Internal-Guidlines on Corporate Governance

1. Preamble

Corporate Governance refers to the framework of principles, structures and processes through which the affairs of a company are directed, managed and controlled. It defines how authority is exercised, how decisions are taken, and how accountability is ensured within the organisation.

The Company is committed to maintaining the highest standards of governance in its conduct of business. The Board of Directors recognises that effective governance is fundamental to institutional credibility, long-term stability and responsible corporate behaviour.

Accordingly, the Company seeks to foster a governance culture rooted in integrity, transparency, accountability and prudent oversight, ensuring that business decisions are aligned with sound risk management and ethical standards.

2. Purpose and Scope

2.1 Purpose

These Internal Guidelines on Corporate Governance (“Guidelines”) are framed in accordance with:

• Directions and Master Directions issued by the Reserve Bank of India (RBI);
• Directions issued by the Insurance Regulatory and Development Authority of India (IRDAI), to the extent applicable to Corporate Agents;
• Applicable provisions of the Companies Act, 2013 and the Companies (Meetings of the Board and its Powers) Rules, 2014, as amended from time to time;
• Secretarial Standard–1 and Secretarial Standard–2 issued by the Institute of Company Secretaries of India;
• Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), where applicable.

The purpose of these Guidelines is to formally codify the governance framework of the Company and to:

• Establish structured mechanisms for oversight and decision-making;
• Clearly define the roles and responsibilities of the Board, its Committees, and Senior Management;
• Ensure compliance with applicable regulatory and statutory requirements;
• Strengthen internal control, audit, and risk governance systems;
• Provide a consistent governance framework applicable across the organisation.

These Guidelines serve as the foundational document governing corporate oversight within the Company

2.2 Scope

These Guidelines shall apply to:

• The Board of Directors;
• All Committees of the Board constituted from time to time;
• Key Managerial Personnel (KMP);
• Senior Leadership Team;
• All employees of the Company, to the extent relevant to their roles and responsibilities.

These Guidelines cover, inter alia:

• Board composition, functioning and evaluation;
• Constitution and responsibilities of Board Committees;
• Risk governance and internal control framework;
• Regulatory compliance and disclosure standards;
• Ethical conduct and conflict of interest principles.

The Board shall review these Guidelines periodically and update them as necessary to ensure continued alignment with evolving regulatory requirements and governance best practices.

3. Governance Philosophy

• The Board must be independent, informed, and effective.
• Risk governance must be integrated with business strategy.
• Compensation structures must not encourage excessive risk-taking.
• Transparency enhances stakeholder confidence.

4. Three Lines of Defence Framework

The Company shall adopt the Three Lines of Defence Model to ensure effective risk management, internal control, and governance oversight in alignment with regulatory expectations of the Reserve Bank of India.

• First Line of Defence – Business & Operations: Business and operational units shall own and manage risks on a day-to-day basis and ensure adherence to internal policies, procedures and regulatory requirements.
• Second Line of Defence – Risk & Compliance Functions: The Risk Management and Compliance functions shall independently oversee risk monitoring, regulatory compliance, policy implementation and effectiveness of internal controls.
• Third Line of Defence – Internal Audit: The Internal Audit function shall provide independent assurance to the Board / Audit Committee regarding the adequacy and effectiveness of governance, risk management and internal control systems.

5. Board of Directors

5.1 Structure

The Board shall comprise:

1. Executive Director(s)
2. Non-Executive Director(s)/Nominee Directors
3. Independent Directors
4. At least one-Woman Director

5.2 Role and Responsibilities of the Board

The Board shall:

Strategic Oversight

1. Strategical Decision Making
2. Ensure sustainable growth.

Financial Oversight

• Approve financial statements/financial results.

Risk Governance

1. Approve Risk Management Framework.
2. Review the progress made in putting place a progressive risk management system and Risk Management Policy and Strategy Followed by the Company.
3. Oversee risk limits and exposures.
4. Review stress testing results.

Regulatory Compliance

To ensure that the company is in compliance with regulatory prescriptions.

Corporate Governance

1. Conformity with corporate governance standards viz., in composition of various committees, their role and functions, periodicity of the meetings and compliance with coverage and review functions, etc.

