the Board of Directors of the Bank held on 18th /
19th March, 2022, the Board had approved the appointment of Mr. Amit Desai as
an Additional Director of the Bank, with effect from 18th March, 2022,
designated as a 'Non-Executive Director', subject to the approval of the members of the
Bank. The members of the Bank had granted their consent to the aforesaid appointment of
Mr. Desai by way of Postal Ballot on 23rd May, 2022.

The Board of Directors of the Bank at its Meeting held on 4th May, 2022:

i. Approved the re-appointment of Mr. KVS Manian as a Whole-time Director for a period
of three years (post the expiry of his current term on 31st October, 2022),
with effect from 1st November, 2022 or from the date of regulatory approvals,
whichever is later;

ii. Accepted the request of Mr. Gaurang Shah, to not continue as a Whole-time Director
and Director of the Bank, on expiry of his current term on 31st October, 2022;
and

iii. Approved the appointment of Ms. Shanti Ekambaram as a Whole-time Director for a
period of three years, with effect from 1st November, 2022 or from the date of
regulatory approvals, whichever is later.


Directors retiring by rotation

At the meeting of the Board of Directors held on 25th June, 2022, the Board
approved the proposal for re-appointment of Mr. KVS Manian and Mr. Gaurang Shah (up to the
end of his current term as a Whole-time Director i.e. 31st October, 2022), as
the Directors of the Bank, liable to retire by rotation at the ensuing AGM, in terms of
Section 152 of the Act.

The details of the Directors along with the rationale for their proposed appointment /
re-appointment, as mentioned above, are included in the Notice convening the
Thirty-Seventh AGM of the Bank.


Declaration from Independent Directors

All the Independent Directors of the Bank have submitted the requisite declarations
stating that they meet the criteria of independence as prescribed under Section 149 (6) of
the Act and Regulation 16(1)(b) of the SEBI Listing Regulations. The Board reviewed and
assessed the veracity of the aforesaid declarations, as required under Regulation 25(9) of
the SEBI Listing Regulations. In the opinion of the Board, all the Independent Directors
fulfil the said conditions as mentioned in Section 149(6) of the Act and SEBI Listing
Regulations and are independent of the Management. All the Independent Directors of the
Bank have complied with the provisions of sub rule (1) and (2) of Rule 6 of the Companies
(Appointment and Qualification of Directors) Rules, 2014 with respect to registration with
the Indian Institute of Corporate Affairs for the Independent Directors' Data base and
have passed the proficiency test or are exempted from the same. There has been no change
in the circumstances affecting their status as Independent Directors of the Bank. In the
opinion of the Board, the Independent Directors possess the requisite integrity,
experience, expertise and proficiency required under all applicable laws and the policies
of the Bank.


Certificate on non-debarment or non-disqualification of Directors

In terms of Regulation 34(3) read with Schedule V of the SEBI Listing Regulations, the
Bank has obtained a certificate from Ms. Rupal D. Jhaveri, Practising Company Secretary,
confirming that none of the Directors on the Board of the Bank have been debarred or
disqualified from being appointed or continuing as Directors of the companies either by
SEBI or MCA or any other statutory / regulatory authority.


Director e-KYC

MCA has vide amendments to the Companies (Appointment and Qualification of Directors)
Rules, 2014, mandated registration of KYC of all Directors. All the Directors of the Bank
have complied with said requirement in FY 2021-22.


Directors and Officers Liability Insurance Policy

The Bank has a Directors and Officers Liability Insurance Policy which protects
Directors and Officers of the Bank for any breach of fiduciary duty.


Board Evaluation1

The Board conducted the performance evaluation of the Individual Directors, Board
Committees, Board as a whole and the Chairman of the Board in accordance with the
provisions of the Act and the SEBI Listing Regulations, including the Guidance Note on
Board Evaluation issued by SEBI on 5th January, 2017.

