This Placement Document Is Dated October 1, 2015

Placement Document Not for Circulation Serial Number: _____ Strictly Confidential

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

Housing Development Finance Corporation Limited (“Company”) was incorporated on October 17, 1977 under the Companies Act, 1956. Its CIN is L70100MH1977PLC019916.

Our Company is issuing 5,000 1.43% secured redeemable non-convertible debentures of face value of ` 1,00,00,000 (“NCD Issue Price”) each due in March 2017 (“NCDs”) for cash aggregating ` 5,000 crore along with 3.65 crore warrants, each exchangeable for one Equity Share (as defined below) (“Warrants” and together with the NCDs, “Securities”), aggregating up to ` 10,434.85 crore, which comprises an issue price of ` 14 per Warrant (“Warrant Issue Price”) and an exchange price of ` 1,475 per Warrant (“Warrant Exercise Price”), assuming full exchange of Warrants into Equity Shares (“Issue”).

Bidders are requested to note that a Bid for one NCD entitles and requires a Bidder to Bid for 7,300 Warrants. Please note that submitting a Bid for NCDs and Warrants in this manner should not be taken to be indicative of the number of Securities that will be Allotted to a successful Bidder. Allotment of Securities will be undertaken by our Company, in its absolute discretion, in consultation with the GCBRLMs.

ISSUE IN RELIANCE UPON CHAPTER VIII OF THE SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2009, AS AMENDED (“SEBI REGULATIONS”) AND SECTIONS 42 AND 71 OF THE COMPANIES ACT, 2013, AS AMENDED, AND THE RULES MADE THEREUNDER

The issuance of NCDs is being made in compliance with the requirements of the Housing Finance Companies issuance of Non-Convertible Debentures on private placement basis (NHB) Directions, 2014, as amended (“NCD Directions”).

All of our outstanding Equity Shares are listed on National Stock Exchange of India Limited (“NSE”) and BSE Limited (“BSE”, together with NSE, “Stock Exchanges”). Our outstanding non-convertible debentures are listed on the wholesale debt market (“WDM”) segment of the Stock Exchanges. The closing price of the Equity Shares on BSE and NSE on September 29, 2015 was ` 1,213.55 and ` 1,216.80 per Equity Share, respectively. The Securities and the Equity Shares to be issued upon exercise of the Warrants are proposed to be listed on the the BSE and / or NSE. Applications have been made and in-principle approvals have been obtained on August 18, 2015 from the Stock Exchanges for listing and admission of the Securities and the Equity Shares to be issued upon exercise of the Warrants for trading on the Stock Exchanges. The Stock Exchanges assume no responsibility for the correctness of any statements made, opinions expressed or reports contained herein. Admission of the Securities and the Equity Shares to be issued upon exercise of the Warrants for trading on the Stock Exchanges should not be taken as an indication of the merits of our Company, the Securities or its Equity Shares.

OUR COMPANY HAS PREPARED THIS PLACEMENT DOCUMENT SOLELY FOR PROVIDING INFORMATION IN CONNECTION WITH THE ISSUE.

A copy of the Preliminary Placement Document (which included disclosures prescribed under Form PAS-4 (as defined hereinafter), Regulation 21 read with Schedule I of the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, as amended (“SEBI Debt Regulations”) and the NCD Directions) and a copy of this Placement Document (which includes disclosures prescribed under Form PAS-4 (as defined hereinafter), Regulation 21 read with Schedule I and the NCD Directions) has been delivered to each of the Stock Exchanges. A copy of the Placement Document (which will include disclosures prescribed under Form PAS-4, Regulation 21 read with Schedule I of the SEBI Debt Regulations and the NCD Directions) will also be delivered to each of the Stock Exchanges. Our Company shall also make the requisite filings with the Registrar of Companies, Maharashtra at Mumbai (“RoC”) and Securities and Exchange Board of India (“SEBI”) within the stipulated period as required under the Companies Act, 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014, as amended. This Placement Document has not been reviewed by SEBI, Reserve Bank of India (“RBI”), the Stock Exchanges, the RoC, National Housing Bank (“NHB”) or any other regulatory or listing authority and is intended only for use by Eligible QIBs (as defined below). This Placement Document has not been and will not be registered as a prospectus with the RoC, will not be circulated or distributed to the public in India, will not be circulated or distributed outside India and will not constitute a public offer in India or any other jurisdiction.

THE ISSUE AND THE DISTRIBUTION OF THIS PLACEMENT DOCUMENT IS BEING DONE IN RELIANCE UPON SECTIONS 42 AND 71 OF THE COMPANIES ACT 2013 AND THE RULES MADE THEREUNDER AND CHAPTER VIII OF THE SEBI REGULATIONS. THIS PLACEMENT DOCUMENT IS PERSONAL TO EACH PROSPECTIVE INVESTOR AND ONLY QUALIFIED INSTITUTIONAL BUYERS, AS DEFINED IN REGULATION 2(1)(ZD) OF THE SEBI REGULATIONS (“QIBs”) WHICH ARE NOT: (I) EXCLUDED PURSUANT TO REGULATION 86 OF THE SEBI REGULATIONS; (II) AN ENTITY NOT BEING A PERSON RESIDENT IN INDIA UNDER THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999 (“FEMA”); (III) ‘OWNED’ OR ‘CONTROLLED’ BY NON-RESIDENTS/ PERSONS RESIDENT OUTSIDE INDIA, AS DEFINED UNDER FEMA, EXCEPT AS SPECIFICALLY SET FORTH IN THIS PLACEMENT DOCUMENT OR (IV) HAVE NOT BEEN PROHIBITED OR DEBARRED BY ANY REGULATORY AUTHORITY FROM BUYING, SELLING OR DEALING IN SECURITIES, ARE ELIGIBLE TO INVEST IN THIS ISSUE (“ELIGIBLE QIBS”).

YOU MAY NOT AND ARE NOT AUTHORISED TO (1) DELIVER THIS PLACEMENT DOCUMENT TO ANY OTHER PERSON; OR (2) REPRODUCE THIS PLACEMENT DOCUMENT IN ANY MANNER WHATSOEVER. ANY DISTRIBUTION OR REPRODUCTION OF THIS PLACEMENT DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS INSTRUCTION MAY RESULT IN A VIOLATION OF THE SEBI REGULATIONS OR OTHER APPLICABLE LAWS OF INDIA.

INVESTMENTS IN THE SECURITIES INVOLVE A DEGREE OF RISK AND PROSPECTIVE INVESTORS SHOULD NOT INVEST IN THE ISSUE UNLESS THEY ARE PREPARED TO TAKE THE RISK OF LOSING ALL OR PART OF THEIR INVESTMENT. PROSPECTIVE INVESTORS ARE ADVISED TO CAREFULLY READ THE SECTION TITLED “RISK FACTORS” ON PAGE 41 OF THIS PLACEMENT DOCUMENT BEFORE MAKING AN INVESTMENT DECISION RELATING TO THE ISSUE. EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT ITS OWN ADVISORS ABOUT THE PARTICULAR CONSEQUENCES OF AN INVESTMENT IN THE SECURITIES BEING ISSUED PURSUANT TO THIS PLACEMENT DOCUMENT.

Invitations, offers and sales of Securities to be issued pursuant to the Issue shall only be made pursuant to the Preliminary Placement Document together with the Application Form, the Placement Document and the Confirmation of Allotment Note. For further details, see the section titled “Issue Procedure” on page 168 of this Placement Document. The distribution of this Placement Document or the disclosure of its contents without our Company’s prior consent to any person, other than Eligible QIBs and persons retained by Eligible QIBs to advise them with respect to their purchase of Securities, is unauthorised and prohibited. Each prospective investor, by accepting delivery of this Placement Document, agrees to observe the foregoing restrictions and to make no copies of this Placement Document or any documents referred to in this Placement Document.

The NCDs being offered by way of this Issue have been rated by CRISIL Limited as CRISIL AAA with stable outlook and ICRA Limited as [ICRA] AAA with stable outlook, indicating highest degree of safety regarding timely servicing of financial obligations. The credit rating letters dated July 31, 2015 and August 3, 2015 issued by CRISIL Limited and ICRA Limited, respectively, are enclosed herewith as Annexure A to this Placement Document. The ratings are not a recommendation to buy, sell or hold Securities and investors should take their own decision. The rating may be subject to revision or withdrawal at anytime by the assigning rating agencies on the basis of new information, and each rating should be evaluated independently of any other rating.

The Securities issued pursuant to this Issue have not been and will not be registered under the U.S. Securities Act of 1933 (“U.S. Securities Act”), and will not be offered or sold within the United States (as defined in Regulation S under the U.S. Securities Act (“Regulation S”)) or any other jurisdiction, other than India.

THIS ISSUE IS BEING MADE ONLY TO ELIGIBLE QIBs AND THE SECURITIES IN THIS ISSUE WILL NOT, IN ANY CIRCUMSTANCE, BE OFFERED TO PERSONS IN ANY JURISDICTION OUTSIDE INDIA.

The information on our Company’s website or any website directly or indirectly linked to our Company’s website or the websites of the Global Co-ordinators and Book Running Lead Managers or their respective affiliates does not constitute nor form part of this Placement Document, and prospective investors should not rely on such information contained in, or available through, any such website. GLOBAL CO-ORDINATORS AND BOOK RUNNING LEAD MANAGERS

Kotak Axis Bank Axis Capital Citigroup HDFC Bank ICICI Bank ICICI IDFC IndusInd Bank JM Financial Mahindra Limited Limited Global Limited* Limited Securities Securities Limited Institutional Capital Markets India Limited Limited Securities Company Private Limited Limited Limited *HDFC Bank Limited (“HDFC Bank”), being an associate of our Company, shall be involved only in marketing of the Issue.

This Placement Document is dated October 1, 2015.

TABLE OF CONTENTS

NOTICE TO INVESTORS ...... 3 REPRESENTATIONS BY INVESTORS...... 5 DISCLAIMERS ...... 9 PRESENTATION OF FINANCIAL AND OTHER INFORMATION ...... 10 INDUSTRY AND MARKET DATA...... 12 FORWARD-LOOKING STATEMENTS ...... 13 EXCHANGE RATES ...... 14 DEFINITIONS AND ABBREVIATIONS ...... 15 DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES ACT, 2013 ...... 24 SUMMARY OF BUSINESS ...... 27 SUMMARY OF THE ISSUE ...... 29 SELECTED FINANCIAL INFORMATION ...... 34 RISK FACTORS ...... 41 MARKET PRICE INFORMATION ...... 53 USE OF PROCEEDS ...... 56 CAPITALISATION STATEMENT ...... 57 CAPITAL STRUCTURE ...... 58 FINANCIAL INDEBTEDNESS ...... 64 DIVIDENDS ...... 73 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 74 INDUSTRY OVERVIEW ...... 91 BUSINESS ...... 103 REGULATION AND POLICIES ...... 120 BOARD OF DIRECTORS AND SENIOR MANAGEMENT ...... 128 PRINCIPAL SHAREHOLDERS ...... 142 TERMS AND CONDITIONS OF NCDS ...... 144 TERMS AND CONDITIONS OF WARRANTS ...... 151 ISSUE PROCEDURE ...... 168 PLACEMENT ...... 180 SELLING RESTRICTIONS ...... 181 TRANSFER RESTRICTIONS ...... 182 THE SECURITIES MARKET OF INDIA...... 183 DESCRIPTION OF THE SECURITIES...... 186 TAXATION ...... 190 LEGAL PROCEEDINGS ...... 197 GENERAL INFORMATION ...... 199 FINANCIAL STATEMENTS ...... 201 DECLARATION ...... 309

NOTICE TO INVESTORS

Our Company has furnished and accepts full responsibility for all of the information contained in this Placement Document and confirms that to its best knowledge and belief, having made all reasonable enquiries, this Placement Document contains all information with respect to our Company and the Securities which is material in the context of the Issue. The statements contained in this Placement Document relating to our Company and the Securities are, in all material respects, true and accurate and not misleading, and the opinions and intentions expressed in this Placement Document with regard to our Company and the Securities are honestly held, have been reached after considering all relevant circumstances and are based on reasonable assumptions and information presently available to our Company. There are no other facts in relation to our Company and the Securities, the omission of which would, in the context of the Issue, make any statement in this Placement Document misleading in any material respect. Further, our Company has made all reasonable enquiries to ascertain such facts and to verify the accuracy of all such information and statements.

The Global Co-ordinators and Book Running Lead Managers, having made reasonable enquiries, have not separately verified the information contained in this Placement Document (financial, legal or otherwise). Accordingly, neither the Global Co-ordinators and Book Running Lead Managers nor any of their respective shareholders, employees, counsel, officers, directors, representatives, agents or affiliates make any express or implied representation, warranty or undertaking, and no responsibility or liability is accepted by the Global Co- ordinators and Book Running Lead Managers as to the accuracy or completeness of the information contained in this Placement Document or any other information supplied in connection with the Securities. Each person receiving this Placement Document acknowledges that such person has not relied on either the Global Co- ordinators and Book Running Lead Managers or on any of their respective shareholders, employees, counsel, officers, directors, representatives, agents or affiliates in connection with such person’s investigation of the accuracy of such information or such person’s investment decision, and each such person must rely on its own examination of our Company and the merits and risks involved in investing in the Securities.

No person is authorised to give any information or to make any representation not contained in this Placement Document and any information or representation not so contained must not be relied upon as having been authorised by or on behalf of our Company or by or on behalf of the Global Co-ordinators and Book Running Lead Managers. The delivery of this Placement Document at any time does not imply that the information contained in it is correct as of any time subsequent to its date.

The Securities issued pursuant to the Issue have not been approved, disapproved or recommended by any regulatory authority in India. No authority has passed on or endorsed the merits of the Issue or the accuracy or adequacy of this Placement Document. Any representation to the contrary may be in violation of applicable rules and regulations in India.

The Issue is being made only to Eligible QIBs and the Securities in the Issue will not be in any circumstance be offered to persons in any jurisdiction outside India. The Securities to be issued pursuant to the Issue have not and will not be registered under the U.S. Securities Act and will not be offered or sold within the United States or any other jurisdiction, other than India.

The distribution of this Placement Document or the disclosure of its contents without the prior consent of our Company to any person, other than Eligible QIBs specified by the Global Co-ordinators and Book Running Lead Managers or their representatives, and those retained by Eligible QIBs to advise them with respect to their purchase of the Securities is unauthorised and prohibited. Each prospective investor, by accepting delivery of this Placement Document, agrees to observe the foregoing restrictions and make no copies of this Placement Document or any documents referred to in this Placement Document.

The distribution of this Placement Document and the issue of the Securities may be restricted in certain jurisdictions by law. As such, this Placement Document does not constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction other than India. In particular, no action has been taken by our Company and the Global Co-ordinators and Book Running Lead Managers that would permit an offering of the Securities or distribution of this Placement Document in any jurisdiction, other than

India. Accordingly, the Securities may not be offered or sold, directly or indirectly, and neither this Placement Document nor any offering material in connection with the Securities may be distributed or published in or from any country or jurisdiction, other than India.

In making an investment decision, investors must rely on their own examination of our Company and the terms of the Issue, including the merits and risks involved. Investors should not construe the contents of this Placement Document as legal, tax, accounting or investment advice. Investors should consult their own counsel and advisors as to business, legal, tax, accounting and related matters concerning the Issue. In addition, neither our Company nor the Global Co-ordinators and Book Running Lead Managers are making any representation to any offeree or subscriber of the Securities regarding the legality of an investment in the Securities by such offeree or subscriber under applicable legal, investment or similar laws or regulations. Each subscriber of the Securities in the Issue is deemed to have acknowledged, represented and agreed that it is eligible to invest in India and in our Company under Indian law, including Chapter VIII of the SEBI Regulations and Sections 42 and 71 of the Companies Act, 2013, and that it is not prohibited by SEBI or any other statutory authority from buying, selling or dealing in the Securities and the Equity Shares. Each purchaser of the Securities in this Issue also acknowledges that it has been afforded an opportunity to request from our Company and review information relating to our Company and the Securities.

This Placement Document contains summaries of certain terms of certain documents, which summaries are qualified in their entirety by the terms and conditions of such document.

The information on our Company’s website, www.hdfc.com, any website directly or indirectly linked to the website of our Company or on the websites of any of the Global Co-ordinators and Book Running Lead Managers, does not constitute nor form part of this Placement Document. Prospective investors should not rely on such information contained in, or available through, any such websites.

Our Company has not, and is not required to, assess its status under the US Investment Company Act of 1940. As a consequence, our Company has also not assessed its status under the statutory text and implementing regulations of the Volcker Rule. Investors in the Securities, either in the Issue or in later secondary trading, must assess on their own the extent to which an investment in the Securities benefits from an exemption from the Volcker Rule, might require a deduction from Tier 1 capital under the Volcker Rule or must otherwise be made a part of the investors’ Volcker compliance program. Our Company reasonably believes that different investors may reach different conclusions based upon their own status and the type of investment made.

REPRESENTATIONS BY INVESTORS

References herein to “you” or “your” is to the prospective investors in the Issue.

By Bidding for and subscribing to any Securities in the Issue, you are deemed to have represented, warranted, acknowledged and agreed to our Company and the Global Co-ordinators and Book Running Lead Managers, as follows:

 You are a QIB as defined in Regulation 2(1)(zd) of the SEBI Regulations and not excluded pursuant to Regulation 86(1)(b) of the SEBI Regulations, having a valid and existing registration under applicable laws and regulations of India, and undertake to acquire, hold, manage or dispose of any Securities that are Allotted to you in accordance with Chapter VIII of the SEBI Regulations and undertake to comply with the SEBI Regulations, SEBI Debt Regulations, the NHB Directions, the Companies Act and all other applicable laws, including any reporting obligations;

 You are a resident of India and are not a foreign portfolio investor (as defined under the Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014) (“FPI”), a foreign institutional investor (as defined under the SEBI FPI Regulations) (“FII”) or a foreign venture capital investor (as defined under the SEBI (Foreign Venture Capital Investors) Regulations, 2000) (“FVCI”);

 You are not ‘owned’ or ‘controlled’ by non-residents / persons resident outside India, as defined under FEMA, except as specified in this Placement Document, and you undertake that your investment pursuant to the Issue shall not amount to direct or indirect foreign investment in our Company;

 If you are Allotted Securities, you shall not, for a period of one year from the date of Allotment, sell the Securities so acquired except on a recognised stock exchange;

 You have made, or are deemed to have made, as applicable, the representations set forth under sections titled “Transfer Restrictions” and “Selling Restrictions” on pages 182 and 181 of this Placement Document;

 You are aware that the Securities have not been and will not be registered through a prospectus under the Companies Act (as defined hereinafter), the SEBI Regulations or under any other law in force in India. This Placement Document has not been reviewed or affirmed by the RBI, SEBI, NHB, the Stock Exchanges, the RoC or any other regulatory or listing authority and is intended only for use by Eligible QIBs;

 You are entitled to subscribe for and acquire the Securities under the laws of India and that you have fully observed such laws and you have necessary capacity, have obtained all necessary consents and approvals, governmental or otherwise, and authorisations and complied with all necessary formalities, to enable you to commit to, and to, participate in the Issue and to perform your obligations in relation thereto (including, without limitation, in the case of any person on whose behalf you are acting, all necessary consents and authorisations to agree to the terms set out or referred to in this Placement Document), and will honour such obligations;

 Neither our Company, the Global Co-ordinators and Book Running Lead Managers nor any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates are making any recommendations to you or advising you regarding the suitability of any transactions it may enter into in connection with the Issue and your participation in the Issue is on the basis that you are not, and will not, up to the Allotment, be a client of the Global Co-ordinators and Book Running Lead Managers. Neither the Global Co-ordinators and Book Running Lead Managers nor any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates have any duties or responsibilities to you for providing the protection afforded to their clients or customers or for providing advice in relation to the Issue and are not in any way acting in any fiduciary capacity;

 You confirm that, either: (i) you have not participated in or attended any investor meetings or presentations by our Company or its agents (“Company Presentations”) with regard to our Company or the Issue; or (ii) if you have participated in or attended any Company Presentations: (a) you understand and acknowledge that the Global Co-ordinators and Book Running Lead Managers may not

have knowledge of the statements that our Company or its agents may have made at such Company Presentations and are therefore unable to determine whether the information provided to you at such Company Presentations may have included any material misstatements or omissions, and, accordingly you acknowledge that the Global Co-ordinators and Book Running Lead Managers has advised you not to rely in any way on any information that was provided to you at such Company Presentations, and (b) confirm that, to the best of your knowledge, you have not been provided any material information relating to our Company and the Issue that was not publicly available;

 All statements other than statements of historical fact included in this Placement Document, including, without limitation, those regarding our Company’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to our Company’s business), are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding our Company’s present and future business strategies and environment in which our Company will operate in the future. You should not place undue reliance on forward-looking statements, which speak only as at the date of this Placement Document. Our Company assumes no responsibility to update any of the forward-looking statements contained in this Placement Document;

 You are aware and understand that the Securities are being offered only to Eligible QIBs and are not being offered to the general public, and the Allotment of the same shall be on a discretionary basis;

 You are aware that if you are Allotted more than 5% of the Securities in the Issue, our Company shall be required to disclose your name and the number of Securities Allotted to you to the Stock Exchanges, and the Stock Exchanges will make the same available on their website and you consent to such disclosures;

 You have been provided a serially numbered copy of this Placement Document and have read it in its entirety, including in particular, the section titled “Risk Factors” on page 41 of this Placement Document;

 In making your investment decision, you have (i) relied on your own examination of our Company and the terms of the Issue, including the merits and risks involved, (ii) made your own assessment of our Company, the Securities and the terms of the Issue based solely on the information contained in this Placement Document and no other disclosure or representation by our Company or any other party, (iii) consulted your own independent counsel and advisors or otherwise have satisfied yourself concerning, without limitation, the effects of local laws, (iv) relied solely on the information contained in this Placement Document and no other disclosure or representation by our Company or any other party, (v) received all information that you believe is necessary or appropriate in order to make an investment decision in respect of our Company and the Securities, and (vi) relied upon your own investigation and resources in deciding to invest in the Issue;

 Neither our Company nor the Global Co-ordinators and Book Running Lead Managers or any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates have provided you with any tax advice or otherwise made any representations regarding the tax consequences of purchase, ownership and disposal of the Securities (including but not limited to the Issue and the use of the proceeds from the Securities). You will obtain your own independent tax advice from a reputable service provider and will not rely on the Global Co-ordinators and Book Running Lead Managers or any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates when evaluating the tax consequences in relation to the Securities (including but not limited to the Issue and the use of the proceeds from the Securities). You waive, and agree not to assert any claim against our Company or any of the Global Co-ordinators and Book Running Lead Managers or any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates with respect to the tax aspects of the Securities or as a result of any tax audits by tax authorities, wherever situated;

 You are a sophisticated investor and have such knowledge and experience in financial, business and investment matters as to be capable of evaluating the merits and risks of an investment in the Securities. You are experienced in investing in private placement transactions of securities of

companies in a similar nature of business, similar stage of development and in similar jurisdictions. You and any accounts for which you are subscribing for the Securities (i) are each able to bear the economic risk of your investment in the Securities, (ii) will not look to our Company and/or any of the Global Co-ordinators and Book Running Lead Managers or any of their respective shareholders, directors, officers, employees, counsel, representatives, agents or affiliates for all or part of any such loss or losses that may be suffered in connection with the Issue, including losses arising out of non- performance by our Company of any of its respective obligations or any breach of any representations and warranties by our Company, whether to you or otherwise, (iii) are able to sustain a complete loss on the investment in the Securities, (iv) have no need for liquidity with respect to the investments in the Securities, and (v) have no reason to anticipate any change in your or their circumstances, financial or otherwise, which may cause or require any sale or distribution by you or them of all or any part of the securities in the near future. You acknowledge that an investment in the Securities involves a high degree of risk and that the Securities are, therefore, a speculative investment;

 If you are acquiring the Securities to be issued pursuant to the Issue for one or more managed accounts, you represent and warrant that you are authorised in writing, by each such managed account to acquire such Securities for each managed account and to make (and you hereby make) the representations, warranties, acknowledgements and agreements herein for and on behalf of each such account, reading the reference to “you” to include such accounts;

 You agree that in terms of Section 42(7) of the Companies Act, 2013, we shall file the list of Eligible QIBs (to whom the Preliminary Placement Document has been circulated) along with other particulars with the RoC and SEBI within 30 days of circulation of this Placement Document and other filings required under the Companies Act, 2013;

 You have no rights under a shareholders’ agreement or voting agreement with our Company or any person in control of our Company, no veto rights or right to appoint any nominee director on the Board of Directors other than the rights acquired, if any, in the capacity of a lender not holding any Equity Shares which shall not be deemed to be a person related to a promoter;

 You will have no right to withdraw your Bid after the Bid/Issue Closing Date;

 You are eligible to apply and hold the Securities Allotted to you together with any Securities held by you prior to the Issue. Further, you confirm that your aggregate holding after the Allotment of the Securities shall not exceed the level permissible as per any applicable regulation;

 The Bid made by you would not eventually (including upon exercise of the Warrants that may be Allotted to you) result in triggering an open offer under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, as amended (“Takeover Regulations”);

 To the best of your knowledge and belief, your aggregate holding, together with other Eligible QIBs in the Issue that belong to the same group or are under common control as you, pursuant to the Allotment under the Issue shall not exceed 50% of the Issue. For the purposes of this representation:

(a) the expression ‘belong to the same group’ shall derive meaning from the concept of ‘companies under the same group’ as provided in sub-section (11) of Section 372 of the Companies Act, 1956; and

(b) ‘Control’ shall have the same meaning as is assigned to it by Regulation 2(1)(e) of the Takeover Regulations;

 You shall not undertake any trade in the Securities credited to your beneficiary account until such time that the final listing and trading approvals for such Securities are issued by the Stock Exchanges;

 You are aware that applications have been made and in-principle approvals have been obtained on August 18, 2015 from the Stock Exchanges, for listing and admission of the NCDs, Warrants and Equity Shares to be issued upon exchange of the Warrants and for trading on the Stock Exchanges;

 You are aware and understand that the Global Co-ordinators and Book Running Lead Managers have

entered into a placement agreement with our Company whereby the Global Co-ordinators and Book Running Lead Managers have, subject to the satisfaction of certain conditions set out therein, agreed to manage the Issue and to procure subscriptions for the Securities to be issued pursuant to the Issue;

 The contents of this Placement Document are exclusively the responsibility of our Company, and neither the Global Co-ordinators and Book Running Lead Managers nor any person acting on their behalf has or shall have any liability for any information, representation or statement contained in this Placement Document or any information previously published by or on behalf of our Company and will not be liable for your decision to participate in the Issue based on any information, representation or statement contained in this Placement Document or otherwise. By accepting a participation in the Issue, you agree to the same and confirm that the only information you are entitled to rely on, and on which you have relied in committing yourself to acquire the Securities is contained in this Placement Document, such information being all that you deem necessary to make an investment decision in respect of the Securities, you have neither received nor relied on any other information, representation, warranty or statement made by or on behalf of the Global Co-ordinators and Book Running Lead Managers or our Company or any of their respective affiliates or any other person, and neither the Global Co-ordinators and Book Running Lead Managers nor our Company nor any other person will be liable for your decision to participate in the Issue based on any other information, representation, warranty or statement that you may have obtained or received;

 You understand that the Securities have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any state of the United States and accordingly, will not be offered or sold within the United States or any jurisdiction, other than India;

 You are able to purchase the Securities in accordance with the restrictions described in “Selling Restrictions” and “Transfer Restrictions” on pages 181 and 182 of this Placement Document, respectively;

 You understand and agree that the Securities are transferable only in accordance with the restrictions described in “Transfer Restrictions” on page 182 of this Placement Document and you warrant that you will comply with those restrictions;

 You are eligible to invest in India under applicable law, and have not been prohibited by SEBI or any other regulatory authority, from buying, selling or dealing in securities;

 You agree that any dispute arising in connection with the Issue will be governed by and construed in accordance with the laws of Republic of India, and the courts in Mumbai, India shall have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Preliminary Placement Document and the Placement Document;

 Each of the representations, warranties, acknowledgements and agreements set out above shall continue to be true and accurate at all times up to and including the Allotment, listing and trading of the Securities in the Issue;

 You agree to indemnify and hold our Company and the Global Co-ordinators and Book Running Lead Managers and their respective affiliates, directors, officers and representatives harmless from any and all costs, claims, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the foregoing representations, warranties, acknowledgements and undertakings made by you in this Placement Document. You agree that the indemnity set forth in this paragraph shall survive the resale of the Securities by, or on behalf of, the managed accounts; and

 Our Company, the Global Co-ordinators and Book Running Lead Managers, their respective affiliates and others will rely on the truth and accuracy of the foregoing representations, warranties, acknowledgements and undertakings, which are given by you to the Global Co-ordinators and Book Running Lead Managers on its own behalf and on behalf of our Company, and are irrevocable.

DISCLAIMERS

DISCLAIMER CLAUSE OF STOCK EXCHANGES

As required, a copy of this Placement Document has been submitted to each of the Stock Exchanges. The Stock Exchanges do not in any manner:

(1) warrant, certify or endorse the correctness or completeness of the contents of this Placement Document;

(2) warrant that the Securities will be listed or will continue to be listed on the Stock Exchanges; or

(3) take any responsibility for the financial or other soundness of our Company, its management or any scheme or project of our Company; and it should not for any reason be deemed or construed to mean that this Placement Document has been cleared or approved by the Stock Exchanges. Every person who desires to apply for or otherwise acquire any Securities may do so pursuant to an independent inquiry, investigation and analysis and shall not have any claim against the Stock Exchanges whatsoever, by reason of any loss which may be suffered by such person consequent to or in connection with, such subscription/acquisition, whether by reason of anything stated or omitted to be stated herein, or for any other reason whatsoever.

DISCLAIMER CLAUSE OF THE NHB

Our Company has a valid Certificate of Registration dated July 31, 2001, issued by the National Housing Bank (NHB) under Section 29A of the NHB Act. However, the NHB does not accept any responsibility or guarantee about the present position as to the financial soundness of our Company or for the correctness of any of the statements or representations made or opinion expressed by our Company and for repayment of deposits / discharge of liabilities by our Company.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this Placement Document, unless otherwise specified or the context otherwise indicates or implies, references to ‘you’, ‘your’, ‘offeree’, ‘purchaser’, ‘subscriber’, ‘recipient’, ‘investors’, ‘prospective investors’ and ‘potential investor’ are to the prospective investors in the Issue, references to the ‘Company’, ‘Housing Development Finance Corporation Limited’, ‘Issuer’, ‘we’, ‘us’ or ‘our’ are to Housing Development Finance Corporation Limited.

In this Placement Document, references to ‘US$’, ‘USD’ and ‘U.S. dollars’ are to the legal currency of the United States of America, and references to ‘`’, ‘INR’, ‘Rs.’, ‘Indian Rupees’ and ‘Rupees’ are to the legal currency of India. All references herein to the ‘US’ or ‘U.S.’ or the ‘United States’ are to the United States of America and its territories and possessions. All references herein to “India” are to the Republic of India and its territories and possessions and all references herein to the ‘Government’ or ‘GOI’ or the ‘Central Government’ or the ‘State Government’ are to the Government of India, central or state, as applicable.

References to the singular also refers to the plural and one gender also refers to any other gender, wherever applicable, and the words “lakh” or “lac” mean “100,000”, and the word “million” means “10 lakh”, and the word “crore” means “10 million” or “100 lakh” and the word “billion” means “1,000 million” or “100 crore”.

Except as otherwise set out in this Placement Document, all figures set out in this Placement Document have been rounded off to the extent of two decimal places and all figures, in percentage terms, have been rounded off to the extent of one decimal place.

Our Company’s audited standalone financial statements as at and for the years ended March 31, 2013, 2014 and 2015 report the financial statements and results of operations relating to the principal business segments of our Company, comprising our Company’s mortgage lending business, which includes the main business of providing loans for the purchase, construction, development and repair of houses, apartments and commercial property in India. Our Company’s audited consolidated financial statements as at and for the years ended March 31, 2013, 2014 and 2015 report the financial statements and results of operations relating to our Company’s and its Subsidiaries (“Group”) five segments comprising housing, life insurance, general insurance, asset management and others (which includes project management, investment consultancy and property related services). Our Company’s standalone and consolidated financial results as at and for the three month period ended June 30, 2015, subjected to limited review by the statutory auditors of our Company, are included in this Placement Document in the section titled “Financial Statements” on page 201 of this Placement Document.

The financial year of our Company commences on April 1 of each calendar year and ends on March 31 of the following calendar year, and, unless otherwise specified or if the context requires otherwise, all references to a particular ‘Fiscal Year’ or ‘Fiscal’ or “financial year” or ‘FY’ are to the 12 month period ended on March 31 of that year. The audited standalone financial statements of our Company as at and for the financial years ended March 31, 2013, 2014 and 2015, and the audited consolidated financial statements of our Company as at and for the financial years ended March 31, 2013, 2014 and 2015 each prepared in accordance with Indian GAAP and the standalone and consolidated financial statements of our Company as at and for the three month period ended June 30, 2015, subjected to limited review by the statutory auditor of our Company, are included in this Placement Document in the section titled “Financial Statements” on page 201 of this Placement Document.

Our Company publishes its financial statements in Indian Rupees. The financial statements of our Company included herein have been prepared in accordance with Indian GAAP as applicable to companies in India. In accordance with our Company’s prevalent practice of announcing and analysing its financial statements on an standalone basis, unless the context otherwise requires, all financial data in this Placement Document is derived from the audited standalone financial statements of our Company as of and for the financial years ended March 31, 2013, 2014 and 2015.

In this Placement Document, certain monetary thresholds have been subjected to rounding adjustments; accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them.

The degree to which the financial information prepared in accordance with Indian GAAP, included in this Placement Document will provide meaningful information is entirely dependent on the reader’s level of familiarity with Indian accounting practices, Indian GAAP and the Companies Act. Any reliance by persons not familiar with Indian accounting practices, Indian GAAP, the Companies Act, 1956 and the Companies Act,

2013 on the financial disclosures presented in this Placement Document should accordingly be limited.

INDUSTRY AND MARKET DATA

Information included in this Placement Document regarding market position, growth rates and other industry data pertaining to our businesses consists of estimates based on data reports compiled by government bodies, professional organisations and analysts, data from other external sources and knowledge of the markets in which we operate. Unless stated otherwise statistical information included in this Placement Document pertaining to the various sectors in which we operate has been reproduced from trade, industry and government publications and websites. We confirm that such information and data has been accurately reproduced, and that as far as we are aware and are able to ascertain from information published by third parties, no facts have been omitted that would render the reproduced information inaccurate or misleading.

This information is subject to change and cannot be verified with complete certainty due to limits on the availability and reliability of the raw data and other limitations and uncertainties inherent in any statistical survey. In many cases, there is no readily available external information (whether from trade or industry associations, government bodies or other organisations) to validate market-related analysis and estimates, so we have relied on internally developed estimates.

Neither we nor the Global Co-ordinators and Book Running Lead Managers have independently verified this data, nor do we or the Global Co-ordinators and Book Running Lead Managers make any representation regarding the accuracy of such data. Similarly, while our Company believes that its internal estimates to be reasonable, such estimates have not been verified by any independent sources, and neither we nor the Global Co-ordinators and Book Running Lead Managers can assure potential investors as to their accuracy.

The extent to which the market and industry data used in this Placement Document is meaningful depends on the reader’s familiarity with and understanding of the methodologies used in compiling such data.

CRISIL disclaimer: CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing this report (Report) based on the Information obtained by CRISIL from sources which it considers reliable (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. This Report is not a recommendation to invest / disinvest in any company covered in the Report. CRISIL especially states that it has no liability whatsoever to the subscribers / users / transmitters/ distributors of this Report. CRISIL Research operates independently of, and does not have access to information obtained by CRISIL’s Ratings Division / CRISIL Risk and Infrastructure Solutions Ltd (CRIS), which may, in their regular operations, obtain information of a confidential nature. The views expressed in this Report are that of CRISIL Research and not of CRISIL’s Ratings Division / CRIS. No part of this Report may be published/ reproduced in any form without CRISIL’s prior written approval.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Placement Document that are not statements of historical fact constitute ‘forward-looking statements’. Investors can generally identify forward-looking statements by terminology such as ‘aim’, ‘anticipate’, ‘believe’, ‘continue’, ‘can’, ‘could’, ‘estimate’, ‘expect’, ‘intend’, ‘may’, ‘objective’, ‘plan’, ‘potential’, ‘project’, ‘pursue’, ‘shall’, ‘should’, ‘will’, ‘would’, or other words or phrases of similar import. Similarly, statements that describe the strategies, objectives, plans or goals of our Company are also forward-looking statements. However, these are not the exclusive means of identifying forward-looking statements.

All statements regarding our expected financial conditions, results of operations, business plans and prospects are forward-looking statements. These forward-looking statements include statements as to our Company’s business strategy, planned projects, revenue and profitability (including, without limitation, any financial or operating projections or forecasts), new business and other matters discussed in this Placement Document that are not historical facts. These forward-looking statements and any other projections contained in this Placement Document (whether made by our Company or any third party), are predictions and involve known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, performance or achievements of our Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or other projections. All forward-looking statements are subject to risks, uncertainties and assumptions about our Company that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause the actual results, performances and achievements of our Company to be materially different from any of the forward-looking statements include, among others:

 An inability to compete effectively with increased competition in the housing finance industry;  A downgrade in our credit ratings;  Increase in the level of NPAs in our portfolio;  Our inability to manage growth;  Dilution or divestment of investment in and control of Subsidiaries and Associates;  A decline in our capital adequacy ratio;  Significant changes in the Government’s economic liberalisation and deregulation policies;  Changes in foreign exchange rates and controls, interest rates; and  A decline in India’s foreign exchange reserves.

Additional factors that could cause actual results, performance or achievements of our Company to differ materially include, but are not limited to, those discussed under the sections titled “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Industry Overview” and “Business” and on pages 41, 74, 91 and 103 of this Placement Document, respectively.

The forward-looking statements contained in this Placement Document are based on the beliefs of the management, as well as the assumptions made by, and information currently available to, the management of our Company. Although our Company believes that the expectations reflected in such forward-looking statements are reasonable at this time, it cannot assure investors that such expectations will prove to be correct. Given these uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements. In any event, these statements speak only as of the date of this Placement Document or the respective dates indicated in this Placement Document, and neither our Company nor the Global Co-ordinators and Book Running Lead Managers undertakes any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. If any of these risks and uncertainties materialise, or if any of our Company’s underlying assumptions prove to be incorrect, the actual results of operations or financial condition of our Company could differ materially from that described herein as anticipated, believed, estimated or expected. All subsequent forward-looking statements attributable to our Company are expressly qualified in their entirety by reference to these cautionary statements.

EXCHANGE RATES

Fluctuations in the exchange rate between the Rupee and foreign currencies will affect the foreign currency equivalent of the Rupee price of the Equity Shares on the Stock Exchanges. These fluctuations will also affect the conversion into foreign currencies of any cash dividends paid in Rupees on the Equity Shares.

The following table sets forth information with respect to the exchange rates between the Rupee and the U.S. dollar (in ` per US$), for or as of the end of the periods indicated. The exchange rates are based on the reference rates released by the RBI, which are available on the website of the RBI. No representation is made that any Rupee amounts could have been, or could be, converted into U.S. dollars at any particular rate, the rates stated below, or at all.

As of September 29, 2015, the exchange rate (RBI reference rate) was ` 66.18 to US$ 1.00 (Source: www.rbi.org.in) (` Per US$) Period end(1)(2)(3)(4) Average(5) High(6) Low(7) Fiscal: 2015 62.59 61.15 63.75 58.43 2014 60.10 60.50 68.36 53.74 2013 54.39 54.45 57.22 50.56

Quarter ended: June 30, 2015 63.75 63.50 64.20 62.16 March 31, 2015 62.59 62.25 63.45 61.41 December 31, 2014 63.33 62.00 63.75 61.04

Month ended: August 31, 2015 66.31 65.07 66.71 63.76 July 31, 2015 64.01 63.63 64.03 63.37 June 30, 2015 63.75 63.86 64.18 63.51 May 31, 2015 63.76 63.80 64.20 63.52 April 30, 2015 63.58 62.75 63.61 62.16 March 31, 2015 62.59 62.45 62.82 61.82 Note: (1) Period end for Fiscal 2014 taken as March 28, 2014 as March 29, 2014, March 30, 2014 and March 31, 2014 were non-trading days. (2) Period end for Fiscal 2013 taken as March 28, 2013 as March 29, 2013, March 30, 2013 and March 31, 2013 were non-trading days. (3) Period end for month ended May 31, 2015 taken as May 29, 2015 as May 30, 2015 and May 31, 2015 were non-trading days. (4) Average of the official rate for each working day of the relevant period. (5) Maximum of the official rate for each working day of the relevant period. (6) Minimum of the official rate for each working day of the relevant period.

(Source: www.rbi.org.in)

DEFINITIONS AND ABBREVIATIONS

This Placement Document uses the definitions and abbreviations set forth below which you should consider when reading the information contained herein.

The following list of certain capitalized terms used in this Placement Document is intended for the convenience of the prospective investor only and is not exhaustive.

Unless otherwise specified, the capitalized terms used in this Placement Document shall have the meaning as defined hereunder. Further any references to any statute or regulations or policies shall, unless the context otherwise requires include amendments thereto, from time to time.

