SK Finance Limited

Nomination - Remuneration and

Compensation Policy
2023-24
SUMMARY OF POLICY

Policy Name Nomination - Remuneration and Compensation Policy (herein

after referred as “NRC Policy”)
Regulations Section 178 of the Companies Act, 2013 (herein after referred as
“Act”), Regulation 19 of Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations
2015 (herein after referred as “Listing Regulations”),

‘Fit and Proper’ Criteria for directors of NBFCs as laid down in

Master Direction - Non-Banking Financial Company -
Systemically Important Non-Deposit taking Company and
Deposit taking Company (Reserve Bank) Directions, 2016 and

RBI Circular DOR.GOV.REC.No.29/18.10.002/2022-23 on

Guidelines on Compensation of Key Managerial Personnel (KMP)
and Senior Management in NBFCs dated April 29, 2022.

Review Cycle Annually or in the event of any change in regulatory guidelines

Approver Board of Directors of SK Finance Limited (Formerly known as
Ess Kay Fincorp Limited)
Latest approval/review date 03rd May 2023
Version 2.2

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Table of Contents

PREAMBLE .......................................................................................................................................................3
PURPOSE ..........................................................................................................................................................3
DEFINITIONS ...................................................................................................................................................4
CONSTITUTION OF NOMINATION & REMUNERATION COMMITTEE ........................................................4
MINUTES OF COMMITTEE MEETING ............................................................................................................5
ROLE OF COMMITTEE.....................................................................................................................................5
TENURE ............................................................................................................................................................7
EVALUATION MECHANISM ............................................................................................................................7
The Board .....................................................................................................................................................7
KMPs and SMPs............................................................................................................................................8
RETIREMENT ...................................................................................................................................................8
REMOVAL/ RESIGNATION/ EXIT ..................................................................................................................8
REMUNERATION AND COMPENSATION OF KMPs AND SMPs....................................................................9
Remuneration of Managing Director / Whole Time Director / Non-Executive Director /Independent
Director (“Collectively referred as Directors”) .........................................................................................9
Minimum Remuneration .............................................................................................................................9
Sitting Fees ...................................................................................................................................................9
Commission..................................................................................................................................................9
Risk Alignment of Compensation ...............................................................................................................9
Approval Mechanism for Compensation of KMPs/ SMPs ........................................................................9
COMPENSATION STRUCTURE......................................................................................................................10
MALUS / CLAW BACK PROVISIONS .............................................................................................................11
FIT AND PROPER CRITERIA .........................................................................................................................12
POLICY SEVERABLE ......................................................................................................................................12
AMENDMENT.................................................................................................................................................12

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PREAMBLE
This NRC Policy provides the framework for remuneration and compensation of members of the Board
of Directors, Key Managerial Personnel’s (“KMP”) and Senior Management Personnel (“SMP”) of SK
Finance Limited (Formerly known as Ess Kay Fincorp Limited) (herein after referred as “SKFL/ the
Company”). This NRC Policy is guided by the principles and objectives as enumerated in the following:

a) Section 178 of the Companies Act, 2013 (herein after referred as “Act”) and Regulation 19 of
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)
Regulations 2015 (herein after referred as “Listing Regulations”),
b) ‘Fit and Proper’ Criteria for directors of NBFCs as laid down in Master Direction - Non-Banking
Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking
Company (Reserve Bank) Directions, 2016, (as amended from time to time) and
c) Compensation requirements as enumerated in RBI Circular on Guidelines on Compensation of
Key Managerial Personnel (KMP) and Senior Management in NBFCs dated April 29, 2022
(Clause b & c herein after collectively referred as “RBI Guidelines”).