The NRC of the Board approves the criteria and the mechanism for carrying out the said
performance evaluation process. Accordingly, the NRC approved the assessment questionnaire
designed for the annual performance evaluation which broadly covered the following
criteria:

i. Board - Competencies, composition and structure, board dynamics, process and
procedure, functioning, oversight of committee composition and functioning and ethics and
compliance

ii. Committees - Composition and quality, process and procedure, terms of reference and
effectiveness in terms of respective roles assigned to the Committees

iii. Chairman - Key focus areas covering understanding of the role, commitment, team
work attributes, utilisation of domain expertise, effective communication, etc. and
certain other parameters such as efficient leadership, decision making, professionalism,
impartial conduct, devotion of sufficient time, effective communication and facilitation
of productive deliberation

iv. Individual Directors - Understanding of role, commitment, effective contribution,
independent view to decision making, utilization of domain expertise, etc.

The aforesaid questionnaire was circulated to all the Directors of the Bank for the
annual performance evaluation. The Board evaluated the effectiveness of its functioning
and that of the Committees and of individual Directors through the annual Board Evaluation
Process.

The Bank had engaged an independent external professional services firm for issuing a
report on the Board Evaluation for the Bank, based on the responses received from the
Directors. Based on the assessment of the responses received to the questionnaire from the
Directors on the annual evaluation of the Board, its Committees, the Chairman and the
individual Directors, the Board Evaluation Report was placed before the meeting of the
Independent Directors held on 24th June, 2022, for consideration. Similarly,
the Board at its meeting held on 25th June, 2022, assessed the performance of
the Independent Directors and the outcome of the Board performance evaluation exercise.

The Directors noted that the results of the performance evaluation of the Board and its
Committees, Chairman and individual directors indicated a high degree of satisfaction
amongst the directors. A suggestion given by the Directors was to increase its focus on
customer centricity. The Bank has accepted the said suggestion made which emanated from
the Board performance evaluation. The status of compliance of the said suggestion will be
reviewed and reported to the Board.

Further, the Bank has taken necessary steps to comply with the suggestions which had
arisen from the Board performance evaluation for FY 2020-21. 


KEY MANAGERIAL PERSONNEL

The following officials of the Bank are the Key Managerial Personnel ("KMP")
pursuant to the provisions of Section 203 of the Act and Rule 8 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 as on the date of this
Report:

i. Mr. Uday Kotak, Managing Director & CEO

ii. Mr. Dipak Gupta, Joint Managing Director

iii. Mr. KVS Manian, Whole-time Director

iv. Mr. Gaurang Shah, Whole-time Director

v. Mr. Jaimin Bhatt, Group Chief Financial Officer

vi. Ms. Avan Doomasia, Company Secretary

There were no changes in the KMPs during FY 2021-22.


POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL2

The appointment and remuneration of Directors of the Bank is governed by the provisions
of Section 35B of the BR Act. The NRC has formulated the criteria for appointment of
Directors and Senior Management Personnel. Based on the criteria set, the NRC recommends
to the Board, the appointment of Directors and Senior Management personnel.

The NRC reviews the range of skills, experience and expertise on the Board and
identifies its needs. After a detailed search, a master list of candidates is prepared.
The NRC then shortlists the candidates from the master list based on the selection
criteria viz., qualifications, knowledge, experience, skills, expertise, fit and proper
status, positive attributes as per the suitability of the role, independent status and
various regulatory / statutory requirements, as may be required of the candidate, and also
keeping in view the Bank's Board Diversity Policy. After detailed discussions and
deliberations, the NRC recommends the candidate to the Board.

The Bank adheres to the process and methodology prescribed by the RBI in respect of the
'Fit & Proper' criteria as applicable to Private Sector Banks, signing of Deeds of
Covenants which binds the Directors to discharge their responsibilities to the best of
their abilities, individually and collectively in order to be eligible for being appointed
/ re-appointed as a Director of the Bank. The prescribed declarations / undertakings given
by the Directors, other than that of the Members of the NRC, are placed before the NRC and
the declarations / undertakings given by the Members of the NRC are placed before the
Board, for its review and noting.