Company Related Terms

Term Description “Issuer”, “HDFC”, “Company” Housing Development Finance Corporation Limited, a public limited company incorporated on October 17, 1977 under the Companies Act, 1956 and having its registered office at Ramon House, H.T. Parekh Marg, 169 Backbay Reclamation, Churchgate, Mumbai 400 020 “Articles” or “Articles of Articles of association of our Company, as amended from time to time Association” or “AOA” Associate(s) The associates of our Company within the meaning of Section 2(6) of the Companies Act, 2013, currently being HDFC Bank Limited, India Value Fund Advisors Private Limited, RuralShores Business Services Private Limited and Magnum Foundations Private Limited Auditors Statutory auditors of our Company, namely Deloitte Haskins & Sells LLP, Chartered Accountants AUM Assets Under Management “Board of Directors” or “Board” The board of directors of our Company or any duly constituted committee thereof Corporate Office The corporate office of our Company located at HDFC House, H.T. Parekh Marg, 165-166 Backbay Reclamation, Churchgate, Mumbai 400 020 Director(s) The directors of our Company Equity Share(s) The equity shares of our Company having a face value of ` 2 each ESOS 1999 Employee Stock Option Scheme, 1999 ESOS 2002 Employee Stock Option Scheme, 2002 ESOS 2005 Employee Stock Option Scheme, 2005 ESOS 2007 Employee Stock Option Scheme, 2007 ESOS 2008 Employee Stock Option Scheme, 2008 ESOS 2011 Employee Stock Option Scheme, 2011 ESOS 2014 Employee Stock Option Scheme, 2014 Group Our Companies and Subsidiaries on a consolidated basis “Memorandum” or “Memorandum Memorandum of association of our Company, as amended from time to of Association” or “MoA” time Registered Office The registered office of our Company located at Ramon House, H.T. Parekh Marg, 169 Backbay Reclamation, Churchgate, Mumbai 400 020 RoC Registrar of Companies, Maharashtra at Mumbai Subsidiaries The subsidiaries of our Company as defined under Section 2(87) of the Companies Act, 2013, currently being:

- Credila Financial Services Private Limited; - HDFC Asset Management Company Limited; - HDFC Capital Advisors Limited; - HDFC Developers Limited; - HDFC Education and Development Services Private Limited; - HDFC ERGO General Insurance Company Limited; - HDFC Holdings Limited; - HDFC Investments Limited; - HDFC Pension Management Company Limited;

Term Description - HDFC Property Ventures Limited; - HDFC Realty Limited; - HDFC Sales Private Limited; - HDFC Standard Life Insurance Company Limited; - HDFC Trustee Company Limited; - HDFC Venture Capital Limited; - HDFC Ventures Trustee Company Limited; - Grandeur Properties Private Limited; - Griha Investments; - Griha Pte. Ltd.; - GRUH Finance Limited; - Haddock Properties Private Limited; - Pentagram Properties Private Limited; - Windermere Properties Private Limited; and - Winchester Properties Private Limited. “we”, “us” or “our” Our Company on a standalone basis, unless specified otherwise

Issue Related Terms

Term Description “Allocated” or “Allocation” The allocation of Securities following the determination of the final terms of the NCDs or the Warrant Issue Price, as the case may be, to Eligible QIBs on the basis of the Application Form submitted by them, by our Company in consultation with the Global Co-ordinators and Book Running Lead Managers and in compliance with Chapter VIII of the SEBI Regulations “Allot” or “Allotment” or “Allotted” Unless the context otherwise requires, the issue and allotment of Securities to be issued pursuant to the Issue Allottees Eligible QIBs to whom Securities are issued and Allotted pursuant to the Issue Application Form The form (including any revisions thereof) pursuant to which an Eligible QIB shall submit a Bid in the Issue Assets The aggregate of the total assets of the Company, all as shown in the relevant financial statements, being, at any particular time, the then latest (unconsolidated) financial statements of the Company delivered or to be delivered to the Trustee Bid(s) Indication of interest of an Eligible QIB, including all revisions and modifications thereto, as provided in the Application Form, to subscribe for the Securities Bid/Issue Closing Date October 1, 2015, which is the last date up to which the Application Forms shall be accepted Bid/Issue Opening Date September 30, 2015 Bid/Issue Period Period between the Bid/Issue Opening Date and the Bid/Issue Closing Date, inclusive of both days, during which prospective Bidders can submit their Bids Bidder Any prospective investor, being an Eligible QIB, who makes a Bid pursuant to the terms of the Preliminary Placement Document and the Application Form “Global Co-ordinators and Book The Global Co-ordinators and Book Running Lead Managers to the Issue, Running Lead Managers” or “Lead namely Kotak Mahindra Capital Company Limited, Axis Bank Limited, Managers” or “GCBRLMs” Axis Capital Limited, Citigroup Global Markets India Private Limited, HDFC Bank Limited, ICICI Bank Limited, ICICI Securities Limited, IDFC Securities Limited, IndusInd Bank Limited and JM Financial Institutional Securities Limited. HDFC Bank, being an associate of our Company, shall be involved in only marketing of the Issue BSE BSE Limited “CAN” or “Confirmation of Note or advice to Eligible QIBs confirming Allocation of Securities to such Allocation Note” Eligible QIBs after determination of the terms of the NCDs Closing Date The date on which Allotment of Securities pursuant to the Issue shall be

Term Description made, i.e. on or about October 5, 2015 Debenture Trustee IDBI Trusteeship Services Limited Debenture Trust Deed The debenture trust deed dated on or about the Closing Date, in terms of which the principal amount of the NCDs and all other monies payable in respect of the NCDs are secured only by way of (a) an equitable assignment on the Assets through a Negative Lien, and (b) registered mortgage and charge of the Property, each in favour of the Trustee Designated Date The date on which the Escrow Agent transfers the funds from the Escrow Account to our Company’s account Eligible QIB QIBs, as defined in regulation 2(1)(zd) of the SEBI Regulations which (a) are not excluded pursuant to regulation 86 of the SEBI Regulations, (b) are not an entity not being a person resident in India under FEMA, (c) are not ‘owned’ or ‘controlled’ by non-residents/ persons resident outside India, as defined under FEMA, except as specifically set forth in this Placement Document or (d) have not been prohibited or debarred by any regulatory authority from buying, selling or dealing in securities, are eligible to invest in this issue Escrow Agent HDFC Bank Limited Escrow Account The accounts entitled “HDFC Limited – QIP NCD Escrow Account”, with regard to any money received towards the subscription to the NCDs, and titled “HDFC Limited – QIP Warrant Escrow Account”, with regard to any money received towards the subscription of the Warrants, opened with the Escrow Agent, subject to the terms of the Escrow Agreement. Escrow Agreement Agreement dated September 30, 2015 entered into amongst our Company, the Escrow Agent and the Global Co-ordinators and Book Running Lead Managers for collection of the Bid Amounts and for remitting refunds, if any, of the amounts collected, to the Bidders Exercise Right The right of the Warrantholder to subscribe, at the option of the Warrantholder, by way of exercise of each Warrant at any time during the Warrant Exercise Period at the Warrant Exercise Price, in the manner set forth in, and on the terms and conditions of, the Terms and Conditions of the Warrants, to one fully paid Equity Share Floor Price The floor price of ` 1,189.66, for the Warrants, which has been calculated in accordance with Chapter VIII of the SEBI Regulations. In terms of the SEBI Regulations, the sum of the Warrant Issue Price and the Warrant Exercise Price cannot be lower than the Floor Price Issue The offer, issue and Allotment of 5,000 NCDs for cash aggregating ` 5,000 crore along with 3.65 crore Warrants aggregating up to ` 10,434.85 crore, which comprises the Warrant Issue Price and the Warrant Exercise Price, assuming full exchange of Warrants into Equity Shares, to Eligible QIBs pursuant to Chapter VIII of the SEBI Regulations, the provisions of the Companies Act, 2013 and the rules made thereunder Issue Size The issue of Securities aggregating up to ` 10,434.85 crore, assuming full exchange of Warrants into Equity Shares Mutual Fund A mutual fund registered with SEBI under the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, as amended Mutual Fund Portion 10% of the Securities proposed to be Allotted in the Issue, which is available for Allocation to Mutual Funds NCD holder Any person who is Allotted or subsequently acquires NCDs NCDs 1.43% secured redeemable non-convertible debentures of face value of ` 1,00,00,000 each due in March 2017 NCD Issue Price ` 1,00,00,000 per NCD Negative Lien Negative lien on the Assets of the Company except to the extent of charge created in favour of its depositors pursuant to the regulatory requirement under section 29B of the NHB Act. The interest on the Assets and the claims and interest of the Trustee would be exercisable through the power of attorney issued to the Trustee

Term Description Note: It is clarified that the Company shall be entitled from time to time to make further issue of debentures or any other instruments to the public and/or private, and/or any other person(s) and to raise further loans, advances or such other facilities from banks, financial institutions and /or any other person(s) on the security or assets without the consent of or intimation to Trustee. Provided further that the Company shall be entitled to assign or securitize in any manner whatsoever, create security for deposits and others and create any charge on its Assets under any law, regulations or guidelines, rules or directions, etc. issued by any authority and be free to dispose of, sell or transfer or part with any of capital or fixed or other assets in ordinary course of business without requiring any consent from trustee Pay-in Date The last date specified in the CAN for payment of application monies by the Eligible QIBs Placement Agreement Agreement dated September 30, 2015 entered into amongst our Company and the Global Co-ordinators and Book Running Lead Managers Placement Document The placement document to be issued by our Company in accordance with Chapter VIII of the SEBI Regulations and Section 42 of the Companies Act, 2013 Preliminary Placement Document The preliminary placement document dated September 30, 2015 issued in accordance with Chapter VIII of the SEBI Regulations and Section 42 of the Companies Act, 2013 Property Flat No. 202 admeasuring 1,300 square feet situated, lying and being at Hasmukh Mansion, Plot No. 375, 39, Chitrakaar Dhurandhar Marg, 14th Road Junction, Khar West, Mumbai 400 052 “QIBs” or “Qualified Institutional Qualified institutional buyers as defined under Regulation 2(1)(zd) of the Buyers” SEBI Regulations or such other persons as maybe permitted by applicable laws to acquire the Securities to be issued pursuant to the Issue QIP Qualified institutions placement under Chapter VIII of the SEBI Regulations Relevant Date September 30, 2015, which is the date of the meeting of the Board, or any committee duly authorised by the Board, deciding to open the Issue Securities NCDs and Warrants Warrants Warrants being offered by way of this Issue each of which are exchangeable for one Equity Share during the Warrant Exercise Period at the Warrant Exercise Price Warrant Cut-off Price The Warrant Issue Price which shall be finalized by our Company in consultation with the Global Co-ordinators and Book Running Lead Managers Warrant Exercise Form The form pursuant to which a Warrantholder shall submit an exercise notice to exercise the Exercise Right Warrant Exercise Period The period of 36 months from the date of Allotment during which the Warrants may be exercised i.e. during normal business hours on or after October 6, 2015 up to 5:00 p.m. in Mumbai on October 5, 2018 Warrant Exercise Price ` 1,475 per share Warrant Issue Price ` 14 per warrant

Industry Related Terms

Term Description ALM Asset-liability management ALM Guidelines Guidelines for Asset Liability Management System for HFCs issued vide circular NHB/ND/DRS/Pol-No. 35/2010-11 dated October 11, 2010 AMC Asset management companies Average borrowings Average borrowings is equal to the total of our long term borrowings, short term borrowings, and current maturities of long term borrowings as at the period end and as at the previous period end, divided by two Book value per share Shareholders’ funds divided by number of outstanding shares as at the end

Term Description of financial year Borrowings or Total Borrowings Long term borrowings plus short term borrowings plus current maturities of the long term borrowings CAGR Compounded annual growth rate calculated as 1/nth root of (Ending value divided by beginning value) less one, where n is the count of years being considered CAR Capital adequacy ratio Cost to Income Ratio or Cost to Net Operating Expenses divided by Net Interest Income Interest Income CRAR Capital to risk-weighted asset ratio CRE-RH Commercial real estates residential housing Dividend percentage or dividend % Dividend per share divided by face value of the share DTL Deferred tax liability EMI Equated monthly installments Fair Practices Code The Guidelines on Fair Practices Code for HFCs, as amended FIPB Foreign Investment Promotion Board of India GDP Gross Domestic Product Gross advances All outstanding loans and advances as computed under the National Housing Bank guidelines General provision Contingent provisions against standard assets Gross NPAs Gross non-performing assets in terms of the definition in the prudential norms applicable to HFCs issued by the National Housing Bank Gross NPA % Gross NPA divided by gross advances HFC Housing Finance Companies IFI Indian Financial Institution Interest expense Interest spended Interest income Interest earned Interest coverage ratio Profit for the year plus finance costs plus depreciation and amortization divided by finance cost IRDA Insurance Regulatory and Development Authority of India IT Information technology KYC Know your customer LTV Loan to value MBS Mortgage backed securities NABARD National Bank for Agricultural and Rural Development NBFC Non-banking financial company registered with the RBI NBFC- D Deposit taking Non-Banking Financial Company NBFC – MFI Non-Banking Financial Company – Micro Finance Institution NCD Directions Housing Finance Companies issuance of Non-Convertible Debentures on private placement basis (NHB) Directions, 2014, as amended and consolidated vide circular no.NHB(ND)/DRS/REG/MC-01/2015 dated September 9, 2015 Net advances Gross Advances less provisions against NPAs Net interest income or NII Total revenue less finance cost Net NPAs Gross Non-Performing assets less provisions made against the NPAs Net NPA % Net NPAs divided by Net Advances NHB National Housing Bank NHB Act National Housing Bank Act, 1987 or as amended from time to time “National Housing Bank Directions” Housing Finance Companies (NHB) Directions, 2010 as amended from or “NHB Directions 2010” or time to time “Directions” NOF Net owned funds NPA Non-performing asset Operating Expenses Sum of employee benefits expense, depreciation and amortization and other expenses NPA Provisioning Coverage or (Gross NPA amount - Net NPA amount) divided by Gross NPA amount Provisioning Coverage Ratio or

Term Description Coverage Ratio POS Principal only swaps PSL Priority sector loan RBI Reserve Bank of India Recovery Agents Guidelines Guidelines for Recovery Agents Engaged by HFCs, as amended RPLR Retail Prime Lending Rate SARFAESI Act The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, as amended SFB Guidelines Guidelines issued by the RBI for licensing small finance banks in the private sector SME Small and medium enterprises Tier I Capital As per the NHB Directions, means an owned fund as reduced by investment in shares of other housing finance companies and in shares, debentures, bonds, outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries and companies in the same group exceeding, in aggregate, 10% of the owned fund Tier II Capital As per the NHB Directions, Tier II Capital includes the following: (a) preference shares (other than those which are compulsorily convertible into equity); (b) revaluation reserves at discounted rate of 55%; (c) general provisions (including that for standard assets) and loss reserves to the extent these are not attributable to actual diminution in value or identifiable potential loss in any specific asset and are available to meet unexpected losses, to the extent of one and one fourth percent of risk weighted assets; (d) hybrid debt; and (e) subordinated debt To the extent the aggregate does not exceed Tier-I Capital VaR Value-at-risk

Conventional and General Terms/Abbreviations

Term Description AGM Annual general meeting AIF(s) Alternative investment funds, as defined and registered with SEBI under the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, as amended AMC Asset management company AOP Association of persons AS Accounting Standards issued by ICAI AY Assessment year BSE BSE Limited Calendar Year Year ending on December 31 Category III Foreign Portfolio An FPI registered as a category III foreign portfolio investor under the SEBI Investor FPI Regulations CBI Central Bureau of Investigation CBSE Central Board of Secondary Education CCI Competition Commission of India CDSL Central Depository Services (India) Limited CEO Chief executive officer CFO Chief financial officer CIBIL Credit Information Bureau (India) Limited CIN Corporate identity number Civil Procedure Code The Code of Civil Procedure, 1908, as amended Companies Act Companies Act, 1956 and the rules thereunder, to the extent not repealed, and/or the Companies Act, 2013 Companies Act, 1956 Companies Act, 1956, as the context requires

Term Description Companies Act, 2013 Companies Act, 2013 and the rules and clarifications thereunder, to the extent notified Competition Act Competition Act, 2002, as amended Consolidated FDI Policy Consolidated Foreign Direct Investment Policy notified under Circular No. 1 of 2015, effective from May 12, 2015, as amended from time to time CRE Commercial real estate CRISIL CRISIL Limited Debt Listing Agreement Listing agreement entered into by our Company with each of the Stock Exchanges for the purpose of listing of non-convertible debentures in accordance with the SEBI Debt Regulations Depositories Act The Depositories Act, 1996, as amended Depository A depository registered with SEBI under the Securities and Exchange Board of India (Depositories and Participant) Regulations, 1996, as amended Depository Participant A depository participant as defined under the Depositories Act DRT Act Recovery of Debts due to Banks and Financial Institutions Act, 1993 DRT Debts Recovery Tribunal EaR Earnings at risk EBITDA Earnings before interest, tax, depreciation and amortisation ECB External commercial borrowing ECS Electronic clearing service EGM Extraordinary general meeting EPS Earnings per share Equity Listing Agreement Listing agreement entered into between our Company and each of the Stock Exchanges in relation to the Equity Shares listed on the Stock Exchanges ESOP Guidelines Erstwhile, Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 as amended from time to time. ETL Expected tail loss FCCB Foreign currency convertible bonds FCNR(B) Foreign currency non-resident (bank) FDI Foreign direct investment FEDAI Foreign Exchange Dealers’ Association of India FEMA The Foreign Exchange Management Act, 1999, as amended, and the regulations issued thereunder FEMA 20 The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, as amended FIIs Foreign institutional investors as defined under the SEBI FPI Regulations “Financial year” or “Fiscal Year” or Period of 12 months ended March 31 of that particular year, unless “FY” or “Fiscal” otherwise stated FIPB Foreign Investment Promotion Board of the Ministry of Finance, Government of India Form PAS-4 Form PAS-4 as prescribed under the Companies (Prospectus and Allotment of Securities) Rules, 2014 FPI Foreign portfolio investors as defined under the SEBI FPI Regulations and includes person who has been registered under the SEBI FPI Regulations. Any foreign institutional investor or qualified foreign investor who holds a valid certificate of registration is deemed to be a foreign portfolio investor till the expiry of the block of three years for which fees have been paid as per the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995 FSI Floor space index FVCI Foreign venture capital investors as defined and registered with SEBI under the Securities and Exchange Board of India (Foreign Venture Capital Investors) Regulations, 2000, as amended GAAP Generally accepted accounting principles GAAR General Anti-Avoidance Rules GDP Gross domestic product

Term Description GIR General index registrar GoI/Government Government of India, unless otherwise specified GST Goods and services tax; a proposed reform to Indian tax laws relating to indirect taxes on goods and services HFCs Housing finance companies HFC Directions The Housing Finance Companies Directions, 2001, as amended HNIs High net worth individuals HUF Hindu undivided family ICAI The Institute of Chartered Accountants of India ICRA ICRA Limited ICSI The Institute of Company Secretaries of India IFC International Finance Corporation IFRS International Financial Reporting Standards of the International Accounting Standards Board Ind-AS/ IND-AS Indian accounting standards converged with IFRS, as per the roadmap issued by the Ministry of Corporate Affairs, Government of India Indian GAAP Generally accepted accounting principles in India as applicable to NBFCs IT Information technology IT Act The Income Tax Act, 1961, as amended Master Circular Master Circular on Housing Finance dated July 1, 2015 issued by the RBI MAT Minimum alternate tax MCA The Ministry of Corporate Affairs, Government of India MoU Memorandum of understanding MSEs Micro and small enterprises NEAT National Exchange for Automated Trading NEFT National electronic fund transfer Notified Sections Sections of the Companies Act, 2013 that have been notified by the Government of India NRE Non-resident (external) NRI Non-resident Indian, being an individual resident outside India who is a citizen of India or is an ‘overseas citizen of India’ cardholder, within the meaning of section 7(A) of the Citizenship Act, 1955 NRO Non-resident Ordinary NSDL National Securities Depository Limited NSE National Stock Exchange of India Limited PAN Permanent account number PMLA The Prevention of Money Laundering Act, 2002 RBI Reserve Bank of India RBI Act The Reserve Bank of India Act, 1934, as amended Refinance Scheme Refinance Scheme for Housing Finance Companies, 2003, as amended RoC Registrar of Companies, at Mumbai Rs./Rupees/INR/` Indian Rupees SCBs Scheduled commercial banks SCR (SECC) Rules Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012, notified by the SEBI SCRA Securities Contracts (Regulation) Act, 1956, as amended SCRR Securities Contracts (Regulation) Rules, 1957, as amended SEBI Securities and Exchange Board of India SEBI Act The Securities and Exchange Board of India Act, 1992, as amended SEBI Debt Regulations The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, as amended SEBI FII Regulations The erstwhile Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995, as amended SEBI FPI Regulations The Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014, amended SEBI Insider Trading Regulations, The erstwhile Securities and Exchange Board of India (Prohibition of 1992 Insider Trading) Regulations, 1992, as amended

Term Description SEBI Insider Trading Regulations, The Securities and Exchange Board of India (Prohibition of Insider Trading) 2015 Regulations, 2015 SEBI ESOP Regulations The Securities Exchange Board of India (Share Based Employee Benfits) Regulations, 2014, as amended SEBI Regulations The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended SENSEX Index of 30 stocks traded on BSE representing a sample of large and liquid listed companies SLR Statutory liquidity ratio Stock Exchanges BSE and NSE STT Securities transaction tax Takeover Regulations The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations 2011, as amended U.K. United Kingdom U.S. $/U.S. dollar United States Dollar, the legal currency of the United States of America USA/U.S./United States The United States of America VCFs Venture capital funds as defined in and registered with SEBI under the erstwhile SEBI (Venture Capital Fund) Regulations, 1996 WDM Wholesale debt market y-o-y Year on year

DISCLOSURE REQUIREMENTS UNDER FORM PAS-4 PRESCRIBED UNDER THE COMPANIES ACT, 2013

The table below sets out the disclosure requirements as provided in Form PAS-4 and the relevant pages in this Placement Document where these disclosures, to the extent applicable, have been provided.

Sr. Disclosure Requirements Relevant Page of this No. Placement Document 1. GENERAL INFORMATION a. Name, address, website and other contact details of the company indicating 199 and 311 both registered office and corporate office. b. Date of incorporation of the company. Cover page and 199 c. Business carried on by the company and its subsidiaries with the details of 103 branches or units, if any. d. Brief particulars of the management of the company. 128 e. Names, addresses, DIN and occupations of the directors. 128 f. Management’s perception of risk factors. 41 g. Details of default, if any, including therein the amount involved, duration of default and present status, in repayment of: (i) Statutory dues; 197 (ii) Debentures and interest thereon; Not applicable (iii) Deposits and interest thereon; and Not applicable (iv) Loan from any bank or financial institution and interest thereon. Not applicable h. Names, designation, address and phone number, email ID of the nodal/ 311 compliance officer of the company, if any, for the private placement offer process. 2. PARTICULARS OF THE OFFER a. Date of passing of board resolution. 199 b. Date of passing of resolution in the general meeting, authorising the offer 199 of securities. c. Kinds of securities offered (i.e. whether share or debenture) and class of 29 security. d. Price at which the security is being offered including the premium, if any, 29 along with justification of the price. e. Name and address of the valuer who performed valuation of the security Not applicable offered. f. Amount which the company intends to raise by way of securities. 29 g. Terms of raising of securities: (i) Duration, if applicable; 29 (ii) Rate of dividend; Not applicable (iii) Rate of interest; 29 (iv) Mode of payment; and 29 (v) Repayment. 29 h. Proposed time schedule for which the offer letter is valid. 29 i. Purposes and objects of the offer. 56 j. Contribution being made by the promoters or directors either as part of the 56 offer or separately in furtherance of such objects. k. Principle terms of assets charged as security, if applicable. 29 3. DISCLOSURES WITH REGARD TO INTEREST OF DIRECTORS, LITIGATION ETC a. Any financial or other material interest of the directors, promoters or key 133 and 134 managerial personnel in the offer and the effect of such interest in so far as it is different from the interests of other persons. b. Details of any litigation or legal action pending or taken by any Ministry or Not applicable Department of the Government or a statutory authority against any promoter of the offeree company during the last three years immediately preceding the year of the circulation of the offer letter and any direction issued by such Ministry or Department or statutory authority upon conclusion of such litigation or legal action shall be disclosed.

Sr. Disclosure Requirements Relevant Page of this No. Placement Document c. Remuneration of directors (during the current year and last three financial 135, 136 and 137 years). d. Related party transactions entered during the last three financial years 141 immediately preceding the year of circulation of offer letter including with regard to loans made or, guarantees given or securities provided. e. Summary of reservations or qualifications or adverse remarks of auditors in Not applicable the last five financial years immediately preceding the year of circulation of offer letter and of their impact on the financial statements and financial position of the company and the corrective steps taken and proposed to be taken by the company for each of the said reservations or qualifications or adverse remark. f. Details of any inquiry, inspections or investigations initiated or conducted Not applicable under the Companies Act or any previous company law in the last three years immediately preceding the year of circulation of offer letter in the case of company and all of its subsidiaries. Also if there were any prosecutions filed (whether pending or not) fines imposed, compounding of offences in the last three years immediately preceding the year of the offer letter and if so, section-wise details thereof for the company and all of its subsidiaries. g. Details of acts of material frauds committed against the company in the last Not applicable three years, if any, and if so, the action taken by the company. 4. FINANCIAL POSITION OF THE COMPANY a. The capital structure of the company in the following manner in a tabular 58 form: (i)(a) The authorised, issued, subscribed and paid up capital (number of 58 securities, description and aggregate nominal value); (b) Size of the present offer; and 58 (c) Paid up capital: 58 (A) After the offer; and 58 (B) After conversion of convertible instruments (if applicable); 58 (d) Share premium account (before and after the offer). 58 (ii) The details of the existing share capital of the issuer company in a tabular 58 form, indicating therein with regard to each allotment, the date of allotment, the number of shares allotted, the face value of the shares allotted, the price and the form of consideration. Provided that the issuer company shall also disclose the number and price Not applicable at which each of the allotments were made in the last one year preceding the date of the offer letter separately indicating the allotments made for considerations other than cash and the details of the consideration in each case. b. Profits of the company, before and after making provision for tax, for the 201 three financial years immediately preceding the date of circulation of offer letter. c. Dividends declared by the company in respect of the said three financial 73 years; interest coverage ratio for last three years (Cash profit after tax plus interest paid/interest paid). d. A summary of the financial position of the company as in the three audited 34 balance sheets immediately preceding the date of circulation of offer letter. e. Audited Cash Flow Statement for the three years immediately preceding 34 the date of circulation of offer letter. f. Any change in accounting policies during the last three years and their Not applicable effect on the profits and the reserves of the company. 5. A DECLARATION BY THE DIRECTORS THAT 310 a. The company has complied with the provisions of the Act and the rules made thereunder. b. The compliance with the Act and the rules does not imply that payment of dividend or interest or repayment of debentures, if applicable, is guaranteed

Sr. Disclosure Requirements Relevant Page of this No. Placement Document by the Central Government. c. The monies received under the offer shall be used only for the purposes and objects indicated in the Offer letter. I am authorised by the Board of Directors of the company vide resolution number ______dated ______to sign this form and declare that all the requirements of Companies Act, 2013 and the rules made thereunder in respect of the subject matter of this form and matters incidental thereto have been complied with. Whatever is stated in this form and in the attachments thereto is true, correct and complete and no information material to the subject matter of this form has been suppressed or concealed and is as per the original records maintained by the promoters subscribing to the Memorandum of Association and Articles of Association It is further declared and verified that all the required attachments have been completely, correctly and legibly attached to this form. Signed: Date: Place: Attachments:- Copy of board resolution Copy of shareholders resolution Copy of _____ Optional attachments, if any

SUMMARY OF BUSINESS

OVERVIEW

We were incorporated as a public limited company on October 17, 1977.

We are the largest housing finance company in India in terms of market share based solely on housing loans. (Source: CRISIL Research, Housing Finance Report, July 2015). As of March 31, 2015, our Company’s outstanding loan book amounted to ` 2,28,180.86 crores and total assets were ` 2,53,951.66 crore. Our principal business is providing finance to individuals, corporates, developers and co-operative societies for the purchase, construction, development and repair of houses, apartments and commercial property in India.

Our initial public offering was undertaken in 1978. Our Equity Shares are listed on BSE and NSE. The closing price of the Equity Shares on September 29, 2015 on NSE was ` 1,216.80 and on BSE was ` 1,213.55. As of the same date, our market capitalisation on NSE and BSE was ` 1,91,972.68 crore and ` 1,91,459.93 crore respectively.

As of March 31, 2015, our distribution network comprised 378 outlets, which include 103 offices of our wholly owned Subsidiary, HDFC Sales Private Limited.

As of March 31, 2015, our capital adequacy ratio after reducing the investment in HDFC Bank Limited (“HDFC Bank”) from Tier 1 Capital, was 16.11% as against a minimum regulatory requirement of 12% and our Tier I capital was 12.47%, as against a minimum requirement of 6%.

STRENGTHS

Our strengths as a provider of housing finance are:

 One of the lowest levels of NPA in the industry due to, among others: o Efficient recovery mechanisms o Efficient and robust operating process  Well diversified assets and liabilities mix  Low average loan to value ratio and instalment to income ratios  Low cost income ratio: As of March 31, 2015, the cost income ratio was 7.6% (excluding expenditure towards corporate social responsibility activities)  Pan-India presence  Quality underwriting with experience of over 37 years

Our corporate strengths are:

 Strong brand and large customer base  Stable and experienced management  High service standards  Synergistic and diverse presence across segments of financial services through subsidiaries and associates

STRATEGY

Our primary objective is to enhance the residential housing stock in India through the provision of housing finance on a systematic and professional basis and to promote home ownership throughout India. We have contributed to increasing the flow of resources to the housing sector through the integration of the housing finance sector with the overall domestic financial markets in India.

Our primary business strategies are to:

 maintain our position as the leading housing finance institution in India;  develop close relationships with individual households and enhance our customer relationships;  transform ideas for housing finance into viable and creative solutions; and

 grow through diversification by leveraging our client base.

Our primary business objectives are to:

 increase the return on equity to maximise shareholder value: As of March 31, 2015, our return on equity (excluding the impact of deferred tax liability on Special Reserve) was 21.6% compared to 20.6% as of March 31, 2014;

 minimise gross non-performing assets: Our gross non-performing loans stood at 0.67% of our loan portfolio as of March 31, 2015, compared to 0.69% as of March 31, 2014; and

 minimise cost to income ratio: for Fiscal 2015 our cost to income ratio stood at 7.6%, as against 7.9% in Fiscal 2014.

SUMMARY OF THE ISSUE

The following is a general summary of the terms of the Issue. This summary should be read in conjunction with, and is qualified in its entirety by, the more detailed information appearing elsewhere in this Placement Document, including the sections titled “Terms and Conditions of the NCDs”, “Terms and Conditions of the Warrants”, “Use of Proceeds”, “Placement”, “Issue Procedure” and “Description of the Securities” on pages 144, 151, 56, 180, 168 and 186 respectively.

Secured Redeemable Non-Convertible Debentures

Issuer Housing Development Finance Corporation Limited

Instrument Secured redeemable non-convertible debentures of the face value of ` 1,00,00,000 each (“NCDs”)

Face Value ` 1,00,00,000 per NCD

NCD Issue Price ` 1,00,00,000 per NCD

NCD Issue size The issue of 5,000 NCDs aggregating to ` 5,000 crore

Eligible investors for QIBs, as defined in regulation 2(1)(zd) of the SEBI Regulations which (a) are not NCDs excluded pursuant to regulation 86 of the SEBI Regulations, (b) are not an entity not being a person resident in India under FEMA, (c) are not ‘owned’ or ‘controlled’ by Non-Residents/ persons resident outside India, as defined under FEMA, except as specifically set forth in this Placement Document or (d) have not been prohibited or debarred by any regulatory authority from buying, selling or dealing in securities, are eligible to invest in this issue. See “Issue Procedure – Eligible QIBs”

Minimum 1 NCD or in multiples thereof Subscription

Ratio One NCD entitles and requires a Bidder to Bid for 7,300 Warrants

Maturity Date March 28, 2017

Interest 1.43%

Interest Payment Date Annually from the deemed date of allotment

Record Date for In case of NCDs held in physical form, to the person appearing in the Register of Interest Payment NCD holders on the date falling 15 days prior to the relevant Interest Payment Date

Tenor Due in March 2017

Security The principal amount of the NCDs, interest and, early redemption amount, if any, and any other monies payable by the Company in respect of the NCDs will be secured only by way of (i) an equitable assignment on the Assets (through a Negative Lien), and (ii) registered mortgage and charge of the Property. See NCD Condition 7 of the “Terms and Conditions of the NCDs”

Ranking The NCDs constitute direct and secured obligations of the Company and shall rank pari passu inter se and without any preference or priority among themselves. Subject to any obligations preferred by mandatory provisions of the law prevailing from time to time, the NCDs shall also, as regards the principal amount of the NCDs, interest, early redemption amount and all other monies secured in respect of the NCDs, rank pari passu with all other present direct and secured obligations of the Company

Events of Default See NCD Condition 8 of the “Terms and Conditions of the NCDs”

Debenture Trustee  IDBI Trusteeship Services Limited

Credit Rating The NCDs being offered by way of this Issue have been rated by CRISIL Limited as CRISIL AAA with stable outlook and ICRA Limited as [ICRA] AAA with stable outlook, indicating highest degree of safety regarding timely servicing of financial obligations

Governing Law Indian law

Form of Issuance The Allotment of NCDs in this Issue shall only be in a dematerialized form. See NCD Condition 2.1 in the “Terms and Conditions of the NCDs”

Listing The Company has made applications to the Stock Exchanges and has on August 18, 2015 received an in-principle approval for the listing of the NCDs on the WDM segment of Stock Exchanges

Trading The trading of the NCDs would be in dematerialized form only for all Eligible QIBs in the demat segment of the Stock Exchanges

Depositories NSDL and CDSL

Transferability The NCDs shall not be sold for a period of one year from the date of Allotment Restrictions except on a recognized stock exchange.

Furthermore, subsequent to receipt of listing and trading approvals from the Stock Exchanges, as per the extant laws, the NCDs cannot be purchased by any FII or FPI.

Use of Proceeds See “Use of Proceeds”

Risk Factors See “Risk Factors”

Pay-in Date Last date specified in the CAN sent to Eligible QIBs for payment of subscription amounts

Closing The Allotment of the NCDs offered pursuant to this Issue is expected to be made on or about October 5, 2015 (“Closing Date”).

Warrants

Issuer Housing Development Finance Corporation Limited

Instrument Warrants of the Issuer that entitle the Warrant holder to apply for one Equity Share for each Warrant held at the Warrant Exercise Price at any time during the Warrant Exercise Period

Warrant Issue Price ` 14 per Warrant

Warrant Exercise ` 1,475 per Warrant Price

Warrant Exercise One Equity Shares for each Warrant Ratio

Warrant Issue Size The issue of 3.65 crore Warrants aggregating up to ` 5,383.75 crore assuming all the Warrants are exchanged into Equity Shares at the Warrant Exercise Price during the Warrant Exercise Period

Eligible investors for QIBs, as defined in regulation 2(1)(zd) of the SEBI Regulations which (a) are not Warrants excluded pursuant to regulation 86 of the SEBI Regulations, (b) are not an entity not being a person resident in India under FEMA, (c) are not ‘owned’ or ‘controlled’ by Non-Residents/ persons resident outside India, as defined under FEMA, except as specifically set forth in this Placement Document or (d) have not been prohibited or debarred by any regulatory authority from buying, selling or dealing in securities, are eligible to invest in this issue. See “Issue Procedure – Eligible QIBs”

Minimum 7,300 Warrants or in multiples thereof Subscription

Ratio One NCD entitles and requires a Bidder to Bid for 7,300 Warrants

Warrant Exercise Within 36 months from the date of the Allotment i.e. October 5, 2018 Period

Adjustments to See Warrant Condition 7 in the “Terms and Conditions of the Warrants” Warrant Exercise Price and Quantum of Warrants

Floor Price ` 1,189.66. In terms of the SEBI Regulations, the sum of the Warrant Issue Price and the Warrant Exercise Price cannot be lower than the Floor Price

Equity Shares issued 1,57,76,84,750 Equity Shares, aggregating ` 315.54 crore and outstanding immediately prior to the Issue

Equity Shares to be 3,65,00,000 Equity Shares of face value of ` 2 each issued on Exercise of Warrants*

Equity Shares issued 1,61,41,84,750 Equity Shares of face value of ` 2 each

and outstanding immediately pursuant to exchange of Warrants during the Warrant Exercise Period*

Ranking The Warrants constitute direct, unsubordinated, unconditional and unsecured obligations of the Company and shall, at all times, rank pari passu and without any preference or priority among themselves and shall also rank pari passu with all other present and future direct, unsubordinated, unconditional and unsecured obligations of the Company (subject to any obligations preferred under mandatory provisions of the law prevailing from time to time).

The Equity Shares to be issued upon exercise of Warrants shall be subject to the provisions of the Company’s Memorandum and Articles of Association and shall rank pari passu in all respects with the existing Equity Shares including rights in respect of dividends. The Shareholders will be entitled to participate in dividends and other corporate benefits in compliance with the Companies Act. Shareholders may attend and vote in Shareholders’ meetings on the basis of one vote for every Equity Share held. See “Description of the Securities”.

Governing Law Indian law

Form of Issuance The allotment of Warrants in this Issue shall only be in a dematerialized form. See Warrant Condition 2.1 in the “Terms and Conditions of the Warrants”.

Listing The Company has made applications to the Stock Exchanges and has on August 18, 2015 received an in-principle approval for the listing of the Warrants on these Stock Exchanges.

Trading The trading of the Warrants would be in dematerialized form only for all Eligible QIBs in the demat segment of the Stock Exchanges

Depositories NSDL and CDSL

Transferability The Warrants shall not be sold for a period of one year from the date of Allotment Restrictions except on a recognized stock exchange.

Furthermore, subsequent to receipt of listing and trading approvals from the Stock Exchanges and as per the extant laws, the Warrants cannot be transferred to non- residents or entities, which are ‘owned’ or ‘controlled’ by non-residents / persons resident outside India and whose downstream investments are regarded as foreign investments.

Use of Proceeds See “Use of Proceeds”.

Risk Factors See “Risk Factors”.

Pay-in Date Last date specified in the CAN sent to Eligible QIBs for payment of subscription amounts

Closing The Allotment of the Warrants offered pursuant to this Issue is expected to be made on or about October 5, 2015 (“Closing Date”).

*Assuming that all Warrants held by eligible investors have been exercised during the Warrant Exercise Period at Warrant Exercise Price.

SELECTED FINANCIAL INFORMATION

The summary financial information as at and for the years ended March 31, 2013, 2014 and 2015 is derived from our audited standalone and consolidated financial statements for those respective financial years. You should read the following information together with the more detailed information contained in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 74 of this Placement Document and our audited standalone and consolidated financial statements, including the notes thereto and the reports thereupon, which appear in the section titled “Financial Statements” on page 201 of this Placement Document.

34 HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED Balance Sheet as at

Mar 31, 2015 Mar 31, 2014 Mar 31, 2013 ` in Crore ` in Crore ` in Crore

EQUITY AND LIABILITIES

SHAREHOLDERS' FUNDS Share capital 314.94 312.10 309.27 Reserves and surplus 30,655.03 27,643.09 24,520.94 9.97 30,969.97 27,955.19 24,830.21 NON-CURRENT LIABILITIES Long-term borrowings 97,602.34 86,881.04 90,005.01 Deferred tax liability (Net) 200.67 - - Other long term liabilities 2,436.81 2,231.11 1,810.57 Long-term provisions 1,550.88 1,347.00 1,305.56 101,790.70 90,459.15 93,121.14 CURRENT LIABILITIES Short-term borrowings 33,257.71 25,317.85 18,544.56 Trade payables 87.80 81.82 26.89 Other current liabilities - Borrowings 77,738.98 71,774.30 50,036.41 - Others 7,467.60 7,137.20 6,159.65 Short-term provisions 2,638.90 2,706.98 2,399.97 121,190.99 107,018.15 77,167.48

253,951.66 225,432.49 195,118.83

ASSETS Mar 31, 2015 Mar 31, 2014 Mar 31, 2013 ` in Crore ` in Crore ` in Crore NON-CURRENT ASSETS Fixed assets (i) Tangible assets 671.84 275.76 232.96 (ii) Intangible assets 5.12 4.72 4.98 Non-current investments 13,691.70 13,370.29 12,531.86 Deferred tax asset (net) - 629.87 631.38 Long-term loans and advances - Loans 201,680.43 175,746.08 151,630.87 - Others 2,564.72 2,640.32 1,869.99 Other non-current assets 2,763.11 914.08 604.04 221,376.92 193,581.12 167,506.08

CURRENT ASSETS Current investments 602.64 542.36 1,081.60 Trade receivables 46.18 84.52 1.32 Cash and bank balances 3,364.65 7,715.52 5,751.14 Short-term loans and advances - Loans 26,019.69 20,808.31 17,939.97 - Others 1,966.28 2,303.36 2,459.89 Other current assets 575.30 397.30 378.83 32,574.74 32,574.74 31,851.37 27,612.75

253,951.66 225,432.49 195,118.83

35 HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED Statement of Profit and Loss for year ended

Mar 31, 2015 Mar 31, 2014 Mar 31, 2013 ` in Crore ` in Crore ` in Crore INCOME

Revenue from Operations 26,959.88 23,894.03 20,796.95 Profit on Sale of Investments 441.28 248.98 315.55 Other Income 69.70 54.66 35.12 Total Revenue 27,470.86 24,197.67 21,147.62

EXPENSES

Finance Cost 17,975.09 16,029.37 13,890.89 Staff Expenses 328.46 279.18 246.19 Establishment Expenses 85.76 86.98 75.68 Other Expenses 262.63 230.03 193.43 Depreciation and Amortisation 29.78 31.87 23.59 Provision for Contingencies 165.00 100.00 145.00 Total Expenses 18,846.72 16,757.43 14,574.78

PROFIT BEFORE TAX 8,624.14 7,440.24 6,572.84 Tax Expense Current Tax 2,363.00 1,973.00 1,727.68 Deferred Tax 271.00 27.00 (3.18) PROFIT FOR THE YEAR 5,990.14 5,440.24 4,848.34

EARNINGS PER SHARE (Face Value ` 2) Basic 38.13 34.89 31.84 Diluted 37.78 34.62 31.45

36 HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

Cash Flow Statement 2014-15 2013-14 2012-13 ``` in crore ` in crore ` in crore A CASH FLOW FROM OPERATING ACTIVITIES

Profit before tax 8,624.14 7,440.24 6,572.84 Adjustments for: Depreciation and Amortisation 29.78 31.87 23.59 Provision for Contingencies 165.00 100.00 145.00 Interest Expense 17,864.71 15,787.38 13,633.99 Net Loss / (Gain) on translation of foreign currency monetary assets & liabilities (19.95) 135.61 166.96 Interest Income (25,605.58) (22,693.17) (19,817.17) Utilisation of Securities Premium (192.80) (398.20) (708.71) Utilisation of Shelter Assistance Reserve (0.79) (13.02) (9.13) Profit on Sale of Investments (441.28) (248.98) (315.55) Dividend Income (688.28) (555.59) (480.66) Profit on Sale of Investment in Properties (6.37) (6.21) (0.12) Surplus from deployment in Cash Management Schemes of Mutual Funds (364.55) (337.38) (252.34) Profit on Sale of Fixed Assets (Net) (27.34) (20.93) (0.23) Operating Profit before Working Capital changes (663.31) (778.38) (1,041.53) Adjustments for: Current and Non Current Assets 21.38 228.46 4,032.24 Current and Non Current Liabilities (48.74) (148.85) (73.85) Cash generated from Operations (690.67) (698.77) 2,916.86 Interest Received 25,499.64 22,376.67 19,568.66 Interest Paid (17,787.00) (14,839.24) (11,771.41) Dividend Received 688.28 555.59 480.66 Taxes Paid (2,707.81) (2,519.78) (2,197.46) Net cash from Operations 5,002.44 4,874.47 8,997.31 Loans disbursed (net) (30,964.16) (26,644.16) (28,993.94) Corporate Deposits (net) 492.49 300.80 344.38 Net cash used in operating activities (25,469.23) (21,468.89) (19,652.25)

B CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (451.77) (79.76) (25.84) Sale of Fixed Assets 56.83 28.55 0.91 94) (394.94) (51.21) (24.93) Investments in Subsidiaries (60.01) (74.66) (86.58) Investment in Cash Management Schemes of Mutual Funds (308,896.00) (440,700.00) (226,559.00) Other Investments (1,743.60) (1,334.42) (3,261.08) Sale proceeds of Investments : - in Subsidiary Company 297.31 - - - in Cash Management Schemes of Mutual Funds 309,260.55 441,037.38 226,8 11.34 - in other Companies and Properties 1,733.33 1,267.26 2,249. 46

Net cash from investing activities 196.64 144.35 (870.79)

C CASH FLOW FROM FINANCING ACTIVITIES Share Capital - Equity 2.84 2.83 13.88 Securities Premium 681.45 626.42 3,819.0 9 Deposits, CPs and other Short Term Borrowings (Net) 26,887.75 4,567.71 20,844 .30 Proceeds from long-term borrowings 48,555.01 63,502.31 52,55 3.66 Repayment of long-term borrowings (50,866.15) (42,816.75) (54,011.24) Dividend paid - Equity Shares (2,502.57) (1,939.91) (1,635.57) Tax paid on Dividend (366.33) (314.98) (241.02)

Net cash from financing activities 22,392.00 23,627.63 21,34 3.10

Net (Decrease) / Increase in cash and cash equivalents [A+B+C] (2,880.59) 2,303.09 820.07 Add : Cash and cash equivalents as at the beginning of the year 5,634.72 3,324.05 2,499. 40 Add : Exchange difference on bank balance 2.80 7.58 4.58 Cash and cash equivalents as at the end of the year 2,756.93 5,634.72 3,324 .05 Earmarked balances with banks: - Unclaimed Dividend Account 20.47 14.36 11.61 - Towards Guarantees Issued by Banks 0.13 0.14 - - Other Against Foreign Currency Loans 7.10 6.40 5.41 Short - term bank deposits 580.02 2,059.90 2,410. 07 Cash and Bank balances at the end of the year 3,364.65 7,715.52 5,751.14

37 HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

Consolidated Balance Sheet as at

March 31, 2015 March 31, 2014 March 31, 2013 EQUITY AND LIABILITIES ``` in Crore ` in Crore ` in Crore SHAREHOLDERS' FUNDS Share Capital 314.94 312.10 309.27 Reserves and Surplus 44,756.69 37,262.51 31,581.29 45,071.63 37,574.61 31,890.56 MINORITY INTEREST 1,820.08 1,423.88 1,071.47 NON-CURRENT LIABILITIES Policy Liabilities (Policyholder's Fund) 54,924.28 45,003.25 35,086.09 Long-term borrowings 104,545.72 91,757.78 93,618.53 Deferred tax liabilities (net) 231.32 15.82 - Other Long-term liabilities 2,546.12 2,288.20 2,021.30 Long-term provisions 1,998.04 1,682.20 1,557.14 164,245.48 140,747.25 132,283.06 CURRENT LIABILITIES Short-term borrowings 34,420.05 26,012.51 18,683.78 Trade Payables 2,984.85 2,371.99 1,780.70 Other current liabilities - Policy Liabilities (Policyholder's Fund) 10,531.68 4,300.42 4,238.40 - Borrowings 78,390.95 72,831.68 51,114.90 - Others 7,864.17 7,559.93 6,856.91

Short-term provisions 4,196.29 4,082.38 3,613.18 138,387.99 117,158.91 86,287.87 349,525.18 296,904.65 251,532.96

ASSETS NON-CURRENT ASSETS: Fixed assets (i) Tangible assets 1,203.17 746.16 611.11 (ii) Intangible assets 79.25 70.49 54.39 (iii) Capital work in Progress 5.60 21.01 32.43 (iv) Intangible assets under Development 3.38 0.03 0.03 GOODWILL ON CONSOLIDATION 187.81 185.59 185.08 Non-current investments 86,887.59 65,377.26 53,616.24 Deferred tax asset (net) 18.55 663.34 659.60 Long-term loans and advances - Loans 211,531.09 183,423.95 157,407.24 - Others 3,150.97 3,084.79 2,188.37 Other non-current assets 2,799.52 930.61 831.07 305,866.93 254,503.23 215,585.56 CURRENT ASSETS: Current investments 6,894.83 7,536.95 5,876.18 Trade receivables 457.79 376.79 216.02 Cash and bank balances 4,261.92 8,588.11 7,071.67 Short-term loans and advances - Loans 26,674.83 21,324.43 18,418.46 - Others 3,679.28 3,259.49 3,333.97 Other current assets 1,689.60 1,315.65 1,031.10 43,658.25 42,401.42 35,947.40 349,525.18 296,904.65 251,532.96

38 HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

Consolidated Statement of Profit and Loss for the year ended

March 31, 2015 March 31, 2014 March 31, 2013 INCOME ``` in Crore ` in Crore ` in Crore

Revenue from Operations 29,075.78 25,583.15 22,032.46 Profit on sale of Investments 510.87 294.03 378.35 Other Income 74.34 61.39 38.75 Premium from Insurance Business 16,427.35 13,539.59 12,650.29 Other Operating Income from Insurance Business 2,301.69 1,336.40 887.08 Total Revenue 48,390.03 40,814.56 35,986.93

EXPENSES

Finance Cost 18,710.29 16,607.89 14,295.52 Employee Benefits Expenses 699.14 597.24 528.13 Establishment Expenses 136.95 143.14 125.54 Other Expenses 584.13 465.07 429.97 Claims paid pertaining to Insurance Business 9,551.25 5,969.83 4,866.93 Commission and operating expenses pertaining to Insurance 2,112.45 2,112.45 1,924.34 2,278.56 Business Other expenses pertaining to Insurance Business 6,244.53 6,103.93 5,792.21 Depreciation and Amortisation 46.63 46.85 54.20 Provision for Contingencies 188.04 110.42 148.59 Total Expenses 38,273.41 31,968.71 28,519.65

PROFIT BEFORE TAX 10,116.62 8,845.85 7,467.28 Tax Expense Current Tax 2,883.62 2,317.05 2,007.28 Deferred Tax 282.08 41.29 (5.25) PROFIT FOR THE YEAR 6,950.92 6,487.51 5,465 .25

Share of profit of Minority Interest (482.72) (454.89) (341.80) Net share of Profit from Associates 2,294.42 1,915.20 1,516.27

PROFIT AFTER TAX ATTRIBUTABLE TO THE 8,762.62 8,762.62 7,947.82 6,639 .72 CORPORATION

EARNINGS PER SHARE (Face Value ` 2) Basic (`) 55.81 51.01 43.63 Diluted (`) 55.30 50.61 43.09

39 HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED Consolidated Cash flow Statement for the year ended March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore A CASH FLOW FROM OPERATING ACTIVITIES Profit After tax Attributable to the Group 8,762.62 7,947.82 6,639.72 Add: Provision for Taxation 3,165.70 2,358.34 2,002.03 Profit Before Tax 11,928.32 10,306.16 8,641.75 Adjustments for: Depreciation and Amortisation * 130.73 108.87 101.33 Provision for Contingencies 188.04 110.20 148.59 Interest Expense 18,589.83 16,357.10 14,033.19 Net (Gain) / Loss on translation of foreign currency monetary assets and liabilities (16.28) 138.76 168.18 Interest Income (26,994.73) (23,774.91) (20,523.01) Employee Stock Option Expense (net of options exercised) - - (4.54) Premium paid on redemption of Debentures (192.80) (398.20) (708.71) Shelter Assistance Reserve - utilisation (10.83) (13.02) (9.82) Corporate Social Responsibility Account - utilisation - (0.46) - Reserve for Unexpired Risk 104.41 180.83 228.96 Policy Liabilities (net) 16,152.28 9,979.18 7,699.08 Surplus from Deployment in Cash Management Schemes of Mutual Funds (369.48) (344.01) (256.74) Profit on Sale of Investments (510.87) (294.03) (378.35) Dividend Income (41.16) (47.64) (68.30) Provision for Diminution in Value of Investments 5.06 (0.38) 6.22 Bad debts written off 4.60 1.89 3.37 (Profit) / Loss on Sale of Fixed Assets (net) (27.64) (22.41) (0.57) Operating Profit before Working Capital changes 18,939.49 12,287.93 9,080.63 Adjustments for: Current and Non Current Assets (978.49) 266.46 2,223.04 Current and Non Current Liabilities 759.49 14.08 523.52 Cash generated from operations 18,720.49 12,568.47 11,827.19 Interest Received 26,682.39 23,271.11 20,053.35 Interest Paid (18,519.42) (15,418.73) (12,125.73) Dividend Received 41.16 47.64 68.30 Taxes Paid (3,227.77) (2,910.84) (2,493.30) Net cash from operation 23,696.84 17,557.65 17,329.81 Loans disbursed (net) (33,281.47) (28,586.35) (30,731.11) Corporate Deposits (net) 466.44 293.80 1,646.78 Net cash used in operating activities [ A ] (9,118.18) (10,734.90) (11,754.52) * Includes depreciation included under Other expenses pertaining to Insurance Business

B CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (616.32) (255.13) (172.30) Sale of Fixed Assets 57.81 31.21 46.91 Goodwill (net) (2.22) (0.51) (7.55) Investments (net) (17,994.19) (12,766.59) (10,083.59) Net cash used in investing activities [ B ] (18,554.92) (12,991.02) (10,216.53)

C CASH FLOW FROM FINANCING ACTIVITIES Share Capital - Equity 2.84 2.83 13.88 Utilisation of Reserves for Buy back of Equity Shares by one of the Subsidiary Company - (20.92) (48.65) Securities Premium 726.52 651.41 3,863.34 Deposits, CPs and other Short Term Borrowings (Net) 27,136.33 5,377.93 21,006.00 Proceeds from long-term borrowings 64,672.33 71,905.16 58,182.51 Repayment of long-term borrowings (65,098.31) (50,231.75) (58,355.87) Dividend paid (2,505.94) (1,939.91) (1,635.56) Tax paid on Dividend (485.43) (385.73) (294.09) Bonus and Securities Issue Expenses (22.01) (0.30) (18.69) Increase in Minority Interest 394.05 359.81 245.94 Net cash from financing activities [ C ] 24,820.38 25,718.53 22,958.81 Net (Decrease) / Increase in cash and cash equivalents [A+B+C] (2,852.73) 1,992.61 987.76 Add: Cash and cash equivalents as at the beginning of the year 6,397.65 4,397.46 3,405.11 Add: Exchange difference on bank balance 2.80 7.58 4.58 Cash and cash equivalents as at the end of the year 3,547.72 6,397.65 4,397.46 Earmarked balances with banks: - Unclaimed dividend account 21.52 15.26 12.38 - Other against Foreign Currency Loans 7.20 6.39 5.42 - Guarantees issued by banks 0.13 0.24 - - Others 2.59 2.59 2.68 Short - term bank deposits 682.76 2,165.98 2,653.73 Cash and Bank balances at the end of the year 4,261.92 8,588.11 7,071.67

RISK FACTORS

Prior to making an investment decision with respect to the Securities offered hereby, all prospective investors and purchasers should carefully consider all of the information contained in this Placement Document, including the risk factors set out below and the financial statements and related notes thereto. The occurrence of any of the following events could have a material adverse effect on our Company’s business, results of operations, financial condition and future prospects and cause the market price of the NCDs, the Warrants and the Equity Shares to fall significantly. Any potential investor in, and purchaser of, the Securities should pay particular attention to the fact that we are an Indian company and are subject to a legal and regulatory environment which in some respects may be different from that which prevails in other countries.