Ethical Leadership

1. Promote sound corporate culture.
2. Ensure whistle-blower protection.
3. Oversee prevention of fraud and misconduct.

The Board shall act in fiduciary capacity and in the best interest of the Company and its stakeholders.

5.3 Fit and Proper Criteria of Directors

The Company shall ensure that all existing and proposed Directors satisfy the “Fit and Proper” criteria at the time of appointment a

Key Criteria

A Director shall:

• Integrity & Reputation
  • Not be convicted of any offence involving moral turpitude or economic offence.
  • Not be declared a wilful defaulter.
  • Not be debarred/restrained by RBI or any financial sector regulator
  • Not be disqualified under the Companies Act, 2013.

• Financial Soundness
  • Not be insolvent or in default to banks/financial institutions

• Competence & Capability
  • Possess relevant qualifications, expertise and experience.
  • Be able to devote sufficient time and attention to the Company’s affairs.

• Conflict of Interest
  • Disclose all interests and avoid material conflicts.

• Declaration by Director
  • Every Director shall submit a declaration and undertaking confirming compliance at the time of appointment and annually thereafter.

5.4 Independent Directors

Independent Directors shall:

• Meet criteria under Section 149(6) of Companies Act, 2013;
• Not to serve on more than Board of 3 NBFC-ML/UL;
• Submit annual declaration of independence;
• Disclose conflict of interest;
• Abide by Code of Conduct for Independent Director mentioned Schedule IV of the Companies Act, 2013.

Separate Meeting of Independent Directors:

• To have a separate meeting of Independent Directors, at least once in a financial year without the attendance of non-independent directors and members of management (all theindependent directors of the company shall strive to be present at such meeting);
• The meeting shall:
  • review the performance of non-independent directors and the Board as a whole
  • review the performance of the Chairperson of the company
  • assess the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

Evaluation mechanism:

The performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.

On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent director.

6. Board Meetings

6. Board Meetings

• To conduct at least four times a year or as required by law.
• To circulate detailed agenda in advance.
• Directors may seek additional information.
• Sensitive matters may be tabled at meeting.
• Minutes circulated and recorded as per SS-1.

7. Information to be placed before Board

To enable informed decision-making and effective oversight, the following information shall be placed before the Board at such periodic intervals as may be prescribed under applicable laws or as determined by the Board:

7.1 Financial & Business Performance

• Quarterly and annual financial statements, including variance analysis.
• Budget vs. actual performance (Target vs. Achievement).

7.2 Asset Liability & Liquidity Management

• Asset Liability Management (ALM) statement and structural liquidity position.
• Funding profile and maturity pattern of assets and liabilities.
• Borrowing mix and cost of borrowings. Funding profile and maturity pattern of assets and liabilities.

7.3 Risk Governance

• Update on Risk Management Framework

7.4 Regulatory & Compliance Reporting

• Compliance certificate from Head of Compliance.
• Observations from RBI/SEBI/IRDAI inspections and status of compliance.

7.5 Fraud Risk & Vigilance

• Fraud cases reported during the period (as per RBI Fraud Risk Management Directions).
• Status of investigation and reporting to RBI.
• Vigilance matters and disciplinary actions.

7.6 Customer Protection & Conduct

• Review of compliance of the Fair Practice Code.
• Review of compliance of the functioning of the grievance redressal mechanism.
• Complaints under Prevention of Sexual Harassment (POSH) Act.

7.7 Related Party Matters

• Related Party Transactions (RPTs), including arm’s length confirmation.
• Disclosure of interest by Directors and KMPs.

7.8 Audit & Internal Control

• Internal Audit reports and significant findings.
• Statutory Auditor observations and management responses.

7.9 IT & Cyber Security

• IT governance review and IS Audit observations.

7.10 Rating & Market Standing

• Credit rating updates and rating migration.
• Investor grievances.

7.11 Corporate Social Responsibility (CSR)

• CSR spending status and annual action plan progress.

8. COMMITTEES

8A Board Level Committees

• CSR spending status and annual action plan progress.