The said declarations / undertakings are obtained from all the Directors on an annual
basis and also at the time of their appointment / re-appointment, in compliance with the
said laws. An assessment on whether the Directors fulfil the prescribed criteria is
carried out by the NRC and the Board, on an annual basis and also at the time of their
appointment / re-appointment.

The salient features of the Compensation Policy are, as follows:

Objective:

• To maintain fair, consistent and equitable compensation practices in alignment
with Kotak's core values and strategic business goals

• To ensure effective governance of compensation and alignment of compensation
practices with prudent risk taking

• To have mechanisms in place for effective supervisory oversight and Board
engagement in compensation

• To ensure that the compensation practices are within the regulatory framework
stipulated from time to time by RBI.

Compensation structure comprises total remuneration consisting of:

• Fixed Pay, which includes perquisite pay / benefits

• Variable Pay, which includes Performance Bonus / Incentive, Long Term Incentive
Pay in the form of cash bonuses, all share-linked instruments (e.g. ESOP, SARS, etc.)

• Other payments, which includes Joining / Sign on Bonus, Severance package,
Deferred Incentive Plans, etc.

Further, the employees have been broadly classified into following categories:

i. Category I - Comprising Managing Director & CEO and Whole-time Director
("WTDs")

ii. Category II - Material Risk Takers ("MRTs")

These include employees whose actions may have material impact on the risk exposures of
the Bank and who satisfy both - qualitative and quantitative criteria, as given below:

a. Qualitative Criteria: Employees in the Grade M10 and above

b. Quantitative Criteria: Fixed Cost To Company ("FTCTC") is Rs 1 crore p.a.
and above This excludes employees under Category III.


2 GRI102-37

iii. Category III - Risk control and compliance employees, comprising staff in Grade M9
and above in the following Control functions:

• Risk & Policy function

• Financial Control including group consolidation

• Compliance

• Internal Audit

• Back-office Operations

• Vigilance

• Legal

• Secretarial

• Human Resources

• Corporate Social Responsibility

• Investor Relations

iv. Category IV: Other employees - This includes all employees, not explicitly covered
in the first three categories.

The limits on the ratio of total Variable Pay (Including Cash or Non Cash Pay) to Fixed
Pay and the limits on the ratio of Cash v/s Non Cash within Variable Pay, is outlined for
each category of employee classification. Further, Malus and Clawback clauses are
applicable as per the Compensation Policy.

The NRC of the Bank and the Board have reviewed and approved all the amendments to the
said Compensation Policy.

The details of the remuneration paid to the Non-Executive Part-time Chairman, Executive
and Non-Executive Directors of the Bank, for the year ended 31st March, 2022 is
provided in the Report on Corporate Governance annexed to this Report.

Mr. Prakash Apte, the Non-Executive Part-time Chairman of the Bank, receives a fixed
amount of remuneration as recommended by the Board and approved by the members of the Bank
and RBI, from time to time. Mr. Apte also receives remuneration by way of sitting fees for
attending meetings of the Board and its Committees.

The Board of Directors of the Bank (in consultation with the NRC) has formulated and
adopted a comprehensive Compensation Policy for Non Executive Directors ("NEDs")
(other than Non-Executive Part-time Chairman).

RBI vide its Circular No. RBI/2021-22/24 OR.GOV.REC.8/29.67.001/2021-22 dated 26th
April, 2021 titled 'Corporate Governance in Banks - Appointment of Directors and
Constitution of Committees of the Board', effective from FY 2021-22, has permitted payment
of fixed remuneration to the NEDs, excluding the Non-Executive Part-time Chairperson, up
to a sum not exceeding Rs 20 lakh per annum for each NED. Accordingly, the members at the
Thirty-Sixth AGM held on 25th August, 2021 had approved the payment of
compensation to each NED (excluding Non-Executive Part-time Chairman) of the Bank, by way
of fixed remuneration up to an overall ceiling of Rs 20 lakh per annum or such higher
amount as may be prescribed by RBI, for a period of five years, with effect from FY
2021-22. The aforesaid Compensation Policy for NEDs (other than Non-Executive Part-time
Chairman) was amended on 5th April, 2022 to, inter alia, give effect to the
above referred members' approval.