PURPOSE
The Nomination and Remuneration Committee (herein after referred as “NRC” or “Committee”) and
this Policy shall be drafted in compliance with the Act, Listing Regulations and RBI Guidelines. The
objective of this policy is to lay down a framework in relation to remuneration/compensation of
directors, KMP, SMP and other employees. The Key Objectives of this NRC policy would be as follows:

a) Ensure that the level and composition of remuneration is reasonable and sufficient to attract,
retain and motivate directors, KMP, SMP and other employees of the quality required to run the
Company successfully.
b) Ensure reasonableness of remuneration to attract, retain and motivate competent resources, a
clear relationship of remuneration/compensation to performance and a balance between
rewarding short and long-term performance of the Company,
c) Ensure that the relationship of remuneration to performance is clear and meets appropriate
performance benchmarks.
d) Ensure compliance with applicable laws, rules and regulations as well as ‘Fit and Proper
criteria’ of directors before their appointment and on a continuing basis.
e) To formulate criteria for evaluation of performance of the members of the Board including
Independent Directors and provide necessary report to the Board for further evaluation of the
Board.
f) To provide to Key Managerial Personnel and SMP reward linked directly to their effort,
performance, dedication and achievement relating to the Company’s operations.
g) To retain, motivate and promote talent and to ensure long-term sustainability of talented
managerial persons and create competitive advantage.
h) To determine whether to extend or continue the term of appointment of the Independent
Director(s), on the basis of the report of performance evaluation of Independent Directors.
i) To ensure that compensation packages are aligned effectively with prudent risk taking so that
compensation is adjusted for all types of risks,
j) To ensure the inclusion of fixed and variable pay structures and Malus/Clawback provisions in
the Company’s compensation structure.
k) To ensure that compensation levels are supported by the need to retain earnings of the
company and the need to maintain adequate capital based on Internal Capital Adequacy
Assessment Process (ICAAP).
l) The NRC may work in close coordination with Risk Management Committee (RMC) of the
company to achieve effective alignment between compensation and risks.

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DEFINITIONS
a) “Act” means the Companies Act, 2013 and Rules framed there under, as amended from time to
time.
b) “Board” means Board of Directors of the Company.
c) “Company” means SK Finance Limited (Formerly known as Ess Kay Fincorp Limited)
d) “Clawback” means a contractual agreement between the employee and the Company in which
the employee agrees to return previously paid or vested remuneration to the Company under
certain circumstances.
e) “Directors” shall mean Directors of the Company.
f) “Independent Director” means a director referred to in Section 149(6) of the Act and
Regulation 16 of Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015.
g) “Key Managerial Personnel” or “KMP” means:
a. In relation to a Company as defined sub-section 51 of Section 2 of the Companies Act,
2013, means and includes:
b. The Chief Executive Officer or the Managing Director or the Manager;
c. Whole-time director;
d. Chief Financial Officer;
e. Company Secretary; and
f. such other officer, not more than one level below the directors who is in whole-time
employment, designated as key managerial personnel by the Board; and
g. such other officer as may be prescribed.
h) “Retention period” shall mean a period of time after the vesting of instruments which have been
awarded as variable pay during which they cannot be sold or accessed.
i) “Senior Management” shall derive the meaning from Section 178 of the Act and Regulation 16
& 19 of Listing Regulations as amended from time to time.
Further, in lieu of the RBI Circular “Senior Management Personnel (“SMP”)” for the purpose
of this policy shall mean the employees designated as Senior Management Personnel by the ‘NRC’
or the ‘Board of Directors’ and necessarily include the following:
a. employees who are members of the Company’s core management team vested with
managerial responsibilities and include Chief Executive Officer, Whole Time Directors,
b. those reporting to the committee of the Board/ Board including those who head control,
assurance, vigilance function.
j) “Malus arrangement” shall mean and arrangement, which shall permits the Company to
prevent vesting of all or part of the amount of a deferred remuneration. Malus arrangement
does not reverse vesting after it has already occurred.

Unless the context otherwise requires, words and expressions used in this Policy and not defined herein
but defined in the Act and Listing Regulations as may be amended from time to time shall have the
meaning respectively assigned to them therein.