The risks and uncertainties described below are not the only risks that we currently face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business, prospects, financial condition and results of operations and cashflows. If any or some combination of the following risks, or other risks that are not currently known or currently believed to be not material, actually occur, our business, financial condition and results of operations and cashflows could suffer, the trading price of, and the value of your investment in, the Securities or the Equity Shares could decline and you may lose all or part of your investment. Our results could differ materially from such forward-looking statements as a result of certain factors including the considerations described below and elsewhere in this Placement Document. In making an investment decision, you must rely on your own examination of our Company and the terms of this Issue, including the merits and risks involved.

This Placement Document also contains forward-looking statements that involve risks and uncertainties. Our results of operations could differ materially from such forward-looking statements as a result of certain factors including the considerations described below and elsewhere in this Placement Document.

Unless otherwise stated, the financial information used in this section is derived from our audited consolidated financial statements prepared under Indian GAAP. For further details, please refer to the section titled “Financial Statements” on page 201 of this Placement Document.

Risks relating to our Company

The Indian housing finance industry is competitive and increasing competition may result in declining margins if we are unable to compete effectively, which may adversely affect our business, financial performance and the trading price of the NCDs, Warrants and Equity Shares.

Our Company’s principal business is the provision of housing finance in India.

We face increasing competition from other HFCs, NBFCs and commercial banks, which have focused on growing their retail portfolios in recent years. Interest rate deregulation and other liberalisation measures affecting the housing finance industry, together with increased demand for home finance, have increased our exposure to competition. The demand for housing loans has also increased due to relatively affordable interest rates, stable property prices, higher disposable incomes and increased fiscal incentives for borrowers. All of these factors have resulted in HFCs, including our Company, facing increased competition from other lenders in the retail housing market, including NBFCs and commercial banks. Unlike commercial banks, our Company does not have access to funding from savings and current deposits of customers. Instead, we are reliant on higher-cost term loans, term deposits and debentures and securities for our funding requirements, which may reduce our margins compared to competitors. Our ability to compete effectively with commercial banks will depend, to some extent, on our ability to raise low-cost funding in the future. If we are unable to compete effectively with other participants in the housing finance industry, our business, future financial performance and the trading price of the NCDs, the Warrants and the Equity Shares may be adversely affected.

If there is an increase in the interest rates that we pay on our borrowings, which we are unable to pass to our customers, we may find it difficult to compete with our competitors, who may have access to lower cost funds. Further, to the extent our borrowings are linked to market interest rates, we may have to pay interest at a higher rate than lenders that borrow only at fixed interest rates. Fluctuations in interest rates may also adversely affect our treasury operations. In a rising interest rate environment, especially if the rise is sudden or sharp, we could be adversely affected by the decline in the market value of our securities portfolio and other fixed income securities.

Furthermore, as a result of increased competition in the housing finance industry, home loans are becoming increasingly standardised and terms such as floating rate interest options, lower processing fees and monthly rest periods are becoming increasingly common in the housing finance industry in India. There can be no assurance that our Company will be able to react effectively to these or other market developments or compete effectively with new and existing players in the increasingly competitive housing finance industry. Increasing competition may have an adverse effect on our net interest margin and other income, and, if we are unable to compete successfully, our market share may decline as the origination of new loans declines.

Due to challenging conditions in the global capital markets, the economy generally and our credit rating in particular, we may be unable to secure funding at competitive rates.

The Indian market and the Indian economy are influenced by economic and market conditions in other countries and markets. Although economic conditions are different in each country, investors’ reactions to developments in other countries or markets may adversely impact the markets in India, including the markets in which we operate. A loss of investor confidence in the financial systems of other markets may lead to increased volatility in the Indian financial markets and may also impact the Indian economy. The deterioration in the financial markets may cause a serious recession in many countries, which may lead to significant declines in employment, household wealth, consumer demand and lending, and as a result may adversely affect economic growth in India and elsewhere. Liquidity risk is the risk that we either do not have sufficient financial resources available to meet all our obligations and commitments as they fall due, or can access them only at excessive cost. This risk is inherent in mortgage-lending operations and can be heightened by a number of these factors mentioned above.

Our Company’s funding consists principally of domestic term loans, debentures and securities, term loans and deposits. Our Company does not have a banking licence and, like other HFCs, we do not have access to savings and current deposits. Funding from debentures and securities have played an increasingly important part in our funding in recent years, representing 56% and 51% of the total funding in Fiscal 2015 and Fiscal 2014, respectively. There can be no assurance that we will be able to continue securing increased funding from banks or other sources of funding at current rates. In particular, banks that currently lend to us may reach industry or borrower concentration limits and be unable to advance further funds.

Furthermore, our cost of funds from banks, domestic and international debt capital markets and our deposits are influenced by our credit rating from the domestic credit rating agencies, being “CRISIL AAA/Stable” from CRISIL Limited (“CRISIL”) and “ICRA AAA/Stable” from ICRA Limited (“ICRA”). There can be no guarantee that we will not be subject to downgrades to our credit ratings. Any downgrade in such ratings would result in an increase in the cost of our funding and could reduce our sources of funding.

Our business is vulnerable to volatility in interest rates which may adversely affect our results of operations and our net interest margin.

Interest rates in India are primarily determined by the market, which results in increased interest rate risk exposure for all banks and financial intermediaries in India, including our Company.

Our results of operations are substantially dependent upon the level of our net interest margins. Interest rates are sensitive to many factors beyond our control, including the RBI’s monetary policies, domestic and international economic and political conditions and other factors. Our policy is to attempt to balance the proportion of our interest-earning assets and interest-bearing liabilities which bear interest at floating rates. However, there can be no assurance that we will be able to adequately manage our interest rate risk in the future and be able effectively to balance floating rate loan assets and liabilities in the future. Further, despite this balancing, changes in interest rates could affect the interest rates charged on interest-earning assets and the interest rates paid on interest- bearing liabilities in different ways. Thus, our results of operations could be affected by changes in interest rates and the timing of any re-pricing of our liabilities compared with the re-pricing of our assets.

There can be no assurance that we will be able adequately to manage our interest rate risk in the future and, if we are unable to do so, this would have an adverse effect on our net interest margin.

We are exposed to large loan concentrations with several borrowers and default by any one of them would adversely affect our business.

As of March 31, 2015, aggregate loans to our 10 largest borrowers amounted to ` 15,305.59 crore, representing approximately 6.7% of our total loans outstanding as of such date. Our single largest borrower on such date had an outstanding balance of ` 3,134.94 crore, representing 1.4% of our total loans outstanding as of such date. Any deterioration in the credit quality of these assets could have a significant adverse effect on our business, prospects, financial condition and results of operations.

We may not be able to successfully sustain our growth, which may adversely impact the quality of our assets and our financial condition.

In Fiscal 2015, our loan book grew by 16% (net of loans sold) to stand at ` 2,28,180.86 crore. The growth in the loan book would have been higher at 20% if the loans sold were included in the loan book. Our total assets also grew by 12.65% from ` 2,25,432.49 crore as of March 31, 2014 to ` 2,53,951.66 crore as of March 31, 2015. Our growth strategy includes growing our loan book and expanding the range of products and services offered to our customers. There can be no assurance that we will be able to sustain our growth successfully or that we will be able to expand further or diversify our loan book.

Furthermore, there may not be sufficient demand for such services and products, and they may not generate sufficient revenues relative to the costs associated with developing and introducing such services and products. Even if we were able to introduce new products and services successfully, there can be no assurance that we will be able to achieve our intended return on such products and services.

In addition, our expansion into certain new lines of business, including through our Subsidiaries, is relatively recent, and we have not fully completed the implementation of comprehensive systems to manage the risks associated with these new business lines. If our Company grows our loan book too rapidly or fails to make proper assessments of credit risks associated with new borrowers or new businesses, a higher percentage of our loans may become non-performing, which would have a negative impact on the quality of our assets and our financial condition.

We also face a number of operational risks in sustaining our growth. We will need to recruit new employees, who will have to be trained and integrated into our operations. We will also have to train existing employees to adhere properly to new internal controls and risk management procedures. Failure to train properly and integrate employees may increase employee attrition rates, require additional hiring, erode the quality of customer service, divert management resources, increase our exposure to high-risk credit and impose significant costs on us.

We regularly introduce new products and services for our customers, and there can be no assurance that our new products will be profitable in the future.

We regularly introduce new products and services in our existing lines of business. We may incur costs to expand our range of products and services and cannot guarantee that such new products and services will be successful once offered, whether due to factors within or outside of our control, such as general economic conditions, a failure to understand customer demand and market requirements or management focus on these new products and services. If we fail to develop and launch these products and services successfully, we may lose a part or all of the costs incurred in development and promotion or discontinue these products and services entirely, which could in turn adversely affect our business and results of operations.

We may experience difficulties in expanding our business into new regions and markets which may adversely affect our business prospects, financial conditions and results of operations.

As of March 31, 2015, our distribution network comprised 378 outlets, which include 103 offices of our wholly owned Subsidiary, HSPL. We continue to evaluate opportunities to expand our business into new regions and markets. Factors such as competition, customer requirements, regulatory regimes, culture, business practices and customs in these new markets may differ from those in our existing markets, and our experience in our existing markets may not be applicable to these new markets. In addition, as we enter new markets and geographical regions, we are likely to compete not only with other banks and financial institutions but also the local unorganized or semi-organized private financiers, who are more familiar with local regulations, business practices and customs, and have stronger relationships with potential customers.

As we continue to expand our geographic footprint, our business may be exposed to various additional challenges, including obtaining necessary governmental approvals, identifying and collaborating with local

business and partners with whom we may have no previous working relationship; successfully marketing our products in markets with which we have no familiarity; attracting potential customers in a market in which we do not have significant experience or visibility; falling under additional local tax jurisdictions; attracting and retaining new employees; expanding our technological infrastructure; maintaining standardized systems and procedures; and adapting our marketing strategy and operations to different regions of India or outside of India in which different languages are spoken. To address these challenges, we may have to make significant investments that may not yield desired results or incur costs that we may not recover. Our inability to expand our current operations may adversely affect our business prospects, financial conditions and results of operations.

We have entered into distribution tie-ups with commercial banks and NBFCs, which may be terminated, adversely affecting our business and results of operations.

Our distribution channels include our branches, HSPL, HDFC Bank and third party direct selling associates (“DSAs”). In Fiscal 2015, HDFC Bank, HSPL and our branches, together, accounted for 82% of our mortgages. We have entered into tie-ups with banks and NBFCs for distributing our loan products. Our agreements with the ally banks can be terminated by either party with notice. In the event any such agreement is terminated by the counterparty bank or NBFC, our ability to provide clients could be affected. In such case, our business and results of operations could be materially and adversely affected.

Additionally, if any the counterparties to our distribution agreements choose to retain accounts or customers, rather than refer such accounts or customers to us, our business and results of operations could be materially and adversely affected.

Our equity investments are subject to market and liquidity risk which may adversely affect our asset quality, business, results of operation, financial condition and prospects.

As on March 31, 2015 the book value of our equity and equity related investments in entities other than our Subsidiaries and Associates was ` 976.04 crore, which accounted for 0.4% of our total assets. The value of these investments depends on the success of operations and management and continued viability of the investee entities. We have limited or no control over the operations and management of these entities. Some of these investments are unlisted, offering limited exit options. Therefore, our ability to realize expected gains as a result of our equity investments depends on factors outside our control. Impairment in the value of the equity portfolio may adversely affect our business, results of operation, financial condition and prospects.

Our investment in and control of our Subsidiaries and Associates may be diluted or divested, which may lead to a loss of control of such entities, which may adversely affect our results of operation, financial condition and prospects. Further any business combination we may enter into could be adversely affected by stringent approvals and compliance requirements.

For the Fiscal 2015, our Subsidiaries and Associates accounted for 31.64% of our consolidated profit after tax. While certain of these Subsidiaries are wholly owned, certain of our Subsidiaries, including our material Subsidiary, HDFC Life, are not wholly owned by us. Any further capital issuances by our Subsidiaries and Associates, may lead to a dilution of our stake in such entities and may adversely affect our control over the operations and management of these entities. Further, we cannot assure you that we will not divest part or all of our shareholding in our Subsidiaries and Associates, whether for commercial reasons or pursuant to regulatory action. Any such divestment or exit could lead to a loss of control over these entities. For example, we have received an RBI approval for holding more than 10.0% of the issued, subscribed and paid-up capital of HDFC Bank, our Associate. Any rescission or non-renewal of this approval could lead to a loss of our control over the operations and management of HDFC Bank.

On August 14, 2015, our Company entered into an agreement with Standard Life (Mauritius Holdings) 2006 Limited (“Standard Life Mauritius”) for sale of 17,95,39,209 equity shares of ` 10 each of HDFC Life, aggregating to 9% of the issued and paid-up share capital of HDFC Life, to Standard Life Mauritius at a price of ` 95 per equity share, subject to, amongst other things, receipt of requisite approvals and satisfaction of conditions precedent. Upon completion of the sale of equity shares of HDFC Life, our Company’s holding in HDFC Life will be 61.65% and that of Standard Life Mauritius will be 35%.

A loss of control over our Subsidiaries and Associates may lead to a diminution of the returns and synergies from these entities, which may have an adverse effect on our results of operation, financial condition and prospects.

There have been reports in the Indian media suggesting that we may merge with HDFC Bank Limited. We consider business combination opportunities as they arise. At present, we are not actively considering a business combination with HDFC Bank Limited. Any significant business combination would involve compliance with regulatory requirements and shareholder and regulatory approvals.

A decline in our capital adequacy ratio could restrict our future business growth.

The NHB Directions require HFCs to maintain a capital adequacy ratio of at least 12% of their risk-weighted assets and of risk adjusted value of off-balance sheet items, with the minimum requirement of Tier I capital being 6% on risk weighted assets. Our capital adequacy ratio was 16.11% as of March 31, 2015, (after reducing the investment in HDFC Bank) with Tier I capital comprising 12.47% and Tier II capital comprising 3.64%.

If our Company continues to grow our loan portfolio and asset base, we may be required to raise additional Tier I and Tier II capital in order to continue to meet applicable capital adequacy ratios with respect to our principal business of housing finance. In addition, if our Subsidiaries and Associates continue to expand rapidly, we may be required to invest additional equity capital in such Subsidiaries and Associates and we may need to raise additional capital to fund such investments. There can be no assurance that we will be able to raise adequate additional capital in the future on terms favourable to us. If the contribution of capital to our Subsidiaries and Associates leads to our capital adequacy ratio declining, the growth of all our businesses, including our core housing finance business, could be materially restricted.

Furthermore, the risk weighting required to be applied by us to individual mortgages ranges from 50% to 75% based on the loan to value ratio and size of the loan. Scheduled commercial banks, however, are required to maintain a minimum capital adequacy ratio of 9% as opposed to HFCs’ 12%. If risk weights are increased, our capital adequacy ratio would be reduced and we may be required to raise additional capital to maintain our capital adequacy ratio. There can be no assurance that we will be able to raise capital as and when necessary. A failure to raise capital when necessary may lead to the growth of all our businesses, including our core housing finance business, being materially restricted.

Increased levels of non-performing loans would adversely affect our results of operations.

Our gross non-performing loans represented 0.67% of our loan portfolio as of March 31, 2015 which was 0.69% of the loan portfolio as of March 31, 2014.

As of March 31, 2015, our provision for contingencies stood at ` 2,033.89 crore or 0.89% of the loan portfolio as compared to 0.97% as of March 31, 2014. There can be no assurance that our provisions will be adequate to cover any further increase in the amount of non-performing loans or any deterioration in our non-performing loan portfolio.

In addition, provisioning norms may be revised by the NHB and become more stringent for HFCs. For instance, the Housing Finance Companies (National Housing Bank) Directions, 2010, as amended (the “NHB Directions, 2010”), have been amended, in relation to provisioning norms, by notification no. NHB.HFC.DIR.3/CMD/2011 dated August 5, 2011, notification no. NHB.HFC.DIR.4/CMD/2012 dated January 19, 2012, and notification no. NHB.HFC.DIR.9/CMD/2013 dated September 6, 2013 and notification no. NHB/(ND)/DRS/REG/MC-01/2015 dated September 9, 2015. As a result of the aforesaid notifications, we have had to increase our provisioning in accordance with these norms as they changed.

A number of factors which are not within our control could affect our ability to control and reduce non-performing assets. These factors include developments in the Indian economy and the real estate scenario, movements in global markets, global competition, changes in interest rates and exchange rates and changes in regulations. If we continue to expand at our current rate, we may in the future reach a point where we cannot continue to grow at the same rate without causing our non-performing loans to increase and the overall quality of our loan portfolio to deteriorate. Any negative trends or financial difficulties among our borrowers could increase the level of non-performing assets in our portfolio and adversely affect our business and financial performance. The borrowers may default in their repayment obligations due to various reasons including insolvency, lack of liquidity, etc. Any such defaults and non-payments would result in write-offs and/or

provisions in our financial statements which may materially and adversely affect our profitability and asset quality. If our non-performing loans increase, we may be unable to execute our business plan as expected and that could adversely affect the price of the NCDs, the Warrants and the Equity Shares.

Certain of our Subsidiaries have incurred losses, which may affect our profitability and may lead to an erosion of the value of our investments in our Subsidiaries.

Certain of our Subsidiaries, have incurred losses in recent years. Furthermore, any adverse impact on the business and revenue of our Subsidiaries would affect our profitability on a consolidated basis and could place the capital invested by us in such Subsidiaries at risk.

We may be subject to regulations in respect of provisioning for non-performing loans that are less stringent than in some other countries, which may not be adequate to cover further increases in our non-performing assets and the consequent adverse effect on our financial condition and results of operations.

NHB guidelines prescribe the provisioning required in respect of our outstanding loan portfolio. These provisioning requirements may require us to reserve lower amounts than the provisioning requirements applicable to financial institutions and banks in other countries. The provisioning requirements may also require the exercise of subjective judgements of management.

The level of our provisions may not be adequate to cover further increases in the amount of our non-performing loans or the underlying collateral. If such provisions are not sufficient to provide adequate cover for loan losses that may occur, or if we are required to increase our provisions, this could have a material adverse effect on our financial condition, liquidity and results of operations and may require us to raise additional capital.

We may not be able to recover the full value of collateral or amounts, which are sufficient to cover the outstanding amounts due under defaulted loans which could expose us to losses and consequent adverse impact on our financial conditions and results of operations.

Our policy is to secure all of our loans by real property and, in some cases, we have also taken further security by way of personal guarantees and the assignment of benefits under life insurance policies. However, an economic downturn or sharp downward movement in prices of real estate could result in a fall in collateral values. Additionally, we may not be able to realise the full value of our collateral, due to, among other things, defects in the perfection of collateral, delays in taking immediate action in foreclosure proceedings and fraudulent transfers by borrowers.

Following the introduction of the SARFAESI Act in 2002 and the extension of its application to HFCs, we may now foreclose on collateral after 60 days’ notice to a borrower whose loan has been classified as non- performing.

However, in a case before the Supreme Court of India in 2004, while the constitutional validity of the SARFAESI Act was affirmed, the right of a defaulting borrower to appeal to the Debt Recovery Tribunal (“DRT”) was also affirmed. The DRT has the power to issue a stay order prohibiting the lender from selling the assets of a defaulted borrower. As a result, there can be no assurance that any foreclosure proceedings would not be stayed by the DRT. In addition, we may be unable to realise the full value of our collateral, as a result of factors including delays in foreclosure proceedings, defects in the perfection of collateral and fraud perpetuated by borrowers. A failure to recover the expected value of collateral security could expose us to a potential loss. Any such losses could adversely affect our financial condition and results of operations.

Although the enactment of the SARFAESI Act has strengthened the rights of creditors by allowing expedited enforcement of security in an event of default, there is still no assurance that we will be able to realize the full value of our collateral, due to, among other things, delays on our part in taking action to secure our property, delays in bankruptcy foreclosure proceedings, market downturns, defects in the perfection of collateral and fraudulent transfers by borrowers.

We may have to comply with stricter regulations and guidelines issued by regulatory authorities in India, including the NHB, which may increase our compliance costs, divert the attention of our management and subject us to penalties.

We are regulated principally by and have reporting obligations to the NHB. We are also subject to the corporate, taxation and other laws in effect in India. The regulatory and legal framework governing us differs in certain material respects from that in effect in other countries and may continue to change as India’s economy and commercial and financial markets evolve. In recent years, existing rules and regulations have been modified, new rules and regulations have been enacted and reforms have been implemented which are intended to provide tighter control and more transparency in India’s housing finance sector.

Any changes in the existing regulatory framework, including any increase in the compliance requirements may require us to divert additional resources, including management time and costs towards such increased compliance requirements. Such increase in costs could have an adverse effect on our financial performance and results of operations. Additionally, our management may be required to divert substantial time and effort towards meeting such enhanced compliance requirements and may be unable to devote adequate time and efforts towards the business of our Company, which may have an adverse effect on our future financial condition and results of operations.

Further, as a listed company, we are subject to continuing obligations with respect to the Listing Agreement. The Listing Agreement is a standard-form agreement that applies to listed companies in India and is amended from time to time unilaterally by SEBI. Additionally, as our outstanding non-convertible debentures are listed on the WDM segment of BSE and NSE, we are subject to the SEBI Debt Regulations.

We cannot assure you that we will be able to comply with any increased or more stringent regulatory requirements, in part or at all. Failure to comply with such further regulatory requirements could subject us to regulatory actions, including penalties.

We may be affected by competition law in India and any adverse application or interpretation of the Competition Act could adversely affect our business.

The Competition Act regulates practices having an appreciable adverse effect on competition in the relevant market in India. Under the Competition Act, any formal or informal arrangement, understanding or action in concert, which causes or is likely to cause an appreciable adverse effect on competition is considered void and may result in the imposition of substantial monetary penalties. Further, any agreement among competitors which directly or indirectly involves the determination of purchase or sale prices, limits or controls production, supply, markets, technical development, investment or provision of services, shares the market or source of production or provision of services in any manner by way of allocation of geographical area, type of goods or services or number of customers in the relevant market or in any other similar way or directly or indirectly results in bid- rigging or collusive bidding is presumed to have an appreciable adverse effect on competition. The Competition Act also prohibits abuse of a dominant position by any enterprise. If it is proved that the contravention committed by a company took place with the consent or connivance or is attributable to any neglect on the part of, any director, manager, secretary or other officer of such company, that person shall be also guilty of the contravention and may be punished.

On March 4, 2011, the Government issued and brought into force the combination regulation (merger control) provisions under the Competition Act with effect from June 1, 2011. These provisions require acquisitions of shares, voting rights, assets or control or mergers or amalgamations that cross the prescribed asset and turnover based thresholds to be mandatorily notified to and pre-approved by the CCI. Additionally, on May 11, 2011, the CCI issued the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, as amended, which sets out the mechanism for implementation of the merger control regime in India. The Competition Act aims to, among others, prohibit all agreements and transactions which may have an appreciable adverse effect on competition in India. Further, the CCI has extra-territorial powers and can investigate any agreements, abusive conduct or combination occurring outside India if such agreement, conduct or combination has an appreciable adverse effect on competition in India.

The applicability or interpretation of the Competition Act to any merger, amalgamation or acquisition proposed or undertaken by us, or any enforcement proceedings initiated by CCI for alleged violation of provisions of the Competition Act may adversely affect our business, financial condition or results of operation. We cannot assure you that we will be able to obtain approval for any future transactions on satisfactory terms, or at all. If we or any member of our group are/is affected directly or indirectly by the application or interpretation of any provision of the Competition Act or any proceedings initiated by the CCI or any other relevant authority (or any other claim by any other party under the Competition Act) or any adverse publicity that may be generated due to

scrutiny or prosecution under the Competition Act, including by way of financial penalties, our reputation may also be materially and adversely affected.

Companies operating in India are subject to a variety of taxes and surcharges.

Tax and other levies imposed by the central and state governments in India that affect our tax liability include central and state taxes and other levies, income tax, value added tax, turnover tax, service tax, stamp duty, tax on dividends and other special taxes and surcharges which are introduced on a temporary or permanent basis from time to time. Moreover, the central and state tax scheme in India is extensive and subject to change from time to time. The central or state government may in the future increase the corporate income tax it imposes. Any such future increases or amendments may affect the overall tax efficiency of companies operating in India and may result in significant additional taxes becoming payable. Additional tax exposure could adversely affect our business, cash flows and results of operations.

The proposed new taxation system in India could adversely affect our business.

The Government has proposed major reforms in Indian tax laws, namely imposition of the Goods and Services Tax and provisions relating to the GAAR. The Goods and Services Tax would replace the indirect taxes on goods and services such as central excise duty, service tax, customs duty, central sales tax, state VAT, surcharge and excise currently being collected by the central and state governments.

As regards, GAAR, the provisions have been introduced in the Finance Act, 2012 and will apply (as per the Finance Act, 2015) in respect of an assessment year beginning on April 1, 2018. The GAAR provisions intend to catch arrangements declared as “impermissible avoidance arrangements”, which is any arrangement, the main purpose or one of the main purposes of which is to obtain a tax benefit and which satisfy at least one of the following tests (a) creates rights, or obligations, which are not normally created between persons dealing at arm’s length; (b) results, directly or indirectly, in misuse, or abuse, of the provisions of the Income Tax Act, 1961; (c) lacks commercial substance or is deemed to lack commercial substance, in whole or in part; or (d) is entered into, or carried out, by means, or in a manner, which are not normally employed for bona fide purposes. If GAAR provisions are invoked, the tax authorities would have wide powers, including denial of tax benefit or a benefit under a tax treaty.

As the taxation system is intended to undergo significant changes, the effect of such changes on the financial system cannot be determined at present and there can be no assurance that such effects would not adversely affect our business, results of operations and cash flows.

Our ability to assess, monitor and manage risks inherent in our business differs from the standards of some of our counterparts in India and in some developed countries and any failure to manage risks could adversely affect our financial condition and results of operations.

We are exposed to a variety of risks, including liquidity risk, interest rate risk, credit risk, operational risk (including fraud) and legal risk. The effectiveness of our risk management is limited by the quality and timeliness of available data.

Our hedging strategies and other risk management techniques may not be fully effective in mitigating our risks in all market environments or against all types of risk, including risks that are unidentified or unanticipated. Some methods of managing risks are based upon observed historical market behaviour. As a result, these methods may not predict future risk exposures, which could be greater than the historical measures indicated. Other risk management methods depend upon an evaluation of information regarding markets, customers or other matters. This information may not in all cases be accurate, complete, up-to-date or properly evaluated. Management of operational, legal or regulatory risk requires, among other things, policies and procedures to properly record and verify a number of transactions and events. Although we have established these policies and procedures, they may not be fully effective.

In order to prevent frauds in loan cases involving multiple lending from different banks or HFCs, the GoI has set up the Central Registry of Securitization Asset Reconstruction and Security Interest of India (“CERSAI”) under section 20 of the SARFAESI Act, 2002 in order to create a central database of all mortgages given by and to lending institutions. We are registered with CERSAI and we submit the relevant data to the CERSAI from time to time. We also appoint a number of providers of credit verification and investigation services to obtain

information on the credit worthiness of our prospective customers. However, there can be no assurance that these measures will be effective in preventing frauds.

Our future success will depend, in part, on our ability to respond to new technological advances and emerging banking and housing finance industry standards and practices on a cost-effective and timely basis. The development and implementation of such technology entails significant technical and business risks. There can be no assurance that we will successfully implement new technologies or adapt our transaction-processing systems to customer requirements or emerging market standards. Failure to properly monitor, assess and manage risks, could subject us to losses which may adversely affect our financial condition and results of operations.

Borrowing for the purchase or construction of property may not continue to offer borrowers the same fiscal benefits it currently offers and the housing sector may not continue to be regarded as a priority sector by the Government, which may adversely affect our profits.

The rapid growth in the housing finance industry in India in the last decade is in part due to the introduction of fiscal benefits for homeowners. Since the early 1990s, interest and principal repayments on capital borrowed for the purchase or construction of housing have been tax deductible up to certain limits and tax rebates have been available for borrowers of such capital up to specified income levels. There can be no assurance that the Government will continue to offer such tax benefits to borrowers at the current levels or at all. In addition, there can be no assurance that the Government will not introduce tax efficient investment options which are more attractive to borrowers than property investment. The demand for housing and/or housing finance may be reduced if any of these changes occur.

The RBI has also provided incentives to the housing finance industry by extending priority sector status to housing loans. In addition, pursuant to Section 36(1)(viii) of the I.T. Act, up to 20% of profits from the provision of long-term finance for the construction or purchase of housing in India may be carried to a special reserve and are not subject to income tax. In each of Fiscal 2014 and 2015, we utilised the maximum amount of this allowance. There can be no assurance that the Government will continue to make this fiscal benefit available to HFCs. If it does not, this may result in a higher tax outflow. Vide notification no. NHB(ND)/DRS/Pol. Circular No. 62/2014 dated May 27, 2014, NHB stipulated that all housing finance companies are required to create a deferred tax liability (“DTL”) on the special reserve created, from current and past profits, irrespective of whether it is intended to withdraw from such reserve or not.

We are party to certain legal proceedings, including disputes with the Indian tax authorities with respect to certain income tax demands, which if determined against us could affect our profitability, financial condition and results of operations.

We are involved in several legal proceedings in the ordinary course of our business such as consumer disputes, debt-recovery proceedings, proceedings under the SARFAESI Act, income tax proceedings and civil disputes. These proceedings are pending at different levels of adjudication before various courts, tribunals and appellate tribunals. A significant degree of judgment is required to assess our exposure in these proceedings and determine the appropriate level of provisions, if any. There can be no assurance on the outcome of the legal proceedings or that the provisions we make will be adequate to cover all losses we may incur in such proceedings, or that our actual liability will be as reflected in any provision that we have made in connection with any such legal proceedings.

Our dispute with the Indian tax authorities relates to the computation of the profit derived from the business of long-term housing finance eligible for this special deduction. The dispute revolves around the correct classification of eligible incomes and related expenses that constitute the long-term housing finance business. Based on advice received from our tax advisers, we believe that the dispute will be settled in our favour. Nonetheless, we have recognised a contingent liability in respect of all the disputed income tax demands up to March 31, 2015 (inclusive) in the amount of ` 1,103.51 crore. We have already paid/adjusted this amount to the Indian tax authorities and will receive this amount as a refund if the disputes are resolved in our favour. If the disputes were to be decided in favour of the tax authorities, although there would be no further payment required by us, the amount of ` 1,103.51 crore would have to be added as a provision for tax and this would accordingly reduce our profit after tax by a corresponding amount.

Although we intend to defend or appeal these proceedings, we will be required to devote management and financial resources in their defense or prosecution. If a significant number of these disputes are determined against our Company and if our Company is required to pay all or a portion of the disputed amounts or if we are

unable to recover amounts for which we have filed recovery proceedings, there could be an adverse impact on our reputation, business, financial condition and results of operations.

If the corporate undertakings provided by us in our assignment of receivables transactions are invoked, it may require outflow in respect of these undertakings and adversely affect our net income.

We have provided credit enhancement for some of our assignment of receivables. Contingent liability in respect of corporate undertakings provided by us for assignment of receivables aggregated to ` 1,919.65 crore in Fiscal 2015 as against ` 1,943.05 crore in Fiscal 2014. The outflow would arise in the event of a shortfall, if any, in the cash flows of the underlying pool of the assigned receivables. If we continue to provide credit enhancement in our future assignment of receivables, even if it is fully provided for as a contingent liability, our financial condition and results of operations may be adversely affected in the event of any shortfall.

We will be subject to a number of new accounting standards that may significantly impact our financial statements, which may adversely affect the manner in which we account for losses and may adversely affect our results of operations.

Our results of operations and financial condition will be affected by certain changes to Indian GAAP, which are intended to align Indian GAAP further with IFRS. These new accounting standards will change our methodology for estimating allowances for probable loan losses. New accounting standards may require us to value our non-performing loans by reference to their market value (if a ready market for such loans exists), or to calculate the present value of the expected future cashflows realisable from our loans, including the possible liquidation of collateral (discounted at the loan’s effective interest rate) in estimating allowances for probable losses. This may result in our recognising higher allowances for probable loan losses in the future which will adversely affect the results of our operations.

The Ministry of Corporate Affairs (“MCA”) notified the Companies (Indian Accounting Standards) Rules, 2015 on February 16, 2015 (“IAS Rules”). The IAS Rules do not apply to banking companies, insurance companies and NBFCs. The IAS Rules provide that the financial statements of the companies to which they apply (as more specifically described below) shall be prepared and audited in accordance with Indian Accounting Standards (“Ind-AS”). Under the IAS Rules, any company may voluntarily implement Ind-AS for the accounting period beginning from April 1, 2015. Further, the IAS Rules prescribe that any company having a net worth of more than ` 500.00 crore, and any holding company, subsidiary, joint venture or an associate company of such company, would have to mandatorily adopt Ind-AS for the accounting period beginning from April 1, 2016 with comparatives for the period ending on March 31, 2016. Our Company has not determined with any degree of certainty the impact such adoption will have on its financial reporting. There can be no assurance that our Company’s financial condition, results of operations, cash flows or changes in shareholders’ equity will not appear materially worse under Ind-AS than under Indian GAAP. In our Company’s transition to Ind-AS reporting, our Company may encounter difficulties in the ongoing process of implementing and enhancing its management information systems. Moreover, there is increasing competition for the small number of Ind-AS experienced accounting personnel available as more Indian companies begin to prepare Ind-AS financial statements. Further, there is no significant body of established practice on which to draw in forming judgments regarding the new system’s implementation and application. There can be no assurance that our Company’s adoption of Ind-AS will not adversely affect its reported results of operations or financial condition and any failure to successfully adopt Ind-AS could adversely affect our Company’s business, financial condition and results of operations.

An investor will not be able to sell any of the Securities subscribed in this Issue other than on a recognised Indian stock exchange for a period of 12 months from the date of the issue of the Securities which may adversely affect the liquidity of the Securities.

The Securities in this Issue are subject to restrictions on transfers. Pursuant to the SEBI Regulations, for a period of 12 months from the date of the issue of Securities in the Issue, Eligible QIBs subscribing to the Securities in the Issue may only sell their Securities on the Stock Exchanges and may not enter into any off market trading in respect of these Securities. Further, our Company has not applied for approval from the FIPB for acquisition of the Securities pursuant to the Issue by non-residents, or by entities, which are ‘owned’ or ‘controlled’ by non- residents / persons resident outside India and whose downstream investments are regarded as foreign investment in terms of the Consolidated FDI Policy.

Furthermore, subsequent to receipt of listing and trading approvals from the Stock Exchanges, subject to applicable law, (1) the Warrants cannot be transferred to non-residents or entities, which are ‘owned’ or ‘controlled’ by non-residents / persons resident outside India, and whose downstream investments are regarded as foreign investments; and (2) the NCDs cannot be purchased by any FII, FPI or QFI. We cannot be certain that these restrictions will not have an impact on the price of the Securities. This may affect the liquidity of the Securities purchased by investors and it is uncertain whether these restrictions will adversely impact the market price of the Securities purchased by investors.

Risks relating to the Warrants

There is no existing market for the Warrants and an active market for the Warrants may not develop, which may cause the price of the Warrants to fall.

The Warrants are securities for which there is currently no trading market. No assurance can be given that an active trading market for the Warrants will develop, or as to the liquidity or sustainability of any such market. The price of the Warrants also depends on the supply and demand for the Warrants in the market and the price at which the Warrants is trading at any time may differ from the underlying valuation of the Warrants because of market inefficiencies. To the extent Warrants are exercised, the number of Warrants of such issue outstanding will decrease, resulting in a diminished liquidity for the remaining Warrants of such issue. A decrease in the liquidity of the Warrants may cause, in turn, an increase in the volatility associated with the price of such issue of Warrants.

Additionally, this Issue is being made exclusively to Eligible QIBs resident in India. As no Securities are being offered to non-residents, the secondary market for the Securities may be limited.

The more limited the secondary market is for the Warrants, the more difficult it may be for the holders thereof to realise value for such Warrants prior to the Expiry Date of the Warrants.

The Warrants can be volatile instruments and may expire worthless.

The Warrants are subject to a number of risks, including: (i) sudden and large falls in value; and (ii) a complete or partial loss of the investment in the Warrants.

The market for the Warrants may be limited and this may adversely impact their value or the ability of a holder of the Warrants to dispose of them. Neither our Company nor any of the Global Co-ordinators and Book Running Lead Managers gives any assurance as to the merits or performance of the Warrants and makes no commitment to make a market in or to repurchase the Warrants.

Transactions in off-exchange Warrants may involve greater risks than dealing in exchange-traded options.

This Placement Document cannot disclose all of the risks and other significant aspects of the Warrants. No person should deal in the Warrants unless that person understands the terms and conditions of the Warrants and the extent of that person's exposure to potential loss. Each prospective purchaser of Warrants should consider carefully whether the Warrants are suitable in the light of our circumstances and financial position.

Prospective purchasers of Warrants should consult their own professional advisers to assist them in determining the suitability of the Warrants for them as an investment.

Future issues or sales of the Equity Shares may significantly affect the trading price of the Warrants and such issues or sales may not result in an adjustment to the conversion price provisions in the Conditions and the Trust Deed.

A future issue of Equity Shares by our Company, including upon conversion of ESOPs and other outstanding convertible securities, or the disposal of Equity Shares by any of the major shareholders of our Company, or the perception that such issues or sales may occur, may significantly affect the trading price of the Warrants or the Equity Shares. There is no restriction on our ability to issue Equity Shares, and there can be no assurance that our Company will not issue Equity Shares or that such issue will result in an adjustment to the conversion price provisions in the Conditions.

Risks relating to the NCDs

Security for the NCDs is created only by way of an equitable assignment of the Assets and registered mortgage on the Property.

Security for the NCDs is created only by way of an equitable assignment of the Assets (through a Negative Lien) and registered mortgage and charge on the Property, each in favour of the Trustee.

There is no existing market for the NCDs and an active market for the NCDs may not develop, which may cause the price of the NCDs to fall.

Prior to this Issue, we have offered non-convertible debentures that have been listed on the WDM segment of NSE on a privately placed basis. However, there has been limited trading of the privately placed debentures from the date of their listing on the WDM segment of NSE. No assurance can be given that an active trading market for the NCDs will develop, or as to the liquidity or sustainability of any such market, the ability of holders to sell their NCDs or the price at which holders of the NCDs will be able to sell their NCDs. If an active market for the NCDs fails to develop or be sustained, the trading price of the NCDs could fall. If an active trading market were to develop, the NCDs could trade at prices that may be lower than the initial offering price of the NCDs.

Whether or not the NCDs will trade at lower prices depends on many factors, including: (i) the market for similar securities; (ii) general economic conditions; and (iii) our financial condition, results of operations and future prospects.

Changes in interest rates may negatively affect the price of the NCDs.

All securities where a fixed rate of interest is offered, such as the NCDs, are subject to price risk. The price of such securities will vary inversely with changes in prevailing interest rates, i.e. when interest rates rise, prices of fixed income securities fall and, when interest rates drop, the prices increase. The extent of a fall or rise in the prices is a function of the existing coupon, days to maturity and the increase or decrease in the level of prevailing interest rates. Increased rates of interest, which frequently accompany inflation, are likely to have a negative effect on the price of the NCDs.

Payments made on the NCDs are subordinated to certain tax and other liabilities preferred by law and the holders of the NCDs may not receive any amount on these NCDs in the event of liquidation or winding-up.

The NCDs will be subordinated to certain liabilities preferred by law such as to claims of the Government on account of taxes, and certain liabilities incurred in the ordinary course of our business. In particular, in the event of bankruptcy, liquidation or winding-up, our assets will be available to pay obligations on the NCDs only after all of those liabilities that rank senior to these NCDs have been paid. In the event of bankruptcy, liquidation or winding-up, there may not be sufficient assets remaining, after paying amounts relating to these proceedings, to pay amounts due on the NCDs.

Any downgrading in credit rating of the NCDs may adversely affect their value.

This Issue has been rated by CRISIL Limited as having a ‘CRISIL AAA with Stable Outlook’ and by ICRA Limited as having an ‘[ICRA] AAA with Stable Outlook’ rating for the issuance of the NCDs for an aggregate amount of ` 5,000 crore. We cannot guarantee that these ratings will not be downgraded. Such a downgrade in the above credit ratings may lower the value of the NCDs.

MARKET PRICE INFORMATION

The Equity Shares have been listed on BSE since July 3, 1978 and NSE since August 5, 1996. As on September 30, 2015, 1,57,76,84,750 Equity Shares have been issued, subscribed and are fully paid up.

As of September 29, 2015, the closing price of the Equity Shares on BSE and NSE was ` 1,213.55 and ` 1,216.80 per Equity Share, respectively. Because the Equity Shares are actively traded on BSE and NSE, the market price and other information for each of BSE and NSE has been given separately.

(i) The following tables set forth the reported high, low, average market prices and the trading volumes of the Equity Shares on the Stock Exchanges on the dates on which such high and low prices were recorded and the total trading volumes for Fiscals 2013, 2014 and 2015:

BSE Fiscal High (`) Date of high Number of Total Low Date of Number Total Averag Equity volum (`) low of volum e price Shares e of Equity e of for the traded on Equity Shares Equity year (`) the date of Shares traded Shares high traded on the traded on date of on date of low date of high (` low crore) (`cror e) 2013 874.50 December 11, 82,079 7.19 621.10 May 16, 7,25,696 44.98 742.60 2012 2012 2014 927.85 May 27, 2013 1,76,213 16.26 654.10 August 28, 9,07,042 58.73 817.08 2013 2015 1,389.05 March 05, 2015 1,36,748 18.89 849.25 May 08, 81,699 6.94 1082.77 2014

NSE Fiscal High (`) Date of high Number of Total Low Date of Number of Total Average Equity volume (`) low Equity volume price for Shares of Shares of the year traded on Equity traded on Equity (`) the date of Shares the date of Shares high traded low traded on date on date of high of low (` in (` in crore) crore) 2013 874.95 December 11, 32,44,995 284.11 620.90 May 16, 80,30,140 498.06 742.77 2012 2012 2014 929.50 May 27, 2013 24,43,669 224.70 652.75 August 1,37,80,849 893.34 817.28 28, 2013 2015 1,394.80 March 05, 2015 46,89,288 647.57 850.45 May 08, 32,93,099 280.04 1,083.29 2014 (Source: www.bseindia.com and www.nseindia.com)

Notes: 1. High, low and average prices are based on the daily closing prices. 2. In case of two days with the same closing price, the date with the higher volume has been chosen. 3. Average price for the year represents the average of the closing prices on each day of each year.

(ii) The following tables set forth the reported high, low and average market prices and the trading volumes of the Equity Shares on the Stock Exchanges on the dates on which such high and low prices were recorded during each of the last six months:

BSE Month, High (`) Date of high Number Total Low (`) Date of low Number of Total Average year of Equity volume Equity volum price for Shares of Shares e of the traded on Equity traded on Equity month date of Shares date of low Shares (`) high traded traded on date on of high date of (` low (` crore) crore) August 1,321.80 August 3, 2015 71,308 9.46 1,102.45 August 26, 245,668 27.70 1,248.56 2015 2015 July 2015 1,360.60 July 16, 2015 77,827 10.59 1,282.90 July 10, 2015 51,988 6.68 1,320.86 June 1,308.90 June 25, 2015 94,818 12.36 1,166.30 June 11, 2015 2,45,792 28.82 1,230.11 2015 May 1,287.50 May 22, 2015 77,376 9.89 1,154.60 May 07, 2015 2,46,559 28.51 1,223.56 2015 April 1,333.80 April 01, 2015 57,940 7.64 1,169.40 April 30, 2015 1,98,426 23.24 1,274.89 2015 March 1,389.05 March 05, 1,36,748 18.89 1,261.75 March 27, 1,07,394 13.62 1,332.20 2015 2015 2015

NSE Month High (`) Date of high Number Total Low (`) Date of low Number of Total Average year of Equity volume Equity volum price for Shares of Shares e of the traded on Equity traded on Equity month date of Shares date of low Shares (`) high traded traded on date on of high date of (` low (` crore) crore) August 1,324.35 August 3, 2015 24,73,182 329.38 1,102.35 August 26, 80,08,888 900.71 1,248.78 2015 2015 July 2015 1,359.70 July 16, 2015 21,99,590 299.10 1,283.35 July 10, 2015 28,21,543 362.53 1,321.17 June 1,308.85 June 25, 2015 35,42,983 462.23 1,164.30 June 11, 2015 28,85,206 339.22 1,230.26 2015 May 1,288.05 May 22, 2015 18,16,951 232.04 1,154.25 May 07, 2015 36,74,392 426.63 1,224.19 2015 April 1,337.05 April 01, 2015 14,92,126 197.45 1,170.00 April 30, 2015 72,07,702 844.17 1,275.53 2015 March 1,394.80 March 05, 46,89,288 647.57 1,262.70 March 27, 31,15,046 395.30 1,333.13 2015 2015 2015 (Source: www.bseindia.com and www.nseindia.com)

Notes:

1. High, low and average prices are based on the daily closing prices. 2. In case of two days with the same closing price, the date with the higher volume has been chosen. 3. Average price for the month represents the average of the closing prices on each day of each month.