The salient features of the Compensation Policy for NEDs are, as follows:

i. Compensation structure is broadly divided into:

• Sitting fees

• Re-imbursement of expenses

• Compensation in the form of Fixed Remuneration.

ii. Amount of sitting fees and remuneration to be decided by the Board from time to
time, subject to the regulatory limits.

iii. Overall cap on compensation in the form of fixed remuneration for each NED
(excluding the Non-Executive Part-time Chairman) of Rs 20 lakh per annum or such other
amount as may be prescribed by the RBI, from time to time.

iv. NEDs are not eligible for any stock options of the Bank.

The Remuneration paid to the Key Managerial Personnel is in line with the Compensation
Policy of the Bank which is based on the RBI Guidelines. The Compensation Policy is
available on the Bank's website viz., URL:
https://www.kotak.com/content/kotakcl/en/investor-relations/qovernance/policies.html


DISCLOSURES PURSUANT TO RULE 5 OF COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL
PERSONNEL) RULES, 2014

The disclosures pursuant to Rule 5 of Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, are annexed to this Report. 

REPORT ON CORPORATE GOVERNANCE

The Bank is committed to achieving and adhering to the highest standards of Corporate
Governance and constantly benchmarks itself with best practices, in this regard.

Pursuant to Regulation 27 of the SEBI Listing Regulations, a separate section titled
'Report on Corporate Governance' has been included in this Annual Report along with the
certificate issued by the Statutory Auditors of the Bank confirming compliance with the
mandatory requirements relating to Corporate Governance under the SEBI Listing
Regulations. The Report of Corporate Governance also contains certain disclosures required
under the Act, including the details of the Board meetings held during the financial year
ended 31st March, 2022.

The Bank also files with the Stock Exchanges, the quarterly Report on Corporate
Governance in terms of Regulation 27(2) of the SEBI Listing Regulations. The said Reports
are available on the Bank's website viz., URL:
https://www.kotak.com/content/kotakcl/en/investor-relations/qovernance/sebi-listinq-disclosures.html


SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of your Bank had
appointed Parikh & Associates, Company Secretaries, Mumbai, a peer reviewed firm, to
act as the Secretarial Auditor of the Bank for FY 2021-22. The Secretarial Audit Report
for the financial year ended 31st March, 2022, as required under Section 204 of
the Act and Regulation 24A of the SEBI Listing Regulations, is annexed to this Report.
Your Bank is in compliance with the applicable Secretarial Standards issued by The
Institute of Company Secretaries of India and approved by the Central Government under
Section 118(10) of the Act for FY 2021-22. The Secretarial Auditor's Report does not
contain any qualifications, reservations, adverse remarks or disclaimers and is annexed to
this Report.

Kotak Mahindra Life Insurance Company Limited ("KLI"), the Bank's material
unlisted subsidiary, has completed its secretarial audit and there are no reservations or
adverse remarks or disclaimers made in the Secretarial Audit Report for the financial year
ended 31st March, 2022. The said Secretarial Audit Report of KLI is annexed to
this Report.