CONSTITUTION OF NOMINATION & REMUNERATION COMMITTEE

a) The Committee shall consist of a minimum three directors, out of which at least two-thirds of
the Directors shall be independent directors. All the directors of the committee shall be non-
executive directors.
b) The Chairperson of the nomination and remuneration committee (hereinafter referred as
“Committee”) shall be an independent director:
Provided that the chairperson of the listed entity, whether executive or non-executive, may be
appointed as a member of the Nomination and Remuneration Committee and shall not chair
such Committee.
c) The quorum for the Meeting of the Nomination and Remuneration Committee shall either be
two members or one third of the total strength of the Committee, whichever is higher (including
at least one independent director in attendance).

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 d) Constitution of the Committee shall be disclosed in the Annual Report.
e) Term of the Committee shall be continued unless terminated by the Board of Directors.
f) The Company Secretary of the Company shall act as Secretary of the Committee.

MINUTES OF COMMITTEE MEETING

Proceedings of all meetings shall be minuted and signed by the Chairperson of the Committee. Minutes
of the Committee meetings shall be tabled at the subsequent Board and Committee meeting.

ROLE OF COMMITTEE
The role of the committee shall be crucial for dealing with the following matters and recommending
the same to the Board:
a) Review of Policy
To oversee the framing, review and implementation of this policy.

b) Evaluation of Performance and Compensation of employees:

a. To specify the manner for effective criteria for evaluation of performance of Board, Independent
Directors, Committees of the Board and Individual Directors to be carried out either by the
Board, by the Nomination and Remuneration Committee or by an independent external agency
and review its implementation and compliance.
b. To work in close coordination with Risk Management Committee (RMC) of the company to
achieve effective alignment between compensation and risks.
c. To ensure that compensation levels are supported by the need to retain earnings of the
company and the need to maintain adequate capital based on Internal Capital Adequacy
Assessment Process (ICAAP).
d. To ensure 'fit and proper' status of proposed / existing directors and that there is no conflict of
interest in appointment of directors on Board of the company, KMPs and senior management.

c) Succession Plans:
a. Establishing and reviewing Board, KMP and Senior Management succession plans in order to
ensure and maintain an appropriate balance of skills, experience and expertise on the Board
and Senior Management.
b. To ensure non-disruptive and seamless succession plan of SMPs and Non-Executive Directors
(NEDs) as a part of business continuity planning within a period of 3 months from the date of
occurrence.

d) Board Diversity:
To devise a Policy on Board Diversity.

e) Employee Stock Options Plans:

a. Perform such functions as mentioned below which are required to be performed by the
Nomination and Remuneration committee under the Employee Stock Option Plans of the
Company:
b. administering the ESOP plans;
c. granting options to eligible employees and determining the date of grant;
d. determining the number of options to be granted to an employee;
e. determining the exercise price under the ESOP plans;

f) Appointment and Removal of Directors, KMP’s and SMP’s:

a. To formulate the criteria for determining qualifications, competencies, positive attributes and
independence for appointment of a Director (Executive / Non-Executive) and recommend to
the Board, policies relating to the remuneration (payable in whatever form) of the Directors,
KMP, SMP and other employees.

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 b. To identify and ascertain the integrity, qualification, expertise and experience of the person for
appointment as Director, KMP or at SMP level and recommend to the Board his / her
appointment.

In its role to appoint/ remove the Directors, SMPs & KMPs, the Committee shall ensure the following:

a. Directors
 Obtain necessary declarations and consent from the proposed/existing director under the
provisions of the Act and Listing Regulations for the purpose of their appointment/re-
appointment.
 Undertake a process of due diligence to determine the suitability of the person for appointment
/ continuing to hold appointment as a director on the board of directors of the Company, based
upon qualification, expertise, track record, integrity and other ‘fit and proper’ criteria.
 Obtain the necessary information, declarations and undertakings from the proposed / existing
director for the purpose of such due diligence in the format as prescribed in the RBI guidelines.
 Undertake the process of due diligence at the time of appointment of the director by
scrutinizing the declarations received and at the time of renewal of appointment of any
director.
 Obtain annually (as on 31st March) a simple declaration from each director that the
information already provided by the director has not undergone change and where there is
any change, the Company shall require such director to furnish the requisite details forthwith.
 Ensure in public interest that each of the nominated / elected directors execute a deed of
covenants in the format as prescribed in the RBI guidelines.
 Not appoint or continue the employment of any person as Managing Director / Whole time
Director who has attained the age of seventy years.