The Company shall have following Board Level Committees:

The Terms of Reference/Charter of the aforesaid Board Level Committees shall be as follows:

8A.1 Audit Committee (ACB)

The Terms of Reference of ACB shall be as follows:

• The recommendation for appointment, remuneration and terms of appointment of auditors of the company;
• To review and monitor the auditor’s independence and performance, and effectiveness of audit process;
• Examination of the financial statement and the auditors’ report thereon;
• Approval or any subsequent modification of transactions of the company with related parties, pursuant to provisions applicable law;
  [Provided that the Audit Committee may make omnibus approval for related party transactions proposed to be entered into by the company subject to such conditions as may be prescribed;]
• To review the valuation of undertakings or assets of the company, wherever it is necessary;
• Evaluation of internal financial controls and risk management systems;
• Monitoring the end use of funds raised through public offers, where applicable and related matters.
• To oversight of Information System Audit of the internal systems and processes.
• To review the ageing analysis of entries pending reconciliation with outsourced vendors
• A periodic review of incidents of fraud
• To undertake such other functions as may be required under applicable laws, regulatory directions, or as may be assigned by the Board from time to time.

Composition of Audit Committee:

The Audit Committee shall consist at least three Directors with Independent Director forming majority and at least one Investor’s Nominee Director (Non-Executive Director) and such other member(s) as may be decided by the Board from time to time.

The Chief Executive Officer of the Company shall be permanent invitee to the Audit Committee.

Frequency of Meeting:

At least once in a quarter

8A. 2 Nomination & Remuneration Committee (NRC)

The Terms of Reference of NRC shall be as follows:

• To ensure remuneration levels and structure shall be reasonable and sufficient to attract, retain and motivate qualified Directors.
• The linkage between remuneration and performance shall be clear and aligned with appropriate performance benchmarks.
• Remuneration of Directors, KMPs and Senior Management/Senior Leadership Team shall appropriately balance fixed and variable pay, reflecting short- and long-term performance objectives.
• The NRC may coordinate with the Risk Management Committee (RMC) to ensure effective alignment between compensation and risk.
• The NRC shall ensure compensation levels support the Company’s earnings retention and maintenance of adequate capital based on ICAAP.
• The NRC shall ensure ‘fit and proper’ status of proposed/existing Directors and absence of conflict of interest in appointments of Directors, KMPs and senior management.
• The NRC shall scrutinize declarations submitted by Directors
• To undertake such other functions as may be required under applicable laws, regulatory directions, or as may be assigned by the Board from time to time.

Composition of NRC

NRC shall consist at least three non-executive Directors out of which not less than one-half shall be independent directors, at least one Investor’s Nominee Director (Non-Executive Director) and Chief Executive Officer of the Company and such other member(s) as may be decided by the Board from time to time.

Frequency of Meeting:

At least once in a financial year.

8A. 3 Stakeholders Relationship Committee (SRC)

The Terms of Reference of SRC shall be as follows:

• To consider and resolve grievances of investors and security holders of the Company, including matters relating to transfer/transmission of securities, non-receipt of dividends, annual reports and other investor services.
• To review the status of customer grievance redressal on a periodic basis and provide oversight, wherever such matters are placed before the Committee.
• To monitor the effectiveness of the stakeholder grievance redressal mechanism of the Company.

Composition of SRC

SRC shall consist of at least three Directors, including at least one being Independent Director, at least one being Investor’s Nominee Director (Non-Executive Director), Chief Executive Officer of the Company and such other member(s) as may be decided by the Board from time to time.

Frequency of Meeting

At least once in a financial year.

8A. 4 Risk Management Committee (RMC)

The Terms of Reference of RMC shall be as follows:

• To manage the integrated risk;
• To lay down procedures to inform board about risk assessment and minimization proceduresin the Company;
• To reviewof Risk Register;
• To reviewon risk management trends;
• To frame, implement and monitorthe risk management plan forthe Company;
• To review central record of all material outsourcing on half yearly basis;
• To oversee the effectiveness of the framework for EWS;
• To perform such other functions asthe Board may deem fit fromtime totime,which shall also cover cybersecurity;
• To suggest methodologies to measure / quantify the risks;
• Sub-delegate its powers and discretions to executives or management committee of the company, with or without power to delegate further;
• To ensure appropriate Risk Organization structure is set up and maintain independence of Risk Management Department;
• To set objectives and review performance of CRO;
• To monitor and review non-compliance, limit breaches, audit/regulatory findings and policy exceptions with respect to Risk Management;

Composition of RMC

The RMC shall consist at least three Directors, including at least one being Independent Director, at least one being Investor’s Nominee Director (Non-Executive Director), Chief Executive Officer of the Company and such other member(s) as may be decided by the Board from time to time.