In terms of the SEBI circular dated 8th February, 2019, your Bank has
submitted the Annual Secretarial Compliance Report for FY 2021-22 to the Stock Exchanges
within the prescribed time and the same is available on websites of the Stock Exchanges
i.e. BSE Limited (www.bseindia.com), National Stock Exchange of India Limited
(www.nseindia.com) and on the Bank's website viz., URL:
https://www.kotak.com/content/kotakcl/en/investor-relations/qovernance/sebi-listinq-disclosures.html


DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors, based on the representations received from the operating management,
confirm in pursuance of Sections 134(3) and 134(5) of the Act, that:

i. your Bank has, in the preparation of the annual accounts for the financial year
ended 31st March, 2022, followed the applicable accounting standards and
guidance provided by The Institute of Chartered Accountants of India along with proper
explanations relating to material departures, if any;

ii. they have selected such accounting policies and applied them consistently and made
judgements and estimates that are reasonable and prudent so as to give a true and fair
view of the state of affairs of your Bank as at 31st March, 2022 and of the
profit of your Bank for the financial year ended 31st March, 2022;

iii. they have taken proper and sufficient care to the best of their knowledge and
ability, for the maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of your Bank and for preventing and
detecting fraud and other irregularities;

iv. the annual accounts have been prepared on a going concern basis;

v. they have laid down internal financial controls to be followed by the Bank and that
such internal financial controls are adequate and are operating effectively; and

vi. they have devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems are adequate and operating effectively.


ANNUAL RETURN

Pursuant to the provisions of Section 134(3)(a) and Section 92(3) of the Act read with
Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Annual Return
of the Bank is available on the Bank's website viz., URL:
https://www.kotak.com/en/investor-relations/financial-results/annual-reports.html


STATUTORY AUDITORS

Pursuant to the Bank's Policy on appointment of Statutory Auditors ("Policy")
and the Circular No. DoS.CO.ARG/ SEC.01/08.91.001/2021-22 dated 27th April,
2021 issued by RBI ("RBI Circular" / "Guidelines"), prescribing the
guidelines for Appointment of Statutory Central Auditors (SCAs) / Statutory Auditors (SAs)
of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs) and upon
recommendation of the Audit Committee and the Board and the further approval of the RBI,
the members of the Bank had, at the Thirty-Sixth AGM held on 25th August, 2021,
re-appointed Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration
Number: 001076N / N500013) as one of the Joint Statutory Auditors of the Bank, for FY
2021-22, to hold office from the conclusion of the Thirty-Sixth AGM until the conclusion
of the Thirty-Seventh AGM of the Bank and appointed Price Waterhouse LLP, Chartered
Accountants (Firm Registration Number: 301112E/E300264), as the other Joint Statutory
Auditor of the Bank, for a period of three years, with effect from FY 2021-22, to hold
office from the conclusion of the Thirty-Sixth AGM until the conclusion of the
Thirty-Ninth AGM of the Bank.

The term of Walker Chandiok & Co LLP as one of the the Bank's Joint Statutory
Auditors expires at the conclusion of the Thirty-Seventh AGM of the Bank.

Pursuant to the RBI Circular and the Policy, the Bank is required to appoint a Joint
Statutory Auditor for a period of three years with effect from FY 2022-23 till FY 2024-25,
to hold office from the conclusion of the Thirty-Seventh AGM until the conclusion of the
Fortieth AGM of the Bank.

In this regard, based on a review of the profile, including the size, experience and
area of specialization and recommendation of the Audit Committee and subject to the
approval of RBI, the Board has, on 31st March, 2022, inter alia, approved and
recommended for the approval of the members, the appointment of KKC & Associates LLP
(formerly, Khimji Kunverji & Co LLP), Chartered Accountants (Firm Registration Number:
105146W / W-100621), as the second Joint Statutory Auditor of the Bank, for a period of
three years with effect from FY 2022-23, to hold office from the conclusion of the
Thirty-Seventh AGM until the conclusion of the Fortieth AGM of the Bank for the purpose of
the audit of the Bank's standalone and consolidated financial statements, with power to
the Board (including the Audit Committee of the Board or any other person(s) authorized by
the Board or Audit Committee in this regard), to do all such acts, matters, deeds and
things as may be necessary or desirable in connection with or incidental for giving effect
to the said appointment of the Joint Statutory Auditors, including but not limited to
determination of roles and responsibilities / scope of work of the respective Joint
Statutory Auditors, negotiating, finalizing, amending, signing, delivering, executing the
terms of appointment, including any contracts or documents in this regard, alter and vary
the terms and conditions of remuneration arising out of increase in scope of work,
amendment in Accounting Standards or regulations and such other requirements resulting in
the change in scope of work, without being required to seek any further consent or
approval of the members of the Bank.