Provided that the term of the person holding this position may be extended beyond the age of
seventy years with the approval of shareholders by passing a special resolution based on the
explanatory statement annexed to the notice for such motion indicating the justification for
extension of appointment beyond seventy years.

b. Independent Director
 Evaluate the candidate based on the criteria provided under the applicable laws including
Companies Act, 2013 read with Rules thereon and Listing Regulations. Each director has an
affirmative obligation to inform the Board of any change in circumstances that may put his/her
independence at issue.
 Prior to appointment evaluate the balance of skills, knowledge and experience on the Board
and on the basis of such evaluation prepare a description of the role and capabilities required
of an independent director.
 Determine the independence of the director on an annual basis through the declarations made
by such director as per the provisions of the Companies Act, 2013 read with Rules thereon and
the Listing Regulations.
 The Independent Director who intends to get appointed as an independent director in a
company, shall before such appointment, apply online to the institute for inclusion of his name
in the data bank for a period of one year or five years or for his life-time, and from time to time
applies for its renewal till he continues to hold the office of an independent director in any
company:
 If any individual, including an individual not having DIN, voluntarily applies to the institute for
inclusion of his name in the data bank, such candidate shall clear an online proficiency self-
assessment test covering Companies law, Securities law, Basic accountancy, and such other
areas relevant to the functioning of an individual and should have mandatory registration with
Indian Institute of Corporate Affairs (“IICA”).

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c. KMP’s and SMP’s
 Identify and ascertain the integrity, qualification, expertise and experience of the person for
appointment as KMP’s/SMP’s and recommend the same to the Board/ Committee his / her
appointment along with the remuneration, in whatever form as may be payable.
 Ensure that such person should possess adequate qualification, expertise and experience for
the position for which he / she is being considered for appointment.
 The Committee has discretion to decide whether qualification, expertise and experience
possessed by a person is sufficient/satisfactory for the position.

TENURE
a) Managing Director/Whole-time Director
The Company shall appoint or re-appoint any person as Managing Director or Whole-time
Director for a term not exceeding five years at a time in terms of applicable provisions of
Companies Act, 2013. Further, no re-appointment shall be made earlier than one year before
the expiry of term.

b) Independent Director
a. An Independent Director shall hold office for a term up to five consecutive years on the
Board of the Company and shall be eligible for re-appointment on passing of a special
resolution by the Company, recommendation of committee based on the report of
performance evaluation of Independent director and disclosure of such appointment in
the Board’s report.
b. No Independent Director shall hold office for more than two consecutive terms, but such
Independent Director shall be eligible for appointment after expiry of three years of
ceasing to become an Independent Director. An Independent Director shall not, during
the said period of three years, be appointed in or be associated with the Company in any
other capacity, either directly or indirectly.

c) KMP and SMP

Upon recommendation of Nomination and Remuneration Committee and based on the criteria
laid down by said committee for appointment of the KMPs or SMP’s for such period and on such
term as may be approved by the Board or as per criteria approved by the board, respectively.

EVALUATION MECHANISM

The Board
The Committee shall specify the manner for effective evaluation of performance of Board, its
committees and individual directors to be carried out either by the Board, by the Nomination and
Remuneration Committee or by an independent external agency and review its implementation and
compliance.
a) The Evaluation process may be carried out as per the SEBI guidelines vide SEBI CIRCULAR NO.
SEBI/HO/CFD/CMD/CIR/P/2017/004, dated 5th January 2017 on Guidance Note on Board
Evaluation or by such other procedure as the Committee may deem fit for evaluation process.

The Company shall consider the below factors while performance evaluation of the Directors,
Committees and the Board as a whole. These parameters are illustrative in nature and the Company
may consider other qualitative and quantitative requirements for evaluation of the Board.