(iii) The following table set forth the details of the number of Equity Shares traded and the turnover during the last six months and the Fiscals 2013, 2014 and 2015 on the Stock Exchanges:

Period Number of Equity Shares traded Turnover (In ` crore)

BSE NSE BSE NSE

August 2015 37,20,590 6,58,66,305 465.05 8,035.58 July 2015 33,27,325 5,19,58,532 436.62 6,860.64 June 2015 30,10,176 5,09,70,921 368.36 6,291.94 May 2015 38,80,567 5,78,30,314 467.79 7,013.03 April 2015 43,68,738 5,74,29,640 554.54 7,230.61 March 2015 31,65,993 7,58,23,891 424.92 10,123.26 (Source: www.bseindia.com and www.nseindia.com)

Fiscal Number of Equity Shares traded Turnover (In ` crore) BSE NSE BSE NSE

2013 4,80,69,657 71,63,00,694 3,904.09 53,298.06 2014 3,76,79,892 79,18,80,445 4,078.13 64,156.51 2015 6,13,59,540 71,34,44,736 4,608.23 77,059.41 (Source: www.bseindia.com and www.nseindia.com)

(iv) The following table sets forth the market price on the Stock Exchanges on July 29, 2015, the first working day following the approval of the Board for the Issue:

BSE Open High Low Close Number of Equity Volume (` crore) Shares traded 1,306.00 1,332.00 1,305.00 1,311.70 1,42,006 18.79

NSE Open High Low Close Number of Equity Volume (` crore) Shares traded 1,310.00 1,332.00 1,305.00 1,312.05 19,96,159 263.34 (Source: www.bseindia.com and www.nseindia.com)

USE OF PROCEEDS

The total initial proceeds of the Issue will be ` 5,051.10 crore. The aggregate proceeds of the Issue, comprising NCDs at the NCD Issue Price and Warrants at the Warrant Issue Price and Warrants at the Warrant Exercise Price, assuming full conversion of the Warrants at the Warrant Exercise Price during the Warrant Exercise Period, will be up to ` 10,434.85 crore. However, the exercise of Warrants is at the option of the Warrant holders and our Company cannot assume that all the Warrant holders will exercise the option to exchange their Warrants for Equity Shares by payment of the Warrant Exercise Price. Non-exercise of some or all of the Warrants would result in our Company not being able to raise the aggregate net proceeds of the Issue as aforesaid.

The proceeds from the Issue, after deducting fees, commissions and expenses of the Issue from the aggregate proceeds of the Issue, are expected to be approximately up to ` 10,418.85 crore (“Net Proceeds”). Subject to compliance with applicable law, we intend to use the Net Proceeds for augmenting the long term resources of our Company for the purpose of on lending for housing finance and our future capital requirements.

We confirm that the proceeds of the Issue to the extent of the NCDs will be utilized for deployment of funds on our Company’s balance sheet and that such proceeds will not be utilised to facilitate resource requests of entities of the Group or Associates of our Company.

None of our Directors are making any contribution either as part of the Issue or separately in furtherance of the objects of the Issue.

CAPITALISATION STATEMENT

The following table sets forth our Company’s standalone capitalisation and total debt, as at March 31, 2015, as adjusted to give effect to (1) the Issue; and (2) the exercise of all Warrants during the Warrant Exercise Period.

You should read this table together with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 74 of this Placement Document and our audited standalone financial statements as of, and for, Fiscal 2015 and the related notes thereto contained in the section titled “Financial Statements” on page 201 of this Placement Document.

As adjusted for Equity As at March As adjusted for Shares issued 31, 2015 the Issue pursuant to exercise of Warrants* (` in crore) Short term borrowings: Secured 4,660.00 4,660.00 4,660.00 Unsecured 28,597.71 28,597.71 28,597.71

Long term borrowings: Secured 60,414.16 65,414.16 65,414.16 Unsecured 37,188.18 37,188.18 37,188.18

Current maturities of long term borrowings Secured loans 39,615.54 39,615.54 39,615.54 Unsecured loans 38,123.44 38,123.44 38,123.44

Total borrowings (A) 2,08,599.03 2,13,599.03 2,13,599.03

Shareholders’ funds: Equity Share capital 314.94 314.94 322.24 Securities premium 10,256.81 10,256.81 15,633.26 Reserves and surplus 20,398.22 20,449.32 20,449.32 Total Shareholders Funds (B) 30,969.97 31,021.07 36,404.82

Total (A+B) 2,39,569.00 2,44,620.10 2,50,003.85 * Assuming that all Warrants held by the Warrantholders in the Issue have been exercised during the Warrant Exercise Period at the Warrant Exercise Price and no other Equity Shares are issued by our Company during the Warrant Exercise Period

For further details with respect to Equity Shares allotted post March 31, 2015, please see section titled “Capital Structure” on page 58 of this Placement Document.

CAPITAL STRUCTURE

The Equity Share capital of our Company as of the date of this Placement Document is set forth below:

(In `) Aggregate nominal value A AUTHORISED SHARE CAPITAL 1,70,00,00,000 Equity Shares 3,40,00,00,000

B ISSUED, SUBSCRIBED AND PAID-UP CAPITAL 1,57,76,84,750 Equity Shares 3,15,53,69,500

E SHARE PREMIUM ACCOUNT Before the Issue 1,02,55,64,11,440 After the Issue 1,02,55,64,11,440

Equity Share Capital History of our Company

The following table sets forth details of allotments of Equity Shares made by our Company since its incorporation:

Date of No. of Cumulative Face Issue Reason for allotment Consid Allotment Equity No. of Equity Value price eration Shares Shares (In `) per (Cash/ Allotted Equity other Share than (In `) cash) 1977 126 126 100 100 Subscription to the Cash Memorandum of Association 1978 1,00,000 1,00,126 100 100 Preferential allotment Cash 1978 3,99,874 5,00,000 100 100 Initial public offer Cash 1978 5,00,000 10,00,000 100 100 Preferential allotment Cash 1987 5,00,000 15,00,000 100 100 Rights issue Cash 1987 5,00,000 20,00,000 100 100 Further public offering Cash 1990 10,00,000 30,00,000 100 175 Rights issue Cash 1990 14,50,000 44,50,000 100 185 Further public offering Cash 1990 50,000 45,00,000 100 175 Preferential allotment Cash 1992 47,25,000 92,25,000 100 400 Conversion of fully Cash convertible debentures August 4, 1994 2,00,000 94,25,000 100 2,900 Preferential allotment Cash August 4, 1994 7,00,000 1,01,25,000 100 2,900 Preferential allotment Cash October 17,1995 17,86,400 1,19,11,400 100 2,400 Preferential allotment Cash Sub-division of face value of Equity Shares from ` 100 to ` 10 March 21, 2001 48,69,005 12,39,83,005 10 Please Allotments under Cash to January 4, refer to Employee Stock Option 2007 Note 1 Scheme, 1999 December 30, 1,219,60,71 24,59,43,718 10 10 Bonus issue Cash 2002 3 November 7, 39,95,466 24,99,39,184 10 Please Allotments under Cash 2003 to refer to Employee Stock Option November 5, note 2 Scheme, 2002 2009 October 31, 2006 60,81,058 25,60,20,242 10 Please Allotments under Cash to August 13, refer to Employee Stock Option 2010 note 3 Scheme, 2005 July 11, 2007 1,52,50,000 27,12,70,242 10 1,730 Preferential allotment Cash July 24, 2007 27,50,000 27,40,20,242 10 1,730 Preferential allotment Cash September 20, 1,18,740 27,41,38,982 10 1,399.15 Conversion of foreign Cash

Date of No. of Cumulative Face Issue Reason for allotment Consid Allotment Equity No. of Equity Value price eration Shares Shares (In `) per (Cash/ Allotted Equity other Share than (In `) cash) 2007 currency convertible bonds September 28, 3,87,467 27,45,26,449 10 1,399.15 Conversion of foreign Cash 2007 currency convertible bonds October 5, 2007 7,96,812 27,53,23,261 10 1,399.15 Conversion of foreign Cash currency convertible bonds October 12, 2007 7,40,566 27,60,63,827 10 1,399.15 Conversion of foreign Cash currency convertible bonds October 22, 2007 3,62,471 27,64,26,298 10 1,399.15 Conversion of foreign Cash currency convertible bonds October 29, 2007 26,06,045 27,90,32,343 10 1,399.15 Conversion of foreign Cash currency convertible bonds November 5, 15,46,750 28,05,79,093 10 1,399.15 Conversion of foreign Cash 2007 currency convertible bonds November 12, 6,56,198 28,12,35,291 10 1,399.15 Conversion of foreign Cash 2007 currency convertible bonds November 19, 3,96,841 28,16,32,132 10 1,399.15 Conversion of foreign Cash 2007 currency convertible bonds November 26, 2,37,481 28,18,69,613 10 1,399.15 Conversion of foreign Cash 2007 currency convertible bonds December 3, 6,40,572 28,25,10,185 10 1,399.15 Conversion of foreign Cash 2007 currency convertible bonds December 17, 10,56,165 28,35,66,350 10 1,399.15 Conversion of foreign Cash 2007 currency convertible bonds December 24, 3,31,223 28,38,97,573 10 1,399.15 Conversion of foreign Cash 2007 currency convertible bonds December 31, 4,49,963 28,43,47,536 10 1,399.15 Conversion of foreign Cash 2007 currency convertible bonds January 7, 2008 2,96,851 28,46,44,387 10 1,399.15 Conversion of foreign Cash currency convertible bonds January 14, 2008 3,71,844 28,50,16,231 10 1,399.15 Conversion of foreign Cash currency convertible bonds January 22, 2008 8,43,681 28,58,59,912 10 1,399.15 Conversion of foreign Cash currency convertible bonds February 4, 2008 43,745 28,59,03,657 10 1,399.15 Conversion of foreign Cash currency convertible bonds

Date of No. of Cumulative Face Issue Reason for allotment Consid Allotment Equity No. of Equity Value price eration Shares Shares (In `) per (Cash/ Allotted Equity other Share than (In `) cash) February 19, 40,621 28,59,44,278 10 1,399.15 Conversion of foreign Cash 2008 currency convertible bonds March 25, 2008 9,374 28,59,53,652 10 1,399.15 Conversion of foreign Cash currency convertible bonds May 12, 2008 31,247 28,59,84,899 10 1,399.15 Conversion of foreign Cash currency convertible bonds October 14, 2008 2,03,108 28,61,88,007 10 1,399.15 Conversion of foreign Cash currency convertible bonds June 18, 2009 to 4,05,225 28,65,93,232 10 Please Allotments under Cash August 13, 2010 refer to Employee Stock Option note 4 Scheme, 2007 May 21, 2009 43,746 28,66,36,978 10 1,399.15 Conversion of foreign Cash currency convertible bonds October 6, 2009 59,370 28,66,96,348 10 1,399.15 Conversion of foreign Cash currency convertible bonds October 12, 2009 43,746 28,67,40,094 10 1,399.15 Conversion of foreign Cash currency convertible bonds October 16, 2009 1,59,361 28,68,99,455 10 1,399.15 Conversion of foreign Cash currency convertible bonds October 29, 2009 43,746 28,69,43,201 10 1,399.15 Conversion of foreign Cash currency convertible bonds November 17, 3,124 28,69,46,325 10 1,399.15 Conversion of foreign Cash 2009 currency convertible bonds November 20, 49,996 28,69,96,321 10 1,399.15 Conversion of foreign Cash 2009 currency convertible bonds December 10, 16,07,886 28,86,04,207 10 Please Allotments under Cash 2009 to August refer to Employee Stock Option 13, 2010 note 5 Scheme, 2008 December 16, 1,24,990 28,87,29,197 10 1,399.15 Conversion of foreign Cash 2009 currency convertible bonds January 12, 2010 34,372 28,87,63,569 10 1,399.15 Conversion of foreign Cash currency convertible bonds March 30, 2010 62,495 28,88,26,064 10 1,399.15 Conversion of foreign Cash currency convertible bonds April 9, 2010 56,245 28,88,82,309 10 1,399.15 Conversion of foreign Cash currency convertible bonds April 15, 2010 1,31,239 28,90,13,548 10 1,399.15 Conversion of foreign Cash currency convertible

Date of No. of Cumulative Face Issue Reason for allotment Consid Allotment Equity No. of Equity Value price eration Shares Shares (In `) per (Cash/ Allotted Equity other Share than (In `) cash) bonds April 29, 2010 2,06,234 28,92,19,782 10 1,399.15 Conversion of foreign Cash currency convertible bonds April 30, 2010 4,03,093 28,96,22,875 10 1,399.15 Conversion of foreign Cash currency convertible bonds May 10, 2010 8,49,933 29,04,72,808 10 1,399.15 Conversion of foreign Cash currency convertible bonds May 12, 2010 87,492 29,05,60,300 10 1,399.15 Conversion of foreign Cash currency convertible bonds May 12, 2010 2,93,727 29,08,54,027 10 1,399.15 Conversion of foreign Cash currency convertible bonds June 16, 2010 1,43,738 29,09,97,765 10 1,399.15 Conversion of foreign Cash currency convertible bonds June 28, 2010 3,74,970 29,13,72,735 10 1,399.15 Conversion of foreign Cash currency convertible bonds July 30, 2010 2,84,350 29,16,57,085 10 1,399.15 Conversion of foreign Cash currency convertible bonds Sub-division of face value of Equity Shares from ` 10 to ` 2 August 30, 2010 58,04,690 1,46,40,90,115 2 Please Allotments under Cash to November 30, refer to Employee Stock Option 2012 note 3 Scheme, 2005 August 31, 2010 2,39,17,295 1,48,80,07,410 2 Please Allotments under Cash to May 11, 2015 refer to Employee Stock Option note 4 Scheme, 2007 August 30, 2010 2,05,29,225 1,50,85,36,635 2 Please Allotments under Cash to March 19, refer to Employee Stock Option 2015 note 5 Scheme, 2008 January 16, 2012 50,000 1,50,85,86,635 2 655 Conversion of warrants Cash January 27, 2012 2,500 1,50,85,89,135 2 655 Conversion of warrants Cash February 3, 2012 2,350 1,50,85,91,485 2 655 Conversion of warrants Cash March 2, 2012 1,350 1,50,85,92,835 2 655 Conversion of warrants Cash March 12, 2012 3,700 1,50,85,96,535 2 655 Conversion of warrants Cash April 12, 2012 3,700 1,50,86,00,235 2 655 Conversion of warrants Cash April 26, 2012 100 1,50,86,00,335 2 655 Conversion of warrants Cash May 18, 2012 9,250 1,50,86,09,585 2 655 Conversion of warrants Cash June 6, 2012 33,300 1,50,86,42,885 2 655 Conversion of warrants Cash June 12, 2012 40,20,250 1,51,26,63,135 2 655 Conversion of warrants Cash June 18, 2012 45,73,070 1,51,72,36,205 2 655 Conversion of warrants Cash July 16, 2012 15,18,960 1,51,87,55,165 2 655 Conversion of warrants Cash July 18, 2012 32,10,100 1,52,19,65,265 2 655 Conversion of warrants Cash July 20, 2012 7,88,150 1,52,27,53,415 2 655 Conversion of warrants Cash July 25, 2012 44,13,875 1,52,71,67,290 2 655 Conversion of warrants Cash July 26, 2012 29,94,430 1,53,01,61,720 2 655 Conversion of warrants Cash July 30, 2012 18,35,650 1,53,19,97,370 2 655 Conversion of warrants Cash August 1, 2012 7,28,300 1,53,27,25,670 2 655 Conversion of warrants Cash

Date of No. of Cumulative Face Issue Reason for allotment Consid Allotment Equity No. of Equity Value price eration Shares Shares (In `) per (Cash/ Allotted Equity other Share than (In `) cash) August 3, 2012 17,56,050 1,53,44,81,720 2 655 Conversion of warrants Cash August 8, 2012 37,98,400 1,53,82,80,120 2 655 Conversion of warrants Cash August 10, 2012 24,14,850 1,54,06,94,970 2 655 Conversion of warrants Cash August 14, 2012 39,83,400 1,54,46,78,370 2 655 Conversion of warrants Cash August 17, 2012 45,94,800 1,54,92,73,170 2 655 Conversion of warrants Cash August 21, 2012 82,56,010 1,55,75,29,180 2 655 Conversion of warrants Cash August 22, 2012 9,21,680 1,55,84,50,860 2 655 Conversion of warrants Cash August 23, 2012 11,47,800 1,55,95,98,660 2 655 Conversion of warrants Cash August 24, 2012 17,28,705 1,56,13,27,365 2 655 Conversion of warrants Cash August 28, 2012 2,52,900 1,56,15,80,265 2 655 Conversion of warrants Cash September 5, 8,58,220 1,56,24,38,485 2 655 Conversion of warrants Cash 2012 September 6, 8,41,300 1,56,32,79,785 2 655 Conversion of warrants Cash 2012 May 29, 2013 to 1,44,04,965 1,57,76,84,750 2 635.50 Allotments under Cash September 24, Employee Stock Option 2015 Scheme, 2011

Notes:

1) The Equity Shares have been allotted pursuant to exercise of vested stock options granted under the ESOS 1999 at an exercise price of ` 128.50 and ` 257. 2) The Equity Shares have been allotted pursuant to exercise of vested stock options granted under the ESOS 2002 at an exercise price of ` 302. 3) The Equity Shares have been allotted pursuant to exercise of vested stock options granted under the ESOS 2005 at an exercise price of ` 182.58 and ` 912.90. 4) The Equity Shares have been allotted pursuant to exercise of vested stock options granted under the ESOS 2007 at an exercise price of ` 429.80 and ` 2,149. 5) The Equity Shares have been allotted pursuant to exercise of vested stock options granted under the ESOS 2008 at an exercise price of ` 270.12 and ` 1,350.60.

Employee Stock Option Scheme

The Nomination and Remuneration Committee has the authority to allocate and grant, at its sole and absolute discretion, certain number of options out of the total available options to certain groups/ grades of employees based on their performance and period of service.

With respect to the employee stock option plans and share purchase schemes which have been instituted by our Company, the following employee stock option plans remain outstanding as of the date of this Placement Document:

A. Employee Stock Option Scheme, 2008 (“ESOS 2008”)

ESOS 2008 was formulated by the Nomination and Remuneration Committee and approved in its meeting held on November 25, 2008, in accordance with the provisions of the ESOP Guidelines. The total number of options that could be granted pursuant to ESOS 2008 and as approved by the meeting of the shareholders held on July 16, 2008, were 56,90,000 options in respect of 57,90,000 Equity Shares. In terms of ESOS 2008, the options would vest over a maximum period of three years. The exercise period in respect of such options was five years from the date of vesting. As of June 30, 2015, 5,102 options were outstanding, of which, no options were vested or exercised under ESOS 2008.

B. Employee Stock Option Scheme, 2011 (“ESOS 2011”)

ESOS 2011 was formulated by the Nomination and Remuneration Committee and approved at its meeting dated May 23, 2012 in accordance with the provisions of the ESOP Guidelines. The total number of options that could be granted pursuant to the ESOS 2011 and as approved by the meeting of shareholders held on July 8, 2011, is 61,02,475 options in respect of 3,05,12,375 Equity Shares. In terms of ESOS 2011, the options would vest over a maximum period of three years. The exercise period in respect of such options is five years from the date of vesting. As of June 30, 2015, 34,79,025 options were outstanding, of which, 36,043 options have vested and 2,66,525 options were exercised under ESOS 2011.

C. Employee Stock Option Scheme, 2014 (“ESOS 2014”)

ESOS 2014 was formulated by the Nomination and Remuneration Committee and approved at its meeting dated October 8, 2014 in accordance with the provisions of the ESOP Guidelines. The total number of options that could be granted pursuant to ESOS 2014 and as approved by the meeting of the shareholders dated July 21, 2014, is 62,83,940 options in respect of 3,14,19,700 Equity Shares. In terms of ESOS 2014, the options would vest over a maximum period of three years. The exercise period in respect of such options is five years from the date of vesting. As of June 30, 2015, 61,90,761 options were outstanding, of which, no options were vested or exercised under ESOS 2014.

Acquisitions or amalgamations

There have been no acquisitions or amalgamations in relation to our Company in the last one year preceding the filing of this Placement Document.

Reorganisations or reconstructions

There have been no reorganisations or reconstructions in relation to our Company in the last one year preceding the filing of this Placement Document.

FINANCIAL INDEBTEDNESS

Given below is a description of the indebtedness of our Company on a standalone basis as on June 30, 2015.

1) Secured loan facilities

The details of our secured borrowings were as follows:

Lender’s Name Type of Amount Principal Repayment Security Facility Sanctioned Amount Date / Schedule (` in Crore) Outstanding (` in Crore) Axis Bank Term loan 248.75 248.75 Tenor up to 8 Negative lien Limited years 9 months and 27 days Axis Bank Term loan 74.25 74.25 Tenor up to 8 Negative lien Limited years and 8 months Axis Bank Term loan 500.00 500.00 Tenor up to 12 Negative lien Limited years Axis Bank Term loan 500.00 500.00 Tenor up to 12 Negative lien Limited years Axis Bank Term loan 1,000.00 1,000.00 Tenor up to 5 Negative lien Limited years Axis Bank Term loan 400.00 400.00 Tenor up to 5 Negative lien Limited years and 10 months Axis Bank Term loan 100.00 100.00 Tenor up to Negative lien Limited 7years and 7 months Bank of Baroda Line of credit 2,500.00 500.00 Tenor up to 1 Negative lien year Corporation Line of credit 3,000.00 500.00 Tenor up to 5 Negative lien Bank months and 24 days Deutsche Bank Term loan 500.00 500.00 Tenor up to 2 Negative lien years and 9 months Deutsche Bank Term loan 500.00 500.00 Tenor up to 3 Negative lien years ICICI Bank Term loan 2,000.00 2,000.00 Tenor up to 8 Negative lien Limited years Indian Bank Line of credit 1,280.00 500.00 Tenor up to 1 Negative lien year Shinhan Bank Term loan 32.00 32.00 Tenor up to 3 Negative lien years State Bank of Line of credit 300.00 300.00 Tenor up to 1 Negative lien Bikaner & year Jaipur State Bank of Working capital 4,000.00 1,000.00 Tenor up to 2 Negative lien India loan months and 27 days State Bank of Working capital 4,000.00 1,000.00 Tenor up to 3 Negative lien India loan months State Bank of Working capital 4,000.00 1,000.00 Tenor up to 3 Negative lien India loan months The Bank of Term loan 285.00 160.00 Tenor up to 2 Negative lien Nova Scotia months and 28 days

Lender’s Name Type of Amount Principal Repayment Security Facility Sanctioned Amount Date / Schedule (` in Crore) Outstanding (` in Crore) Union Bank of Line of credit 2,000.00 2,000.00 Tenor up to 1 Negative lien India year

Note: The loan facilities have been secured by negative lien on the assets of our Company and/ or mortgage of property as the case maybe, subject to the charge created in favour of its depositors pursuant to the regulatory requirement under Section 29B of the NHB Act. However, our Company shall, from time to time, be further entitled to create, charge, mortgage, pledge, hypothecate, encumber or create lien on its assets except to the extent of charge created in favour of its depositors pursuant to the regulatory requirement under Section 29B of the NHB Act.

(i) Secured foreign currency borrowings

The details of our secured foreign currency borrowings were as follows:

Party Name / Type of Amount Principal Repayment Date / Security Instrument Facility/ Sanctioned/ Amount Schedule Instrument Issued Outstanding (US$ in (US$ in million) million)

Indusind Bank FCNR(B) 16.60 16.60 June 20, 2017 Negative lien loan Indusind Bank FCNR(B) 49.21 49.21 September 17, Negative lien loan 2017 The Federal FCNR(B) 20.00 20.00 September 18, Negative lien Bank loan 2015 The Federal FCNR(B) 20.00 20.00 February 12, 2016 Negative lien Bank loan Asian Term loan 100.00 4.94 Repayable in semi- Negative lien Development annual instalments Bank from December 15, 2002 to June 15, 2022.

2) Unsecured loan facilities

The details of our unsecured borrowings were as follows:

Lender’s Name Type of Amount Principal Amount Repayment Date / Facility Sanctioned Outstanding Schedule (` in crore) (` in crore) JP Morgan Chase Bank Term loan 285.00 285.00 Tenor up to 3 years N.A. Sumitomo Mitsui Term loan 260.00 150.00 Tenor up to 1 year Banking Corporation Kreditanstalt fur Line of credit 8.00 8.00 Tenor up to Wiederaufbau November 11, 2015 Kreditanstalt fur Line of credit 6.44 6.44 Tenor up to February Wiederaufbau 11, 2016 Kreditanstalt fur Line of credit 3.00 3.00 Tenor up to February Wiederaufbau 6, 2017

(i) Foreign Currency Borrowings:

The details of our unsecured foreign currency borrowings were as follows:

Party Name / Type of Facility/ Amount Principal Amount Repayment Date / Instrument Instrument Sanctioned/ Issued Outstanding Schedule (US$ million) (US$ million)

Citibank FCNR(B) loan 130.00 130.00 September 30, 2016 Citibank FCNR(B) loan 35.00 35.00 October 30, 2015 Citibank FCNR(B) loan 20.00 20.00 February 3, 2016 Citibank FCNR(B) loan 15.00 15.00 February 3, 2016 South Indian FCNR(B) loan 55.00 55.00 March 20, 2016 Bank State Bank of FCNR(B) loan 60.00 60.00 September 22, 2017 Travancore

3) Non-convertible debentures

The details of outstanding secured non-convertible debentures are as follows:

Debenture Tenor / Coupon Amount (` In Date of Allotment Redemption Date series Period of Crore) / Schedule Maturity (except as otherwise stated, in years) 75 (C-006) 10 7.50% 177.00 November 22, 2005 November 22, 2015 78 (C-009) 12 7.60% 250.00 December 8, 2005 December 8, 2017 79 (C-010) 12 7.60% 250.00 December 21, 2005 December 21, 2017 80 (C-011) 10 7.87% 500.00 December 23, 2005 December 23, 2015 81 (C-012) 10 7.65% 253.60 January 19, 2006 January 19, 2016 83 (C-014) 11 8.00% 300.00 February 8, 2006 February 8, 2017 84 (C-015) 10 8.00% 150.00 February 24, 2006 February 24, 2016 85 (C-016) 9.6 8.10% 140.00 March 2, 2006 September 2, 2015 86 (C-017) 10 8.75% 250.00 March 29, 2006 March 29, 2016 93 (D-007) 10 9.20% 250.00 August 11, 2006 August 11, 2016 110 (D-024) 10 10.25% 500.00 March 20, 2007 March 20, 2017 111 (D-025) 10 10.10% 175.00 March 20, 2007 March 20, 2017 115 (D-029) 10 10.25% 50.00 March 29, 2007 March 29, 2017 116 (D-030) 10 10.25% 360.00 March 30, 2007 March 30, 2017 119 (E-001) 10 10.35% 250.00 May 16, 2007 May 16, 2017 124 (E-006) 10 10.35% 300.00 June 6, 2007 June 6, 2017 125 (E-007) 10 9.70% 100.00 July 19, 2007 July 19, 2017 127 (E-009) 10 10.10% 470.00 September 13, 2007 September 13, 2017 131 (E-013) 10 10.05% 100.00 September 28, 2007 September 28, 2017 134 (E-016) 10 9.50% 500.00 October 31, 2007 October 31, 2017 137 (E-019 & 10 9.50% 510.00 December 10, 2007 December 10, 2017 E-020) 141 (E-023) 12 9.60% 250.00 December 12, 2007 December 12, 2019 149 (E-031) 10 9.20% 300.00 February 7, 2008 February 7, 2018 155 (E-037) 10 9.75% 500.00 March 13, 2008 March 13, 20018 160 (F-002) 10 9.90% 340.00 May 30, 2008 May 30, 2018 161 (F-003) 10 10.50% 200.00 June 30, 2008 June 30, 2018 163 (F-005) 10 11.00% 500.00 July 21, 2008 July 21, 2018 164 (F-006) 10 11.15% 400.00 August 6, 2008 August 6, 2018 165 (F-007) 10 11.25% 500.00 September 4, 2008 September 4, 2018 167 (F-009) 10 11.25% 400.00 September 9, 2008 September 9, 2018

Debenture Tenor / Coupon Amount (` In Date of Allotment Redemption Date series Period of Crore) / Schedule Maturity (except as otherwise stated, in years) 169 (F-011) 10 11.70% 500.00 October 27, 2008 October 27, 2018 170 (F-012) 10 11.70% 500.00 November 4, 2008 November 4, 2018 171 (F-013) 10 11.95% 400.00 November 26, 2008 November 26, 2018 172 (F-014) 10 11.95% 800.00 November 26, 2008 November 26, 2018 175 (F-017) 10 9.90% 379.90 December 23, 2008 December 23, 2018 176 (F-018) 10 9.90% 366.00 December 29, 2008 December 29, 2018 177 (F-019) 10 9.90% 104.10 January 2, 2009 January 2, 2019 193 (G-012) 15 8.96% 500.00 April 8, 2010 April 8, 2025 196 (G-015) 15 8.96% 500.00 April 9, 2010 April 9, 2025 199 (H-003) 10 8.65% 250.00 May 20, 2010 May 20, 2020 203 (H-007) 5 8.35% 500.00 July 19, 2010 July 19, 2015 204 (H-008) 10 8.79% 500.00 July 21, 2010 July 21, 2020 206 (H-010) 10 8.90% 500.00 August 18, 2010 August 18, 2020 208 (H-012) 10 8.95% 500.00 October 19, 2010 October 19, 2020 209 (H-013) 10 8.98% 250.00 November 26, 2010 November 26, 2020 212 (H-016) 10 9.00% 500.00 December 23, 2010 December 23, 2020 216 (H-020) 10 9.30% 400.00 January 18, 2011 January 18, 2021 217 (H-021) 5 Variable Rate 105.00 January 18, 2011 January 18, 2016 220 (H-024) 5 9.70% 370.00 February 9, 2011 February 9, 2016 221 (H-025) 5 9.75% 500.00 March 8, 2011 March 8, 2016 225 (H-029) 5 9.60% 750.00 April 7, 2011 April 7, 2016 227 (H-031) 10 9.40% 285.00 April 13, 2011 April 13, 2021 I-001 10 9.40% 1,000.00 May 3, 2011 May 3, 2021 I-005 5 9.90% 500.00 May 19, 2011 May 19, 2016 I-007 10 9.90% 400.00 June 10, 2011 June 10, 2021 I-009 5 Zero Coupon 750.00 June 14, 2011 June 14, 2016 I-012 10 9.55% 500.00 July 20, 2011 July 20, 2021 I-016 10 9.45% 210.00 August 17, 2011 August 17, 2021 I-017 5 9.65% 250.00 August 29, 2011 August 29, 2016 I-018 5 9.65% 1,000.00 September 13, 2011 September 13, 2016 I-019 10 9.60% 250.00 September 23, 2011 September 23, 2021 I-021 10 9.90% 750.00 November 11, 2011 November 11, 2021 I-025 5 9.75% 1,750.00 December 7, 2011 December 7, 2016 I-026 5 9.50% 750.00 December 23, 2011 December 23, 2016 I-027 5 Zero Coupon 450.00 January 10, 2012 January 10, 2017 I-028 5 Zero Coupon 250.00 January 16, 2012 January 16, 2017 I-030 5 9.60% 500.00 January 20, 2012 January 20, 2017 I-031 5 Zero Coupon 250.00 January 24, 2012 Januray 24, 2017 I-032 5 Zero Coupon 500.00 February 6, 2012 February 6, 2017 I-033 5 Zero Coupon 430.00 February 8, 2012 February 8, 2017 I-041 5 9.65% 500.00 March 7, 2012 March 7, 2017 J-002 10 9.50% 200.00 May 9, 2012 May 9, 2022 J-006 5 9.70% 750.00 June 7, 2012 June 7, 2017 J-007 5 9.55% 200.00 June 19, 2012 June 19, 2017 J-008 10 9.50% 200.00 July 4, 2012 July 4, 2022 J-009 5 9.60% 101.00 July 5, 2012 July 5, 2017 J-012 3 9.60% 500.00 July 18, 2012 July 18, 2015 J-016 5 9.50% 225.00 July 23, 2012 July 23, 2017 J-021 3 9.60% 1,000.00 August 7, 2012 August 7, 2015

Debenture Tenor / Coupon Amount (` In Date of Allotment Redemption Date series Period of Crore) / Schedule Maturity (except as otherwise stated, in years) J-022 5 9.50% 500.00 August 13, 2012 August 13, 2017 J-023 5 9.45% 5.00 August 23, 2012 August 23, 2017 J-025 5 9.45% 25.00 August 28, 2012 August 28, 2017 J-026 3 9.58% 315.00 August 29, 2012 August 29, 2015 J-027 3 9.55% 500.00 September 7, 2012 September 7, 2015 J-030 5 9.50% 200.00 September 13, 2012 September 13, 2017 J-033 5 9.30% 500.00 October 4, 2012 October 4, 2017 J-036 5 9.20% 520.00 October 8, 2012 October 8, 2017 J-041 5 Zero 360.00 October 23, 2012 October 23, 2017 coupon J-043 3 9.20% 560.00 November 1, 2012 November 1, 2015 K-002 5 9.05% 250.00 February 4, 2013 February 4, 2018 K-004 5 9.18% 500.00 February 12, 2013 February 12, 2018 K-009 5 9.25% 750.00 February 26, 201 February 26, 2018 K-013 3 9.35% 620.00 March 4, 2013 March 4, 2016 K-018 5 9.25% 500.00 March 11, 2013 March 11, 2018 K-022 5 9.20% 500.00 March 19, 2013 March 19, 2018 K-024 10 8.95% 200.00 March 21, 2013 March 21, 2023 K-028 3 9.15% 500.00 April 3, 2013 April 3, 2016 K-030 5 9.05% 350.00 April 10, 2013 April 10, 2018 K-036 3 8.80% 600.00 May 2, 2013 May 2, 2016 K-038 3 8.60% 200.00 May 7, 2013 May 7, 2016 K-039 5 8.58% 750.00 May 8, 2013 May 8, 2018 K-041 5 8.50% 440.00 May 15, 2013 May 15, 2018 K-042 3 8.48% 500.00 May 17, 2013 May 17, 2016 K-043 5 8.38% 500.00 May 20, 2013 May 20, 2018 L-002 3 9.75% 2000.00 October 10, 2013 October 10, 2016 L-003 3 9.25% 500.00 October 21, 2013 October 21, 2016 L-004 5 Zero coupon 800.00 October 30, 2013 October 30, 2018 L-009 2 9.70% 365.00 December 23,2013 December 23, 2015 L-012 3 9.75% 500.00 January 10, 2014 January 10, 2017 L-013 3 9.75% 500.00 January 13, 2014 January 13, 2017 L-015 5 9.65% 1000.00 January 17, 2014 January 17, 2019 L-016 4 years and 9.65% 994.70 January 20, 2014 January 19, 2019 364 days L-017 2 9.70% 750.00 January 20, 2014 January 20, 2016 M-001 3 9.70% 1000.00 March 18, 2014 March 18, 2017 M-003 2 9.72% 1000.00 March 25, 2014 March 25, 2016 M-008 1 year and 2 8.99% 900.00 June 17, 2014 August 17, 2015 months M-009 10 9.24% 550.00 June 24, 2014 June 24, 2024 M-010 3 Zero 650.00 July 14, 2014 July 14, 2017 Coupon M-011 1 year and 1 9.20% 1000.00 July 28, 2014 July 28, 2015 day M-012 2 9.30% 1250.00 August 1, 2014 August 1, 2016 M-013 1 year and 6 9.11% 700.00 August 5, 2014 August 11, 2015 days M-014 10 9.50% 500.00 August 13, 2014 August 13, 2024 M-015 5 9.45% 2000.00 August 21, 2014 August 21, 2019

Debenture Tenor / Coupon Amount (` In Date of Allotment Redemption Date series Period of Crore) / Schedule Maturity (except as otherwise stated, in years) M-016 5 9.40% 685.00 August 26, 2014 August 26, 2019 M-017 2 9.45% 710.00 August 27, 2014 August 27, 2016 M-018 10 9.34% 1000.00 August 28, 2014 August 28, 2024 M-019 1 year and 1 9.47% 1000.00 September 1, 2014 October 1, 2015 month M-020 2 9.43% 1050.00 September 2, 2014 September 2, 2016 M-021 2 and 1 9.38% 1000.00 September 4, 2014 October 4, 2016 month M-022 1 year and 5 9.32% 500.00 September 5, 2014 September 10, days 2015 N-001 5 8.65% 1000.00 January 6, 2015 January 6, 2020 N-002 5 8.75% 2000.00 January 13, 2015 January 13, 2020 N-003 5 Zero coupon 1000.00 January 15, 2015 January 15, 2020 N-004 10 8.40% 500.00 January 23, 2015 January 23, 2025 N-005 3 8.50% 525.00 February 2, 2015 February 2, 2018 N-006 10 8.33% 500.00 February 6, 2015 February 6, 2025 N-007 1 year and 2 9.10% 1100.00 February 20, 2015 February 22, 2016 days N-008 10 8.45% 750.00 February 25, 2015 February 25, 2025 N-009 3 year and 2 8.70% 1200.00 February 26, 2015 April 26, 2018 months N-010 10 8.43% 600.00 March 4, 2015 March 4, 2025 N-011 3 year and 6 8.50% 500.00 March 11, 2015 September 11, months 2018 N-012 3 years 1 8.45% 500.00 April 13, 2015 June 11, 2018 month and 28 days N-013 2 years 11 8.41% 500.00 April 15, 2015 April 9, 2018 months and 24 days N-014 2 8.45% 500.00 April 24, 2015 April 24, 2017 N-015 5 8.49% 1251.00 April 27, 2015 April 27, 2020 N-016 1 year and 1 Zero coupon 500.00 May 14, 2015 June 14, 2016 month N-017 5 8.70% 1500.00 May 18, 2015 May 18, 2020 N-018 3 years and Zero coupon 150.00 May 26, 2015 June 8, 2018 13 days N-019 3 8.57% 950.00 June 12, 2015 June 12, 2018 SD-3 10 9.25% 400.00 November 24, 2006 November 24, 2016 SD-4 10 9.20% 75.00 January 9, 2007 January 9, 2017 SD-5 10 8.73% 500.00 March 4, 2010 March 4, 2020 SD-6 10 9.40% 1,000.00 February 17, 2011 February 17, 2021 SD-7 10 9.50% 1,000.00 March 2, 2012 March 2, 2022

Note: All the above non-convertible debentures have been rated CRISIL AAA and ICRA AAA and have been secured by negative lien on the assets of our Company and/ or mortgage of property as the case maybe, subject to the charge created in favour of its depositors pursuant to the regulatory requirement under Section 29B of the NHB Act. However, our Company shall, from time to time, be further entitled to create, charge, mortgage, pledge, hypothecate, encumber or create lien on its assets except to the extent of charge created in favour of its depositors pursuant to the regulatory requirement under Section 29B of the NHB Act.

The details of outstanding unsecured non-convertible debentures are as follows:

Debenture Tenor / Coupon Amount (` In Date of Allotment Redemption Date / Schedule series Period of Crore) Maturity (except as otherwise stated, in years) SD-2 10 7.62% 500.00 June 29, 2005 June 29, 2015 SD-3 10 9.25% 400.00 November 24, 2006 November 24, 2016 SD-4 10 9.20% 75.00 January 9, 2007 January 9, 2017 SD-5 10 8.73% 500.00 March 4, 2010 March 4, 2020 SD-6 10 9.40% 1,000.00 February 17, 2011 February 17, 2021 SD-7 10 9.50% 1,000.00 March 2, 2012 March 2, 2022 SD-8 10 9.60% 2,000.00 October 21, 2014 October 21, 2024 SD-9 10 8.65% 1,000.00 February 24, 2015 February 24, 2025

4) Top 10 debenture holders

Our top 10 debenture holders in value terms, on a cumulative basis for all our outstanding debentures is as follows:

Sr. Name of debenture holder Amount (` in crore) No. 1. Life Insurance Corporation of India P & GS Fund 9,470.10 2. Life Insurance Corporation of India 6,734.40 3. Reliance Industries Limited 4,870.00 4. Credit Suisse AG Singapore Branch 3,930.00 5. State Bank of India 2,600.00 6. Punjab National Bank 1,807.30 7. Citicorp Investment Bank (Singapore) Limited 1,605.00 8. CBT EPF-11-C-DM 1,236.80 9. Coal Mines Provident Fund Organisation 1,204.20 10. Standard Chartered Bank Singapore Branch 1,087.40

5) Corporate guarantees

Our Company has issued corporate guarantees aggregating to ` 2,719.65 crore. The details of these corporate guarantees are as follows:

Sr. Name of counterparty on whose behalf the corporate guarantee has Amount (` in crore) No. been issued a) Subsidiary: Credila Financial Services Private Limited 800.00 b) Associate: HDFC Bank Limited 1,919.65

6) Commercial papers

Our Company had issued commercial papers aggregating to ` 31,240.00 crore. The details of these commercial papers are as follows:

Series Maturity date Amount outstanding (` in crore) CP- 11/15-16 August 20, 2015 1,000.00 CP- 41/14-15 August 25, 2015 500.00 CP- 13/15-16 September 4, 2015 1,500.00 CP- 14/15-16 September 9, 2015 600.00 CP- 15/15-16 September 10, 2015 1,500.00 CP- 73/14-15 September 18, 2015 550.00 CP- 17/15-16 September 24, 2015 1,550.00 CP- 39/14-15 October 12, 2015 1,250.00 CP- 16/15-16 October 16, 2015 1,000.00 CP- 43/14-15 October 21, 2015 575.00 CP- 44/14-15 October 21, 2015 300.00 CP- 12/15-16 October 28, 2015 1,500.00 CP- 46/14-15 November 4, 2015 1,750.00 CP- 47/14-15 November 16, 2015 750.00 CP- 49/14-15 November 17, 2015 750.00 CP- 50/14-15 November 19, 2015 200.00 CP- 52/14-15 November 23, 2015 800.00 CP- 54/14-15 December 3, 2015 1,500.00 CP- 55/14-15 December 9, 2015 1,215.00 CP- 59/14-15 December 14, 2015 1,100.00 CP- 62/14-15 December 29, 2015 1,300.00 CP- 66/14-15 February 18, 2016 300.00 CP- 67/14-15 February 26, 2016 1,000.00 CP- 71/14-15 March 10, 2016 2,000.00

7) Other borrowings

The details of other borrowings are as follows:

Party Name / Type of Amount Principal Repayment Credit Secured / Security Instrument Facility/ Sanctione Amount Date / Rating Unsecure Instrument d/ Issued Outstandi Schedule d (` in ng crore) (` in crore)

Bank of India Long term 100.00 49.50 Repayable CRISIL Secured Negative bonds semi-annually AAA and lien on the from June 10, ICRA assets of 2014 to June LAAA our 10, 2022 Company National Refinance 1500.00 1456.68 Repayable in - Secured Negative Housing Bank a maximum lien on the of 60 equal assets of quarterly our installments. Company Default in repayment beyond first three working days from the due date is subject to an additional interest rate of 2% p.a.

(i) External Commercial Borrowings

The details of external commercial borrowings are as follows:

Name of Type of Amount Principal Repayment Credit Secured / Security party / facility / sanctione amount date rating unsecure instrument instrument d / issued outstandin d (US$ in g (US$ in million) million) BNP Paribas, Term loan 300.00 300.00 Repayment is - Unsecured Negative The Bank of to be made on lien Tokyo- February 18, Mitsubishi 2019 for US$ UFJ, Limited, 150 million Sumitomo and February Mitsui 28, 2019 for Banking US$ 150 Corporation million

8) Defaults and delays in the past five years

In the past five years, our Company has not defaulted on or made any delay in the payment of interest and principal of any term loans, debt securities and other financial indebtedness including any corporate guarantees issued by our Company.

9) Outstanding borrowings for consideration other than cash, at a premium or discount or in pursuance of an option

As on June 30, 2015, there are no outstanding borrowings taken by our Company or debt securities issued by our Company (i) for consideration other than cash, whether in whole or part; (ii) at a premium or discount; or (iii) in pursuance of an option.

The Board and the shareholders of our Company have approved a proposed issuance of non-convertible debentures worth ` 85,000.00 crores on a private placement basis in accordance with applicable law.

DIVIDENDS

Under the Companies Act, an Indian company pays dividends upon a recommendation by its board of directors and approval by a majority of its shareholders, who have the right to decrease but not to increase the amount of the dividend recommended by the board of directors. Under the Companies Act, dividends may be paid out of profits of a company in the year in which the dividend is declared or out of the undistributed profits or reserves of previous Fiscal or out of both.

Warrant holders shall not be entitled to any dividend or any other corporate benefits, which may be declared or announced by our Company from time to time, until such time that the Warrants are exchanged for the underlying Equity Shares of our Company in accordance with the terms of the Issue.

Our Company does not have any formal dividend policy for the Equity Shares. The declaration and payment of equity dividend is governed by the applicable provisions of the Companies Act and Articles of Association of our Company. The following table sets forth, for the periods indicated, the dividend per Equity Share and the total amount of dividend declared on the Equity Shares, both exclusive of dividend tax:

Fiscal Dividend per Equity Share Total amount of Dividend (In `) (In `) 2015 ` 13.00 per Equity Share on 1,57,63,87,010 fully paid Equity Shares 20,49,30,31,130 2015 ` 2.00 per Equity Share on 1,57,46,97,670 fully paid Equity Shares* 3,14,93,95,340 2014 ` 14.00 per Equity Share on 1,56,69,49,470 fully paid Equity Shares 21,93,72,92,580 2013 ` 12.50 per Equity Share on 1,55,41,31,425 Equity Shares 19,42,66,69,037 *This is by way of an Interim dividend.

The amounts paid as dividends in the past are not necessarily indicative of the dividend policy of our Company or dividend amounts, if any, in the future.

Any future dividends would be at the discretion of the Board of Directors and would depend on the revenue, cash flow, financial condition, results of operations, capital requirements, contractual obligations, the terms of the credit facilities and other financing arrangements of our Company at the time dividend is considered, and other relevant factors.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our audited standalone financial statements as of and for the years ended March 31, 2013, 2014 and 2015 and in each case, the notes thereto, which are prepared in accordance with Indian GAAP and included elsewhere in this Placement Document. For purposes of this discussion, references to “fiscal year” are to the year ended, and as of, March 31.

You should also read the section titled "Risk Factors" on page 41 of this Placement Document, which discusses a number of factors and contingencies that could impact our financial condition and results of operations.

This discussion contains forward-looking statements and reflects our current plans and expectations. Actual results may differ materially from those anticipated in these forward-looking statements. By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the sections titled "Risk Factors", "Forward-Looking Statements" and "Business" on pages 41, 13 and 103, respectively, of this Placement Document.

Basis of presentation of financial information

For financial statement reporting purposes, we have reported both audited standalone financial statements as of and for the years ended March 31, 2013, 2014 and 2015 and audited consolidated financial statements as of and for the years ended March 31, 2013, 2014 and 2015.