KKC & Associates LLP has consented to act as one of the Joint Statutory Auditors of
the Bank and have intimated that such appointment would be in accordance with the
conditions prescribed in Section 139 of the Act and have also confirmed their eligibility
to be appointed as Statutory Auditors, in terms of Section 141 of the Act and applicable
rules and RBI Guidelines.

The RBI has, vide its letter bearing No. DOS. CO.RPD. No. S2271 /08.30.005/2022- 23
dated 5th July, 2022, granted its approval for the aforementioned appointment
of KKC & Associates LLP, as one of the Joint Statutory Auditors.

Further, based on the recommendation of the Audit Committee, the Board at its meeting
held on 23 rd July, 2022, approved an overall audit fee not exceeding
Rs3,50,00,000/- (Rupees Three Crore Fifty Lakh Only), plus outlays and taxes, as
applicable, for FY 2022-23, subject to the approval of the members, to be allocated by the
Bank between M/s. Price Waterhouse LLP, Chartered Accountants and KKC & Associates
LLP, depending upon their respective scope of work.

The approval of members of the Bank is, accordingly, being sought pursuant to the
provisions of Sections 139, 141, 142 and other applicable provisions, if any, of the Act
and the relevant Rules thereunder and pursuant to Section 30 of the BR Act and RBI
Circular for:

i. the aforementioned appointment of KKC & Associates LLP, as one of the Joint
Statutory Auditors; and

ii. fixing the remuneration of the Joint Statutory Auditors for FY 2022-23.

As per the applicable provisions of law, including the RBI Circular and the BR Act, the
appointment of Joint Statutory Auditors would be subject to the approval of the RBI every
year.

As required under Regulation 33(1)(d) of the SEBI Listing Regulations, the Joint
Statutory Auditors have confirmed that they have subjected themselves to the peer review
process of the Institute of Chartered Accountants of India ("ICAI") and that
they hold a valid certificate issued by the Peer Review Board of ICAI.

There are no qualifications, reservations, adverse remarks or disclaimers made by
Walker Chandiok & Co. LLP, Chartered Accountants and Price Waterhouse LLP, in the
Statutory Auditors Report for FY 2021 -22.


Payment of additional fees / remuneration to the Statutory Auditors for FY 2021-22:

At the AGM of the Bank held on 25th August, 2021, the members had approved
the appointment of Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration
Number 001076N / N500013) and Price Waterhouse LLP, Chartered Accountants (Firm
Registration Number 301112E / E300264), as Joint Statutory Auditors of the Bank for the
purpose of the audit of the Bank's standalone and consolidated financial statements, for
FY 2021-22. An overall fee of Rs 29,000,000/- (Rupees Two Crore Ninety Lakh Only), to be
allocated by the Bank between the Joint Statutory Auditors, depending upon their
respective scope of work in addition to the out of pocket expenses, outlays and taxes, as
applicable, had been approved by the members.

There have been various additional requirements during FY 2021-22 for which the
Statutory Auditors have provided additional services, and in respect of which an
additional remuneration / fees of Rs 2,000,000 (Rupees Twenty Lakh Only) plus outlays and
taxes at the applicable rates are proposed to be paid to the Joint Statutory Auditors.
Based on the approval and recommendation of the Audit Committee, the Board, at its meeting
held on 4th May, 2022, approved of the aforementioned payment of additional
remuneration / fees to the Joint Statutory Auditors, subject to the approval of the
members of the Bank and such other consents / permissions / sanctions as may be required
from any regulatory / statutory authority, if any.