Matrix For The Evaluation of Board ,Committees And The Directors

1. Criteria for the Evaluation of a Board as a whole:
 Board Composition & Quality;
 Board and Management Relations;
 Board Meeting & Procedures;
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  Board Strategy and Risk Management;
 Grievance Redressal for Investors;
 Conflict of Interest;
 Stakeholder Value and responsibility;
 Corporate Cultures & Values;
 Review of Board Evaluation;
 Facilitation of Independent Directors;
2. Criteria for the Evaluation of Board Committee:
 Structure of the Committee and meetings;
 Mandate & Composition;
 Effectiveness of the Committee;
 Independence of the Committee from the Board;
 Contribution to Decisions of the Board;
3. Criteria MD & WTD
 Leadership
 Performance
 Value Creation
 Governance & Compliance
4. Criteria for Non- Executive Directors
 Knowledge & Skill
 Diligence & Participation
 Leadership
 Managing Relationship
5. Criteria for Independent Directors
 Independence
 Knowledge & Participation
 Commitment
 Integrity
6. Criteria for Chairperson
 Managing Relationship
 Leadership
7. Rankings
Rankings stands as under :
1= Poor
2= Average
3= Good
4= Very Good
5= Excellent

KMPs and SMPs

Evaluation of all the SMPs and KMPs (other than Board members) shall be carried out in accordance
with the Key Performance Indicators defined and agreed to in this regard, in the manner as deemed fit
by the Board/ Committee.

RETIREMENT
The Director, KMP and SMP shall retire as per the applicable provisions of the Companies Act, 2013 and
the prevailing HR policy of the Company. The Board will have the discretion to retain the Director, KMP,
SMP in the same position / remuneration or otherwise even after attaining the retirement age, for the
benefit of the Company, subject to necessary compliances.

REMOVAL/ RESIGNATION/ EXIT

Due to reasons for any disqualification mentioned in the Companies Act, 2013, rules made there under
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or under any other applicable Act, rules and regulations or as per the employment agreement (if any)
the Committee may recommend, to the Board with reasons recorded in writing, removal of a Director,
KMP or SMP subject to the provisions and compliance of the said Act, rules and regulations.

The resignation/ removal/ exit of SMPs and NEDs may happen due to various reasons such as personal
reasons, better growth opportunities or any other concerns. The Company shall report, to the Reserve
Bank of India, on the exit of SMP and/ or NED by way of resignation/ removal/ early retirement (such
as tendering of resignation letter, management decision to terminate the services of any SMPs) within
2 days of such occurrence in the format prescribed.

REMUNERATION AND COMPENSATION OF KMPs AND SMPs

Remuneration of Managing Director / Whole Time Director / Non-Executive Director /Independent

Director (“Collectively referred as Directors”)
The remuneration / compensation / commission etc. to the Managing Director / Whole-time Director,
shall be recommended by the Nomination and Remuneration Committee to the Board for approval and
further recommendation to the Shareholders for their approval. The remuneration / compensation /
commission etc. shall be subject to the prior/post approval of the shareholders of the Company in terms
of the provisions of the Companies Act, 2013, and the rules and Schedule made thereunder, as
applicable from time to time.

Minimum Remuneration
If, in any financial year, the Company has no profits or its profits are inadequate, the Company shall pay
remuneration to its Managing Director or Whole-time Director in accordance with the provisions of
Schedule V of the Companies Act, 2013.

Sitting Fees
The Independent Directors may receive remuneration by way of fees for attending meetings of Board
or Committee thereof provided that the amount of such fees shall not exceed such amount as may be
recommended by Nomination and Remuneration Committee and approved by the Board from time to
time subject to the limits as prescribed under the Companies Act, 2013.

Commission
The Directors may receive Commission within the monetary limit approved by shareholders, subject to
the limit not exceeding 1% of the profits of the Company computed as per the applicable provisions of
the Companies Act, 2013 and rules made thereunder.

