External Risk factors of IDFC Bonds

Long term infrastructure bonds of face value of Rs. 5,000 each, in the nature of secured, redeemable, non-convertible debentures not exceeding Rs. 50,000 million, to be issued at par Face Value (Rs.): 5,000/Rating: (ICRA)AAA from ICRA & Fitch AAA(ind) from Fitch Lock-in Period: 5 years from the Deemed Date of Allotment Trading: Dematerialized form only following expiry of the Lock-in Period Maturity Date: 10 years from the Deemed Date of Allotment Buyback Date: Date falling 5 years and one day from the Deemed Date of Allotment

No tax benefits under Section 80CCF of the Income Tax Act if the amount exceed 20,000 per annum No prior public market for the Bonds and it may not develop in the future, and the price of the Bonds may be volatile on maturity The legal regime in respect of public issue of infrastructure bonds has been recently introduced and its efficiency is yet to be established.

Unable to recover, on a timely basis or at all, the full value of the outstanding amounts and/or the interest accrued thereon in connection with the Bonds Debenture Redemption Reserve ( DRR ) would be created up to an extent of 50% for the Bonds. Any downgrading in credit rating of the Bonds may affect the trading price of the Bonds

The Bondholders are required to comply with certain lock-in requirements Changes in interest rates may affect the price of the Company s Bonds Payments made on the Bonds is subordinated to certain tax and other liabilities preferred by law

Slowdown of economic growth in India Increased volatility or inflation of commodity prices in India Significant shortages in the supply of crude oil or natural gas, and other raw materials Financial instability in other countries Political instability or changes in the Government

Increase in regional hostilities, terrorist attacks or social unrest in India Natural calamities Difficulties faced by other banks, financial institutions or NBFCs or the Indian financial sector as a whole