Accordingly, approval of the members is now being sought for the payment of additional
fees / remuneration to the Joint Statutory Auditors, for FY 2021-22, for the general
increase in their efforts, depending upon their respective scope of work, in addition to
the out of pocket expenses, outlays and taxes, as applicable.


INTERNAL FINANCIAL CONTROLS

The Board of Directors confirm that your Bank has laid down set of standards, processes
and structure which enables it to implement internal financial controls across the
organisation with reference to financial statements and that such controls are adequate
and are operating effectively. Controls are reviewed / revisited / updated / deleted each
year for change in processes / organisational changes / product changes, etc. Given the
COVID-19 pandemic, all additional controls that were implemented due to lockdowns and
consequential Work From Home requirements were also considered and incorporated. Testing
is done for each of the controls with the help of an independent firm of Chartered
Accountants, on behalf of Management, who confirm to the Audit Committee of the Bank, the
existence and operating effectiveness of controls over financial reporting. During the
year under review, no material or serious observations were observed for inefficiency or
inadequacy of such controls.


IMPLEMENTATION OF IND AS

The Ministry of Finance, GOI, had vide its press release dated 18th January,
2016 outlined the roadmap for implementation of International Financial Reporting
Standards ("IFRS") converged Ind AS for Scheduled Commercial Bank (excluding
RRBs), NBFC and Insurance companies. The RBI vide its circular dated 22nd
March, 2019, deferred the implementation of Ind AS for Scheduled Commercial Banks
("SCB") till further notice, pending the consideration of some recommended
legislative amendments by GOI. The RBI has not issued any further notification on
implementation of Ind AS for SCBs.

The Bank has so far taken following steps for implementation of Ind AS:

i. Formed Steering Committee for Ind AS implementation. The Steering Committee
comprises representatives from Finance, Risk, Information Technology and Treasury. The
Committee closely reviews progress of Ind AS implementation in the Bank and provides
guidance on critical aspects of the implementation.

ii. The Bank has identified changes required to its IT systems for automation of Ind AS
reporting. The Bank has identified an IT solution for Ind AS reporting and is currently in
the process of implementing the solution.


RELATED PARTY TRANSACTIONS3

During the year, the Bank has not entered into any materially significant transaction
with its related parties, which could lead to a potential conflict of interest between the
Bank and these parties. All the related party transactions that were entered into during
the year were on an arm's length basis and in ordinary course of business. Hence, pursuant
to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules,
2014, there are no related party transactions to be reported under Section 188(1) of the
Act and Form AOC-2 is not applicable to the Bank.

The members of the Bank had, vide resolutions passed through postal ballot on 19th
January, 2022, approved related party transactions by the Bank, as potential Material
related party transactions under the then existing provisions of Regulation 23 of the SEBI
Listing Regulations, with Infina Finance Private Limited ("Infina") and Mr. Uday
Kotak for FY 2022-23, at an arm's length basis and in the ordinary course of business of
the Bank. However, during the year, none of the related party transactions of the Bank
exceeded the applicable materiality threshold.

The Bank has a Board approved 'Policy on dealing with Related Party Transactions'. The
same is available on the Bank's website viz., URL:
https://www.kotak.com/en/investor-relations/qovernance/policies.html

All related party transactions are placed before the Audit Committee for its review and
approval on a quarterly basis. An omnibus approval of the Audit Committee is obtained for
the related party transactions which are repetitive in nature. Further, all related party
transactions are reviewed by the Statutory Auditors of the Bank. Also, the Bank had
engaged the services of an external professional firm for verification of the related
party transactions during the year as also their disclosure and for validation of the
process followed by the Bank.

Members may refer to Note 7 of Schedule 18 - Notes to Accounts of the Standalone
Financial Statement and Note 25 of Schedule 17 - Notes to Accounts of the Consolidated
Financial Statement of your Bank, which set out related party disclosures pursuant to
Accounting Standards AS-18.


PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The provisions of Section 186 of the Act except sub-section (1), do not apply to loans
made, guarantees given and securities provided by a banking company in the ordinary course
of its business and are exempted from the disclosure requirement under Section 134(3)(g)
of the Act.