Risk Alignment of Compensation

The compensation of Key Managerial Personnel (KMPs) and senior management shall be reasonable,
recognizing all relevant factors including adherence to the statutory requirements and industry
practices. The compensation package shall comprise of fixed and variable pay components aligned
effectively with prudent risk taking to ensure that compensation is adjusted for all types of risks, the
compensation outcomes are symmetric with risk outcomes, compensation pay-outs are sensitive to the
time horizon of the risks, and the mix of cash, equity and other forms of compensation are consistent
with risk alignment.

Approval Mechanism for Compensation of KMPs/ SMPs

Pursuant to the Section 203 of Companies Act 2013 and rules made thereunder, the Company is
required to have the following whole-time key managerial personnel:
 Managing Director & Chief Executive Officer and whole-time director
 Chief Financial Officer; and
 Company Secretary

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The key managerial personnel of the Company shall be appointed by Nomination and Remuneration
Committee and Board specifying the terms and conditions of the appointment including the
remuneration.

In the event of any vacancy, it shall be filled-up by the Board at a meeting within a period of six months
from the date of such vacancy.

Further, pursuant to the Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015, the appointment of Senior Management Personnel shall be taken
care by the Management of the Company. On recommendation of the nomination and remuneration
committee, Board will review and approve the annual revision in remuneration of the Senior
Management Personnel. SMPs whose appointment is regulated by the provisions of the guidelines
issued by The Reserve Bank of India shall be appointed in accordance with the respective requirements
as prescribed.

COMPENSATION STRUCTURE
a) Fixed compensation/ Fixed Pay
a. The KMP/ SMP are eligible for fixed remuneration comprising of Basic Salary, Cash & other
allowances as may be decided by the Nomination and Remuneration Committee and for KMPs
by Board of Directors also.
b. All perquisites that are reimbursable will be classified as fixed pay so long as there are
monetary ceilings applicable on these reimbursements.
c. Contributions towards superannuation/retirement benefits will be treated as part of fixed
pay.

b) Variable Compensation/ Variable Pay

a. Composition of Variable Pay:
The Company may issue variable pay which may be in the form of share-linked instruments,
or a mix of cash and share-linked instruments, as per the discretion of the management. The
Company shall ensure that the share-linked instruments issued are in conformity with
relevant statutory provisions and policies approved by the Board of the Company.

b. Proportion:
While formalizing the pay structure of the employee, it shall be ensured that the proportion
of variable pay in total compensation shall be commensurate with the role and prudent risk
taking profile of KMPs / senior management.

At higher levels of responsibility, the proportion of variable pay shall be higher. There shall
be proper balance between the cash and share-linked instruments in the variable pay in case
the variable pay contains share-linked instruments. The variable pay shall be truly and
effectively variable and the Company shall have the right to reduce the variable pay to zero
based on performance of the individual, business-unit and company-wide level.

In order to do so, performance measures/ Key performance indicators and their relation to
remuneration packages shall be clearly defined at the beginning of the performance
measurement period to ensure that the employees perceive the incentive mechanism.

c. Deferral of variable pay:

 Variable Pay of senior executives, including WTDs, and other employees shall be
deferred over the period so that compensation is adjusted for all types of risks that
organization may be exposed to.
 The deferral period shall be a minimum of three years. This would be applicable to both
the cash and non-cash components of the variable pay:

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  A minimum of 40% of the total variable pay must invariably be under deferral
arrangements.
 If cash component is part of variable pay, at least 40% of the cash bonus shall also be
deferred.
 In case, where the net cash component of variable pay is under INR 25 lakh, deferral
requirements shall not be necessary.
 Deferred remuneration should either vest fully at the end of the deferral period or be
spread out over the course of the deferral period.
 The first such vesting should be not before one year from the commencement of the
deferral period and shall not take place more frequently than on a yearly basis.

c) Guaranteed Bonus
Guaranteed bonus shall not be paid to KMPs and senior management. However, in the context
of new hiring joining/sign-on bonus could be considered. Such bonus will neither be considered
part of fixed pay nor of variable pay.

d) Compensation of Control & Assurance function personnel

KMPs and senior management engaged in financial control, risk management, compliance and
internal audit shall be compensated in a manner that is independent of the business areas they
oversee and commensurate with their key role in the Company. Accordingly, such personnel
shall have higher proportion of fixed compensation. However, a reasonable proportion of
compensation shall be in the form of variable pay, so that exercising the options of malus and /
or clawback, when warranted, is not rendered infructuous.