Our audited standalone financial statements as of and for the years ended March 31, 2013, 2014 and 2015 report the financial statements and results of operations relating to our principal business segment, comprising our mortgage lending business, which includes the main business of providing home loans for the construction of residential houses. Our audited consolidated financial statements as of and for the years ended March 31, 2013, 2014 and 2015 report the financial statements and results of operations relating to the Group’s five segments comprising housing, life insurance, general insurance, asset management and others (which includes project management, investment consultancy and property related services).

In accordance with our previous practice of announcing and analysing our financial statements on an standalone basis, the discussion in this section, unless otherwise stated, relates to our audited standalone financial statements as of and for the years ended March 31, 2013, 2014 and 2015.

For our audited standalone financial statements as of and for the years ended March 31, 2013, 2014 and 2015 and our audited consolidated financial statements as of and for the years ended March 31, 2013, 2014 and 2015, refer to the section titled “Financial Statements” on page 201 of this Placement Document.

Overview

We were incorporated as a public limited company on October 17, 1977 under the Companies Act, 1956.

We are the largest housing finance company in India in terms of market share based solely on housing loans. (Source: CRISIL Research, Housing Finance Report, July 2015). As of March 31, 2015, our outstanding loan book amounted to ` 2,28,180.86 crore and total assets were ` 2,53,951.66 crore. Our principal business is providing finance to individuals, corporates, developers and co-operative societies for the purchase, construction, development and repair of houses, apartments and commercial property in India.

As of March 31, 2015, our distribution network comprised 378 outlets, which include 103 offices of our wholly owned distribution company, HDFC Sales Private Limited.

Principal factors affecting our financial results and performance

Our financial results are dependent generally on the performance of the Indian economy and to a lesser extent global economy and the banking and financial services sector in particular. Our business, prospects, financial condition and results of operations are subject to various risks and uncertainties including those disclosed in the section titled “Risk Factors” on page 41 of this Placement Document. The following is a discussion of certain other factors that have had, and continue to have, a significant effect on our financial results.

Growth in loan book:

In Fiscal 2015, our loan book increased to ` 2,28,180.86 crore from ` 1,97,100.35 crore in Fiscal 2014. The net increase, after removal of loans that have been securitized, in the loan book of ` 31,080.51 crore has been determined after taking into account loan repayments of ` 66,422.22 crore as against repayments of ` 58,410.83 crore in Fiscal 2014 and loans written off during the year amounting to ` 28.00 crore as against write-off of loans amounting to ` 46.17 crore in Fiscal 2014. The loan book, net of loans sold has grown by 16.0% in Fiscal 2015. The growth in the loan book stood at 20.0%, if the loans sold were included in the loan book. The following table sets forth a breakdown of our loan portfolio as at the specified dates:

Particulars As of March 31, 2013 2014 2015 (in ` crore) Individuals 111,320.65 133,281.08 155,689.71 Corporate Bodies 56,956.65 61,624.77 69,144.76 Others 1,768.87 2,194.50 3,346.39 Total 170,046.17 197,100.35 228,180.86

Capital adequacy and non performing assets: Our capital adequacy ratio was equal to 16.11% (after reduction of the investment in HDFC Bank from Tier I capital) as of March 31, 2015 as against the minimum requirement of 12% stipulated by the NHB. The capital adequacy ratio without reducing the investment in HDFC Bank from Tier I capital, while treating it as a 100% risk-weight, stood at 18.5%. Our gross non performing loans position was equal to 0.67% of the total loan portfolio in Fiscal 2015 as compared to 0.69% in Fiscal 2014.

Particulars As of March 31, 2013 2014 2015 (in ` crore except ratios and percentages) Capital Adequacy Ratio (%) 16.35% 14.55% 16.11% Total Loan Portfolio 170,046.17 197,100.35 228,180.86 Gross Non Performing Assets 1,199 1,357 1,542 % of NPAs to the total loan portfolio 0.70% 0.69% 0.67%

Deposits: As of March 31, 2015, total outstanding deposits stood at ` 66,705.96 crore as against ` 57,020.79 crore at of March 31, 2014, representing a growth of 16.98%. During the year deposits accounted for 39.0% of our incremental borrowings. The number of deposit accounts grew from 17.54 lakh as of March 31, 2014 to 18.61 lakh as of March 31, 2015. CRISIL and ICRA have for the years 2013, 2014 and 2015, reaffirmed their ‘CRISIL FAAA/Stable’ and ‘ICRA MAAA/Stable’ rating for our deposits. These ratings represent the highest degree of safety as regards timely repayment of principal and interest. We pay brokerage to agents who mobilise retail deposits. The brokerage is linked to the amount and the period of deposit and is paid up-front for the full term of the deposit. In addition, agents who achieve certain collection targets are paid an incentive every year. With effect from April 1, 2014, incentive brokerage on deposits is being amortised over the period of deposit, which earlier was expensed when incurred. There is no material impact on the statement of profit and loss as a result of this change.

Issue of debentures:

During the year, we raised ` 3,000.00 crore through the issue of long-term unsecured redeemable non- convertible subordinated debentures. Further, during Fiscal 2015, we have issued non-convertible debentures

aggregating to ` 26,170.00 crore on private placement basis in multiple tranches to investors. As of March 31, 2015, the total amount outstanding pursuant to issuance of non-convertible debentures was ` 90,605.30 crore. We have been making regular payments on principal and interest of the outstanding non-convertible debentures. For further details of the issue of debentures during Fiscal 2015, please refer to section titled “Financial Indebtedness” on page 64 of this Placement Document.

Sale of loans: During Fiscal 2015, we, under the loan assignment route sold ` 8,249.21 crore of loans to HDFC Bank, pursuant to the buyback option embedded in the home loan arrangement between our Company and HDFC Bank. For details of the home loan arrangement, refer to the section titled “Business” on page 103 of this Placement Document. The loans outstanding in respect of loans sold/assigned as of March 31, 2015 stood at ` 25,152.10 crore, including ` 156.00 crore of non-individual loans. We continue to service the loans sold and are entitled to the residual interest on the loans sold/assigned. The residual income on loans sold is being recognised over the life of the underlying loans and not on an upfront basis.

Changes in economic conditions in India: As a company operating in the housing industry with businesses currently operating in the domestic Indian market, our performance is highly dependent on the overall economic conditions in India, including the GDP growth rate, the economic cycle and the health of the securities markets. Any trends or events which have a significant impact on the economic situation in India, including a rise in interest rates could have an adverse impact on the financial standing and growth plans of our borrowers and contractual counter parties, and lead to a slowdown in sectors important to our business. For further details, refer to “Risk Factors ― Due to challenging conditions in the global capital markets, the economy generally and our credit rating in particular, we may be unable to secure funding at competitive rates.” on page 41 of this Placement Document.

Changes in government policies and regulation: The financial services industry including the home loans business in India is subject to extensive regulation by governmental and self-regulatory organizations, including the RBI, SEBI, NHB, BSE and NSE. These regulations address issues such as customer protection, capital adequacy for housing finance companies (“HFCs”), market conduct, margin requirements, foreign investment and foreign exchange. In recent years, existing rules and regulations have been modified, new rules and regulations have been enacted and reforms have been implemented. Changes in government and other regulatory policies affecting the financial services industry could require changes to our systems and business operations and could involve additional costs and management time. Other general changes in economic and regulatory policy may also affect our business, as they affect the businesses, financial condition and investment policies of our customers. India has been charting a course of economic liberalisation and deregulation in recent years. Some policy changes may be beneficial to our business, while others may have a negative impact. For example, significant changes in deregulation policies could adversely affect the competitive position of our borrowers, and this may impact the quality of our loan portfolio. For further details, refer to “Risk Factors ― We may have to comply with stricter regulations and guidelines issued by regulatory authorities in India, including the NHB, which may increase our compliance costs, divert the attention of our management and subject us to penalties.” on page 46 of this Placement Document.

Factors relating to expansion of our operations: As on March 31, 2015, we had 275 offices (excluding offices of HDFC Sales Private Limited) and 2,081 employees. Total assets per employee as of March 31, 2015 stood at ` 115.13 crore as compared to ` 108.89 crore as of March 31, 2014 and net profit per employee in Fiscal 2015 was ` 3.10 crore (excluding deferred tax liability (“DTL”) on special reserve) as compared to ` 2.80 crore in Fiscal 2014. Employees are our most important assets and employee costs are a large component of our total cost. The Indian financial services sector is highly competitive, and it can be difficult and expensive to attract and retain talented and experienced employees. For further details, refer to “Risk Factors ― The Indian housing finance industry is competitive and increasing competition may result in declining margins if we are unable to compete effectively, which may adversely affect our business, financial performance and the trading price of the NCDs, Warrants and Equity Shares.” on page 41 of this Placement Document.

Financial results for the years ending March 31, 2013, 2014 and 2015

The table below sets forth, for the periods indicated, certain revenue and expense items for our Company's non- consolidated operations. (in ` crore) For the year ended March 31, 2013 2014 2015 INCOME Operating Income 20,555.61 23,598.84 26,668.98 Fees and Other Charges 241.34 295.19 290.90 Profit on Sale of Investments 315.55 248.98 441.28 Other Income 35.12 54.66 69.70 21,147.62 24,197.67 27,470.86 EXPENDITURE AND CHARGES

Interest and Other Charges 13,890.89 16,029.37 17,975.09 Staff Expenses 246.19 279.18 328.46 Establishment Expenses 75.68 86.98 85.76 Other Expenses 193.43 230.03 262.63 Depreciation and Amortisation 23.59 31.87 29.78 Provision for Contingencies 145.00 100.00 165.00 14,574.78 16,757.43 18,846.72

PROFIT BEFORE TAX AND EXCEPTIONAL ITEMS 6,572.84 7,440.24 8,624.14 Exceptional Items 0 0 0 PROFIT BEFORE TAX 6,572.84 7,440.24 8,624.14 Less : Provision for Tax 1,724.50 2,000.00 2,634.00 Less : Provision for Fringe Benefit Tax 0 0 0 PROFIT AFTER TAX AVAILABLE FOR APPROPRIATION 4,848.34 5,440.24 5,990.14

The table below sets forth, for the periods indicated our Company’s standalone balance sheet:

As of March 31 Particulars 2013 2014 2015 ASSETS: (in ` crore)

Cash and balances with banks 5,751.14 7,715.52 3,364.65 Loans 1,73,900.72 2,01,498.07 2,32,231.12 Other Investments 5,395.76 5,561.93 5,935.49 Equity Investments in Subsidiaries and Associates 8,217.70 8,350.72 8,358.85 Fixed Assets 237.94 280.48 676.96 Deferred tax asset (net) 631.38 629.87 - Other assets 984.19 1,395.90 3,384.59 Corporate Deposits - - -

Total Assets 1,95,118.83 2,25,432.49 2,53,951.66

LIABILITIES:

Debt securities in issue 59,503.10 58,192.85 60,192.20 Public Deposits 29,309.60 25,547.45 30,670.03 Other Borrowed Funds 69,773.28 100,232.89 117,736.80 Current liabilities 6,186.54 7,219.02 7,555.40 Provisions 3,705.53 4,053.98 4,189.78 Other long term liabilities 1,810.57 2,231.11 2,436.81 Deferred tax liability (net) - - 200.67

Total Liabilities 1,70,288.62 1,97,477.30 2,22,981.69

SHAREHOLDERS' EQUITY:

As of March 31 Particulars 2013 2014 2015 Ordinary shares 309.27 312.10 314.94 Securities premium 9,721.17 9,990.42 10,256.81 Other reserves 14,799.77 17,652.67 20,398.22

Total shareholders' equity 24,830.21 27,955.19 30,969.97 Total of Equity and Liabilities 1,95,118.83 2,25,432.49 2,53,951.66

Results of Fiscal 2015 compared to Fiscal 2014

Our loan book also increased from ` 1,97,100.35 crore in Fiscal 2014 to ` 2,28,180.86 crore in Fiscal 2015, which is a growth of 16%, net of loans sold. Our expenditure and charges increased from ` 16,757.43 crore in Fiscal 2014 to ` 18,846.72 crore in Fiscal 2015, which is an increase of 12.5%.

Income

In Fiscal 2015 our income increased by 14% from ` 24,197.67 crore in Fiscal 2014 to ` 27,470.86 crore. This was primarily due to an increase in our operating income from ` 23,894.03 crore in Fiscal 2014 to ` 26,959.88 crore in Fiscal 2015, which is an increase of 13%.

In Fiscal 2015 the profit on sale of investments stood at ` 441.28 crore as compared to ` 248.98 crore in Fiscal 2014.

Exceptional income

We had no exceptional income for Fiscal 2015 and Fiscal 2014.

Expenditure and charges

The following table sets forth the details of our expenditures and charges for the periods mentioned:

Fiscal Particulars 2014 2015 (in ` crore) Interest and Other Charges 16,029.37 17,975.09 Staff Expenses 279.18 328.46 Establishment Expenses 86.98 85.76 Other Expenses 230.03 262.63 Depreciation and Amortisation 31.87 29.78 Provisions for Contingencies 100.00 165.00 Total 16,757.43 18,846.72

In Fiscal 2015, our expenditure and charges have increased from ` 16,757.43 crore in Fiscal 2014 to ` 18,846.72 crore primarily on account of an increase in interest and other charges.

Profit for the year

The total profit before tax for the year ended March 31, 2015, stood at ` 8,624.14 crore as compared to ` 7,440.24 crore for the year ended March 31, 2014. After providing ` 2,363.00 crore for taxes, the net profit before adjustment of DTL on special reserve was ` 6,261.14 crore for the year ended March 31, 2015 as compared to ` 5,467.24 crore for the year ended March 31, 2014, representing a growth of 14.5%. After providing for ` 271.00 crore for DTL on special reserve, the profit after tax for the year ended March 31, 2015 stood at ` 5,990.14 crore.

Deferred tax liability on special reserve

The NHB, vide circular dated May 27, 2014, directed HFCs to provide for DTL in respect of special reserve created under section 36(1)(viii) of the IT Act.

The balance in the special reserve at the beginning of Fiscal 2015 was ` 6,467.18 crore. By way of its circular dated August 22, 2014, NHB permitted HFCs to create DTL in respect of the opening balance in special reserve over a period of three years, in a phased manner in the ratio of 25:25:50 from the reserves.

In accordance with the NHB circular (NHB(ND)/DRS/Policy/Circular 65/2014-15) dated August 22, 2014, our Company has created 25% of DTL on the opening balance in special reserve, which was equal to ` 559.54 crore at the end of Fiscal 2015. Our Company has adjusted this amount from the general reserves during Fiscal 2015.

The deferred tax liability on the amount of special reserve appropriated out of the profits of our Company for Fiscal 2015 was ` 364.77 crore. This has been taken into account in determining the effective tax rate which has been used in determining the tax charge on the income of our Company for the year ended March 31, 2015. After taking this into account, the effective tax rate for Fiscal 2015 increased to 30.5% as compared to 26.9% in Fiscal 2014.

The regulator NHB, as a matter of abundant prudence requires HFCs to create DTL on the amount appropriated to special reserve. We believe that the special reserve will never be utilised for payment of dividend or any other purpose and believe that our Company has adequate other reserves for meeting any such requirements if so needed at a later stage.

Analysis of profits

For the year ended March 31, 2015, profit before considering profit on sale of investments and exceptional items and tax stood at ` 8,182.86 crore compared to ` 7,191.26 crore for the year ended March 31, 2014. After providing ` 2,634.00 crore for taxes, the net profit after tax for the year ended March 31, 2015, increased by 10.1% to ` 5,990.14 crore as compared to ` 5,440.24 crore for the year ended March 31, 2014.

For the year ended March 31 Analysis of Profit After Tax 2014 2015 (in ` crore) Profit After Tax as Reported 5,440.24 5,990.14 Less: Profit on Sale of Investments (net of tax) 248.98 441.28 Less: Exceptional Income (net of tax) 0.00 0.00 Profit Before Exceptional Income and Profit on Sale of 5,689.22 6,431.42 Investments

Spread on loans

The average yield on our loan assets during Fiscal 2015 was 11.78% per annum which was the same during Fiscal 2014. The average all-inclusive cost of funds was 9.46% per annum in Fiscal 2015 as compared to 9.49% per annum in Fiscal 2014. The spread on loans over the cost of borrowings for Fiscal 2015 was 2.32% per annum as against 2.29% per annum in Fiscal 2014. The spread on individual loans for Fiscal 2015 was 1.96% and on non-individual loans was 3.10%.

Financial condition

Current assets, loans and advances

The table below sets forth the details of our current assets, loans and advances for the periods mentioned:

Particulars As of March 31 2014 2015 Current Assets (in ` crore) Sundry Debtors (Unsecured: Considered good) 84.52 46.18 Sub Total 84.52 46.18

Cash and Bank Balances Cash and Cheques on Hand 26.32 95.43 Current Accounts 2,083.40 61.50 Deposit Accounts 5,584.90 3,180.02 With RBI - - With National Housing Bank - -

Particulars As of March 31 2014 2015 Earmarked balance with banks 20.90 27.70 Sub Total 7,715.52 3,364.65

Loans and Advances Current maturities of long-term loans and advances 18,310.72 23,569.97 Corporate Bodies 2,497.59 2,449.72 Current maturities of Staff Loans - others -Secured; 3.75 4.35 Considered good Corporate Deposits 1,403.01 921.34 Installments due from borrowers - Secured; Considered 763.72 900.88 good Other Advances recoverable in cash or kind or for value to 24.97 33.26 be received - Unsecured; Considered good Prepaid Expenses - Unsecured; Considered good 96.46 99.22 Security Deposits - Unsecured; Considered good 11.45 7.23 Sub Total 23,111.67 27,985.97

Other Current Assets Receivables on Securitised Loans 30.11 53.30 Interest accrued but not due on Loans 206.31 343.13 Interest accrued and due on Loans 5.65 0.22 Income accrued but not due on Investments 105.41 166.81 Interest accrued but not due on Corporate Deposits 38.53 11.12 Interest accrued and due on Corporate Deposits 10.39 0.72 Application money – Investments 0.90 - Sub Total 397.30 575.30 Total 31,309.01 31,972.10

Our current assets, loans and advances increased by 2.12% from ` 31,309.01 crore as of March 31, 2014 to ` 31,972.10 crore as of March 31, 2015, primarily due to an increase in the current maturities of loans and advances and a decrease in balances in current accounts, deposit accounts and corporate deposits.

Investments

As of March 31, 2015, the investment portfolio stood at ` 14,294.34 crore as against ` 13,912.65 crore as of March 31, 2014.

The table below sets forth the details of our investments for the periods mentioned:

Particulars As of March 31, 2014 As of March 31, 2015 (in ` crore) Equity Shares - Subsidiaries and Associate Companies 8,350.72 8,358.85 Equity Shares - Other Companies 745.59 597.70 Convertible Preference Shares - Subsidiary and Other 67.50 67.50 Companies Cumulative Redeemable Preference Shares 5.99 5.99 Debentures and Bonds - for Financing Real Estate Projects 428.51 428.51 Debentures and Bonds – Others 133.98 109.00 Pass Through Certificates & Security Receipts - for 41.91 50.21 Financing Real Estate Projects Security Receipts – Others 21.97 8.11 Government Securities 3,762.37 4,087.64 Mutual Funds 10.00 10.00 Venture Funds & Other Funds 323.09 378.34 Properties ( Net of Depreciation ) 102.88 270.93 13,994.51 14,372.78 Less: Provision for Diminution 81.87 78.44 Total 13,912.64 14,294.34

The table below sets forth the book value and the market value of our investments as of March 31, 2015 and March 31, 2014 (as previous year):

Particulars Book Value Market Value (in ` crore) Aggregate of Quoted Investments 5,806.92 45,661.78 Previous year 5,976.95 Aggregate of Investments listed but not quoted 4,260.97 Previous year 3,935.70 Aggregate of Investments in Unquoted Mutual Funds # 10.00 10.20 Previous year 10.00 Aggregate of Unquoted Investments 3,945.53 Previous year 3,887.12 Properties 270.93 Previous year 102.88 Total 14,294.34 Previous year 13,912.65

# Market value of Investments in Unquoted Mutual Funds represents the repurchase price of the units issued by the Mutual Funds.

Results of Fiscal 2014 compared to Fiscal 2013

In Fiscal 2014, our loan book increased from ` 1,70,046.17 crore in Fiscal 2013 to ` 1,97,100.35 crore in Fiscal 2014, which is a growth of 16%. Our expenditure and charges increased from ` 14,574.78 crore in Fiscal 2013 to ` 16,757.43 crore in Fiscal 2014, which is an increase of 15%.

Income

Our income for Fiscal 2014 increased by 14.4% from ` 21,147.62 crore in Fiscal 2013 to ` 24,197.67 crore in Fiscal 2014.

This was primarily due to an increase in our operating income from ` 20,796.95 crore in Fiscal 2013 to ` 23,894.03 crore in Fiscal 2014, which is an increase of 14.9%.

In Fiscal 2014 profit on sale of investments stood at ` 248.98 crore as compared to ` 315.55 crore in Fiscal 2013.

Exceptional income

We had no exceptional income for the Fiscal 2014 and Fiscal 2013.

Expenditure and charges

The following table sets forth the details of our expenditures and charges for the periods mentioned:

Particulars Fiscal 2013 2014 (in ` crore) Interest and Other Charges 13,890.89 16,029.37 Staff Expenses 246.19 279.18 Establishment Expenses 75.68 86.98 Other Expenses 193.43 230.03 Depreciation and Amortisation 23.59 31.87 Provisions for Contingencies 145.00 100.00 Total 14,574.78 16,757.43

In Fiscal 2014, our expenditure and charges have increased from ` 14,574.78 crore in Fiscal 2013 to ` 16,757.43 crore primarily on account of increase in interest and other charges.

Profit for the year

The total profit before tax for the year ended March 31, 2014, stood at ` 7,440.24 crore as compared to ` 6,572.84 crore for the year ended March 31, 2013 – an increase of 13.2%. After providing ` 2,000.00 crore for taxes, the profit after tax for the year ended March 31, 2014 stood at ` 5,440.24 crore as compared to ` 4,848.34 crore for the year ended March 31, 2013, representing an increase of 12.2%.

Analysis of profits

For the year ended March 31, 2014, profit before considering profit on sale of investments and exceptional items and tax stood at ` 7,191.26 crore compared to ` 6,257.29 crore for the year ended March 31, 2013. After providing ` 2,000.00 crore for taxes, the net profit after tax for the year ended March 31, 2014, increased by 12.21% to ` 5,440.24 crore as compared to ` 4,848.34 crore for the year ended March 31, 2013.

For the year ended March 31 Analysis of Profit After Tax 2013 2014 (in ` crore) Profit After Tax as Reported 4,848.34 5,440.24 Less: Profit on Sale of Investments (net of tax) 315.55 248.98 Less: Exceptional Income (net of tax) 0.00 0.00 Profit Before Exceptional Income and Profit on Sale of 4,532.79 5,191.26 Investments

Spread on loans

The average yield on our loan assets during Fiscal 2014 was 11.78% per annum as compared to 11.98% per annum during Fiscal 2013. The average all-inclusive cost of funds was 9.49% per annum in Fiscal 2014 as compared to 9.68% per annum in Fiscal 2013. The spread on loans over the cost of borrowings for Fiscal 2014 was 2.29% per annum as against 2.30% per annum for Fiscal 2013.

Financial condition

Current assets, loans and advances

The table below sets forth the details of our current assets, loans and advances for the periods mentioned:

Particulars As of March 31 2013 2014 (in ` crore) Current Assets Sundry Debtors (Unsecured: Considered good) 1.32 84.52 Sub Total 1.32 84.52

Cash and Bank Balances Cash and Cheques on Hand 37.85 26.32 Current Accounts 786.20 2,083.40 Deposit Accounts 4,909.95 5,584.90 With RBI - - With National Housing Bank - - Earmarked balance with banks 17.14 20.90 Sub Total 5,751.14 7,715.52

Loans and Advances Current maturities of long-term loans and advances 16,784.61 18,310.72 Corporate Bodies 1,155.36 2,497.59 Current maturities of Staff Loans - others -Secured; 3.54 3.75 Considered good Corporate Deposits 1,686.72 1,403.01 Instalments due from borrowers - Secured; Considered 706.71 763.72 good Other Advances - Unsecured; Considered good 28.53 24.97 Prepaid Expenses - Unsecured; Considered good 28.27 96.46

Particulars As of March 31 2013 2014 (in ` crore) Security Deposits - Unsecured; Considered good 6.12 11.45 Sub Total 20,399.86 23,111.67

Other Current Assets Receivables on Securitised Loans 18.04 30.11 Interest accrued but not due on Loans 160.45 206.31 Interest accrued and due on Loans - 5.65 Income accrued but not due on Investments 73.41 105.41 Interest accrued but not due on Corporate Deposits 125.93 38.53 Interest accrued and due on Corporate Deposits - 10.39 Application money - Investments 1.00 0.90 Sub Total 378.83 397.30 Total 26,531.15 31,309.01

Our current assets, loans and advances increased by 18.01% from ` 26,531.15 crore as of March 31, 2013 to ` 31,309.01 crore as of March 31, 2014.

Investments

As of March 31, 2014, the investment portfolio stood at ` 13,912.65 crore as against ` 13,613.46 crore as of March 31, 2013.

The table below sets forth the details of our investments for the periods mentioned:

Particulars As of March 31, 2013 As of March 31, 2014 (in ` crore) Equity Shares - Subsidiaries and Associate Companies 8,217.70 8,350.72 Equity Shares - Other Companies 772.07 745.59 Convertible Preference Shares - Subsidiary and Other 85.50 67.50 Companies Cumulative Redeemable Preference Shares 5.99 5.99 Convertible Debentures - Subsidiary, Associate and 2.00 0.00 Other Companies Debentures and Bonds - for Financing Real Estate 163.33 428.51 Projects Debentures and Bonds - Others 134.98 133.98 Pass Through Certificates & Security Receipts - for 48.77 41.91 Financing Real Estate Projects Security Receipts - Others 22.28 21.97 Certificate of Deposits 522.99 0.00 Government Securities 2,837.27 3,762.37 Mutual Funds 5.00 10.00 Venture Funds & Other Funds 724.66 323.09 Properties ( Net of Depreciation ) 141.54 102.88 13,684.08 13,994.52 Less: Provision for Diminution 70.62 81.87 Total 13,613.46 13,912.65

The table below sets forth the book value and the market value of our investments as of March 31, 2014 and March 31, 2013 (for the previous year):

Particulars Book Value Market Value (in ` crore) Aggregate of Quoted Investments 5,976.95 32,992.16 Previous year 6,017.25 27,401.20 Aggregate of Investments listed but not quoted 3,935.70 Previous year 3,010.60 Aggregate of Investments in Unquoted Mutual Funds # 10.00 10.06 Previous year 5.00 5.02 Aggregate of Unquoted Investments 3,887.12 Previous year 4,439.07 Properties 102.88 Previous year 141.54 Total 13,912.66 Previous year 13,613.47

Liquidity and capital resources

We have historically financed liquidity and capital resource needs primarily through the use of funds generated from operations, customer deposits, borrowings, issue of debentures and securities, new issuances of equity capital and subordinated debt.

We are subject to NHB capital adequacy requirements, which are primarily based on the capital adequacy accord reached by the Basel Committee of Banking Supervision, Bank of International Settlements in 1988. NHB has issued guidelines to HFCs on prudential norms for income recognition, provisioning, asset classification, provisioning for bad and doubtful debts, capital adequacy and concentration of credit/investments. Our position with respect to the guidelines is as follows: As of March 31, 2015 our capital adequacy ratio stood at 16.11% of the risk weighted assets, (of which Tier 1 capital was 12.47% and Tier 2 capital was 3.64%) as against the minimum requirement of 12% We are in compliance with the limits prescribed by NHB in respect of concentration of credit, exposure to investment in real estate and capital market exposure.

We plan to finance our liquidity and capital resource needs primarily through our earnings, borrowings, issue of debentures and securities, cash on hand and from the proceeds of this Issue. In addition, in the future we may issue additional equity securities. There can be no assurance that financing will be available if needed, on terms favourable to us, or at all. For further details, please see “Risk Factors – Due to challenging conditions in the global capital markets, the economy generally and our credit rating in particular, we may be unable to secure funding at competitive rates.” on page 42 of this Placement Document.

If additional funds are raised through issuance of equity securities, the percentage ownership of our stockholders may be reduced, our stockholders may experience additional dilution in net book value per share and such securities may have rights, preferences or privileges senior to those of the current holders of its common stock.

Cash flow

Year Ended March 31, 2013 2014 2015 (in ` crore) Net cash from / (used in) operating activities (19,652.25) (21,468.89) (25,469.23) Net cash from / (used in) investing activities (870.79) 144.35 196.64 Net cash from / (used in) financing activities 21,343.10 23,627.63 22,392.00 Net increase/(decrease) in cash and cash equivalents 820.07 2,303.09 (2,880.59) Exchange difference on bank balance 4.58 7.58 2.80 Cash and cash equivalents at the beginning of the year 2,499.40 3,324.05 5,634.72 Cash and cash equivalents at the end of the year 3,324.05 5,634.72 2,756.93

Investing activities

The Investment Committee constituted by the Board of Directors is responsible for approving investment proposals in line with the limits as set out by the Board of Directors. Mr. Deepak Parekh, Mr. Keki M. Mistry, Ms. Renu Sud Karnad and Mr. V. Srinivasa Rangan are members of the Committee.

The investment function supports the core business of housing finance. The investment mandate includes ensuring adequate levels of liquidity to support core business requirements, maintaining a high degree of safety and optimising the level of returns, consistent with acceptable levels of risk.

As of March 31, 2015, the investment portfolio stood at ` 14,294.34 crore as against ` 13,912.65 crore as of March 31, 2014. The proportion of investments to total assets was 6%.

HFCs are required to maintain a statutory liquidity ratio (“SLR”) in respect of public deposits raised. Currently the SLR requirement is 12.5% of public deposits. As of March 31, 2015, we held ` 2,378.33 crore in bonds issued by NHB and bank deposits and ` 4,123.14 crore in government securities.

As of March 31, 2015, the treasury portfolio (excluding investments in equity shares) had an average balance period to maturity of 34 months. The average yield on the non-equity portfolio for the year ended March 31, 2015 was 10.13% per annum.

We have classified our investments into current and long-term investments. The current investments have been entirely ‘marked to market’. In respect of long-term investments, provisions have been made to reflect any permanent diminution in the value of investments. The aggregate provision on account of such current and long- term investments stood at ` 78.00 crore as of March 31, 2015. After considering the opening balance of ` 82.00 crore in the diminution in the value of investments account, an amount of ` 4.00 crore has been written back through the provision for contingencies in the statement of profit and loss during the year ended March 31, 2015.

As of March 31, 2015, the market value of quoted investments was higher by ` 55,185.00 crore as compared to the value at which these investments are reflected in the balance sheet. This unrealised gain includes appreciation in the market value of investments held by our wholly owned subsidiaries, HDFC Investments Limited and HDFC Holdings Limited. It, however, excludes the unrealised gains on the unlisted investments, such as HDFC Standard Life Insurance Company Limited and HDFC ERGO General Insurance Company Limited, amongst others.

Indebtedness

The following table sets forth the details of our indebtedness as of the dates mentioned: (in ` crore) Particulars As of March 31, 2013 2014 2015 LONG - TERM BORROWINGS Bonds and Debentures 59,503.10 58,192.85 60,192.20 Term Loans : Banks 5,454.30 5,605.21 6,378.01 External Commercial Borrowing - Low Cost Affordable - 1,805.10 1,884.00 Housing Others 1,393.58 1,492.06 1,300.15 Deposits 23,654.03 19,785.82 27,847.98 Total 90,005.01 86,881.04 97,602.34

OTHER LONG - TERM LIABILITIES Interest accrued but not due on borrowings 947.42 741.83 772.20 Total 947.42 741.83 772.20

SHORT-TERM BORROWINGS Loans repayable on demand: From Banks - Unsecured 259.27 6.12 116.46 Deposits - Unsecured 5,655.57 5,761.63 2,822.05 Other loans and advances:

Particulars As of March 31, 2013 2014 2015 Scheduled Banks - Secured 3,285.00 9,800.00 4,660.00 National Housing Bank - Secured 36.85 - - Scheduled Banks - Unsecured - 500.00 - Commercial Papers - Unsecured 9,307.87 9,250.10 25,659.20 Total 18,544.56 25,317.85 33,257.71

OTHER CURRENT LIABILITIES Current maturities of long-term borrowings 50,036.41 71,774.30 77,738.98 Interest accrued but not due on borrowings 4,254.18 5,385.82 5,409.65 Interest accrued and due on matured deposits 33.10 55.19 78.70 Unclaimed matured deposits 310.11 442.56 617.92 Total 54,633.80 77,657.87 83,845.25

As of March 31, 2015, the total loans outstanding from banks, financial institutions and the NHB amounted to ` 26,194.25 crore as compared to ` 32,951.76 crore as of March 31, 2014.

During Fiscal 2015, we raised ` 3,000.00 crore through the issue of long-term unsecured redeemable non- convertible subordinated debentures. The subordinated debt was assigned the highest rating of ‘CRISIL AAA/Stable’ and ‘ICRA AAA/Stable’ by CRISIL and ICRA respectively.

As of March 31, 2015, our outstanding subordinated debt stood at ` 6,475.00 crore. The debt is subordinated to present and future senior indebtedness of our Company and has been assigned the highest rating by CRISIL and ICRA respectively. Based on the balance term to maturity, as of March 31, 2015, ` 5,495.00 crore of the book value of subordinated debt was considered as Tier II under the guidelines issued by NHB for the purpose of capital adequacy computation.

Our ability to incur additional debt in the future is subject to a variety of uncertainties including, among other things, the amount of capital that other Indian entities may seek to raise in the domestic and foreign capital markets, economic and other conditions in India that may affect investor demand for our securities and those of other Indian entities, the liquidity of the Indian capital markets and our financial condition and results of operations. We intend to continue to utilize long-term debt.

Non convertible debentures

During Fiscal 2015, we have issued non-convertible debentures amounting to ` 26,170.00 crore on a private placement basis. Our non-convertible debentures have been listed on the Wholesale Debt Market segment of NSE and BSE. The non-convertible debentures have been assigned the highest rating of 'CRISIL AAA/Stable' and ‘ICRA AAA/Stable’, by CRISIL and ICRA respectively.

Debt – equity ratio

The gross debt to equity ratio of our Company as on March 31, 2015, before the Issue is 6.74:1. The gross debt to equity ratio of our Company post the Issue is 6.89 : 1.

Interest coverage ratio

The following table sets our interest coverage ratio as at March 31, 2013, 2014 and 2015 on a standalone basis.

As at March 31 2015 2014 2013 Interest coverage ratio (%) 134.41 134.76 136.12

Contractual commitments

As on March 31, 2015, our Company did not have any contractual commitments other than in the ordinary course of business.

Fixed assets and intangible assets

During the year, we reviewed our policy of providing for depreciation on tangible fixed assets and have also reassessed their useful lives. On and from April 1, 2014, the straight line method is being used to depreciate all classes of tangible fixed assets. Previously, the straight line method was used for depreciating buildings, computers, leased assets and leasehold improvements, while other tangible fixed assets were being depreciated using the reducing balance method. The revised useful lives, as assessed by management match those specified in Part C of Schedule II to the Companies Act, 2013, for all classes of assets other than computer hardware and vehicles. Management believes that the revised useful lives of the assets reflect the periods over which these assets are expected to be used.

As a result of the change, the charge on account of depreciation for the year ended March 31, 2015, is lower by ` 1.29 crore compared to the method used and useful lives estimated in earlier periods.

During the year, our Company acquired the erstwhile HUL House which is now our corporate office and has been renamed as HDFC House.

Net fixed assets as of March 31, 2015 amounted to ` 676.96 crore compared to ` 280.48 crore as of March 31, 2014.

Provision for contingencies

During the year, we have made a provision for contingencies of ` 165.00 crore against a provision in Fiscal 2014 for an amount of ` (100.00) crore through a debit to the statement of profit and loss. This provision was mainly in respect of standard assets.

As per the prudential norms prescribed by NHB, we are required to carry a provision of ` 1,703.37 crore as of March 31, 2015 in respect of non-performing assets and a general provision on outstanding standard non- housing loans. As a matter of prudence, however, over the years, we have been transferring additional amounts to the provision for contingencies account.

During the year ended March 31, 2015, we utilised ` 37.82 crore (net) out of the balance in provision for contingencies primarily on account of provision in diminution of value of investments and loan write-offs. After taking into account the transfers as well as the net utilisation, the balance in provision for contingencies as of March 31, 2015 stood at ` 2,033.89 crore, including provision for non-performing loans of ` 480.74 crore. The balance in the provision for contingencies stood at 0.89% of the loan portfolio as of March 31, 2015.

Recoveries

In terms of our accounting policies, an asset is a NPA if the interest or instalment is overdue for 90 days.

Gross non-performing loans outstanding amounted to ` 1,542 crore as of March 31, 2015, constituting 0.67% of the loan portfolio. The principal outstanding in respect of individual loans where the instalments were in arrears constituted 0.51% of the individual portfolio and the corresponding figure was 1.01% in respect of the non- individual portfolio.

We have written off loans aggregating to ` 28 crore during Fiscal 2015. These loans have been written off pursuant to one-time settlements, where we will continue making efforts to recover the money.

Quantitative and qualitative disclosures about market risk

Market risk is the risk of loss related to adverse changes in market prices, including interest rates and foreign exchange rates, of financial instruments. We are exposed to various types of market risk, including changes in interest rates and foreign exchange rates, in the ordinary course of business. We entered into forward foreign exchange contracts and cross-currency swaps with banks to hedge against interest rate and foreign exchange rate risks, the application of which is primarily for hedging purposes and not for speculative purposes.

We maintain our accounting records and prepare our financial statements in Indian Rupees.

Risk management

The Financial Risk Management and Hedging Policy as approved by our Audit Committee sets limits for exposures on currency and interest rates. We manage our interest rate and currency risk in accordance with the guidelines prescribed. The risk management strategy has been to protect against foreign exchange risk, whilst at the same time exploring any opportunities for an upside, so as to keep the maximum all-in cost on the borrowing in line with or lower than the cost of a borrowing in the domestic market for a similar maturity.

We have to manage various risks associated with the mortgage business. These risks include credit risk, liquidity risk, foreign exchange risk and interest rate risk. We manage credit risk through stringent credit norms. Liquidity risk and interest rate risks arising out of maturity mismatch of assets and liabilities are managed through regular monitoring of the maturity profiles.

We have, from time to time, entered into risk management arrangements in order to hedge its exposure to foreign exchange and interest rate risks. The currency risk on the borrowings is actively hedged through a combination of dollar denominated assets, long term forward contracts, principal only swaps (“POS”), full currency swaps and currency options.

As of March 31, 2015, we had foreign currency borrowings of US$ 1,013.01 million equivalent. The entire principal on the foreign currency borrowings has been hedged by way of principal only swaps, currency options, forward contracts and risk management arrangements with financial institutions. As of March 31, 2015, we had no foreign currency exposure on borrowings net of risk management arrangements.

In addition, we have entered into cross currency swaps of a notional amount of US$ 408.69 million equivalent wherein it has converted its rupee liabilities into foreign currency liabilities and the interest rate is linked to benchmarks of the respective currencies. The total net foreign currency exposure on cross currency swaps is US$ 331.96 million. The open position stood at 0.99% of our total borrowings.

As a part of asset liability management and on account of the predominance of our adjustable rate home loan product as well as to reduce the overall cost of borrowings, we have entered into interest rate swaps wherein we have converted our fixed rate rupee liabilities of a notional amount of ` 15,240.00 crore as of March 31, 2015 for varying maturities into floating rate liabilities linked to various benchmarks. In addition, interest rate swaps of a notional amount of US$ 330 million equivalent are outstanding as of March 31, 2015, and have been undertaken to hedge the interest rate risk on foreign currency borrowings.

Revaluation of foreign currency assets and liabilities

Assets and liabilities in foreign currencies net of risk management arrangements are converted at the rates of exchange prevailing at the year end, where not covered by forward contracts. Wherever we have entered into a forward contract or an instrument that is, in substance, a forward exchange contract, the exchange difference is being amortised over the life of the contract.

Cross currency interest rate swaps are recorded at the closing rate.

The net loss/gain on translation of long-term monetary assets and liabilities in foreign currencies is amortised over the maturity period of monetary assets and liabilities. The unamortised exchange difference is carried in the balance sheet as ‘foreign currency monetary item translation difference account’. The net loss/gain on translation of short- term monetary assets and liabilities in foreign currencies is recorded in the statement of profit and loss.

As on March 31, 2015, an amount of ` 33.75 crore (net of future tax benefit of ` 11.47 crore) is carried forward in the foreign currency monetary item translation difference account. This amount is to be amortised over the period of the monetary assets/liabilities.

Asset-liability management (“ALM”)

Under Schedule III of the Companies Act, 2013, the classification of assets and liabilities into current and non- current is based on their contracted maturities. However, the estimates based on past trends in respect of prepayments of loans, renewals of liabilities and liquid investments, which are in accordance with the ALM guidelines issued by NHB have not been taken into consideration while classifying the assets and liabilities under the Schedule III.

Our ALM position is based on the maturity buckets as per the guidelines issued by NHB. In computing the information, certain estimates, assumptions and adjustments have been made by our Company. Our ALM position is as under:

As of March 31, 2015, assets and liabilities with maturity up to one year amounted to ` 64,824.64 crore and ` 62,993.85 crore respectively. Asset and liabilities with maturity of between two years and five years amounted to ` 1,22,054.75 crore and ` 1,18,590.42 crore, respectively and assets and liabilities with maturity beyond five years amounted to ` 67,072.27 crore and ` 72,367.39 crore respectively.

Our loan book is predominantly floating rates whereas liabilities, especially deposits and non convertible debentures are fixed rates. In normal economic conditions, the fixed rate liabilities are converted into floating rate denominated liabilities by way of interest rate swaps. However, during the Fiscal 2015, due to inflationary conditions and an uncertain economic environment, short term rates remained higher than the long term rates throughout the year. This resulted in the cost of floating rate liabilities post the interest rate swap being higher than fixed rate liabilities. Hence, we did not convert a part of our liabilities into floating rate basis to avoid the negative carry. We have been monitoring the money market conditions and shall enter into interest rate swaps at an appropriate time to minimise the interest rate gap.

As of March 31, 2015, 86% of the assets and 73% of the liabilities were on a floating rate basis.

Further, we have a fixed rate home loan scheme and have kept some liabilities on a fixed rate basis to match out the expected disbursals under the fixed rate product.

Exchange rate risk

Monetary assets and liabilities in foreign currencies net of risk management arrangement are revalued at the rate of exchange prevailing at the year end. Cross currency swaps have been marked to market at the year end. For forward contract or instruments that are in substance, forward exchange contracts, the exchange differences on such contracts are being amortised over the life of contracts. Loss on mark to market of cross currency interest rates swaps is recognised in the Profit and Loss Account and the net gains is not recognised keeping in view the principles of prudence as enumerated in Accounting Standard (AS1) notified by the Companies (Accounting Standards) Rules, 2006.

Taxation

The DTL on the amount of Special Reserve appropriated out of the profits of our Company for the current financial year was ` 364.77 crore. This has been taken into account in determining the effective tax rate which has been used in determining the tax charge on the income of our Company for the year ended March 31, 2015. After taking this into account, the effective tax rate for the year increased to 30.5% as compared to 26.9% for Fiscal 2014.

Subsidiaries and Associates

Though housing remains the core business, we have continued to make investments in our Subsidiaries. These investments are made in companies where there are strong synergies with us. We will continue to explore avenues for such investments with the objective of providing a wide range of financial services and products under the “HDFC” brand name. In Fiscal 2015, we made gross investments in the equity capital of our Subsidiaries, HDFC ERGO General Insurance Company Limited (` 47.00 crore), HDFC Education and Development Services Private Limited (` 5.00 crore) and HDFC Developers Limited (` 3.00 crore). We have also invested in non-convertible debentures issued by Credila Financial Services Private Limited (` 5.00 crore).

During Fiscal 2015, we sold 3,44,34,508 equity shares of ` 10 each of HDFC Standard Life Insurance Company Limited representing 1.73% of the total issued and paid-up share capital of HDFC Standard Life Insurance Company Limited.

Our shareholding (together with our nominees) in our key Subsidiaries and Associates, as of March 31, 2015 is as follows:

Entity % HDFC Developers Limited 100.0%

Entity % HDFC Investments Limited 100.0% HDFC Holdings Limited 100.0% HDFC Trustee Company Limited 100.0% HDFC Realty Limited 100.0% HDFC Property Ventures Limited 100.0% HDFC Sales Private Limited 100.0% HDFC Ventures Trustee Company Limited 100.0% Credila Financial Services Private Limited(1) 89.5% HDFC Venture Capital Limited 80.5% HDFC ERGO General Insurance Company Limited 73.6% HDFC Standard Life Insurance Company Limited 70.7% GRUH Finance Limited 58.6% HDFC Asset Management Company Limited 59.8% HDFC Bank Limited(2) 21.7%

Note:

(1) On a fully diluted basis including holding in convertible securities. (2) Inclusive of shareholding of HDFC Investments Limited and HDFC Holdings Limited.

Material developments after March 31, 2015

1. On August 14, 2015, our Company entered into an agreement with Standard Life (Mauritius Holdings) 2006 Limited (“Standard Life Mauritius”) for sale of 17,95,39,209 equity shares of ` 10 each of HDFC Standard Life Insurance Company Limited (“HDFC Life”), aggregating to 9% of the issued and paid-up share capital of HDFC Life, to Standard Life Mauritius at a price of ` 95 per equity share, subject to, amongst other things, receipt of requisite approvals and satisfaction of conditions precedent. Upon completion of the sale of equity shares of HDFC Life, our Company’s holding in HDFC Life will be 61.65% and that of Standard Life Mauritius will be 35%.

2. On October 1, 2015, our Company has informed the Stock Exchanges of the following:

a. Income from dividend for the quarter ended September 30, 2015 was ` 425 crore compared to ` 104 crore in the corresponding period of the previous year. This includes dividend of ` 315 crore from HDFC Bank Limited. Income from dividend for the half-year ended September 30, 2015 was ` 480 crore compared to ` 407 crore in the corresponding period of the previous year.

b. The profit on sale of investments for the quarter ended September 30, 2015 was ` 48 crore.

c. Our Company, under the loan assignment route sold loans amounting to ` 2,864 crore in the quarter ending September 30, 2015 to HDFC Bank Limited (compared to ` 844 crore during the corresponding quarter of the previous year). Loans sold in the preceding twelve months amounted to ` 12,969 crore.

Investors should note that the above figures are subject to limited review by the statutory auditors of our Company.

Other than as set forth herein above and the financial results for the quarter ended June 30, 2015, which are included in the section titled “Financial Statements” on page 201 of this Placement Document, there have been no material developments after March 31, 2015.

INDUSTRY OVERVIEW

All data in this section is derived from (i) websites of and publicly available documents from various sources, including but not limited to, the RBI and the NHB, the Ministry of Finance, Ministry of Housing and Urban Poverty Alleviation, (ii) reports from CRISIL Research, and (iii) The World Factbook. The data from CRISIL Research is subject to the disclaimer set out below. The data may have been re-classified by us for the purpose of presentation.