Frequency of Meeting

At least once in a quarter

8A. 5 Corporate Social Responsibility Committee (CSR Committee)

The Terms of Reference of CSR Committee shall be as follows:

• To formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company
• To recommend the amount of expenditure to be incurred on the CSR Activities as above
• To monitor the Corporate Social Responsibility Policy of the company from time to time.

Composition of CSR Committee

The CSR Committee shall consist at least three Directors including at least one being Independent Director, at least one being Investor’s Nominee Director (Non-Executive Director) and Chief Executive Officer of the Company, and such other member(s) as may be decided by the Board from time to time.

Frequency of Meeting

At least once in a year

8A. 6 Wilful Defaulters Review Committee

The Terms of Reference of Wilful Defaulter Review Committee shall be as follows:

• To review the proposal of the Identification Committee for classification of a borrower / guarantor / promoter / director / persons in charge of and responsible for the management of the affairs of the entity as a wilful defaulter, after ensuring that due process has been followed.
• To examine the written representations submitted by the concerned borrower / guarantor / promoter / director / persons responsible for the management of the entity.
• To provide an opportunity of personal hearing, if requested by the concerned persons, before taking a final decision.
• Where the opportunity of personal hearing is not availed, to decide the matter based on the facts on record and written submissions, if any.
• To pass a reasoned order confirming or rejecting the proposal of the Identification Committee.
• To communicate the final decision of the Committee to the borrower and other concerned persons.
• To undertake such other functions as may be required under applicable laws, regulatory directions, or as may be assigned by the Board from time to time.

Composition of Wilful Defaulters Review Committee

The Wilful Defaulter Committee shall consist at least three Directors, including at least two shall be Independent Directors or Non-Executive Directors (including at least one Investor’s Nominee Director) and Chief Executive Officer of the Company, and such other member(s) as may be decided by the Board from time to time.

Frequency of Meeting

As and when required

8A. 7 IT Strategy Committee (ITSC)

The Terms of Reference of ITSC shall be as follows:

• To ensure the Company has an effective IT strategic planning process.
• To guide preparation of the IT Strategy and ensure alignment with the Company’s overall business objectives.
• To satisfy itself that IT and Information Security governance structures are effective, accountable and adequately resourced with clearly defined responsibilities.
• To ensure robust processes are in place for assessment and management of IT and cybersecurity risks.
• To ensure IT and cybersecurity budgets are commensurate with the Company’s maturity, risk environment and industry standards and are properly utilised.
• To review, at least annually, the adequacy and effectiveness of the Company’s Business Continuity and Disaster Recovery framework.
• To undertake such other functions as may be required under applicable laws, regulatory directions, or as may be assigned by the Board from time to time.

Composition of ITSC

The ITSC shall consist at least three Directors, including at least one being Independent Director, at least one being Investor’s Nominee Director (Non-Executive Director), Chief Executive Officer of the Company and such other member(s) as may be decided by the Board from time to time.

Frequency of Meeting

At least once in a quarter

8B. Other Management/Executive Level Committees

Apart from the aforesaid Board Level Committees, the Company shall have the following Management/Executive Level Committees:

1	Assets and Liability Management Committee (ALCO)
2	Finance Committee
3	Credit Committee
4	Compromise, Settlement & Write-Off Committee
5	Committee of the Executives (CoE)- for Fraud Monitoring
6	Grievance Redressal Management Committee
7	Wilful Defaulter Identification Committee
8	IT Steering Committee
9	Information Security Committee
10	Internal Committee (Under Prevention of Sexual Harassment. It refers to the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013)
11	Outsourcing Committee

The terms of reference/Charter of the above-mentioned Committees shall be determined by the Board from time to time as per Applicable Laws.

All decisions pertaining to the constitution/ re-constitution/ dissolution of Committees, appointment of members and fixing/ modification of terms of reference of the various Committees shall be made by the Board from time to time as desired necessary.