The particulars of investments made by the Bank are disclosed in Schedule 8 of the
Financial Statements as per the applicable provisions of Banking Regulation Act, 1949.


RISK MANAGEMENT POLICY

Pursuant to Regulation 21 of the SEBI Listing Regulations, your Bank has a Risk
Management Committee, details of which can be referred to in the Report on Corporate
Governance forming part of this Report. Your Bank has a robust Risk Management Framework.
While Risk Management is the responsibility of the Board of Directors, it has delegated
its powers relating to monitoring and reviewing risks associated with the Bank to the Risk
Management Committee. The Bank has also adopted a Group Enterprise-wide Risk Management
framework supported by appropriate policies and processes for management of Credit Risk,
Market Risk, Liquidity Risk, Operational Risk and various other Risks. Details of
identification, assessment, mitigations, monitoring and the management of these risks are
mentioned in the Management Discussion and Analysis Report appended to this Report.


CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Bank has undertaken various initiatives for the conservation of energy. Details of
the same are available in the BRSR of the Bank which is available on the Bank's website
viz., URL:
https://www.kotak.com/en/investor-relations/financial-results/annual-reports.html

The Bank has used information technology extensively in its operations as detailed in
the para on 'Technology and Digitisation'. Further, the provisions of Section 134(3)(m) of
the Act, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 for Foreign Exchange
Earnings are not applicable to your Bank.


REPORTING OF FRAUDS BY AUDITORS

During the year under review, no instances of fraud committed in the Bank by its
officers or employees were reported by the Statutory Auditors and Secretarial Auditor
under Section 143(12) of the Act, to the Audit Committee or the Board of Directors of the
Bank.


MAINTENANCE OF COST RECORDS

Being a Banking company, your Bank is not required to maintain cost records as
specified by the Central Government under Section 148(1) of the Act.


SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
IMPACTING THE GOING CONCERN STATUS AND OPERATIONS IN FUTURE

During the year under review, no significant and / or material order was passed by any
regulatory authority or Court or Tribunal against the Bank, which could impact the going
concern status or its future operations.


MATERIAL CHANGES AND COMMITMENT AFFECTING THE FINANCIAL POSITION OF THE BANK

There are no material changes and commitments which affected the financial position of
your Bank, which occurred between the end of the financial year to which the financial
statements relate and up to the date of this Report.


ANNEXURES

The following statements / reports / certificates are annexed to the Directors' Report:

i. Annual Report on Corporate Social Responsibility Activities of the Bank for the
financial year ended 31st March, 2022.

ii. Certificate confirming that none of the Directors of the Bank have been debarred or
disqualified from being appointed or continuing as directors of Companies by SEBI/MCA or
any such statutory authority.

iii. Disclosures pursuant to Rule 5 of Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014.

iv. Secretarial Audit Report pursuant to Section 204 of the Act and Regulation 24A the
SEBI Listing Regulations.

v. Report on Corporate Governance pursuant to Schedule V Part C of the SEBI Listing
Regulations along with Certificate from the auditors regarding compliance of conditions of
Corporate Governance as stipulated in para E of Schedule V of the SEBI Listing
Regulations.

vi. Management Discussion and Analysis Report pursuant to Schedule V Part B of the SEBI
Listing Regulations.


ACKNOWLEDGEMENT

Your Directors would like to place on record their gratitude for the valuable guidance
and support received from the RBI, the SEBI, Stock Exchanges, Insurance Regulatory and
Development Authority and other Government and Regulatory agencies.

Your Directors acknowledge the support of the Members for their continued support and
also wish to place on record their appreciation for employees for their commendable
efforts, commitment, teamwork and professionalism.


  

    
For and on behalf of the Board of Directors
  
  

    
Prakash Apte Chairman
  
  

    
Date: 23rd July, 2022
  
  

    
Place: Mumbai