Industry websites and publications generally state that the information contained therein has been obtained from sources believed to be reliable but their accuracy and completeness are not guaranteed and their reliability cannot be assured. While we have exercised reasonable care in compiling and reproducing such official, industry, market and other data in this document, it has not been independently verified by us or any of our advisors, or any of the Global Co-ordinators and Book Running Lead Managers or any of their advisors, and should not be relied on as if it had been so verified. Industry sources and publications are prepared based on information as of specific dates and may no longer be current or reflect the current trend. Industry sources and publications may also base their information on estimates, forecasts and assumptions that may prove to be incorrect. Accordingly, investors should not place undue reliance on the information contained in this section.

CRISIL Disclaimer: CRISIL Research, a division of CRISIL Limited (“CRISIL”) has taken due care and caution in preparing this report (“Report”) based on the Information obtained by CRISIL from sources which it considers reliable (“Data”). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. This Report is not a recommendation to invest / disinvest in any company covered in the Report. CRISIL especially states that it has no liability whatsoever to the subscribers / users / transmitters / distributors of this Report. CRISIL Research operates independently of, and does not have access to information obtained by CRISIL’s Ratings Division / CRISIL Risk and Infrastructure Solutions Ltd (“CRIS”), which may, in their regular operations, obtain information of a confidential nature. The views expressed in this Report are that of CRISIL Research and not of CRISIL’s Ratings Division / CRIS. No part of this Report may be published / reproduced in any form without CRISIL’s prior written approval.

Overview of the Indian economy

GDP and disposable income

The Indian economy is one of the largest economies in the world, with a GDP on purchasing power parity basis of an estimated US$ 7.376 trillion for the Fiscal Year 2013-2014. (Source: The World Factbook available on https://www.cia.gov/library/publications/the-world-factbook/geos/in.html).

Despite an overall slowdown in India’s rate of GDP growth since 2011, per capita GDP in India has nevertheless grown from estimated US$5,100 in 2012 to an estimated US$5,900 for the year 2014. (Source: The World Factbook available on https://www.cia.gov/library/publications/the-world-factbook/geos/in.html). The increase in per capita income has created increasing wealth and positively affected disposable incomes. This has consequently had a significant investment multiplier effect on the economy leading to increasing consumerism and wealth creation and thus positively impacting savings.

Investors’ perceptions of India improved in early 2014, due to a reduction of the current account deficit and expectations of post-election economic reform, resulting in a surge of inbound capital flows and stabilization of the rupee. (Source: The World Factbook available on https://www.cia.gov/library/publications/the-world- factbook/geos/in.html). The real GDP growth as per the RBI was 6.1% in the fourth quarter of Fiscal 2015 against 5.3% for the same period in the previous year. (Source: Reserve Bank of India Bulletin – July 2015). A recovery in growth would essentially come from an improvement in the investment climate as a result of better governance, transparent, effective and efficient regulatory and legal regimes, improvement in technical efficiency, institutional improvements, improved labor mobility and other reforms. (Source: RBI’s Annual Report 2013-2014). The outlook for India’s long-term growth is moderately positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. High demand growth in the mortgage market in India is driven by improved affordability as a result of rising disposable income and tax incentives (interest and principal repayments deductible). As per the 2011 census, only 31.16% of the total Indian population is urban. The urban housing shortage is estimated at 1.878 crore units. Increasing urbanization has also resulted in a higher demand for housing, and has spurred an increase in mortgage lending, given that the key market for HFCs is urban areas. (Source: Ministry of Housing

& Urban Poverty Alleviation Annual Report 2012-13 available on mhupa.gov.in/pdf/annual- reports/Annual_Reprot_English_2012-13.pdf)

Demographics

India’s median population is below 27 years of age. (Source: The World Factbook available on https://www.cia.gov/library/publications/the-world-factbook/geos/in.html). The Indian housing finance market is largely driven by the aspirations of people in all income segments who desire to own a house early in their lives. The capacity of the lending institutions has grown over the years as the mortgage segment has proved to be promising and profitable and increasingly bankable. The market is growing on account of factors such as population migrating to urban centers, and demographic composition. (Source: NHB, Report on Trend and Progress of Housing in India 2014)

Indian housing finance industry

Overview

The Indian housing finance market has grown rapidly, with mortgage lending significantly contributing to the growth in housing construction and housing demand. Housing finance companies (“HFCs”) have been at the forefront; clocking a CAGR of approximately 26% in loan outstanding between 2009-2010 and 2014-2015 compared to the industry’s CAGR of 19-20% (computed as an aggregate of banks and HFCs). (Source: CRISIL Research, Housing Finance Report, July 2015).

Housing finance is the second largest segment after infrastructure for non-banking financial companies. Several HFCs have shifted focus towards secured lending post the global slowdown in 2008-2009 owing to high delinquencies in the unsecured loan portfolio during the slowdown. The shift in focus can be gauged from the fact that a large number of players started full-fledged housing finance divisions as a result of which loan outstanding by HFCs accelerated at about 30% CAGR during 2009-2010 to 2012-2013. As of November 2014, the total number of HFCs registered with NHB rose to 63 from 43 as of March 2009. The change in focus towards secured assets helped de-risk the book and resulted in continuous improvement in asset quality. However, the pace of growth moderated in 2013-2014 and 2014-2015, although it was still at healthy levels of 20-22% CAGR. This was because growth rate of mid- and small size HFC reduced as their base increased. (Source: CRISIL Research, Housing Finance Report, July 2015).

Outstanding home loans by banks and HFCs increased 18.9% year on year to ` 10,26,000 crore in 2014-2015. Demand for individual home loans rose despite high residential property prices during the year, especially in non-metro tier-II and tier-III cities. Rising disposable incomes, interest rate subventions and fiscal incentives on housing loans, along with more options in the affordable housing segment, has aided the robust offtake. (Source: CRISIL Research, Housing Finance Report, July 2015). Tax incentives on home loans, has increased from ` 1,50,000 to ` 2,00,000 in 2015. Increased tax incentives are likely to encourage individuals, especially the younger segment of the population, to invest in housing. (Source: Finance Bill, 2015 available on http://indiabudget.nic.in/bill.asp)

In contrast, owing to slowdown and rising delinquencies in the builders’ portfolio over 2010-2011 and 2014- 2015, financiers had become cautious in lending to this segment. During the period, the share of housing loans increased gradually from 69% to 73% as HFCs mainly focused on providing housing loans to individuals. (Source: CRISIL Research, Housing Finance Report, July 2015).

The following graph indicates the trend in outstanding housing finance loans from 2009-2010 till 2014-2015:

(Source: CRISIL Research, Housing Finance Report, July 2015).

Despite the strong growth in outstanding housing loans in India in recent years, India’s housing finance sector remains underpenetrated in comparison to other advanced economies, evidenced by its low mortgage-to-GDP ratio. As of March 2014, India’s mortgage-to-GDP ratio remained at approximately 8% which increased to 9% in 2014-2015.

The following graph illustrates the mortgage-to-GDP ratio in India from March 2007 to March 2018:

(Source: ICRA Research Services, Indian Mortgage Finance Market, Updated for H1, 2014-2015).

India’s mortgage-to-GDP ratio is significantly lower than the levels achieved in most of the advanced economies where the mortgage markets average roughly around 60% of GDP. Some advanced economies (for example, Denmark) have mortgage markets that are close to 100% of GDP, while others (such as Australia, New Zealand and the United States) average around 80%. (Source: NHB, Report on Trend and Progress of Housing in India 2013).

The following graph shows mortgage-to-GDP ratio for certain countries in the year 2014-2015:

(Source: CRISIL Research, Housing Finance Report, July 2015).

National Housing Bank

National Housing Bank (“NHB”) was established under an Act of Parliament (“NHB Act”) in 1988 to operate as a principal agency and statutory body to promote housing finance institutions and to provide financial and other support to such institutions. NHB is wholly-owned by the RBI. One of the prime objectives of the RBI is to establish and promote a sound and stable housing financial system in India. Under the provision of the NHB Act, NHB regulates HFCs conducting business in India.

Through its refinance schemes, NHB has made cumulative refinance disbursements (from its inception till June 30, 2014) of ` 1,204,84.79 crore. The following table and graph illustrate the cumulative disbursements of NHB, by breakdown of categories of recipient institutions, from inception up to June 30, 2014:

Amount % of Institutions (` Crore) Total Housing Finance 51,569.01 42.80 Companies

Scheduled 64,967.97 53.92 Commercial Banks Regional Rural 1,422.63 1.18 Banks Cooperative 2,525.18 2.10 Sector Total 1,204,84.79 100.00

(Source: NHB, Annual Report 2013-2014).

During the year 2013-2014, refinance disbursements reached a peak of ` 17,856.18 crore, recording an increase of 1.79% from ` 17,541.64 crore in the year 2012-2013.

The following table and graph sets out the refinance disbursements of NHB, by breakdown of categories of recipient institutions, in the year 2012-2013 and the year 2013-2014: (in ` Crore) Disbursements Institution 2013-2014 2012-2013 Housing Finance Companies 9,632.99 7,693.51 Scheduled Commercial Banks 7,942.72 9,459.33 Regional Rural Banks 280.47 388.80 Cooperative Sector 0.0 0.0 Total 17,856.18 17,541.64 (Source: NHB, Annual Report 2013-2014).

The following chart illustrates the breakdown of refinance disbursements by NHB, by categories of recipient institutions, in the year 2013-2014:

(Source: NHB, Annual Report 2013-2014).

Out of the total refinance disbursements by NHB of ` 17,856.18 crore in the year 2013-2014, approximately ` 7,689.97 crore were made for rural housing loans. The following table and graph illustrates the refinance disbursements of NHB for rural housings, by breakdown of categories of recipient institutions, in the year 2013- 2014:

Institution Amount % of Category (` Crore) Total Housing 5,966.11 77.58 Finance Companies Scheduled 1,443.39 18.77 Commercial Banks Regional 280.47 3.65 Rural Banks Total 7,689.97 100.00

(Source: NHB, Annual Report 2013-2014).

Housing finance companies

The Indian financial system includes banks and non-bank financial companies (“NBFCs”). NBFCs over the years have played a vital role in the Indian economy. They have been at the forefront of catering to the financial needs of the un-bankable masses in the rural and semi-urban areas, through their strong linkage to these segments. In respect of the housing finance market in India, the scheduled commercial banks hold 62% of the share in this market as of 2014-2015. The higher share of banks can be attributed to extensive network, broad customer base and access to stable low-cost funds. Over the past six years, however, HFCs, as a category of

NBFCs, have steadily gained market share from 29% in 2009-2010 to 38% in 2014-2015 and are one of the major players in the mortgage market in India. HFCs are specialized lending institutions for housing registered with the NHB. Despite banks showing healthy growth in their lending portfolio, HFCs are able to gain market share due to better access to customers in non metro cities, their strong origination skills, focused approach, niche marketing, customer service orientation and diverse channels of sourcing business. Moreover, with HFCs recently accessing non-bank sources for funds (along with easing of bond yields) their competitiveness on ‘cost of funds’ should improve. (Source: CRISIL Research, Housing Finance Report, July 2015).

As of August 17, 2015, the total number of HFCs registered with National Housing Board rose to 66. (Source: http://www.nhb.org.in/Regulation/Registration.php accessed on August 17, 2015) As of March 31, 2014, HFCs had a network of 2,510 branches and other offices spread across the country.(Source: NHB, Report on Trend and Progress of Housing in India 2014).

Product segments

Generally, HFCs’ housing loans can be categorized into two segments: retail housing loans and non-retail housing loans. Retail housing loans represent housing loans to individuals, which is the focus of HFC. Non- retail housing loans include construction finance, corporate loans, loan against property and lease rental discounting. CRISIL Research estimates the retail segment to have outperformed the non-retail segment in terms of growth, with the proportion of retail segment increasing from 69% in the year 2010-2011 to 73% by the year 2014-2015.

The following graph shows the composition of housing loans of HFCs from the year 2010-2011 to the year 2014-2015:

(Source: CRISIL Research, Housing Finance Report, July 2015).

Share of HFCs in housing finance market increasing gradually

HFCs, due to better access to customers in non-metro cities, saw their retail outstanding grow 20.5% y-o-y in 2014-15. By contrast, banks' advances rose at a stable 18% y-o-y owing to rising focus on the retail segment, as corporate investments stayed dormant.

The banks, though, retain a lion's share of the loan assets (62% as of 2014-15). The higher share of banks can be attributed to their extensive network, broad customer base and access to stable low-cost funds. However, the share of HFCs has increased steadily from 29% to 38% over the past 6 years. HFCs have been able to corner market share because of their strong origination ability, focused approach, creating a niche in catering to a particular category of customers, relatively superior customer service and diverse channels of sourcing business.

The share of HFCs in the total retail housing loans portfolio in India has been increasing over the last few years. The following graph sets out the market share of HFCs’ retail housing loans from the year 2009-2010 to the year

2014-2015:

(Source: CRISIL Research, Housing Finance Report, July 2015).

Among the retail housing loans portfolio in the year 2013-2014, approximately 74% of the loans were for construction or buying new houses, 2% were for upgrades including repairs of existing houses, and the remaining 24% were for acquisition of old or existing houses (resale transactions). The data demonstrates that new assets creation were the main activity financed by housing loans disbursed by HFCs. The following table sets out the disbursements of housing loans by HFCs, by purposes of the housing loans, for the year 2011-2012 to the year 2013-2014:

(Source: NHB, Report on Trend and Progress of Housing in India 2014).

Out of the total housing loan disbursements of ` 1,04,057 crore in the year 2013-2014, approximately ` 2,817 crore were disbursed towards individual loan up to ` 500,000, which contributed to 2.71% of the total.

The following table sets out the breakdown of small ticket size loans by size of loans and by monthly income of borrowers in the year 2013-2014:

Disbursements of housing loans by HFCs to individuals in 2013-2014, as per income category (Amounts in ` crore) Income < ` 5,000 per Income ` 5,001 to Income > ` 10,000 Total month 10,000 per month per month Size of Amount No. Amount No. Amount No. Amount No. Loan Up to ` 8 1,196 179 22,662 904 63,493 1,092 87,351 300,000 > ` 300,000 1 116 28 1,034 1,696 50,898 1,725 52,048 and up to ` 500,000 Total 10 1,312 207 23,696 2,600 1,14,391 2,817 1,39,399 (Source: NHB, Report on Trend and Progress of Housing in India 2014).

Geographic segments

Tier-I cities

In the recent years, slower economic growth along with high costs (due to rising inflation, home loan rates and property prices) have impacted the demand for real estate in India between 2012-13 and 2014-15, particularly in tier-1 cities. However, demand is set to improve, with aggregate absorptions (new home sales) in the top cities, bolstered by rising disposable incomes, interest rate subventions and fiscal incentives on housing loans, along with more options in the affordable housing segment. Demand is also expected to pick-up as a likely decrease in CPI inflation on account of lower food inflation and revival in the economy will improve affordability in tier-I and metro cities.

(Source: CRISIL Research, Housing Finance Report, July 2015).

Property sales in tier-1 cities have witnessed a slowdown in the recent years, however demand is set to improve with aggregate sales in the top cities such as Ahmedabad, Delhi- National Capital Region (NCR), Bengaluru, Chandigarh, Chennai, Hyderabad, Kolkata, Kochi, Mumbai-MMR, Pune and Trichy being likely to increase in 2015 and 2016 vis-a-vis a decline in 2014.

The following graph illustrates the trend in property sales from the calendar year 2010 to the calendar year

2016:

Note: Data for 2016 is projected

(Source: CRISIL Research, Housing Finance Report, July 2015).

Tier-II and Tier-III cities

Despite increase in residential property prices in recent years, demand for individual home loans remained robust in tier-II and tier-III cities. Employment opportunities, affordable property prices and availability of finance have been encouraging an increasing number of people to migrate from smaller towns and rural areas to tier-II and tier-III cities.

With strong presence in tier-II and tier-III cities and superior client servicing resulting in quicker turnaround time, HFCs are expected to witness faster growth than banks in these segments. HFCs have shown strong growth in disbursements in non-metro cities, including Bhopal, Indore, Lucknow, Kanpur, Baroda, Surat, Vijaywada and Coimbatore. Strong growth in these segments is expected to contribute to growth in HFCs’ disbursements in the near future.

The following graph illustrates the growth trend in HFCs’ disbursements from the year 2011-2012 to the year 2016-2017:

(Source: CRISIL Research, Housing Finance Report, July 2015).

Profitability

Key financial indicators

The key financial indicators of all HFCs as of March 31, 2012, 2013 and 2014 are set out below: (` Crore) Growth Growth Particulars 2012 2013 2014 % % Paid up Capital 5,403 5,541 2.55 6,014 8.54 Free Reserves 34,658 48,019 38.55 55,179 14.91 Net Owned Fund (NOF) 37,103 51,027 37.53 51,785 1.49 Public Deposits 35,476 44,179 24.53 51,981 17.66 Outstanding Housing Loans 2,22,225 2,90,427 30.69 3,47,858 19.77 Outstanding Total Loans 3,01,681 3,90,217 29.35 4,63,942 18.89 GNPA as Percentage of Total Loans 1.23 1.11 - 1.14 - NNPA as Percentage of Total Loans 0.48 0.45 - 0.59 - (Source: NHB, Report on Trend and Progress of Housing in India 2014).

Assets profile

Assets profile of HFCs mainly comprises of housing loans, other loans and advances and investments. As of March 31, 2014, total assets of all HFCs amounted to ` 4,98,170 crore. In the year 2013-2014, housing loans contributed around 70% of the total assets portfolio of HFCs, with an annual growth rate of 19% as on March 31, 2014. (Source: NHB, Report on Trend and Progress of Housing in India 2014).

The following table sets out the assets profiles of HFCs, by type of assets, as of March 31, 2012, 2013 and 2014: (` Crore) Particulars 2012 2013 Growth % 2014 Growth % Housing Loans 2,22,225 2,90,427 30.69 3,47,858 19.77 Other Loans & Advances 79,456 99,790 25.59 1,16,084 16.33

Investments 26,397 27,176 2.95 34,228 25.95

100

Total 3,280,780 4,173,930 27.22 4,98,170 19.35 (Source: NHB, Report on Trend and Progress of Housing in India 2014).

CRISIL Research expects the net profit margin for HFCs to be in the range of 1.8% to 2.0% in the near future, as the decline in the cost of funds will more than offset any fall in yields. The following table sets forth the profitability of HFCs (actual, expected and projected) for the year 2012-2013 to the year 2016-2017:

Note: Data for the year 2014-2015 is estimated, and data for 2015-2016 and the year 2016-2017 is projected. (Source: CRISIL Research, Housing Finance Report, July 2015).

Additionally, for large HFCs, the profitability (actual, expected and projected) for the period from 2012-2013 till 2016-2017 is as below:

(Source: CRISIL Research, Housing Finance Report, July 2015).

Capital adequacy and return on assets

The financial profile of HFCs remains sound, marked by good capitalization and profitability. The capital adequacy of major HFCs is well above the regulatory requirement of 12%. This along with healthy return on asset ratios is expected to support HFC’s business expansion in the long term. (Source: CRISIL Research, Housing Finance Report, July 2015).

As seen in the chart below, capital adequacy of major HFCs is well above the regulatory mandate. This along with healthy return on asset ratios is expected to support HFCs’ business expansion in the long term.

101

(Source: CRISIL Research, Housing Finance Report, July 2015).

Asset quality

As demand for home loans largely comes from first-time buyers, asset quality in this segment has remained low historically. In 2014-2015, though, the non-performing assets (NPAs) of financiers improved because of adequate appraisal systems and effective recovery mechanisms, as well as better availability of information (CIBIL data). NPAs are likely to decline marginally in 2015-16 and 2016-17 owing to economic recovery, lower interest rates, better control, system checks, follow-ups and the expected improvement in job security. Segmental analysis indicates that the gross NPAs in the non-individual portfolio are higher than in the individual portfolio. The former is relatively lumpy and is vulnerable to stress in the current economic environment.

The following graph illustrates the trend of gross NPAs (estimated and projected) of HFCs from the year 2011- 2012 to the year 2016-2017:

(Source: CRISIL Research, Housing Finance Report, July 2015)

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BUSINESS

OVERVIEW

We were incorporated as a public limited company on October 17, 1977.

HDFC is the largest housing finance company in India in terms of market share based solely on housing loans. (Source: CRISIL Research, Housing Finance Report, July 2015). As of March 31, 2015, our Company’s outstanding loan book amounted to ` 2,28,180.86 crore and total assets were ` 2,53,951.66 crore. Our principal business is providing finance to individuals, corporates, developers and co-operative societies for the purchase, construction, development and repair of houses, apartments and commercial property in India.

As of March 31, 2015, our distribution network comprised 378 outlets, which include 103 offices of our wholly owned Subsidiary, HDFC Sales Private Limited.

As of March 31, 2015, our capital adequacy ratio after reducing the investment in HDFC Bank from Tier 1 Capital, was 16.11%, as against a minimum regulatory requirement of 12% and our Tier I capital was 12.47%, as against a minimum requirement of 6%.

STRENGTHS

Our strengths as a provider of housing finance are:

Our corporate strengths are:

STRATEGY

Our primary business strategies are to:

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 grow through diversification by leveraging our client base.

Our primary business objectives are to:

 minimise gross non-performing assets: Our gross non-performing loans stood at 0.67% of our loan portfolio as of March 31, 2015, compared to 0.69% as of March 31, 2014; and

 minimise cost to income ratio: for Fiscal 2015 our cost to income ratio stood at 7.6%, as against 7.9% in Fiscal 2014.

ORGANIZATIONAL STRUCTURE

The following diagram sets forth an overview of our organizational structure:

LOAN PRODUCTS

We lend to individuals, members of co-operative housing societies and companies to finance the construction, repair, development or purchase of residential and non-residential premises in India. We constantly endeavour to improve and expand our existing product portfolio. Our products are designed to satisfy the diverse needs of our customers. We have introduced various innovative lending products at affordable rates of interest to serve such diverse purposes. Our principal products include:

 home loans to individuals to finance the purchase of property or land, for construction and for extension, repair or renovation of property;

 loans against the value and security of a property for education, medical costs and other approved purposes;

 non-residential premises loans provided to professionals to facilitate purchase or construction of their office premises and renovation of their existing office premises;

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 corporate loans, including loans provided to approved corporates for financing the purchase or construction of staff accommodation and office premises, and line of credit facilities under which we provide funds to corporates for onward lending to their employees; and

 developer loans provided to approved developers to finance the construction of housing projects and loans to property owners against rent receivables.

The total loans outstanding for various customer categories and as a percentage of total outstanding loans across the following categories of customers as of March 31, 2013, 2014 and 2015, were as follows:

` Crore, except percentages As of March 31, 2013 % 2014 % 2015 % Individuals (1) 1,11,320.65 65.5% 1,33,281.08 67.6% 1,55,689.71 68.2% Corporate Bodies 56,956.65 33.5% 61,624.77 31.3% 69,144.76 30.3% Others 1,768.87 1.0% 2,194.50 1.1% 3,346.39 1.5% Total 1,70,046.17 100.0% 1,97,100.35 100.0% 2,28,180.86 100.0% (1): If the individual loans sold were to be included, individual loans would comprise 66.0% of total outstanding loans as of March 31, 2013, 70.0% of total outstanding loans as of March 31, 2014 and 71.0% of total outstanding loans as of March 31, 2015.

For our individual loan portfolio, the average loan size is ` 0.23 crore, average loan-to-value is 66.0% (at origination) and average loan tenure is 13 years as of March 31, 2015.

Individual loans

We offer loans to acquire or construct residential accommodation in India. The principal eligibility criterion is the borrower’s repayment capacity. Loans are generally repaid in equated monthly instalments (“EMIs”) over a period of 5 to 20 years. The maximum loan size for loans above ` 0.20 crore and upto ` 0.75 crore is 80.0% of the cost of the property, for loans above ` 0.75 crore is 75.0% of the cost of the property and for loans below ` 0.20 crore is 90.0% of the cost of the property, and is based on our evaluation of the repayment capacity of the customer.The security for such loans is equitable mortgage over the property to be financed and/or such other collateral security as may be necessary.

We offer an option to individuals to choose between a fixed rate of interest or a variable rate of interest. We also offer customers a combined option of a part fixed, part variable rate of interest to allow them to hedge against unexpected interest rate movements.

In the case of fixed rate housing loans, the rate of interest remains fixed for the entire tenor of the housing loan. In the case of the variable rate loans, the interest rate is linked to our Retail Prime Lending Rate (“RPLR”) and the rate on the loan is reviewed every three months from the date of the first disbursement of the loan. The term of any loan varies according to the purpose of the loan and most loans are for a term of 15 to 20 years, or until the retirement age of the borrower, whichever is earlier.

Borrowers are typically required to pay a processing fee of up to 1.0% of the total amount of the loan prior to the disbursement.

As security for the loans provided by us, we require borrowers to grant us a charge over the property and deposit the title deeds to the property with us. Borrowers may also be required to obtain a guarantee from a person of good financial standing acceptable to us. We may also require the borrower to assign collateral in the form of insurance policies or bonds. These decisions are based on our internal credit rating of the borrower.

We, as a part of our corporate marketing initiative, advance housing loans for the purchase, construction, extension, repair or renovation of property to employees of approved corporates. These loans on preferential terms and conditions and the employees of the approved corporates enjoy benefits such as guarantee waiver and real estate counselling.

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The disbursement of individual home loans has increased in recent years largely due to increased marketing efforts, increased demand for home loans due to affordable interest rate levels in India, stable property prices, increased fiscal benefits available to home-owners, higher disposable incomes and increased urbanisation.

Of the total loans outstanding as of March 31, 2015, individual loans comprised 68.2%. If individual loans outstanding in respect of loans sold/assigned, were to be included, individual loans would comprise 71% of the total outstanding loans.

Other individual loan products

Apart from home loans, we offer a number of other lending products to individuals:

 Home Improvement Loans: Loans for internal and external repairs, additions and other structural improvements of homes;

 Home Extension Loans: Loans to finance additions and extensions in the form of an additional room, floor and any other extensions to homes;

 Home Equity / Top-Up Loans: Loans advanced against the value and security of the customer’s existing property for non-housing purposes such as education, medical costs, etc.;

 Non-Residential Premises Loans: Loans provided to professionals such as doctors, chartered accountants and other such professionals to facilitate purchase or construction of their own office premises and/or to renovate their existing office premises;

 Land Purchase Loans: Loans to acquire land for construction of a residential unit; and

 We also grant loans to NRIs and persons of Indian origin for the purchase or construction of properties anywhere in India.

Repayment terms

We offer flexible repayment schemes to structure customers’ repayment terms in accordance with their unique needs. These include:

 Step Up Repayment Facility: In this facility, the repayment schedule is linked to customers’ expected growth in income and repayment is accelerated proportionately with the assumed increase in income; and

 Flexible Loan Instalment Plan: In this facility, the repayment schedule is in tranches with an initial higher instalment for a fixed term followed by lower instalments for the balance of the term.

Non-individual loans

 Corporate loans

We offer loans and line of credit facilities to approved corporates and loans to housing boards and co- operative housing societies.

As part of our portfolio, we also provide loans against rent receivables.

 Developer loans

We offer loans to approved developers for the construction of housing projects and loans to property owners which are secured by rent receivables from their tenants.

Developer loans are typically for a term of two to four years. We generally require security by way of a mortgage over the property, a personal guarantee in respect of amounts due under the loan and such other security as we may require.

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Sale of loans

During Fiscal 2015, we sold loans amounting to ` 8,249.21 crore to HDFC Bank under the loan assignment route, which qualified as priority sector advances for HDFC Bank. The amount of loans that was sold under the mortgage backed securities (“MBS”) and loan assignment route as of March 31, 2015 stood at ` 25,152.10 crore. We continue to service these loans. The residual income on loans sold is recognised at the time of actual collections, (i.e. over the life of the underlying loans) and not upfront on a net present value basis. Loan pools which were rated by external rating agencies carry a rating indicating the highest degree of safety.

MARKETING AND DISTRIBUTION

Offices

As of March 31, 2015, our business is conducted through our network of 378 offices across India, including 103 outlets of our wholly owned Subsidiary, HDFC Sales Private Limited (“HSPL”).

The following map shows our distribution network across India:

We have overseas offices in London, Dubai and Singapore. The Dubai office reaches out to its customers across West Asia thorough its service associates in Kuwait, Qatar, Oman, Abu Dhabi and Saudi Arabia.

Distribution

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Our distribution channels which include our branches, HSPL, HDFC Bank and third party direct selling associates (“DSAs”) play an important role in sourcing home loans. 82.0% of our mortgages are sourced through ourselves or our affiliates. We also have distribution tie-ups with banks such as IndusInd Bank, RBL Bank and Lakshmi Vilas Bank as well as with Sundaram Finance Limited, IIFL Limited and Cholamandalam Distribution Services Limited.

The role of our distribution channels is limited only to marketing of loan products. We retain control over the credit, legal and technical appraisal process, thereby ensuring that the quality of borrowers to whom loans are distributed is not compromised in any way and is consistent across all distribution channels.

Cross-selling

Our subsidiary and associate companies have strong synergies with us. This enables us to provide property related value added services and cross sell products and services under the ‘HDFC’ brand.

HDFC Realty Limited, a property advisory company, is present in over 20 locations in India and helps individuals and corporate institutions to buy, sell or lease real estate. HDFCRED.com, an on-line real estate search engine assists potential home buyers in identifying properties and provides leads for potential home loan customers.

Our Company and HSPL are Composite Corporate Agents for HDFC Standard Life Insurance Company Limited.

We have entered into an arrangement with HDFC Bank whereby HDFC Bank sources loans for us. The arrangement seeks to leverage the strengths of the two organisations in terms of product acceptance, operational efficiencies and credit expertise on the one hand and sales origination and distribution on the other. For further details of our Subsidiaries and Associates, please refer to “– Key Subsidiaries and Associates — HDFC Bank Limited” on page 115 of this Placement Document.

LENDING

Loan book

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Our home loans have continued to grow as a result of increased demand for home loans, more affordable interest rates, increased fiscal benefits available to home-owners, higher disposable incomes and increased urbanisation. As of March 31, 2015, our loan book increased to ` 2,28,180.86 crore from ` 1,97,100.35 crore as of March 31, 2014, representing a growth of 16%. The growth in the loan book would have been 20% if the loans sold during the preceding twelve months were to be included in the loan book.

We also invest in debentures, and corporate deposits towards financing real estate projects. As of March 31, 2015 our outstanding investments in debentures and corporate deposits for financing housing and real estate projects amounted to ` 604.77 crore as against ` 547.93 crore as of March 31, 2014.

Our loan portfolio is diversified in terms of market segmentation. As of March 31, 2015, individual loans, inclusive of loans sold, constituted 71%, and non-individual loans constituted 29% of our outstanding loans.

Interest rates

An important component of our asset and liability management policy is our management of interest rate risk, which is the relationship between market interest rates and interest rates on our interest-earning assets and interest-bearing liabilities. For details of our risk management policy, please refer to “– Risk Management — Financial Risk Management” on page 112 of this Placement Document.

Currently, the housing finance industry in India is principally based on floating rate lending. The interest rates on our individual floating rate loans are benchmarked to our RPLR and on non-individual loans to our CPLR. As of March 31, 2015, 86% of the assets and 73% of the liabilities were on a floating rate basis.

Size and concentration of loans

NHB Guidelines restrict HFCs from making loans to a single borrower or a group of borrowers in excess of 15.0% and 25.0%, respectively, of an HFC’s total net worth. As of March 31, 2015, our single largest borrower accounted for ` 3,134.94 crore or 10.12% of our net worth.

As of March 31, 2015, our 10 largest performing loans accounted for ` 15,305.59 crore or 6.7% of our outstanding loans.

Collateral

Most of the loans provided by us are secured by an equitable mortgage of the property being financed. Loans granted by us could also be secured or partly secured by pledges of shares, units or other securities, assignments of life insurance policies, hypothecation of assets, bank guarantees, company or personal guarantees, negative liens or assignments of hire purchase receivables. There could also be loans provided which are accompanied by undertakings to create a security.

The maximum loan size for loans above ` 0.20 crore is 80.0% of the cost of the property and for loans below ` 0.20 crore, is 90.0% of the cost of the property, and is based on our evaluation of the repayment capacity of the customer. The security for such loans is equitable mortgage over the property to be financed and/or such other collateral security as may be necessary.

We use in-house valuers to value properties to be given as security and we consider these valuations to be more conservative than market valuations as the valuation is typically the lesser of the transaction value and the market value of the property.

Credit policy

Our credit policy is central to all our lending activities and functions. Our standard credit norms and procedures are reviewed periodically and are applicable to all segments of our business.

The credit approval process is initiated at the office where the initial application is made. Each loan approval passes through various levels of assessment from the time a customer requests the loan until the time the loan is disbursed.

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Our loan approval process is decentralised, with varying approval limits. Loan proposals are referred to Committtees of management, which in certain cases include some of our Directors.

Key components of our credit appraisal process

 Information Acquisition: Gathering authentic and reliable customer information is essential for our credit appraisal processes

 Carefully Designed Application Form: The application form captures the applicant’s income and stability factors, such as the employment and dependency details, age and educational status and other financial obligations of the applicant, amongst other details.

 Standard Document List: The standard documentation to be provided by the applicant includes evidence of identification, income, employment, asset holdings and details of the property to be financed.

 Customer Interface: A personal meeting/telephone discussion is carried out with the customer. This helps in arriving at the credit decision and aids in satisfying any queries.

 Customer Credit Verifications: We ensure that employer and residence field credit investigations are executed to verify that the information supplied by the customer is authentic.

 Credit Bureau Report: Credit Information Bureau India Limited (“CIBIL”) is a repository of information which contains credit histories of customers. CIBIL provides this information to its members in the form of credit information reports.

Credit appraisal

Post documentation and information gathering, the process of credit appraisal begins. Each loan goes through four levels of assessment – the appraiser at level one, the double checker at level two and two approvers at levels three and four. These levels of assessment are conducted by officers with a stipulated level of experience, with clear financial delegations at each level.

The loan processing software has in-built warnings and validations with respect to our credit policy, internal process and government regulations.

Disbursement diligence

 Legal Due Diligence: A specialised in-house team scrutinises the transaction-related documents, checking various legal issues such as the authenticity of the ownership papers of the seller and compliance with statutory approvals laid down by the relevant authorities. This is an important aspect as, in India, land ownership falls under the purview of state legislation and laws differ from state to state.

 Technical Due Diligence: A specialised in-house team assesses the property and confirms that the property selected conforms to the appropriate building plans and standards.

 Disbursement: The handing over of the cheque of the approved amount to the customer occurs only if the required legal and technical diligence reports are satisfactory.

Asset classification

With effect from June 10, 2010, the NHB notified The Housing Finance Companies (NHB) Directions, 2010, with respect to prudential norms for recognising NPAs. In accordance with the revised norms, NPAs are recognised as such when an asset is 90 days overdue. The classification and provisioning requirements are as follows:

Asset Classification Guidelines Period of Default Provisioning Required (in %) Standard Assets <90 days 0.40%

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Asset Classification Guidelines Period of Default Provisioning Required (in %) <90 days 0.75%* <90 days 1.00%** Sub-standard Assets 90 days to one year 15.00% Doubtful Assets One to two years 25.00% Two years to three years 40.00% More than three years 100.00% Loss Assets - 100.00% * with respect to commercial real estate – residential housing ** with respect to commercial real estate – other than residential housing

Our gross non-performing loans as of March 31, 2015 amounted to ` 1,542.36 crore, which is equivalent to 0.67% of the portfolio, comprising loans as well as debentures issued by corporates and corporate deposits placed for financing their real estate projects.

In terms of prudential norms as stipulated by NHB, we are required to carry a provision of ` 1,703.37 crore in respect of non-performing assets and a general provision on outstanding standard non-housing loans. As a matter of prudence, however, over the years, we have been transferring additional amounts to the provision for contingencies account. The balance in the provision for contingencies account as of March 31, 2015 stood at ` 2,033.89 crore, which is equivalent to 0.89% of the portfolio. Our Company carries an additional provision of ` 330.52 crore over the regulatory requirements.

The following table sets forth the details of our gross non-performing loans as a percentage of our portfolio and the provision for contingencies as a percentage of our portfolio:

As of March 31, Gross non-performing loans as a percentage of the portfolio (in %) 2015 0.67% 2014 0.69% 2013 0.70%

There are no loans classified as loss assets. For Fiscal 2015 the net-write off was ` 28 crore. Since inception, we have written off loans (net of subsequent recovery) aggregating to ` 224 crore.

FUNDING

Overview

We have expanded our sources of funds in order to reduce our funding costs, protect interest margins and maintain a diverse funding portfolio that will enable us to achieve funding stability and liquidity.

As of March 31, 2015, 82% of our liabilities comprised borrowings. Our sources of funding comprise debentures and securities, which constitute 56%, term loans, which constitute 12% and deposits, which account for 32% of our borrowings.

Sources of borrowings

Subordinated Debt

As of March 31, 2015, our outstanding subordinated debt stood at ` 6,475.00 crore. The debt is subordinated to our present and future senior indebtedness. Based on the balance term to maturity, as of March 31, 2015, ` 5,495.00 crore of the book value of subordinated debt is considered as Tier II under the guidelines issued by the NHB for the purpose of capital adequacy computation.

Debentures and securities

As of March 31, 2015, outstanding debentures and securities amounted to ` 1,16,316.75 crore as against ` 94,443.20 crore as of March 31, 2014. Our Company’s issuances of non-convertible debentures have been listed

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on the Wholesale Debt Market segment of either the NSE or BSE, or the Wholesale Debt Market segments of both the Stock Exchanges. These issuances of non-convertible debentures have been assigned the highest rating of ‘CRISIL AAA/Stable’ and ‘ICRA AAA/ Stable’.

As of March 31, 2015, we have outstanding zero coupon debentures amounting to ` 6,440.00 crore.

Deposit products

We offer a range of savings products to individuals, associations of persons, co-operatives, educational and charitable trusts and corporate bodies. The savings products carry competitive rates of interest and have different features to suit investor requirements. In 2013, 2014 and 2015, our deposits have been rated ‘CRISIL AAA/Stable’ and ‘ICRA AAA/Stable’ by CRISIL and ICRA respectively. We accept deposits in accordance with the guidelines stipulated in the NHB Directions. As of March 31, 2015, we had deposits outstanding of ` 66,705.96 crore.

Term loans from banks and institutions and refinance from NHB

As of March 31, 2015, the total loans outstanding from banks, financial institutions and NHB amounted to ` 26,194.00 crore as compared to ` 32,952.00 crore as of March 31, 2014.

Foreign currency borrowings

As of March 31, 2015, the outstanding foreign currency borrowings constitute borrowings from FCNR (B) loans from commercial banks amounting US$ 660.81 million, Asian Development Bank under the Housing Finance Facility Project amounting US$ 52.20 million and external commercial borrowing (“ECB”) under RBI’s Low Cost Affordable Housing Scheme amounting US$ 300 million.

Rating

Both CRISIL and ICRA, the leading rating agencies in India, have assigned an “AAA” rating for our deposits, bonds and debentures. This rating represents the highest safety grade with respect to timely repayment of principal and interest.

RISK MANAGEMENT

As a financial intermediary, we are exposed to risks that are particular to our lending business and the environment in which we operate. Our goal in risk management is to ensure that we understand; measure and monitor the various risks that arise and that we adhere strictly to the policies and procedures which are established to address these risks.

As a financial intermediary, we are primarily exposed to liquidity risk, interest rate risk, credit risk, operational risk and legal risk.

Financial risk management

The Financial Risk Management and Hedging Policy as approved by the Audit Committee sets limits for exposures on currency and interest rates. We manage our interest rate and currency risk in accordance with the guidelines prescribed. The risk management strategy is to protect against foreign exchange risk, whilst at the same time exploring any opportunities for an upside, so as to keep the maximum all-in cost on the borrowing in line with or lower than the cost of a borrowing in the domestic market for a similar maturity.

We have to manage various risks associated with the lending business. These risks include credit risk, liquidity risk, foreign exchange risk and interest rate risk. We manage credit risk through stringent credit norms. Liquidity risk and interest rate risks arising out of maturity mismatch of assets and liabilities are managed through regular monitoring of the maturity profiles.

We have from time to time entered into risk management arrangements in order to hedge its exposure to foreign exchange and interest rate risks. The currency risk on the borrowings is actively hedged through a combination of dollar denominated assets, long term forward contracts, principal only swaps and currency options.

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As of March 31, 2015, we had foreign currency borrowings of US$ 1,013 million equivalents. The entire principal on the foreign currency borrowings has been fully hedged through the above-mentioned instruments. Hence as of March 31, 2015, our foreign currency exposure on borrowings net of risk management arrangements is nil.

In addition, we have entered into cross currency swaps of a notional amount of US$ 408.69 million equivalents wherein we have converted our rupee liabilities into foreign currency liabilities and the interest rate is linked to benchmarks of the respective currencies. As of March 31, 2015, the total net foreign currency exposure on cross currency swaps stood at US$ 331.96 million. As of March 31, 2015, the open position stood at 0.99% of our total borrowings.

As a part of asset liability management and on account of the predominance of our Adjustable Rate Home Loan product as well as to reduce the overall cost of borrowings, we have entered into interest rate swaps wherein we have converted our fixed rate rupee liabilities of a notional amount of ` 15,240.00 crore as of March 31, 2015 for varying maturities into floating rate liabilities linked to various benchmarks. Further, interest rate swaps on a notional amount of US$ 330 million equivalents are outstanding and have been undertaken to hedge the interest rate risk on the foreign currency borrowings.

Revaluation of foreign currency assets and liabilities

Cross currency interest rate swaps are recorded at the closing rate.

The net loss/gain on translation of long-term monetary assets and liabilities in foreign currencies is amortised over the maturity period of monetary assets and liabilities. The unamortised exchange difference is carried in the Balance Sheet as ‘foreign currency monetary item translation difference account’. The net loss/gain on translation of short-term monetary assets and liabilities in foreign currencies is recorded in the Statement of Profit and Loss.

Asset-liability management (“ALM”)

Under Schedule III of the Companies Act, 2013, the classification of assets and liabilities into current and non- current is based on their contracted maturities. However, the estimates based on past trends in respect of prepayments of loans, renewals of liabilities and liquid investments, which are in accordance with the ALM guidelines issued by NHB, have not been taken into consideration while classifying the assets and liabilities under Schedule III.

Our ALM position is based on maturity buckets as per guidelines issued by NHB. In computing the information, certain estimates, assumptions and adjustments have been made by the management.

The ALM position as of March 31, 2015 is as under:

As of March 31, 2015, assets and liabilities with maturity up to 1 year amounted to ` 64,824.64 crore and ` 62,993.85 crore respectively. Asset and liabilities with maturity of between two years and five years amounted to ` 1,22,054.75 crore and ` 1,18,590.42 crore respectively and assets and liabilities with maturity beyond 5 years amounted to ` 67,072.27 crore and ` 72,367.39 crore respectively.

Our loan book is predominantly floating rates whereas liabilities, especially deposits and non-convertible debentures are fixed rates. In normal economic conditions, the fixed rate liabilities are converted into floating rate denominated liabilities by way of interest rate swaps. However, during the Fiscal 2015, due to inflationary conditions and an uncertain economic environment, short term rates remained higher than the long term rates throughout the year. This resulted in the cost of floating rate liabilities post the interest rate swap being higher

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than fixed rate liabilities. Hence, we did not convert a part of our liabilities into floating rate basis to avoid negative carry. We monitor money market conditions and shall enter into interest rate swaps at an appropriate time to minimise the interest rate gap.

As of March 31, 2015, 86% of the assets and 73% of the liabilities were on a floating rate basis.

Further, we have a Fixed Rate Home Loan Scheme and have kept some liabilities on a fixed rate basis to match out the expected disbursals under the fixed rate product.

Operational risk

Operational risk can result from a variety of factors, including the failure to obtain proper internal authorisations, improperly documented transactions, failure of operational and information security procedures, computer systems, software or equipment, fraud, inadequate training and employee errors. We attempt to mitigate operational risk by maintaining a comprehensive system of internal controls, establishing systems and procedures to monitor transactions, maintaining key back-up procedures, undertaking regular contingency planning and providing employees with continuous training.

Legal risk

The uncertainty of enforcement of the obligations of our customers and counterparties, including our ability to foreclose on collateral, creates legal risk. Changes in law and regulation could adversely affect our operations. We seek to minimise legal risk by using stringent legal documentation, employing procedures designed to ensure that transactions are properly authorised and consulting internal and external legal advisers.

INFORMATION TECHNOLOGY

Our investments in technology have always been dictated by value enhancements for customers. Most of our systems have been developed in-house and all of our offices are electronically inter-connected. Technology has helped us reduce cycle time and has enabled the organisation to enhance customer satisfaction.

Our website, www.hdfc.com, offers a number of interactive features and email based services.

The website offers information on our products and services, including interactive tools such as a monthly instalment calculator and a deposit calculator. Through the website, we provide customers with an option of applying for housing loans on-line. The number of applications received for online loans, particularly from NRIs, has been encouraging.

An investor help desk has been incorporated into the website providing relevant information regarding us, including responses to frequently asked questions by investors. An up-to-date corporate profile has also been made available to investors and lenders on the website. In order to reach out and connect more effectively with customers, our Company embarked on a number of digital initiatives including a revamped website, development of a mobile application, introduction of a ‘live chat’ with non-resident Indian customers as well as building a stronger presence on various social media platforms.

EMPLOYEES

As of March 31, 2015, we had 2,081 full-time employees.

Our Company recognises that training and continuous upgrading of skill sets are essential to ensure a high calibre workforce. New recruits participate in an induction programme at the Centre for Housing Finance, which is our Company’s training centre in Lonavla. Other in-house training programmes are conducted on subjects like Know Your Customer, Credit Fraud Risk and Mitigation, Disbursement Processes, Rural Housing and Appraisal Techniques for Customers from the Unorganised Sector. Training is also imparted in specialised fields of legal and credit risk management. In addition, staff members are nominated for a variety of external training programmes in India and overseas.

Total assets per employee as of March 31, 2015 stood at ` 115.00 crore as compared to ` 109.00 crore as of March 31, 2014 and net profit per employee as of March 31, 2015 was ` 3.05 crore as compared to ` 2.78 crore as of March 31, 2014.

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We offer our employees a range of incentives, including housing loans at reduced rates, vehicle/consumer financing, healthcare benefits and performance incentives. We also have employee share option schemes.

Our employees are not represented by a union, which is consistent with other HFCs in India. We consider our relations with our employees to be good.

KEY SUBSIDIARIES AND ASSOCIATES

Housing finance continues to remain our core business. While the main focus is to grow the housing portfolio, organically and inorganically, we have made investments in various group companies in order to capitalise on our strong brand and to maximise returns for shareholders. These group companies have strong synergies with us and such diversification enables us to offer a wide gamut of financial services and products to our customers. Some of the key subsidiaries and associate companies are described below:

HDFC Bank Limited

HDFC Bank, a commercial bank, was promoted by us in Fiscal 1993. Its equity shares are listed on the BSE and the NSE. As of June 30, 2015, its market capitalisation on the NSE and BSE was ` 2,68,010.3 crore and ` 2,68,085.6 crore, respectively.