9. Auditors

Statutory Auditors

Appointment of Statutory Auditors

The Board of Directors, based on the recommendation of the Audit Committee, shall appoint the Statutory Auditors of the Company in accordance with the provisions of the Companies Act, 2013 and the guidelines issued by the Reserve Bank of India.

The Audit Committee shall ensure that the proposed Statutory Auditors possess the required professional competence, experience, and independence. Prior to appointment and at each subsequent year of engagement, a written declaration shall be obtained from the Auditors confirming their eligibility, independence, and compliance with applicable regulatory requirements.

The Audit Committee shall periodically review:

• Independence and performance of the Statutory Auditors;
• Effectiveness of the audit process; and
• Compliance with regulatory prescriptions.

Internal Auditors

The Board of Directors of the Company shall appoint Internal Auditors in accordance with the provisions of Companies Act, 2013 and other applicable law(s), who shall perform independent and objective assessment of the internal controls, processes and procedures instituted by the management and accordingly monitor its adequacy and effectiveness.

Secretarial Auditors

The Company shall have a company secretary in practice in terms of Section 204 of the Companies Act, 2013 read with the rules made thereunder and as per the other applicable law(s), who shall be responsible to conduct secretarial audit of the Company as per the rules made thereunder to conduct a secretarial audit of the Company for every financial year.

The secretarial auditor shall provide its report in the form and manner prescribed under the applicable laws / regulations. The secretarial audit report shall be placed before the Board for its noting and records and the same to be annexed to the board’s report which shall be circulated to the members of the Company in accordance with the applicable laws / regulations.

10. Role and Responsibilities of Chief Risk Officer (CRO)

The Company shall have a Chief Risk Officer (CRO), in accordance with the guidelines issued by the Reserve Bank of India. The CRO shall function independently and shall have direct access to the Risk Management Committee (RMC) and the Board.

Key Responsibilities

The CRO shall be responsible for:

Key Responsibilities

• Risk Management
  • Developing and implementing a risk management framework covering credit, market, liquidity, operational, IT, cyber, compliance and reputational risks.
  • All credit products of the Company shall be vetted by its CRO from the angle of inherent and control risks
  • The CRO’s role in deciding credit proposals shall be limited to being an advisor.
  • CRO will take care of duties of CISO and will be assisted by Information Security Officer.
• Reporting & Escalation
  • Placing periodic risk reports before the RMC and Board.
• Independence
  • the CRO shall have direct reporting lines to the CEO / Risk Management Committee of the Board (RMC);
  • in case the CRO reports to the CEO, the RMC / Board shall meet the CRO without the presence of the CEO, at least on a quarterly basis;
• Conflict of Interest
  • There shall not be conflict of interest w.r.t. roles and responsibility of CRO.

11. Head of Compliance

In order to ensure an effective compliance culture the company to ensure to have an independent compliance function and a strong compliance risk management framework. In this regard, the Company shall have a Head of Compliance, in accordance with the applicable provisions of Laws(s).

12. Key Managerial Personnel (KMP)

• The Company shall have KMP as per the provisions of Companies Act, 2013 and other applicable law(s).
• Except for directorship in a subsidiary, Key Managerial Personnel (KMP) shall not hold any office (including directorships) in any other NBFC-ML or NBFC-UL. (Note: Such KMP may assume directorship in NBFCs-BL).
• The Company shall have a Board approved Nomination and Remuneration Policy for payment of remuneration to KMP, as per applicable provisions of the Reserve Bank of India and other applicable law(s).

13. Policies adopted by the Company

In accordance with the applicable provisions of the Companies Act, 2013, the directions/ guidelines issued by the RBI, under other applicable laws and for internal requirements and operational convenience, the Company shall frame and adopt various policies and shall modify/ update/ revise/ review as and when required under the applicable laws or due to change in the functioning or the structure of the Company.

14. Regulatory Override

• Not with standing anything contained in this Policy, in case of any inconsistency between this Policy and any applicable RBI or statutory regulation, the provisions of such regulation shall prevail.
• Any amendment or modification to the applicable regulatory framework shall be deemed to be automatically incorporated into this Policy with effect from the date of such change. The Policy shall be updated accordingly, annually, if required.

15. Policy Review

This Policy shall be reviewed by the Board of Directors of the company annually.