MALUS / CLAW BACK PROVISIONS

In the event of negative contributions of the persons governed by this policy and/or the relevant line
of business in any year, the compensation shall be subject to:

a) Malus arrangement wherein Company shall withhold vesting of amount of deferred

remuneration:
a. Wherever the assessed divergence in Company’s provisioning for Non-Performing Assets
(NPAs) or asset classification exceeds the prescribed threshold for public disclosure, the
Company shall not pay the unvested portion of the variable compensation for the
assessment year.
b. Further, in such situations, no proposal for increase in variable pay (for the assessment
year) shall be entertained.
c. In case the Company’s post assessment Gross NPAs are less than 2.0%, these restrictions
will apply only if criteria for public disclosure are triggered either on account of divergence
in provisioning or both provisioning and asset classification.
d. Where Prompt Corrective Action Plan has been invoked on the Company
e. Where any monetary penalty or sanctions have been imposed on the Company
f. Any other criteria/ conditions found reasonable by the Board/ Committee

The malus arrangement for the above mentioned shall be invoked for those persons whose
negligence/ involvement has been identified.

b) Claw back arrangement wherein the employee shall be liable to return previously paid or
vested remuneration to the Company as per the applicable provisions/guidelines stipulated by
RBI.

The set of situations are classified below in which the applicability of malus and clawback clauses can
arise and be invoked in compliance of compensation guidelines:

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  Gross negligence and integrity breach. Errors of judgment shall not be construed to be breaches
under this note.
 Material Misstatement of the company’s results.
 Exercise his/her responsibilities in a mala fide manner.
 Unfairly obstruct the functioning of the Company which may affect the material decision.

FIT AND PROPER CRITERIA

The Nomination and Remuneration Committee shall undertake a process of Due Diligence based on the
criteria of qualifications, technical expertise, track record, integrity etc. The basic objective of
ascertaining the fit and proper criteria shall be to put in place an internal supervisory process on a
continuing basis and to determine the suitability of the person for appointment / continuing to hold
appointment as a Director of the Board of the Company. The Candidate at the time of appointment and
at the time of the renewal of Directorship shall fill in such form as approved by the Nomination and
Remuneration Committee to enable the Committee undertake such exercise of ensuring the ‘Fit and
Proper Criteria’. Further, the Company has adopted the separate policy on Fit and Proper criteria as
prescribed under RBI Guidelines which is to be adhered at the time of appointment and/or re-
appointment.

The Committee shall undertake such Due Diligence exercise at the time of appointment of the
Directorships of the incumbent.

POLICY SEVERABLE
This policy read with the Act, Listing Regulations and RBI Guidelines, constitutes the entire document
in relation to its subject matter. In the event that any term, condition or provision of this policy being
held to be a violation of any applicable law, statute or regulation, the same shall be severable from the
rest of this policy and shall be of no force and effect, and this policy shall remain in full force and effect
as if such term, condition or provision had not originally been contained in this Policy. Further, the
regulatory guidelines as prescribed shall prevail in the event of any amendments or requirements not
incorporated in the policy.

AMENDMENT
Any change in the policy shall be approved by the Board of Directors of the Company based on the
recommendation of the Nomination and Remuneration Committee. Any amendment in the regulatory
guidelines shall prevail and necessary amendment shall be carried out at a subsequent date in the
policy. The Board of Directors of the Company shall have the right to withdraw and / or amend any part
of this policy or the entire policy, at any time, as it deems fit, or from time to time, subject to applicable
law in force.

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