Our Company and HDFC Bank maintain an arm’s length relationship in accordance with the regulatory framework. Both organizations, however, capitalise on the strong synergies through a system of referrals, special arrangements and cross selling in order to effectively provide a wide range of products and services under the ‘HDFC’ brand name.

As at March 31, 2015, advances of HDFC Bank stood at ` 3,65,495 crore – an increase of 21.0% over the previous year. Total deposits stood at ` 4,50,796 crore – an increase of 20.6%. As at March 31, 2015, HDFC Bank’s distribution network includes 4,014 branches and 11,766 ATMs in 2,464 locations.

For the year ended March 31, 2015, HDFC Bank reported a profit after tax of ` 10,215.9 crore as against ` 8,478.4 crore in the previous year, representing an increase of 20.5%. HDFC Bank has recommended a dividend of ` 8 per share of ` 2 each as against ` 6.85 per share for the previous year.

As of June 30, 2015, our Company together with its wholly owned subsidiaries, HDFC Investments Limited and HDFC Holdings Limited held 21.63% of the equity share capital of HDFC Bank.

HDFC Standard Life Insurance Company Limited (“HDFC Life”)

HDFC Life is a joint venture between HDFC and Standard Life Assurance Company (UK) (“Standard Life”).

As of March 31, 2015 HDFC Life has a portfolio of 24 retail products and 7 group products covering saving, investment, protection and retirement needs of its customers, along with 9 optional rider benefits.

As of March 31, 2015 HDFC Life’s distribution network includes 414 branches, covering 1,000 locations and a liaison office in Dubai. In addition, HDFC Life has 86,315 financial consultants, 4 bancassurance partners and 9 pan-India brokers and corporate agency tie-ups.

Gross premium income of HDFC Life for the year ended March 31, 2015 stood at ` 14,829.90 crore as compared to ` 12,062.90 crore in the previous year. As at March 31, 2015, its assets under management stood at ` 67,046.70 crore, an increase of 32.6% over March 31, 2014.

In FY 2015, HDFC Life ranked third among private sector life insurers in terms of market share based on the weighted received premium of individual business of 14.8%.

HDFC Life reported a profit after tax of ` 785.51 crore for the year ended March 31, 2015 as against ` 725.28 crore in the previous year. The back book is generating sufficient profits to offset the new business strain incurred in writing of new policies.

As at March 31, 2015, the Market Consistent Embedded Value stood at ` 8,805.00 crore (previous year `

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6,992.00 crore).

During the year, HDFC Life paid an interim dividend of ` 0.70 per equity share of ` 10 each. The solvency ratio of HDFC Life was 196.0% as at March 31, 2015 as against the minimum regulatory requirement of 150.0%.

As of March 31, 2015, we held 70.64% of the equity share capital in HDFC Life.

HDFC Asset Management Company Limited (“HDFC-AMC”)

HDFC-AMC is the investment manager to HDFC Mutual Fund, with HDFC Trustee Company Limited acting as trustee. HDFC-AMC is a joint venture between our Company and HDFC Standard Life Investments.

As at March 31, 2015, HDFC-AMC managed various debt, equity, gold exchange traded fund and fund of fund schemes of HDFC Mutual Fund. The quarterly average assets under management as of March 31, 2015 stood at ` 1,61,634.00 crore. HDFC Mutual Fund has been ranked first in the industry on the basis of quarterly average assets under management for the quarter ended March 31, 2015.

The assets under management (“AUM”) as at March 31, 2015 was ` 1,52,466.55 crore as against ` 1,10,217.52 crore as at March 31, 2014 representing an increase of 38.33% or ` 42,249.03 crore. For the year ended March 31, 2015, HDFC-AMC reported a profit after tax of ` 415.50 crore as against ` 357.77 crore in the previous year.

As of March 31, 2015, our Company held 59.8% of the equity share capital of HDFC-AMC.

HDFC ERGO General Insurance Company Limited (“HDFC ERGO”)

HDFC ERGO (“ERGO”), offers a diverse range of insurance products like motor, health, travel, home and personal accident in the retail segment and customised products like property, marine, aviation and liability insurance in the corporate segment. As of March 31, 2015, HDFC ERGO was the fourth largest private sector player in the general insurance industry. Further, as of March 31, 2015, it was the largest player in the personal accident insurance line of business.

HDFC ERGO continues to leverage on the HDFC group’s distribution capability to drive its growth and on the technical capability of ERGO in the field of general insurance. It has a balanced portfolio mix with the retail segment accounting for 59.0% of the business. As of March 31, 2015, it managed operations through 108 offices across India.

The gross written premium (excluding motor declined risk pool) of HDFC ERGO increased by 9.0% to ` 3,256.00 crore in the year ended March 31, 2015 as against ` 2,978.00 crore in the previous year.

The profit before tax of HDFC ERGO for the year ended March 31, 2015 stood at ` 141 crore as against ` 224 crore in the previous year. In the year ended March 31, 2015, profits were affected by the impact of natural catastrophes such as the Jammu and Kashmir floods, Cyclone Hudhud and Cyclone Phailin and one time depreciation impact due to a change in the depreciation policy for aligning it with the Companies Act, 2013. For the year ended March 31, 2015, the profit after tax stood at ` 104.00 crore.

During the year ended March 31, 2015 HDFC ERGO paid an interim dividend of ` 0.75 per equity share of ` 10 each as against ` 0.50 per equity share in the previous year. The combined ratio as at March 31, 2015 stood at 108.3%. The solvency ratio of HDFC ERGO was 165.2% as at March 31, 2015 as against the minimum regulatory requirement of 150.0%.

As of March 31, 2015, our Company held 73.6% of the equity share capital of HDFC ERGO.

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HDFC Property Funds

HDFC Venture Capital Limited (“HVCL”) is the investment manager to HDFC Property Fund, a registered venture capital fund with SEBI. HDFC Property Fund was registered with SEBI in 2004

HDFC Property Fund has two domestic schemes – the first scheme is HDFC India Real Estate Fund (“HI- REF”), which had an initial corpus of ` 1,000.00 crore. HI-REF has distributed the entire investment corpus and also profits to its investors. HI-REF is in the midst of concluding final exits from the balance portfolio. The second scheme was HDFC IT Corridor Fund, a ` 464.00 crore rent yielding portfolio. This scheme has been fully exited.

HDFC Property Ventures Limited (“HPVL”) provides investment advisory services to Indian and overseas asset management companies (“AMCs”). Such AMCs in turn manage and advise Indian and offshore private equity funds.

As of March 31, 2015, our Company held 80.5% of the equity share capital of HVCL and 100.0% of the equity share capital of HPVL (including co-investment by our Company and other co-investors).

In addition, our Company has sponsored two off shore funds -- HIREF International LLC and HIREF International Fund II Pe. Ltd. HIREF International LLC was launched in 2007 and has a corpus of US$ 80.00 crore (including co-investment by HDFC). Exits have commenced and the fund is in the process of exiting the balance investments. HIREF International Fund II Pte Ltd. had its second and final closing in April 2015 with a total corpus of US$ 321.00 million (including co-investment by our Company and other investors).

GRUH Finance Limited (“GRUH”)

GRUH is a housing finance company with a retail network of 154 offices spread across 8 states. During the year ended March 31, 2015 GRUH disbursed loans amounting to ` 3,121.00 crore compared to ` 2,577.00 crore in the previous year – an increase of 21.0%. As at March 31, 2015, the loan portfolio stood at ` 8,915.35 crore, recording a growth of 27.0% over the previous year. The gross non-performing loans stood at 0.28% of the total loans outstanding and the net non performing loans are nil. The average size of loans disbursed during the year was ` 8,39,000. Its equity shares are listed on the BSE and the NSE. As of June 30, 2015, its market capitalisation on the NSE and BSE was ` 9,520 crore and ` 9,473 crore, respectively.

As at March 31, 2015, the capital adequacy ratio stood at 15.4%, of which Tier I capital was 13.90% and Tier II capital was 1.5%.

For the year ended March 31, 2015, GRUH reported a profit after tax before DTL on Special Reserve of ` 223.13 crore compared to ` 176.96 crore – representing a growth of 26.1%. The profit after tax after the factoring DTL on Special Reserve for the year ended March 31, 2015 stood at ` 203.80 crore.

The board recommended payment of a dividend for the year ended March 31, 2015 of ` 2.00 per equity share of ` 2 each as against ` 3 per equity share in the previous year. Considering GRUH declared a 1:1 bonus during the year, the effective dividend for the year is ` 4 per equity share (pre bonus) as compared to ` 3 per share in the previous year (pre bonus).

As of June 30, 2015, our Company’s holding in GRUH stood at 58.6%.

HDFC Sales Private Limited (“HSPL”)

HSPL continues to strengthen our Company’s marketing and sales efforts by providing a dedicated sales force to sell home loans and other financial products.

HSPL has a presence in 103 locations (excluding HDFC Core and Satellite Fund) offices as of March 31, 2015. During the year under review, HSPL sourced loans accounting for 49.0% of individual loans disbursed by our Company.

As of March 31, 2015, HSPL is a wholly owned subsidiary of our Company.

Credila Financial Services Private Limited (“Credila”)

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Credila is our Company’s dedicated education loan company, providing loans to students pursuing higher education in India and abroad.

As on March 31, 2015, Credila had cumulatively disbursed ` 2,220.92 crore to 21,034 customers. The outstanding loan book stood at ` 1,690.35 crore, registering a growth of 43% over the previous year. The average loan amount disbursed was ` 0.10 crore. For the year ended March 31, 2015, Credila reported a profit after tax of ` 27.80 crore as against ` 19.18 crore in the previous year – a growth of 44.9%. The gross non- performing loans stood at 0.05% of the total loans outstanding.

In addition to having its own offices and sourcing applications through various direct sourcing channels and partners Credila uses our distribution network to source and market education loans. Credila’s borrowers are entitled to income tax exemption under Section 80E of the IT Act.

As of March 31, 2015, our Company held 89.5% of the share holding in Credila on a fully diluted basis.

HDFC Education and Development Services Private Limited (“HDFC Edu”)

HDFC Edu is our Company’s wholly owned subsidiary which focuses on the education sector.

The objective of our Company entering the education space is to imbibe best practices in education and facilitate innovation, thereby creating a visible impact on the schooling system in the country.

In March 2015, it has helped 3E Education Trust set up the first school of the group called ‘The HDFC School’ was inaugurated in Gurgaon. The motto of the school is ‘Educate, Excel and Empower.’ The school has started the primary wing and is in the process of setting up a 5-acre school campus for its secondary wing. The HDFC School is intended to be a full-fledged K-12 school, which will follow the National Curriculum Framework, 2005 and will be a Central Board of Secondary Education (“CBSE”) affiliated school.

OTHER SERVICES

Property services group

Our Property Services Group assists individuals and companies in locating suitable residential or commercial premises in major cities and towns in India. These facilities are also available to NRIs. We also undertake valuation of real estate for companies.

Advance processing facility

We have an “Advance Processing Facility” under which developers who are undertaking a residential project can approach us for approval in principle to finance individuals buying a dwelling unit in their project. The facility has been designed to expedite the processing of loan applications and make it more convenient for individuals to obtain loans from us.

International housing finance initiatives

Our expertise in housing finance is well regarded and therefore a number of existing and new housing finance companies are keen to tap our Company for training and technical assistance in housing finance.

The Frankfurt School of Finance & Management and our Company jointly organise the ‘Housing Finance Summer Academy’ in Germany, a course that aims to provide housing finance solutions for emerging markets through a combination of academic knowledge and practical experience.

Our Company remains committed to sharing its expertise in countries which have nascent mortgage markets. Our Company continues to lend its support to housing finance players in Bangladesh and Maldives.

To develop the capital markets to facilitate access to long-term funding for housing finance, our Company participated in the first international conference on capital markets in East Africa. The conference was held in Rwanda and was co-hosted by the Rwanda government and IFC.

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INSURANCE

Our policy is to insure all of our properties adequately against fire and other usual risks. We also maintain insurance for operational risks such as the loss or theft of cash or securities.

Our insurance policies are subject to exclusions which are customary for insurance policies of the type held by us, including those exclusions which relate to war and terrorism-related events.

We believe that our insurance policies as described above are appropriate for our business.

INTELLECTUAL PROPERTY

We have registered our service mark under the Trade Marks Act, 1999.

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REGULATION AND POLICIES

The following description is a summary of relevant regulations and policies as prescribed by the Government of India and other regulatory bodies that are applicable to our Company. The information detailed below has been obtained from various legislations, including rules and regulations promulgated by regulatory bodies, and the bylaws of the respective local authorities that are available in the public domain. The regulations set out below may not be exhaustive and are merely intended to provide general information to the investors and are neither designed nor intended to substitute for professional legal advice. The statements below are based on the current provisions of Indian law, and the judicial and administrative interpretations thereof, which are subject to change or modification by subsequent legislative, regulatory, administrative or judicial decisions.

In addition to the regulations and policies specified herein below, taxation law, labour law, intellect property law, environmental law and other miscellaneous laws apply to our Company as they do to any other Indian company.

The National Housing Bank Act, 1987

The National Housing Bank Act, 1987 (the “NHB Act”) was enacted to establish NHB to operate as a principal agency to promote HFCs both at the local and regional levels and to provide financial and other support to such institutions for matters connected therewith or incidental thereto. The business of the NHB includes, among others, promoting, establishing, supporting or aiding in the promotion, establishment and for housing activities of HFCs, scheduled banks, state co-operative agricultural and rural development banks or any other institution or class of institutions, as may be notified by the Central Government; making loans and advances or other forms of financial assistance; guaranteeing the financial obligations of HFCs and underwriting the issue of stocks, shares, debentures and other securities of HFCs; formulating one or more schemes for the purpose of mobilization of resources and extension of credit for housing; providing guidelines to HFCs to ensure their growth on sound lines; providing technical and administrative assistance to HFCs and exercising all powers and functions in the performance of duties entrusted to the NHB under the NHB Act or under any other law for the time being in force.

Under the NHB Act, the NHB has the power to direct deposit accepting HFCs to furnish such statements, information or particulars relating to deposits received by the HFC, as may be specified by the NHB. Every HFC is required to obtain a certificate of registration and meet the requirement of net owned funds of ` two crore or such other higher amount as the NHB may specify for commencing or carrying on the business of HFCs. Further, every HFC is required to invest and continue to invest in India in unencumbered approved securities, an amount which, at the close of business on any day, is not less than 5% (or such higher percentage as the NHB may specify, not exceeding 25%) of the deposits outstanding at the close of business on the last working day of the second preceding quarter.

Additionally, every HFC is required to maintain in India an account with a scheduled bank in term deposits or certificate of deposits (free of charge or lien) or in deposits with the NHB or by way of subscription to the bonds issued by the NHB, or partly in such account or in such deposit or partly by way of such subscription, a sum which, at the close of business on any day, together with the investment as specified above, shall not be less than 10% (or such higher percentage as the NHB may specify, not exceeding 25%), of the deposits outstanding in the books of the HFC at the close of business on the last working day of the second preceding quarter. Pursuant to the NHB Act, every HFC is also required to create a reserve fund and transfer therein a sum not less than 20% of its net profit every year as disclosed in the profit and loss account and before any dividend is declared.

Under the terms of the NHB Act, the NHB has the power to direct deposit accepting HFCs to furnish such statements, information or particulars relating to deposits received by the HFC, as may be specified by the NHB. The NHB may cause an inspection to be made of any deposit accepting HFCs for the purpose of verifying the correctness or completeness of any statement, information or particulars furnished to the NHB or for the purpose of obtaining any information or particulars which the HFC has failed to furnish on being called upon to do so. If any HFC accepting deposits fails to comply with any direction given by the NHB, the NHB may prohibit the acceptance of deposits by that HFC.

The Recovery of Debts due to Banks and Financial Institutions Act, 1993

The Recovery of Debts due to Banks and Financial Institutions Act, 1993 (“DRT Act”) provides for establishment of the Debts Recovery Tribunals (“DRTs”) for expeditious adjudication and recovery of debts

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due to banks and public financial institutions or to a consortium of banks and public financial institutions. Under the DRT Act, the procedures for recovery of debt have been simplified and time frames have been fixed for speedy disposal of cases. The DRT Act lays down the rules for establishment of DRTs, procedure for making application to the DRTs, powers of the DRTs and modes of recovery of debts determined by DRTs. These include attachment and sale of movable and immovable property of the defendant, arrest of the defendant and defendant’s detention in prison and appointment of receiver for management of the movable or immovable properties of the defendant.

The DRT Act also provides that a bank or public financial institution having a claim to recover its debt may join an ongoing proceeding filed by some other bank or public financial institution against its debtor at any stage of the proceedings before the final order is passed by making an application to the DRT.

The Housing Finance Companies (National Housing Bank) Directions, 2010

The objective of the NHB Directions, 2010 is to consolidate and issue directions in relation to the acceptance of deposits by the HFCs. Additionally, the NHB Directions, 2010, provide the prudential norms for income recognition, accounting standards, asset classification, provision for bad and doubtful assets, capital adequacy and concentration of credit/investment to be observed by the housing finance institutions and the matters to be included in the auditors’ report by the auditors of HFCs.

Pursuant to the NHB Directions, 2010, no HFC shall accept or renew public deposits unless the HFC has obtained minimum investment grade rating for its fixed deposits from any one of the approved rating agencies, at least once a year and a copy of the rating is sent to the NHB and it is complying with all the prudential norms, provided that:

 A HFC which has obtained credit rating for its fixed deposits not below the minimum investment grade rating as above and complied with all the prudential norms may accept public deposits not exceeding five times of its net owned funds (“NOF”); and

 A HFC which does not have the requisite rating for its fixed deposits shall obtain the same within a period of six months’ from the date of notification or such extended period as may be permitted by the NHB, to obtain the prescribed rating for its fixed deposit.

Under the NHB Directions, 2010, no HFC shall have deposits inclusive of public deposits, the aggregate amount of which, together with the amounts, if any, held by it which are referred in Section 45(I)(bb)(iii) to Section 45(I)(bb)(vii) of the Reserve Bank of India Act, 1934, and loans or other assistance from the NHB, is in excess of 16 times of its NOF. In addition, no HFC shall accept or renew any public deposit which is (a) repayable on demand or on notice; or (b) unless such deposit is repayable after a period of 12 months or more but not later than 84 months from the date of acceptance or renewal of such deposits. On and from July 6, 2007, no HFC shall invite or accept or renew any public deposit at a rate of interest exceeding 12.5% per annum, such interest being payable or compounded at rests which should not be shorter than monthly rests. On and from September 20, 2003, no HFC shall invite or accept or renew repatriable deposits from non-resident Indians in terms of Schedule 1 of Notification no. FEMA.5/2000-RB dated May 3, 2000 under Non-Resident (External) Rupee Account Scheme at a rate exceeding the rates specified by the RBI for such deposits with scheduled commercial banks.

A HFC which has failed to repay any public deposit or part thereof in accordance with the terms of conditions of such deposit, as provided in the NHB Act, is not permitted to grant any loan or other credit facility by whatever name called or make any investment or create any other asset as long as the default exists.

In accordance with the prudential norms mentioned in the NHB Directions, 2010, income recognition shall be based on recognized accounting principles. Every HFC shall, after taking into account the degree of well defined credit weaknesses and extent of dependence on collateral security for realization, classify its lease/hire purchase assets, loans and advances and any other forms of credit into certain specified classes, viz. standard assets, sub-standard assets, doubtful assets and loss assets. Every HFC, after taking into account the time lag between an account becoming non-performing, its recognition as such, the realization of the security and the erosion over time in the value of security charged, is required to make provision against substandard assets, doubtful assets and loss assets as provided under the NHB Directions, 2010.

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The NHB has amended the provisioning norms in the NHB Directions, 2010, pursuant to the notification no. NHB.HFC.DIR.3/CMD/2011 dated August 5, 2011, as further amended by NHB vide notification no. NHB.HFC.DIR.4/CMD/2012 dated January 19, 2012, as amended by notification no. NHB.HFC.DIR.9/CMD/2013 dated September 6, 2013. The provisioning requirement in respect of loans, advances and other credit facilities including bills purchased and discounted are required to be:

(a) loss assets - the entire assets are required to be written off. If assets are permitted to remain in the books for any reason, then 100% of the outstanding amounts should be provided for;

(b) doubtful assets - 100% provision to the extent to which the advance is not covered by the realizable value of the security to which a HFC has a valid recourse shall be made and in addition, depending upon the period for which the asset has remained doubtful provision to the extent of 25% to 100% of the secured portion i.e. the estimated realisable value of the outstanding shall be made in the following manner: i) 25% up to the period of one year; (ii) 40% for the period of one year to three years, and (iii) 100% for the period more than three years;

(c) substandard assets - provision of 15% of the total outstanding amounts should be made without making any allowance for export credit guarantee, corporation guarantee and securities available; and

(d) standard assets- (i) standard assets with respect to housing loans at teaser/special rates - provision of 2% on the total outstanding amount of such loans and the provisioning of these loans to be re-set after one year at the applicable rates from the date on which the rates are re-set at higher rates if the accounts remain standard; (ii) (a) standard assets in respect of Commercial Real Estates Residential Housing (“CRE-RH”) (consisting of loans to builders/ developers for residential housing projects (except for captive consumption). Such projects do not include non-residential commercial real estate. However, integrated housing projects comprising of some commercial space (e.g. shopping complex, school etc.) can be classified as CRE-RH, provided that the commercial space in the residential housing project does not exceed 10% of the total floor space index (“FSI”) of the project. In case the FSI of the commercial area in a predominantly residential housing complex exceeds the ceiling of the project loans, the entire loan should be classified as CRE (and not CRE-RH) - provision of 0.75% on the total outstanding amount of such loans; (ii) (b) standard assets in respect of all other Commercial Real Estates (“CRE”) (consisting of loans to builders/developers/others for office buildings, retail space, multipurpose commercial premises multi- tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction etc., other than those covered in (ii)(a). Loans for third dwelling unit onwards to an individual will also be treated as CRE exposure) – provision of 1% on the total outstanding amount of such loans; and (iii) standard assets in respect of all loans other than (i) and (ii) - a general provision of 0.4% of the total outstanding amount of loans which are standard assets is required to be made.

Pursuant to the notification No.NHB.HFC.DIR.9/CMD/2013 dated September 6, 2013, no HFC shall (i) grant housing loans up to ` 0.20 crore to individuals with loan to value (“LTV”) ratio exceeding 90%, (ii) grant housing loans above ` 0.20 crore and up to ` 0.75 crore to individuals with LTV exceeding 80% and (iii) grant housing loans above ` 0.75 crore to individuals with LTV exceeding 75%.

Every HFC shall maintain a minimum capital ratio consisting of Tier I and Tier II capital which shall not be less than 12% of its aggregate risk weighted assets and of risk adjusted value of off-balance sheet items.

Under the NHB Directions, 2010, degrees of credit risk expressed as percentage weighting have been assigned to balance sheet assets. Hence, the face value of each asset is multiplied by the relevant risk weights to arrive at its risk adjusted value of the asset. The aggregate shall be taken into account for calculating the minimum capital adequacy ratio of a housing finance institution.

Further, in terms of the NHB Directions, 2010, no HFC shall invest in land or buildings, except for its own use, an amount exceeding 20% of its capital fund (aggregate of Tier I capital and Tier II capital) provided that such investment over and above 10% of its owned funds is required to be made only in residential units. Additionally, no HFC shall lend to any single borrower an amount exceeding 15% of its owned funds, and to any single group of borrowers, an amount exceeding 25% of its owned funds. A HFC is not allowed to invest in the shares of another company an amount exceeding 15% of its owned funds; and in the shares of a single group of companies an amount exceeding 25% of its owned funds. An HFC shall not lend and invest (loans/investments together) amounts exceeding 25% of its owned funds to a single party and 40% of its owned funds to a single group of parties. Additionally, a HFC is not allowed to lend against its own shares and any outstanding loan

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granted by a HFC against its own shares on the date of commencement of the NHB Directions, 2010 shall be recovered by the HFC in accordance with the repayment schedule.

The NHB Directions, 2010 provide for exposure limits for HFC to the capital market. Pursuant to the NHB Directions, 2010, the aggregate exposure of an HFC to the capital market in all forms should not exceed 40% of its net worth as on March 31 of the previous year. Within this overall ceiling, direct investment in shares, convertible bonds, debentures, units of equity-oriented mutual funds and all exposures to VCFs should not exceed 20% of its net worth.

The NHB vide circular no NHB(ND)/DRS/POL-No. 36/2010 dated October 18, 2010 has directed all HFCs not to charge any prepayment levy or penalty on pre-closure of housing loans by the borrowers out of their own sources. Further, NHB, vide circular no NHB(ND)/DRS/POL-No. 43/2011-2012 dated October 19, 2011 has directed all HFCs to discontinue the pre-payment levy or penalty on pre-closure of housing loans when (i) the housing loan is on floating rate basis and pre-closed by the borrower from funds received from any source and (ii) the housing loan is on fixed rate basis if pre-closed by the borrowers from their “own sources” which means any source other than by borrowing from a bank, HFC, NBFC and/or a financial institution. It has been clarified vide circular no NHB(ND)/DRS/Pol-No.48/2011-12 dated April 4, 2012 that the instruction applicable to fixed interest rate housing loans referred to in the circular dated October 19, 2011 will be applicable to such loans which carry fixed rate of interest at the time of origination of the loan. Further, it has been directed vide circular no NHB(ND)/DRS/Pol-No.51/2012-13 dated August 7, 2012 that all dual/special rate (combination of fixed and floating) housing loans will attract the pre-closure norms applicable to fixed/floating rate depending on whether at the time of pre-closure, the loan is on fixed or floating rate. A fixed rate loan shall be considered to be a loan where the rate is fixed for entire duration of the loan. Thus, in the case of a dual/special rate housing loans, the pre-closure norm for floating rate will be applicable once the loan has been converted into floating rate loan, after the expiry of the fixed interest rate period. This shall be applicable to all such dual/special rate housing loans being foreclosed hereafter. Further vide NHB (ND)/DRS/Policy circular No. 63/2014-15 dated August 14, 2014 directed that HFCs shall not charge foreclosure charges/pre-payment penalties on all floating rate term loans sanctioned to individual borrowers, with immediate effect. Subsequently, it was clarified vide circular no NHB(ND)/DRS/Policy circular 66/2014-15 dated September 3, 2014 provisions of the circular issued on August 14, 2014 are applicable in respect of all floating rate term loans sanctioned to individual borrowers by HFCs, irrespective of the date of sanction and prepaid on or after August 14, 2014. The provisions of the said circular cover part as well as full prepayment. It was also clarified that aforesaid circular is applicable to term loans sanctioned to individual borrowers and loan in which company, firm etc. is a borrower or co-borrower, therefore is excluded from its purview.

The NHB vide circular no NHB (ND)/DRS/POL-No. 58/2013-14 dated November 18, 2013 has directed all HFCs to ensure that disbursement of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing projects/ houses and upfront disbursal should not be made in cases of incomplete/ under-construction/ greenfield housing projects/ houses.

The Prevention of Money Laundering Act, 2002

The Prevention of Money Laundering Act, 2002 (“PMLA”) was enacted to prevent money laundering and to provide for confiscation of property derived from, and involved in, money laundering. In terms of the PMLA, every financial institution, including housing finance institutions, is required to maintain record of all transactions including the value and nature of such transactions, furnish information of such transactions to the director defined under PMLA and verify and maintain the records of the identity of all its clients, in such a manner as may be prescribed. The PMLA also provides for power of summons, searches and seizures to the authorities under the PMLA. In terms of PMLA, whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering. The NHB vide circular NHB(ND)/DRS/POL No. 13/2006 dated April 10, 2006 had introduced anti-money laundering measures wherein the HFCs were advised inter-alia to follow the customer identification procedure, maintenance of records of transactions and period of preservation of such record keeping in view of the provisions of PMLA. Further, the aforesaid circular introducing anti-money laundering measures were reviewed and revised vide circular NHB (ND)/DRS/POL-No. 33/2010-11 dated October 11, 2010 (“2010 Notification”) in light of amendments in the PMLA and the rules framed there under. Further the 2010 Notification requires the HFC to verify the identities of non-account based customers while carrying out transactions of an amount equal to, or exceeding, ` 50,000, whether conducted as a single transaction or several transactions, that appear to be conducted or any international money transfer operations. Further, it was directed vide NHB(ND)/DRS/Misc.

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circular No.13/2014 dated January 20, 2014, that the HFCs shall ensure that the documents are not given directly to the customers for verification, etc. to obviate any frauds.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”) regulates the securitization and reconstruction of financial assets of banks and financial institutions. The SARFAESI Act provides for measures in relation to enforcement of security interests and rights of the secured creditor in case of default.

The RBI has issued guidelines to banks and financial institutions on the process to be followed for sales of financial assets to asset reconstruction companies. These guidelines provide that a bank or a financial institution may sell financial assets to an asset reconstruction company provided the asset is an NPA. A bank or financial institution may sell a financial asset only if the borrower has a consortium or multiple banking arrangements and at least 75% by value of the assets to the borrower are classified as an NPA and at least 75% by the value of the banks and financial institutions in the consortium or multiple banking arrangement agree to the sale of the asset to the securitisation or reconstruction company.

The SARFAESI Act provides for the acquisition of financial assets by securitization company or reconstruction company from any bank or financial institution on such terms and conditions as may be agreed upon between them. A securitization company or reconstruction company having regard to the guidelines framed by the RBI may, for the purposes of asset reconstruction, provide for measures such as the proper management of the business of the borrower by change in or takeover of the management of the business of the borrower, the sale or lease of a part or whole of the business of the borrower and certain other measures such as rescheduling of payment of debts payable by the borrower and enforcement of security.

Additionally, under the provisions of the SARFAESI Act, any securitization company or reconstruction company may act as an agent for any bank or financial institution for the purpose of recovering its dues from the borrower on payment of such fee or charges as may be mutually agreed between the parties.

Refinance Scheme for Housing Finance Companies, 2003

Pursuant to Refinance Scheme for Housing Finance Companies, 2003, as amended (“Refinance Scheme”), as amended vide circular NHB(ND)/ROD/HFC/LRS/17/2004 dated April 15, 2005, HFCs registered with the NHB are eligible to obtain refinance from the NHB in respect of their direct lending up to ` 0.5 crore to individuals for the purchase, construction, repair and upgrade of housing units.

In addition, the HFCs are required to provide long-term finance for purchase, construction, repair and upgrading of dwelling units by home-seekers. The HFCs are also required to have specific levels of capital employed and net owned funds to be eligible to avail refinance facilities under the Refinance Scheme. The financial assistance can be drawn by HFCs in respect of loans already advanced by them and also for prospective disbursements. The security for refinance from the NHB may generally be secured by a charge on the book debts of a HFC. If at any time the NHB is of the opinion that the security provided by the HFC has become inadequate to cover the outstanding refinance, it may advise the HFC to furnish such additional security including, inter-alia, charges on immovable/moveable property or a requisite guarantee.

Master Circular on Housing Finance issued by the RBI

Pursuant to the Master Circular on Housing Finance dated July 1, 2015, issued by the RBI (“Master Circular”), banks are eligible to deploy their funds under the housing finance allocation in any of three categories, i.e. (i) direct finance; (ii) indirect finance; or (iii) investment in bonds of the NHB/Housing and Urban Development Corporation Limited, or combination thereof. Indirect finance includes loans to HFCs, housing boards, other public housing agencies, etc., primarily for augmenting the supply of serviced land and constructed units.

Under the terms of the Master Circular, banks may grant loans to housing finance institutions taking in to account (long-term) debt equity ratio, track record, recovery performance and other relevant factors including the other applicable regulatory guidelines. While deciding the quantum of term loan to be sanctioned to them banks are required to adhere to the loan to value ratio for loans as specified in the Master Circular.

Master Circular on Priority Sector Lending issued by the RBI

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Pursuant to the Master Circular on Priority Sector Lending – Urban Cooperative Banks dated July 01, 2015, issued by the RBI, assistance given to a non-governmental agency approved by the NHB for the purpose of refinance for construction/ reconstruction of dwelling units or for slum clearance and rehabilitation of slum dwellers, subject to an aggregate loan limit of ` 0.10 crore per dwelling unit would be classified under priority sector, provided that all inclusive interest rate charged to the ultimate borrower is not exceeding the lowest lending rate of the lending bank for housing loans plus 8% p.a. However, the eligibility under this measure is restricted to 5% of the individual bank’s total priority sector lending, on an ongoing basis. The maturity of bank loans should be co-terminus with average maturity of loans extended by HFCs. Banks should maintain necessary borrower-wise details of the underlying portfolio.

Guidelines for Asset Liability Management System for HFCs vide circular NHB/ND/DRS/Pol-No. 35/2010- 11 dated October 11, 2010

The guidelines for introduction of asset liability management system by HFCs was issued by NHB vide circular NHB (ND)/HFC(DRS-REG)/ALM/1407/2002 dated June 28, 2002, (“ALM Guidelines”). NHB has since revised the guidelines. The revised guidelines would be applicable to all HFCs irrespective of whether they are accepting/ holding public deposits or not. The ALM Guidelines for HFCs lays down broad guidelines for HFCs in respect of systems for management of liquidity and interest rate risks. The ALM Guidelines provide that the board of directors of an HFC should have overall responsibility for management of risks and should decide the risk management policy and set limits for liquidity, interest rate, exchange rate and equity price risks. Additionally, an asset-liability committee is required to be constituted consisting of the HFC’s senior management including the chief executive officer for ensuring adherence to the limits set by the board as well as for deciding the business strategy of the HFC (on the assets and liabilities sides) in line with the HFC’s budget and decided risk management objectives. Asset-liability management support groups to be constituted of operating staff are responsible for analysing, monitoring and reporting the risk profiles to the asset-liability committee.

The ALM Guidelines also recommended classification of various components of assets and liabilities into different time buckets for preparation of gap reports (liquidity and interest rate sensitive). The gap is the difference between rate sensitive assets and rate sensitive liabilities for each time bucket. In accordance with the ALM Guidelines, HFCs which are better equipped to reasonably estimate the behavioural pattern of various components of assets and liabilities on the basis of past data/empirical studies could classify them in the appropriate time buckets, subject to approval by the asset-liability committee/board of the HFC.

Guidelines on Fair Practices Code for HFCs

The Guidelines on Fair Practices Code for HFCs (“Fair Practices Code”) were issued by the NHB vide circular NHB(ND)/DRS/POL-No-16/2006 dated September 5, 2006, and were revised by the NHB vide circular NHB/ND/DRS/Pol No. 34/2010-11 dated October 11, 2010, and as further amended vide circular NHB (ND)/DRS/Pol. No. 38/2010-11, dated April 25, 2011 and notification no. NHB/(ND)/DRS/REG/MC-03/2015 dated September 9, 2015, to bring more clarity and transparency and to cover all aspects of loan sanctioning, disbursal and repayment issues. The Fair Practices Code seeks to promote good and fair practices by setting minimum standards in dealing with customers, increase transparency, encourage market forces, promote fair and cordial relationship between customer and HFCs and foster confidence in the housing finance system.

The Fair Practices Code provides for provisions in relation to providing regular and appropriate updates to the customer, prompt resolution of grievances and confidentiality of customer information. Further, the HFCs are required to disclose information on interest rates, common fees and charges through notices etc. HFCs are required to ensure that all advertising and promotional material is clear and not misleading and that privacy and confidentiality of the customers’ information is maintained. Further, whenever loans are given, HFCs should explain to the customer the repayment process by way of amount, tenure and periodicity of repayment. However if the customer does not adhere to repayment schedule, a defined process in accordance with the laws of the land shall be followed for recovery of dues. The process will involve reminding the customer by sending him/her notice or by making personal visits and/or repossession of security, if any.

Guidelines for Recovery Agents Engaged by HFCs

The Guidelines for Recovery Agents Engaged by HFCs (“Recovery Agents Guidelines”) were issued on July 14, 2008 by the NHB in relation to the practices and procedures regarding the engagement of recovery agents by

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the HFCs. Under of the Recovery Agents Guidelines, HFCs are required to have a due diligence process in place for engagement of recovery agents, which should cover inter-alia, individuals involved in the recovery process. HFCs are required to ensure that the agents engaged by them in the recovery process carry out verification of the antecedents of their employees, which may include pre-employment police verification, as a matter of abundant caution and HFCs may decide the periodicity at which re-verification should be resorted to. HFCs are required to ensure that the recovery agents are properly trained to handle with care and sensitivity their responsibilities, in particular, aspects like hours of calling and privacy of customer information, among others. HFCs are also required to inform the borrower of the details of recovery agency firms/companies while forwarding default cases to the recovery agency.

Under the Recovery Agents Guidelines, any person authorized to represent an HFC in collection and/or security repossession should follow guidelines which includes inter-alia contacting the customer ordinarily at the place of his/her choice; interaction with the customer in a civil manner and assistance to resolve disputes or differences regarding dues in a mutually acceptable and orderly manner. Each HFC should have a mechanism whereby the borrower’s grievances with regard to the recovery process can be addressed. The details of the mechanism should also be furnished to the borrower. HFCs have been advised to constitute grievance redressal machinery within the company and give wide publicity about it through electronic and print media.

HFCs are required to, at least on an annual basis, review the financial and operational condition of the service providers to assess their ability to continue to meet their outsourcing obligations. Such due diligence reviews, which can be based on all available information about the service provider, should highlight any deterioration or breach in performance standards, confidentiality and security, and in business continuity preparedness.

Guidelines on Know Your Customers and Anti Money Laundering measures for Housing Finance Companies

The KYC Guidelines issued by NHB on NHB(ND)/DRS/policy circular No. 72/2014-15 dated April 23, 2015, mandate the KYC policies and anti-money laundering measures for HFC to have certain key elements, including inter-alia a customer acceptance policy, customer identification procedures, monitoring of transactions and risk management, adherence to NHB KYC Guidelines and the exercise of due diligence by the NBFC, including its brokers and agents.

Norms for excessive interest rates

The NHB vide circular NHB(ND)/DRS/POL-No-29/2009 dated June 2, 2009, has advised all HFCs to revisit internal policies in determining interest rates, fee and other charges. According to this notification, the board of each HFC is required to revisit its policies on interest rate determination, fees and other charges, including margins and risk premiums charged to different categories of borrowers and approve the same. HFCs are advised to put in place an internal mechanism to monitor the process and operations in relation to disclosure of interest rates and charges in view of the guidelines indicated in the Fair Practices Code, to ensure transparency in communications with borrowers.

Foreign Investment in HFCs

Foreign Investment in India is governed primarily by the provisions of the FEMA and the rules, regulations and notifications there-under, read with the presently applicable Consolidated FDI Policy, effective from May 12, 2015 (“Consolidated FDI Policy”) (provisions of the Circular 2015) issued by the Department of Industrial Policy and Promotion from time to time. As per the provisions of the Consolidated FDI Policy, 100% FDI under the automatic route is permitted for investment in the NBFCs which carry out certain specified activities, which includes HFCs, subject to the following conditions:

1. Minimum Capitalization:

(a) For FDI up to 51% - US$ 0.5 million to be brought upfront; (b) For FDI above 51% and up to 75% - US$ 5 million to be brought upfront; and (c) For FDI above 75% and up to 100% - US$ 50 million out of which US$ 7.5 million to be brought up front and the balance to be brought up in 24 months.

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2. Foreign investors can set up 100% step down subsidiaries for specific NBFC activities, subject to bringing in US$ 50 million without any restriction on number of operating subsidiaries and without bringing in additional capital.

3. Joint venture operating NBFCs that have 75% or less than 75% foreign investment will also be allowed to set up subsidiaries for undertaking other NBFC activities, subject to the subsidiaries complying with the applicable minimum capitalization norms mentioned above.

4. Compliance with guidelines of the relevant regulator is required in this regard.

5. The minimum capitalization norms would apply where the foreign holding in the NBFC (both direct and indirect) exceeds the limits indicated above.

Where FDI is allowed on an automatic basis without FIPB approval, the RBI would continue to be the primary agency for the purposes of monitoring and regulating foreign investment. In cases where FIPB approval is obtained, no approval of the RBI is required except with respect to fixing the issuance price, although a declaration in the prescribed form, detailing the foreign investment, must be filed with the RBI once the foreign investment is made in the Indian company. The foregoing description applies only to an issuance of shares by, and not to a transfer of shares of, Indian companies. Every Indian company issuing shares or convertible debentures in accordance with the RBI regulations is required to submit a report to the RBI within 30 days of receipt of the consideration and another report within 30 days from the date of issue of the shares to a non- resident purchaser.

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BOARD OF DIRECTORS AND SENIOR MANAGEMENT

Board of Directors

The Board presently consists of 11 Directors and, as per our Articles of Association, our Company shall have at least three Directors and not more than 15 Directors. The quorum for meetings of the Board is one third of the total number of Directors or two Directors, whichever is higher. Where the number of interested Directors exceeds, or is equal to, two thirds of the total strength, the number of remaining Directors present at such meeting, the number of remaining Directors who are not interested and are present at the meeting, not being less than two, shall be the quorum during such time.

The following table sets forth details regarding the Board as of the date of this Placement Document:

Sr. Name, Address, Occupation, Age Designation Details of other directorships No. DIN, Current Term and Nationality 1. Mr. Deepak S. Parekh 70 Non-executive 1. Mahindra & Mahindra Chairman Limited Address: Apartment No. 4607, 2. GlaxoSmithKline 47th floor, North Tower, Pharmaceuticals Limited The Imperial, (Chairman) B. B. Nakashe Marg (Tardeo 3. Breach Candy Hospital Trust Road), 4. The Indian Hotels Company Near Tardeo AC Market, Limited Mumbai - 400034, Maharashtra 5. HDFC Asset Management Company Limited Occupation: Professional (Chairman) 6. HDFC Standard Life DIN: 00009078 Insurance Company Limited (Chairman) Term: Liable to retire by rotation 7. HDFC ERGO General Insurance Company Limited Nationality: Indian (Chairman) 8. Siemens Limited (Chairman) 9. Indian Institute for Human Settlements 10. Network 18 Media & Investments Limited 11. BAE Systems India (Services) Private Limited (Additional Director) 12. H T Parekh Foundation (Chairman)

Foreign Companies

1. DP World Limited 2. Vedanta Resources PLC, London 3. Fairfax India Holdings Corporation 4. Economic Zones World FZE

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Sr. Name, Address, Occupation, Age Designation Details of other directorships No. DIN, Current Term and Nationality 2. Mr. Keki M. Mistry 60 Vice-Chairman and 1. Greatship (India) Limited CEO and Executive 2. GRUH Finance Limited Address: Flat No. 2603, 26th Director (Chairman) floor, 3. HCL Technologies Limited B - Wing, Vivarea, 4. HDFC Asset Management S. G. Marg, Mahalaxmi (East), Company Limited Mumbai - 400011, Maharashtra 5. HDFC Bank Limited 6. HDFC ERGO General Occupation: Company Executive Insurance Company Limited 7. HDFC Standard Life DIN: 00008886 Insurance Company Limited 8. Sun Pharmaceuticals Term: November 14, 2010 to Industries Limited November 13, 2015, liable to 9. Torrent Power Limited retire by rotation within such 10. H T Parekh Foundation term Foreign Companies Nationality: Indian 1. Griha Investements, Mauritius 2. Griha Pte. Limited, Singapore 3. CDC Group, London

3. Ms. Renu Sud Karnad 63 Managing Director 1. Feedback Infra Private Limited (Nominee Director) Address: BB - 14, 2. HDFC Asset Management Greater Kailash, Enclave - II, Company Limited New Delhi - 110048, National 3. GRUH Finance Limited Capital Territory of Delhi 4. HDFC ERGO General Insurance Company Limited Occupation: Company Executive 5. HDFC Bank Limited 6. Indraprastha Medical DIN: 00008064 Corporation Limited 7. HDFC Standard Life Term: January 1, 2015 to Insurance Company Limited December 31, 2019, liable to 8. Bosch Limited retire by rotation within such 9. Lafarge India Private term Limited 10. EIH Limited Nationality: Indian 11. ABB India Limited 12. H T Parekh Foundation

Foreign Companies 1. HDFC PLC, Maldives 2. HIREF International LLC 3. WNS (Holdings) Limited 4. HIREF International Fund II Pte. Limited 5. HIF International Fund Pte. Limited

4. Mr. V. Srinivasa Rangan 55 Executive Director and 1. HDFC Investments Limited CFO 2. HDFC Property Ventures Address: C - 1003, 10th Floor, Limited Ashok Towers, 3. IVF Advisors Private Dr. S. S Rao Road, Limited Parel, 4. HDFC Trustee Company

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Sr. Name, Address, Occupation, Age Designation Details of other directorships No. DIN, Current Term and Nationality Mumbai - 400012, Maharashtra Limited 5. Credila Financial Services Occupation: Company Private Limited Executive 6. HDFC Developers Limited 7. Atul Limited DIN: 00030248 8. Cholamandalam Investment and Finance Company Term: January 1, 2015 to Limited December 31, 2019, liable to 9. TVS Credit Services Limited retire by rotation within such 10. HDFC Education and term Development Services Private Limited Nationality: Indian 11. Computer Age Management Services Private Limited 12. H T Parekh Foundation

5. Mr. Dattatraya M. Sukthankar 83 Non-executive Director 1. HDFC Developers Limited 2. Phoenix Township Limited Address: Flat No. 5, Priya Co- operative Housing Society, 9, Khan Abdul Gafar Khan Road, Worli Sea Face, Mumbai - 400030, Maharashtra

Occupation: Professional Director

DIN: 00034416

Term: Liable to retire by rotation

Nationality: Indian 6. Mr. Bansidhar S. Mehta 80 Independent Director 1. Century Enka Limited 2. Procter & Gamble Hygiene Address: 5th Floor, Maheshwari and Health Care Limited Mansion, 3. IL&FS Investment 34 - Napean Sea Road, Managers Limited Mumbai - 400006, Maharashtra 4. Atul Limited 5. Pidilite Industries Limited Occupation: Practicing 6. Sasken Communication Chartered Accountant Technologies Limited 7. Gillette India Limited DIN: 00035019 8. NSDL e-Governance Infrastructure Limited Term: July 21, 2014 to July 20, 9. Tyssenkrupp Industrial 2019; not liable to retire by Solutions (India) Private rotation Limited

Nationality: Indian Foreign Companies Jumbo World Holdings Limited (BVI)

7. Mr. Dhruba N. Ghosh 87 Independent Director 1. Birla Corporation Limited 2. Peerless Hospitex Hospital Address: South City Projects & Research Center Limited (Kolkata) Limited Tower-1, Flat no. 22E,

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Sr. Name, Address, Occupation, Age Designation Details of other directorships No. DIN, Current Term and Nationality 375, Prince Shah Road, Kolkata - 700068, West Bengal

Occupation: Professional Director

DIN: 00012608

Term: July 21, 2014 to July 20, 2019; not liable to retire by rotation

Nationality: Indian

8. Dr. Surendra A. Dave 79 Independent Director 1. Centre For Monitoring Indian Economy Private Address: 17/31, MHB Colony, Limited Bandra Reclamation, 2. Ankar Capital India Private Bandra (West), Limited Mumbai - 400050, Maharashtra 3. Phoenix Township Limited 4. India Value Fund Trustee Occupation: Professional Company Private Limited Director 5. Shrenuj and Company Limited DIN: 00001480 6. Escorts Limited 7. IVF Trustee Company Term: July 21, 2014 to July 20, Private Limited 2019; not liable to retire by 8. Deccan Cements Limited rotation 9. HDFC Standard Life Insurance Company Limited Nationality: Indian 10. HDFC Pension Management Company Limited

9. Mr. Nasser M. Munjee 62 Independent Director 1. ABB India Limited 2. Ambuja Cements Limited Address: Benedict Villa, House 3. Britannia Industries Limited No.471, 4. Cummins India Limited Saud Vaddo, 5. Tata Chemicals Limited Chorao Island, 6. Tata Motors Limited Tiswadi, Goa - 403102 7. DCB Bank Limited 8. Go Airlines (India) Limited Occupation: Professional 9. Tata Motors Finance Director Limited 10. Aarusha Homes Private DIN: 00010180 Limited 11. Aga Khan Rural Support Term: July 21, 2014 to July 20, Programme (India) 2019; not liable to retire by 12. Indian Institute for Human rotation Settlements

Nationality: Indian Foreign Companies

1. Tata Chemicals North America, Inc., USA 2. Jaguar Land Rover Automotive Plc., U.K. 3. Strategic Foods International

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Sr. Name, Address, Occupation, Age Designation Details of other directorships No. DIN, Current Term and Nationality Co. (LLC), Dubai, U.A.E.

10. Dr. Bimal N. Jalan 74 Independent Director 1. Associated Advisory Services Private Limited, Address: 4, Babar Road, New Delhi New Delhi - 110001, National Capital Territory of Delhi

Occupation: Professional Director

DIN: 00449491

Term: July 21, 2014 to July 20, 2019; not liable to retire by rotation

Nationality: Indian

11. Dr. Jamshed J. Irani 79 Independent Director 1. Repro India Limited 2. Electro Steel Castings Address: H No. 3 C Road (East) Limited Northern Town, Bistupur East Singhbhum, Jamshedpur - 831001, Jharkhand

Occupation: Professional Director

DIN: 00311104

Term: July 21, 2014 to July 20, 2019; not liable to retire by rotation

Nationality: Indian

Mr. Deepak S. Parekh is the Non-executive Chairman of our Company. He is a Fellow of The Institute of Chartered Accountants in England & Wales. He joined our Company in a senior management position in 1978 and was inducted as a whole-time director of our Company in 1985 and subsequently appointed as the Managing Director of our Company (designated as “Chairman”) in 1993. He retired as the Managing Director, on December 31, 2009. He was appointed as a Director of our Company, liable to retire by rotation, by the shareholders of our Company at its AGM held on July 14, 2010. He is a director on the boards of several companies in India.

Mr. Keki M. Mistry is the Vice Chairman and Chief Executive Officer of our Company. He is a Fellow of The Institute of Chartered Accountants of India. He joined our Company in 1981 and was appointed as an Executive Director in 1993, as the Deputy Managing Director in 1999 and as the Managing Director in 2000. He was re- designated as the Vice Chairman and Managing Director of our Company in October 2007 and as the Vice Chairman and Chief Executive Officer, with effect from January 1, 2010.

Ms. Renu Sud Karnad is the Managing Director of our Company. She holds a Bachelor’s degree in law from the University of Mumbai and a Master’s degree in Economics from the University of Delhi. She is a Parvin Fellow – Woodrow Wilson School of International Affairs, Princeton University, U.S.A. She joined our Company in 1978 and was appointed as the Executive Director of our Company in 2000 and was re-designated as the Joint Managing Director of our Company in October 2007. She was appointed as the Managing Director

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of our Company, with effect from January 1, 2010.

Mr. V. Srinivasa Rangan is the Executive Director and CFO of our Company. He holds a Bachelor’s degree in Commerce and is an Associate of The Institute of Chartered Accountants of India and of The Institute of Cost Accountants of India. He joined our Company in 1986 and served as a Senior General Manager-Corporate Planning and Finance since 2006. He was appointed as the Executive Director of our Company with effect from January 1, 2010 and is responsible for the Treasury, Resources and Accounts functions of our Company.

Mr. Dattatraya M. Sukthankar is a Non-executive Director of our Company. He was an officer of the Indian Administrative Service and was the Secretary, Ministry of Urban Development, Government of India and, subsequently, the Chief Secretary to the Government of Maharashtra. He is recognised as an expert on issues related to urban development and management and has been associated with the housing sector in India for a number of years. He has been a Director of our Company since 1989.

Mr. Bansidhar S. Mehta is an Independent Director in our Company. He is a Fellow of The Institute of Chartered Accountants of India. He is a Chartered Accountant in practice dealing with taxation, accountancy and valuation of mergers and acquisitions. He is a director on the boards of several companies in India. He has been a Director of our Company since 1988.

Mr. Dhruba N. Ghosh is an Independent Director in our Company. He holds a Master’s degree in economics from Calcutta University. He was the former Chairman of the State Bank of India. He has been a Director of our Company since 1989.

Dr. Surendra A. Dave is an Independent Director in our Company. He holds a Master’s degree in economics from the University of Rochester and a Doctorate degree in economics from University of Cambridge. He was the former Chairman of the SEBI and the Unit Trust of India. He is a director on the boards of several companies in India. He has been a Director of our Company since 1990. He is the nominee of our Company on the board of HDFC Life.

Mr. Nasser M. Munjee is an Independent Director in our Company. He holds a Master’s degree in economics from the London School of Economics, United Kingdom. He is a director on the boards of several companies in India. He was appointed as an Executive Director of our Company in 1993 and has worked with our Company from 1978 to 1998. He is deeply interested in development and infrastructure issues.

Dr. Bimal N. Jalan is an Independent Director of our Company. He holds a Bachelor’s degree in Arts (Economics) from Presidency College, Kolkata and a Masters in Arts from University of Cambridge, U.K. He is a former Governor of the Reserve Bank of India. He has previously held several positions in the Government including those of the Finance Secretary and Chairman of the Economic Advisory Council to Prime Minister. He was also a nominated Member of Parliament from 2003 to 2009. He was associated with a number of public institutions and was a Chairman of Centre for Development Studies, Thiruvananthapuram. He has been a Director of our Company since 2008.

Dr. Jamshed J. Irani is an Independent Director in our Company. He holds a Master’s degree in science from the Nagpur University and a Master’s degree in Metallurgy from University of Sheffield, U.K. He holds a Doctorate degree in Metallurgy from the University of Sheffield, U.K. The President of India conferred on him the award of Padma Bhushan in 2007 for his services to trade and industry in India. Queen Elizabeth II conferred on him honorary Knighthood (KBE) for his contribution to Indo-British Trade and Co-operation. He has been a Director of our Company since 2008.

Relationship with other Directors

None of the Directors of our Company are related to each other.

Borrowing powers of our Board

Our Board is authorised to borrow money upon such terms and conditions and with or without security as the Board may think fit, which may exceed the aggregate of our paid up capital and free reserves, provided that the aggregate amount of its borrowings shall not exceed ` 3,00,000 crore at any time.

Interest of the Directors

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All the Directors may be deemed to be interested to the extent of fees payable to them for attending Board or committee meetings, commission as well as to the extent of reimbursement of expenses payable to them. The Whole-time Directors may also be deemed to be interested to the extent of remuneration paid to them for their services rendered.

All the Directors may also be regarded as interested in any Equity Shares or any stock options held by them and also to the extent of any dividend payable to them and other distributions in respect of such Equity Shares held by them. All Directors may also be regarded to be interested in the deposits placed by them or their respective relatives or the companies, firms and trusts, in which they are interested as directors, members, partners, trustees with our Company, housing loans availed from our Company, and Equity Shares held by, or subscribed by, and allotted to, their respective relatives or the companies, firms and trusts, in which they are interested as directors, members, partners, trustees.

Except for the agreements entered into with the Whole-time Directors of our Company in relation to their terms of appointment, our Company has not entered into any contract, agreement or arrangement in which any of the Directors are interested, directly or indirectly, during the two years preceding the date of this Placement Document and no payments have been made to them in respect of any such contracts, agreements or arrangements.

Shareholding of Directors

The following table sets forth the shareholding of the Directors in our Company as of June 30, 2015:

Name Number of Percentage of Total Equity Shares Number of Outstanding Equity Shares Mr. Deepak S. Parekh 16,00,000 0.1 Mr. Keki M. Mistry 7,00,000 0.0 Ms. Renu Sud Karnad 23,01,072 0.2 Mr. V. Srinivasa Rangan 3,90,000 0.0 Mr. Bansidhar S. Mehta 4,35,000 0.0 Mr. Dhruba N. Ghosh 1,62,935 0.0 Dr. Surendra A. Dave 3,70,215 0.0 Mr. Nasser M. Munjee 3,100 0.0 Dr. Bimal N. Jalan 15,000 0.0 Dr. Jamshed J. Irani 65,000 0.0 Mr. Dattatraya M. Sukthankar 2,65,799 0.0

Terms of appointment of the Whole-time Directors

Except for Mr. Keki Mistry, Ms. Renu Sud Karnad, and Mr. V. Srinivasa Rangan, our Company does not have any Whole-time Directors.

The following is a description of the terms of appointment of Mr. Keki Mistry as a Managing Director, designated as the Vice Chairman and CEO of our Company:

a. Period of Agreement: Five years with effect from November 14, 2010, up to November 13, 2015. b. Salary: Within the range of ` 10 lakhs to ` 20 lakhs per month. The current salary paid to him is ` 17.10 lakhs per month, effective from January 1, 2015.

The following is a description of the terms of appointment of Ms. Renu Sud Karnad as the Managing Director of our Company:

a. Period of Agreement: Five years with effect from January 1, 2015, up to December 31, 2019 and liable to retire by rotation. b. Salary: Within the range of ` 10 lakhs to ` 20 lakhs per month. The current salary paid to her is ` 15.60 lakhs per month, effective from January 1, 2015.

The following is a description of the terms of appointment of Mr. V. Srinivasa Rangan as a Whole-time

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Director, designated as the Executive Director of our Company:

a. Period of Agreement: Five years with effect from January 1, 2015, up to December 31, 2019 and liable to retire by rotation. b. Salary: Within the range of ` 5 lakhs to ` 15 lakhs per month. The current salary paid to him is ` 10.40 lakhs per month, effective from January 1, 2015.

Mr. V. Srinivasa Ranagan has also been appointed as the CFO of our Company.

Common terms applicable to the agreements entered into with Mr. Keki Mistry, Ms. Renu Sud Karnad and Mr. V. Srinivasa Rangan:

a. Commission: Commission per annum shall be equivalent to such sums as may be fixed by the Board or the Nomination and Remuneration Committee of Directors, subject to an overall ceiling of 1% of the net profits of our Company. b. Perquisites: Perquisites per annum to each of them shall be equivalent to their respective annual salary. Perquisites include rent free furnished accommodation, reimbursement of gas, electricity, water charges and medical expenses for self and family members, furnishings, payment of premium on personal accident and health insurance, club fees and such other perquisites as may be approved by the Board or the Nomination and Remuneration Committee of Directors, from time to time, subject to an overall ceiling of their respective annual salary. c. Other benefits and allowances: Other benefits and allowances include use of car with driver, telephones for our Company’s business (expenses whereof would be borne and paid by our Company), house rent allowance/ house maintenance allowance, leave travel allowance, contributions to provident fund, superannuation fund and all other benefits as are applicable to directors and /or senior employees of our Company including but not limited to gratuity, leave entitlement, encashment of leave and housing and other loan facilities as per the schemes of our Company and as approved by the Board or the Nomination and Remuneration Committee of Directors from time to time. d. Retirement benefits: Subject to fulfilment of eligibility criteria and/or qualifying conditions(s), post retirement pension and other post retirement benefit(s) in the form of medical benefits and the use of car and all other benefits as are provided to directors and/ senior employees of our Company, in accordance with the schemes framed/ to be framed by our Company and as approved by the Board or the Nomination and Remuneration Committee of Directors from time to time. e. Employee Stock Options: Shall be eligible for stock options under the employee stock option scheme(s) as may be approved by the Board or Nomination and Remuneration Committee of Directors from time to time. f. Valuation of perquisites: Perquisites/ allowances shall be valued as per Income-Tax Rules, 1962, in cases where the same is otherwise not possible to be valued. g. Minimum remuneration: In the event of loss, absence or inadequacy of profits in any Fiscal during the tenure of the appointment, the Managing/Executive Director shall, subject to the approval of the Central Government, if required, be paid remuneration by way of salary, commission, perquisites, other benefits and allowances as remuneration, subject to restrictions, if any, set out in the Companies Act from time to time. h. The terms and conditions of the appointment may be altered and modified from time to time by the Board or the Nomination and Remuneration Committee of Directors, as it may, in its discretion, deem fit within the maximum amount payable to the Whole-time Directors in accordance with the provisions of the Companies Act, 2013 or any amendments made therein. i. The Managing/Executive Director shall be eligible to receive remuneration from our Subsidiaries, subject to it being disclosed in the Director’s Report of our Company.

Remuneration of the Directors

Executive Directors

The Executive Directors are paid a remuneration consisting of commission as approved by the Nomination and Remuneration Committee of Directors and salary, perquisites and other allowances as per their terms of appointment mentioned above.

The following tables set forth the remuneration paid by our Company to the present Executive Directors of our Company for the Fiscals 2016 (to the extent paid as on the date of this Placement Document), 2015, 2014 and

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2013:

Commission (`) Name of the Directors Fiscal 2016 Fiscal 2015 Fiscal 2014 Fiscal 2013 Mr. Keki Mistry - 5,13,00,000 4,45,50,000 3,87,00,000 Ms. Renu Sud Karnad - 4,68,00,000 4,06,50,000 3,54,00,000 Mr. V. Srinivasa Rangan - 3,12,00,000 2,59,50,000 2,25,00,000

Salary and Perquisites (`) Name of the Directors Fiscal 2016 Fiscal 2015 Fiscal 2014 Fiscal 2013 Mr. Keki Mistry 1,68,84,353.33 3,66,53,094 3,32,26,243 2,79,95,744 Ms. Renu Sud Karnad 1,41,17,582.29 3,32,90,688 3,09,69,159 2,66,02,658 Mr. V. Srinivasa Rangan 93,44,240.03 2,25,86,995 1,94,69,302 1,60,24,574

Total (`) Name of the Directors Fiscal 2016 Fiscal 2015 Fiscal 2014 Fiscal 2013 Mr. Keki Mistry 1,68,84,353.33 8,79,53,094 7,77,76,243 6,66,95,744 Ms. Renu Sud Karnad 1,41,17,582.29 8,00,90,688 7,16,19,159 6,20,02,658 Mr. V. Srinivasa Rangan 93,44,240.03 5,37,86,995 4,54,19,302 3,85,24,574

Non-executive Directors

The non-executive Directors are paid a remuneration consisting of commission and sitting fees, which is determined by the Board. Our Company pays sitting fees of ` 50,000 per meeting to non-executive Directors for attending meetings of the Board and all committees thereof.

The following tables set forth the remuneration paid by our Company to the present non-executive Directors of our Company for the Fiscals 2016 (to the extent paid as on the date of this Placement Document), 2015, 2014 and 2013:

Commission (`) Name of the Directors Fiscal 2016 Fiscal 2015 Fiscal 2014 Fiscal 2013 Mr. Deepak S. Parekh - 1,80,00,000 1,80,00,000 1,80,00,000 Mr. Bansidhar S. Mehta - 20,00,000 15,00,000 10,00,000 Mr. Dhruba N. Ghosh - 20,00,000 15,00,000 10,00,000 Dr. Surendra A. Dave - 20,00,000 15,00,000 10,00,000 Mr. Nasser M. Munjee - 20,00,000 15,00,000 10,00,000 Dr. Bimal N. Jalan - 20,00,000 15,00,000 10,00,000 Dr. Jamshed J. Irani - 20,00,000 15,00,000 10,00,000 Mr. Dattatraya M. Sukthankar - 20,00,000 15,00,000 10,00,000

Sitting fees (`) Name of the Directors Fiscal 2016 Fiscal 2015 Fiscal 2014 Fiscal 2013 Mr. Deepak S. Parekh 4,50,000 7,00,000 2,60,000 3,40,000 Mr. Bansidhar S. Mehta 3,00,000 9,00,000 2,80,000 3,20,000 Mr. Dhruba N. Ghosh 2,50,000 7,00,000 2,20,000 1,60,000 Dr. Surendra A. Dave 3,00,000 9,20,000 2,80,000 3,00,000 Mr. Nasser M. Munjee 1,50,000 3,00,000 1,00,000 80,000 Dr. Bimal N. Jalan 50,000 2,50,000 80,000 1,00,000 Dr. Jamshed J. Irani 1,50,000 5,00,000 1,00,000 1,00,000 Mr. Dattatraya M. Sukthankar 1,00,000 3,00,000 1,00,000 1,00,000

Total (`) Name of the Directors Fiscal 2016 Fiscal 2015 Fiscal 2014 Fiscal 2013 Mr. Deepak S. Parekh 4,50,000 1,87,00,000 1,82,60,000 1,83,40,000 Mr. Bansidhrar S. Mehta 3,00,000 29,00,000 17,80,000 13,20,000 Mr. Dhruba N. Ghosh 2,50,000 27,00,000 17,20,000 11,60,000 Dr. Surendra A. Dave 3,00,000 29,20,000 17,80,000 13,00,000

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Total (`) Name of the Directors Fiscal 2016 Fiscal 2015 Fiscal 2014 Fiscal 2013 Mr. Nasser M. Munjee 1,50,000 23,00,000 16,00,000 10,80,000 Dr. Bimal N. Jalan 50,000 22,50,000 15,80,000 11,00,000 Dr. Jamshed J. Irani 1,50,000 25,00,000 16,00,000 11,00,000 Mr. Dattatraya M. Sukthankar 1,00,000 23,00,000 16,00,000 11,00,000

Changes in the Board in the last three years

Name of Director Date of Date of cessation Remarks appointment Resignation; appointed as a Director Mr. Shirish B. Patel - October 22, 2013 of our Company on October 17, DIN: 00027512 1977 Resignation; appointed as a Director Mr. Keshubh Mahindra - October 22, 2013 of our Company on October 17, DIN: 00004489 1977 Mr. Dhruba N. Ghosh Appointed as an Independent July 21, 2014 - DIN: 00012608 Director Dr. Ram S. Tarneja Appointed as an Independent July 21, 2014 - DIN: 00009395 Director Dr. Bimal N. Jalan Appointed as an Independent July 21, 2014 - DIN: 00449491 Director Mr. Bansidhar. S. Mehta Appointed as an Independent July 21, 2014 - DIN: 00035019 Director Dr. Surendra. A. Dave Appointed as an Independent July 21, 2014 - DIN: 00001480 Director Dr. Jamshed. J. Irani Appointed as an Independent July 21, 2014 - DIN: 00311104 Director Mr. Nasser M. Munjee Appointed as an Independent July 21, 2014 - DIN: 00010180 Director Ms. Renu Sud Karnad* January 1, 2015 - Appointed as a Managing Director DIN: 00008064 Mr. V. Srinivasa Rangan* January 1, 2015 - Appointed as an Executive Director DIN: 00030248 Mr. Ram S. Tarneja Vacation of office on account of - August 7, 2015 DIN: 00009395 death on August 7, 2015 *Ms. Renu Sud Karnad and Mr. V. Srinivasa Rangan were re-appointed as Managing Director and Executive Director, respectively with effect from January 1, 2015.

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Management Organisation Structure:

Key Managerial Personnel

The following table sets forth details regarding our key managerial personnel in terms of the Companies Act, other than our Whole-time Directors including our Managing Director, as of the date of this Placement Document:

Sr. Name Age (years) Designation No. 1. Mr. Ajay Agarwal 43 Company Secretary

Biographies of the key managerial personnel

The details of the key management personnel other than our Whole-time Directors, as on the date of this Placement Document, are set out below:

Mr. Ajay Agarwal, aged 43 years, is the Company Secretary of our Company. He is an Associate Member of the Institute of Company Secretaries of India. He has 17 years of experience in corporate and securities laws. He has been associated with our Company since September 2000. He has been appointed as the Company Secretary and the key managerial person of our Company under Section 203 of the Companies Act, 2013 with effect from March 20, 2015. He is responsible for ensuring compliances with the applicable corporate and securities laws, secretarial standards etc. He is also the Compliance Officer of our Company under the Equity and Debt Listing Agreements, Insider Trading Regulations, 2015 and Securities and Exchange Board of India (Registrar and Share Transfer Agent) Regulations, 1993.

All the key management personnel are permanent employees of our Company.

Shareholding of key managerial personnel

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The following table sets forth the shareholding of our key managerial personnel other than our Whole-time Directors as of June 30, 2015:

Name Number of Percent of Equity Shares Total Number of Outstanding Equity Shares Mr. Ajay Agarwal 41,190 0.00

Interest of key managerial personnel

The key managerial personnel of our Company do not have any interest in our Company other than to the extent of the remuneration or benefits to which they are entitled to as per their terms of appointment and reimbursement of expenses incurred by them and to the extent of the Equity Shares held by them or their dependents in our Company, if any or any stock options held by them.

Senior Management Personnel

The following is list of the senior management personnel of our Company as of the date of this Placement Document together with a brief description of their respective biographies:

Mr. Conrad D’Souza is a Member of Executive Management and Chief Investor Relations Officer of our Company and his responsibilities include corporate planning and budgeting, corporate finance and investor relations. He holds a Masters’ degree in Commerce from University of Mumbai, a Masters’ degree in Business Administration from South Gujarat University and is a Senior Executive Program (SEP) graduate of the London Business School. He has been associated with our Company since 1984. He was earlier the Treasurer of our Company and his responsibilities included resource mobilisation both domestic and international and asset liability management. Mr. D’Souza has also worked earlier in the operations and management services at our Company and was also the Regional Manager for the State of Maharashtra. He has been a consultant to USAID, United Nations Development Programme and International Finance Corporation (Washington) and has undertaken assignments in Asia, Africa and Eastern Europe. He has also been a speaker at various international seminars on housing finance. He is a member of the Asset Liability Committee and the Risk Management Committee of our Company.

Mr. Suresh Menon is a Member of Executive Management of our Company and is responsible for policy implementation and process monitoring, internal audit and Information Technology User Support Group. He holds a Bachelor’s degree in Commerce from Maharaja Sayajirao University of Baroda and a Master’s degree in Business Administration from South Gujarat University. He has been associated with our Company since 1984. He has previously held the positions of the Head of the Recoveries department, Area Manager in Baroda and Regional Manager for Mumbai. He was also responsible for laying down the Retail Lending policies for our Company and coordinating with the marketing, information technology, legal and communications department for development and implementation of new lending products. He was also deputed as the CEO of HDFC General Insurance Company in 2007-2008. He is currently co-ordinating the consultancy and training assignments with Sarana Multigriya Finansial - Indonesia. He is also a member of the core faculty at the Frankfurt School of Finance and Management, Germany - Housing Finance Summer Academy. He is a member of the Risk Management Committee of our Company.

Ms. Madhumita Ganguli is a Member of Executive Management of our Company and is responsible for the home loan operations of our Company in the National Capital Region and the states of Punjab and Madhya Pradesh. She holds a Bachelor’s degree in Law from University of Delhi. She has been associated with our Company since 1981 and was responsible for steering the Business Process Reengineering program in our Company for retail lending, which has helped our Company accentuate its competitive edge by introducing technology in the underwriting process. She was a key member of the team that provided consultancy for setting up the operations of Mauritius Housing Finance Company. She is a member of the National Housing Bank Working Committee on Standardizing of Loan Documentation for Retail Housing Loans and a committee set up by FICCI to formulate recommendations for the Government of India for real estate sector. She has also been a speaker at various international and national seminars on housing finance. She is a member of the Risk Management Committee of our Company.

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Mr. M Ramabhadran is a Member of Executive Management of our Company and is responsible for Accounts, Information Technology User Support Group (Accounts). He is a Fellow member of Institute of Chartered Accountants of India. He has been associated with our Company since 1983. He is a member of the Asset Liability Committee of our Company.

Mr. Mathew Joseph is a Member of Executive Management of our Company and is responsible for the operations and business of our Company in the States of Tamil Nadu, Andhra Pradesh and Telangana. He is a member of Institute of Chartered Accountants of India. He has been associated with our Company since 1988. He is also a member of a group formulating policies and processes for individual loans. He has been involved in consultancy assignments undertaken by our Company in Africa and Asia to support and establish their housing finance institutions.

Mr. Gautam Bhagat is a Member of Executive Management of our Company. He holds a Masters degree in Business Administration from Symbiosis Institute of Business Management, Pune. He has been associated with our Company since 1988 and represented our Company in our joint venture with the Chubb Corporation and was responsible for the Accidental and Health Insurance vertical of the newly formed company, HDFC Chubb General Insurance Company. He is currently deputed as the CEO of HDFC Sales Private Limited, a wholly owned subsidiary of our Company which serves as a distribution arm of our Company offering doorstep service to prospective clients.

Mr. R. Arivazhagan is a Member of Executive Management of our Company and is responsible for all information technology decisions at our Company and HDFC Mutual Fund Limited. He holds a post graduate diploma in Management from IIM Calcutta. He has been associated with our Company since 1986. He has previously worked with Larsen and Toubro Limited as a management trainee.

Mr. Rajeev Sardana is a Member of Executive Management of our Company and is the National Head - Self Employed Business and Loan against Property and also the Business Head for the states of Uttar Pradesh, Uttarakhand and Bihar. He is a member of the Institute of Chartered Accountants of India. He has been associated with our Company since 1987 and is also involved in the development of products and policies for retail mortgage loans. He has been involved in consultancy assignments undertaken by our Company in various countries across Asia to support and establish their housing finance institutions.

Mr. S. N. Nagendra is a Member of Executive Management of our Company and is responsible for home loan operations of our Company in the states of Karnataka and Goa. He has been associated as a legal officer of our Company since 1982. He has been a speaker at various seminars on real estate and project financing. He has in the past, also advised the local government on financing housing projects and infrastructure, securitisation, stamp duty, etc.

Corporate governance

The Board presently consists of 11 Directors. In compliance with the requirements of the Equity Listing Agreement, the Board of Directors consists of six independent Directors. Our Company is in compliance with the new corporate governance requirements under clause 49 of the Equity Listing Agreement effective from October 1, 2014.

Committees of the Board of Directors

The Board has constituted committees, which function in accordance with the relevant provisions of the Companies Act, directions from RBI, ESOP Guidelines and the Equity Listing Agreement. The Committees constituted in accordance with the Equity Listing Agreement are: (i) Audit Committee; (ii) Nomination and Remuneration Committee; (iii) Stakeholders’ Relationship Committee; (iv) Risk Management Committee; (v) Corporate Social Responsibility Committee; and (vi) Allotment Committee - Equity Shares.

The following table sets forth the members of the aforesaid committees as of the date of this Placement Document:

Committee Members Audit Committee Dr. S. A. Dave (Chairman), Mr. B. S. Mehta and Mr. D. N. Ghosh Nomination and Remuneration Mr. B. S. Mehta (Chairman), Mr. Nasser Munjee and Dr. J. J. Committee Irani

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Committee Members Stakeholders Relationship Committee* Dr. S. A. Dave and Mr. V. Srinivasa Rangan Risk Management Committee Dr. S. A. Dave (Chairman), Mr. Keki M. Mistry, Ms. Renu Sud Karnad, Mr. V. Srinivasa Rangan, Mr. Conrad D’Souza, Ms. Madhumita Ganguli and Mr. Suresh Menon Corporate Social Responsibility Mr. Deepak S. Parekh (Chairman), Mr. Keki M. Mistry, Ms. Renu Committee Sud Karnad, Mr. V. Srinivasa Rangan and Mr. D. N. Ghosh Allotment Committee - Equity Shares Mr. Deepak S. Parekh (Chairman), Mr. Keki M. Mistry, Ms. Renu Sud Karnad, Mr. V. Srinivasa Rangan and Mr. D. M. Sukthankar *Dr. Ram S. Tarneja served as the Chairman of the Stakeholders Relationship Committee until August 7, 2015; the Board shall appoint a new Chairman at its next meeting.

Other confirmations

1. None of the Directors or key managerial personnel of our Company have any financial or other material interest in the Issue. 2. None of our Company’s Directors have been named in the RBI defaulter list and/or the Export Credit Guarantee Corporation of India default list.

Related Party Transactions

For details in relation to the related party transactions entered by our Company during the last three Fiscals, as per the requirements under Accounting Standard 18 issued by the Institute of Chartered Accountants in India, see the section titled “Financial Statements” on page 201 of this Placement Document.

Policy on Disclosures and Internal Procedure for prevention of Insider Trading

The Insider Trading Regulations, 2015 applies to our employees and to our Company which requires our Company to implement a code of internal procedures and conduct for the prevention of insider trading. Our Company is in compliance with the same and has implemented a Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (“Code”) for all employees, officers, directors and persons authorized to speak on behalf of our Company. Mr. Conrad D’Souza, a Member of Executive Management of our Company, acts as the Chief Investor Relations Officer of our Company under the aforesaid Code. In terms of the Companies Act, 2013, our Directors and key managerial personnel are prohibited from (a) acquiring an option over, or entering into forward dealings in securities of our Company, its subsidiaries or associate companies; and (b) engaging in insider trading.

Our Company has also implemented a Share Dealing Code which prescribes the detailed procedures and guidelines to be adopted whilst dealing in the Equity Shares of our Company. The Share Dealing Code is applicable to all Directors, employees and their immediate relatives. Mr. Ajay Agarwal, the Company Secretary is the Compliance Officer under the said code.

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PRINCIPAL SHAREHOLDERS

Our Company does not have an identifiable promoter or any principal shareholder. The following table sets forth the shareholding pattern of our Company as on June 30, 2015:

Category of Shareholder No. of Total No. of Total No. of Total Shares pledged or Shareholders Shares Shares held in Shareholding as a otherwise Dematerialized % of Total No. of encumbered Form Shares As a As a % Number As a % of of of % of (A+B) (A+B+C) shares Total No. of Shares (A) Shareholding of Promoter and Promoter Group (1) Indian (2) Foreign (B) Public Shareholding (1) Institutions Mutual Funds / UTI 285 3,50,42,625 3,50,37,875 2.22 2.22 0 0.00 Financial Institutions / Banks 83 1,88,83,424 1,88,76,324 1.20 1.20 0 0.00 Central Government / State 7 10,11,773 10,11,773 0.06 0.06 0 0.00 Government(s) Insurance Companies 26 9,15,84,418 9,15,83,918 5.81 5.81 0 0.00 Foreign Institutional 1,215 1,24,22,77,751 1,24,22,77,751 78.82 78.82 0 0.00 Investors Any Others (Specify) 5 26,18,564 26,18,564 0.17 0.17 0 0.00 Others 5 26,18,564 26,18,564 0.17 0.17 0 0.00 Sub Total 1,621 1,39,14,18,555 1,39,14,06,205 88.29 88.29 0 0.00 (2) Non-Institutions Bodies Corporate 2,253 2,58,17,020 2,54,66,685 1.64 1.64 0 0.00 Individuals Individual shareholders 1,87,650 11,31,40,112 9,85,02,828 7.18 7.18 0 0.00 holding nominal share capital up to Rs. 1 lakh Individual shareholders 212 2,73,22,769 2,71,14,219 1.73 1.73 0 0.00 holding nominal share capital in excess of Rs. 1 lakh Any Others (Specify) 7,881 1,83,32,149 1,83,17,249 1.16 1.16 0 0.00 Hindu Undivided Families 3,304 13,09,069 13,09,069 0.08 0.08 0 0.00 Non Resident Indians 4,248 33,26,649 33,15,649 0.21 0.21 0 0.00 Clearing Members 247 13,90,514 13,90,514 0.09 0.09 0 0.00 Trusts 42 35,36,479 35,36,479 0.22 0.22 0 0.00 Others 1 427 427 0.00 0.00 0 0.00 Others 39 87,69,011 87,65,111 0.56 0.56 0 0.00 Sub Total 1,97,996 18,46,12,050 16,94,00,981 11.71 11.71 0 0.00 Total Public shareholding 1,99,617 1,57,60,30,605 1,56,08,07,186 100.00 100.00 0 0.00 (B) Total (A)+(B) 1,99,617 1,57,60,30,605 1,56,08,07,186 100.00 100.00 0 0.00 (C) Shares held by 0 0 0 0.00 0.00 0 0.00 Custodians and against which Depository Receipts have been issued (1) Promoter and Promoter 0 0 0 0.00 0.00 0 0.00 Group (2) Public 0 0 0 0.00 0.00 0 0.00 Sub Total 0 0 0 0.00 0.00 0 0.00 Total (A)+(B)+(C) 1,99,617 1,57,60,30,605 1,56,08,07,186 0.00 100.00 0 0.00

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The following table sets forth the shareholding of persons belonging to the category “Public” and holding more than 1.00% of the total number of Equity Shares as at June 30, 2015:

Sr. Name of the Shareholder No. of Equity Total Shareholding as a No. Shares % of total No. of Equity Shares 1. Europacific Growth Fund 6,52,90,337 4.14% 2. Oppenheimer Developing Markets Fund 6,48,24,142 4.11% 3. Life Insurance Corporation of India 4,21,86,012 2.68% Vanguard Emerging Markets Stock Index Fund, A 4. 2,83,07,441 1.80% Series of Vanguard International Equity Index Fund 5. Virtus Emerging Markets Opportunities 2,65,24,186 1.68% 6. Government of Singapore 2,45,98,831 1.56% 7. Copthall Mauritus Investment Limited 2,28,92,957 1.45% National Westminster Bank Plc. as depository of First 8. State Asia Pacific Leaders Fund a Sub Fund of First 2,25,96,049 1.43% State Investments ICVC 9. Aberdeen Global Indian Equity (Mauritius) Limited 2,16,46,089 1.37% 10. Abu Dhabi Investment Authority – GULAB 2,12,82,435 1.35% 11. Vontobel India Fund 2,04,39,081 1.30% 12. Ishares India Index Mauritius Company 1,86,71,808 1.18% 13. Aberdeen Emerging Markets Fund 1,73,00,000 1.10% Total 3,96,559,368 25.15%

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TERMS AND CONDITIONS OF NCDS

The following other than the words in italics constitutes the Terms and Conditions of the Non-Convertible Debentures (“NCD Conditions”) and will appear on the reverse of each NCD Consolidated Certificate (as defined below):

The issue of 5,000 1.43% secured redeemable non-convertible debentures of the face value of ` 1,00,00,000 each due in March 2017 (“NCDs”) of Housing Development Finance Corporation Limited (“Company”), was authorized by a resolution of the Board of Directors and shareholders of our Company each on July 28, 2015 and July 28, 2015. The NCDs are constituted pursuant to trust deed dated on or about the Closing Date (“Debenture Trust Deed”) entered into between our Company and IDBI Trusteeship Services Limited as trustee for the NCD holders (“Debenture Trustee”), which term shall, where the context so permits, include all other persons for the time being acting as Debenture Trustee. The statements in these NCD Conditions include summaries of, and are subject to, the detailed provisions of the Debenture Trust Deed. The NCD holders are entitled to the benefit of the Debenture Trust Deed and are bound by, and are deemed to have notice of, all the provisions of the Debenture Trust Deed. Bidders are requested to note that a Bid for one NCD entitles and requires a Bidder to Bid for 7,300 Warrants. Please note that submitting a Bid for NCDs and Warrants in this manner should not be taken to be indicative of the number of Securities that will be Allotted to a successful Bidder. Allotment of Securities will be undertaken by our Company, in its absolute discretion, in consultation with the Global Co-ordinators and Book Running Lead Managers.

1. Status

The NCDs constitute direct and secured obligations of our Company and shall rank pari passu inter se and without any preference or priority among themselves. Subject to any obligations preferred by mandatory provisions of the law prevailing from time to time, the NCDs shall also, as regards the principal amount of the NCDs, interest, early redemption amount and all other monies secured in respect of the NCDs, rank pari passu with all other present direct and secured obligations of our Company. The claims of the NCD holders (as defined hereinafter) shall be superior to the claims of the unsecured creditors of our Company (subject to any obligations preferred by mandatory provisions of the law prevailing from time to time).

2. Form, Denomination, Title and Listing

2.1 Form

2.1.1 The allotment of NCDs in this Issue shall only be in dematerialized form (i.e., not in the form of physical certificates, but be fungible and be represented by the statement issued through the electronic mode). Our Company has made depository arrangements with National Securities Depository Limited (“NSDL”) and Central Depository Services (India) Limited (“CDSL”, and together with NSDL, the “Depositories”) for the issue of NCDs in dematerialised form. Subject to NCD Condition, the NCD holders will hold the NCDs in dematerialised form and deal with the same in accordance with the provisions of the Depositories Act, 1996 and rules as notified by the Depositories from time to time.

2.1.2 The NCD holders may rematerialize the NCDs at any time after allotment, in accordance with the provisions of the Depositories Act, 1996 and rules as notified by the Depositories from time to time.

2.2 Denomination

The denomination of each NCD is ` 1,00,00,000.

In case of NCDs that are rematerialized and held in physical form, our Company will issue one certificate to the NCD holder for the aggregate amount of NCDs that are rematerialized and held by such NCD holder (each such certificate a “NCD Consolidated Certificate”). In respect of the NCD Consolidated Certificates, our Company will, upon receipt of a request from the NCD holder within five business days of such request, split such NCD Consolidated Certificates into smaller denominations in accordance with the Articles of Association, subject to a minimum denomination of one NCD (“Market Lot”). No fees would be charged for splitting any NCD Consolidated Certificates; however, stamp duty payable, if any, would be borne by the NCD holder. The request for split of a

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NCD Consolidated Certificate should be accompanied by the original NCD Consolidated Certificate which will, upon issuance of the split NCD Consolidated Certificates, be cancelled by our Company.

2.3 Title

In case of: (i) NCDs held in the dematerialized form, the person for the time being appearing in the register of beneficial owners of a Depository as an NCD holder, and (ii) NCDs held in physical form, the person for the time being appearing in the Register of NCD holders as an NCD holder shall be treated for all purposes by our Company, the Debenture Trustee, the Depositories and all other persons dealing with such person as the holder thereof and its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it or any writing on, theft or loss of the NCD Consolidated Certificate issued in respect of that NCD) and no person will be liable for so treating the holder. In these NCD Conditions, “NCD holder” and “holder” means the person in whose name an NCD is registered.

Title to the NCDs shall pass only by transfer and registration as described in NCD Condition.

2.4 Listing

The NCDs will be listed on the Wholesale Debt Market segments of NSE and BSE.

3. Transfers of NCDs; Issue of NCD Consolidated Certificates

3.1 Register

Our Company shall maintain at its Registered Office (or such other place as permitted by law) a register of NCD holders (the “Register of NCD holders”) containing such particulars as required by Section 88 of the Companies Act, 2013 read with Rule 4 of the Companies (Management and Administration) Rules, 2014. In terms of Section 88 of the Companies Act, 2013, read with Rule 4 of the Companies (Management and Administration) Rules, 2014 the Register of NCD holders maintained by a Depository for any NCDs in dematerialized form under Section 11 of the Depositories Act shall be deemed to be a corresponding Register of NCD holders solely for the purposes of this NCD Condition.

3.2 Transfers

Subject to NCD Conditions and:

3.2.1 In case of NCDs held in the dematerialized form, transfers of NCDs may be effected only through the Depository(ies) through which such NCDs to be transferred are held, in accordance with the provisions of the Depositories Act and the rules as notified by the Depositories from time to time.

3.2.2 In case of NCDs held in physical form, transfers of NCDs may be effected only by delivery of the NCD Consolidated Certificate issued in respect of that NCD, with the form of transfer on the back thereof duly completed and signed by the NCD holder or his duly authorized attorney, to the specified office of the Registrar. No transfer of title of an NCD will be valid unless and until entered on the Register of NCD holders. In accordance with Articles 51 and Article 60 of the Articles of Association, a fee not exceeding ` 1.00 may be charged by our Company for each NCD transferred and, if so required by the Directors, be paid before registration thereof.

3.3 No transfer except on Stock Exchange for one year

The NCDs shall not be sold for a period of one year from the date of Allotment except on a recognized stock exchange.

Please note that the Securities cannot be purchased pursuant to the Issue by non-residents, or by entities, which are ‘owned’ or ‘controlled’ by non-residents / persons resident outside India and whose downstream investments are regarded as foreign investment in terms of the Consolidated FDI Policy. Furthermore, subsequent to receipt of listing and trading approvals from the Stock Exchanges, as per the extant laws, the NCDs cannot be purchased by any FII or FPI.

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3.4 Transfer after any record date for interest payment or Maturity Date

If a request for transfer of NCDs is not received by the Registrar before any Record Date for Interest Payment (as defined in NCD Condition), the interest payable on such Interest Payment Date (as defined in NCD Condition) shall be paid to the seller and not to the buyer.

If a request for transfer of NCDs is not received by the Registrar before the Maturity Date (as defined in NCD Condition), the redemption proceeds of the NCDs shall be paid to the seller and not to the buyer.

In such cases, any claims shall be settled inter se between the parties and no claim or action shall lie against our Company.

3.5 Formalities free of charge

Registration of a transfer of NCDs and issuance of new NCD Consolidated Certificates will be effected without charge by or on behalf of our Company, but upon payment (or the giving of such indemnity as our Company may require) in respect of any tax or other governmental charges which may be imposed in relation to such transfer, and our Company being satisfied that the regulations concerning transfers of NCDs have been complied with.

4. Interest

Interest rate

4.1 The NCDs shall bear interest from and (including) the Date of Allotment at the rate of 1.43% per annum calculated by reference to the principal amount thereof and shall be payable annually from the deemed date of allotment (each an “Interest Payment Date”). The interest will be paid after the end of twelve months from the date of Allotment.

4.2 The first payment of interest will be made on October 5, 2016 in respect of the period from and including the date of Allotment (but excluding the Interest Payment Date).

4.3 The amount of interest payable on any Interest Payment Date shall be calculated on an actual-by-365 days a year basis on the face value of the principal amount outstanding on the NCDs. Interest shall be calculated on a 366 day basis in case of a leap year wherein the month of February has 29 days.

4.4 An additional interest at the rate of 2% over and above the rate of interest of 1.43% per annum shall be applicable in case of default in payment of interest or in redemption of the principal amount.

4.5 Interest shall be payable on the application money for the NCDs in respect of all valid applications, including refunds (subject to deduction of income tax under the provisions of the I.T Act, or any other statutory modification or re-enactment thereof, as applicable) to all applicants from the date of realization of the cheque(s)/demand draft(s) up to one day prior to the deemed date of allotment. This interest shall be calculated on an actual-by-365 days a year basis. The interest on application money shall be paid along with the refund orders where entire subscription amount is refunded and where an applicant is allotted lesser NCDs than applied for, the interest on application money shall be paid along with the refund of excess amount paid on application.

Accrual of interest

4.6 Each NCD shall cease to bear interest from the Maturity Date (as defined in NCD Condition) unless, upon due presentation thereof, payment of principal is improperly withheld or refused, in which event interest will continue to accrue as provided in these NCD Conditions.

5. Redemption and cancellation

5.1 Unless previously redeemed as provided herein, our Company will redeem the NCDs at 100% of their principal amount on March 28, 2017 (the “Maturity Date”). Our Company or the NCD holder may not redeem the NCDs at any time prior to the Maturity Date, except as provided in NCD Condition below.

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5.2 All NCDs that are redeemed will forthwith be cancelled.

6. Payments

6.1 Principal and early redemption amount

6.1.1 Payment of principal or early redemption amount will be made, on the Maturity Date or on the early redemption date (as the case may be), to:

(i) in case of NCDs held in the dematerialized form, to the person appearing in the register of beneficial owners of a Depository as the beneficial owner of such NCDs; and

(ii) in case of NCDs held in physical form, to the person appearing in the Register of NCD holders,

6.1.2 Payment of interest will be made, on the Interest Payment Date, to:

(i) in case of NCDs held in the dematerialized form, to the person appearing in the register of beneficial owners of a Depository as the beneficial owner of such NCDs; and

(ii) in case of NCDs held in physical form, to the person appearing in the Register of NCD holders on the date falling 15 days prior (the “Record Date for Interest Payment”) to the relevant Interest Payment Date.

6.1.3 Payment of principal, interest and early redemption amount will be made through the Electronic Clearing Service (“ECS”), Direct Credit, Real Time Gross Settlement (“RTGS”) or National Electronic Funds Transfer (“NEFT”) as per the applicable norms prescribed by the RBI.

6.2 Payments on Sundays and public holidays

If the Interest Payment Date, Maturity Date or early redemption date falls on a Sunday or a public holiday or any other holiday in Mumbai notified in terms of the Negotiable Instruments Act, 1881, then the interest would be paid on the next working day and the principal and early redemption amount, as the case may be, would be paid on the previous working day.

6.3 Applicable laws

All payments are subject in all cases to any applicable laws and regulations, but without prejudice to the provisions of NCD Condition. No commissions or expenses shall be charged to the NCD holders in respect of such payments.

6.4 Taxation

Payment of interest / early redemption amount will be subject to deduction of income tax under the provisions of I.T Act or any statutory modification or re-enactment thereof for the time being in force or any other duties, assessments or governmental charges of whatever nature imposed or levied by or on behalf of India or any authority thereof or therein having power to tax.

7. Security

The principal amount of the NCDs, interest and, early redemption amount, if any, and any other monies payable by our Company in respect of the NCDs will be secured by way of (i) an equitable assignment on the Assets (through a Negative Lien), and (ii) registered mortgage and charge of the Property.

The amount owing to the Trustees shall be paid out of Assets of our Company and our Company undertakes to take all necessary steps to pay amounts owing to our Company to the order of the Trustees including by directing such persons to pay the funds to the Trustees. Further, pursuant to the issuance of the power of attorney (relating to Negative Lien) our Company intends to protect the

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Trustees (and thereby the NCD holders) and to secure the monies payable by our Company in respect of the NCDs.

Our Company hereby creates Negative Lien on the Assets in favour of the Trustees, except to the extent of charge created in favour of its depositors pursuant to the regulatory requirement under Section 29B of the National Housing Bank Act, 1987. However, our Company shall, from time to time, be further entitled to create, charge, mortgage, pledge, hypothecate, encumber or create lien on its Assets except to the extent of charge created in favour of its depositors pursuant to the regulatory requirement under Section 29B of the National Housing Bank Act, 1987 or as may be required under any law, regulation, guidelines or rules.

8. Events of default

8.1 The Trustee, at its discretion, may, and if so required in writing by the NCD holders of not less than 25% in principal amount of the NCDs then outstanding or if so directed by an extraordinary resolution of the NCD holders shall (subject to being indemnified and/or secured by the NCD holders to its satisfaction), give notice to our Company that the NCDs are, and they shall accordingly thereby become, due and repayable at their early redemption amount if any of the events listed in Clause (each, an “Event of Default”) has occurred.

8.2 Each of the following events shall be an Event of Default:

(i) Default is made in any payment of any sum due in respect of the NCDs or any of them and such failure continues for a period of two (2) days;

(ii) Our Company does not perform or comply with one or more of its other obligations in relation to the NCDs or the Debenture Trust Deed which default is incapable of remedy or, if in the opinion of the Debenture Trustee capable of remedy, is not remedied within 15 days after written notice of such default shall have been given to our Company by the Debenture Trustee;

(iii) our Company is (or is deemed by law or a court to be) insolvent or bankrupt or unable to pay (in the opinion of the Debenture Trustee) a material part of its debts, or stops, suspends or threatens to stop or suspend payment of all or (in the opinion of the Debenture Trustee) a material part of (or of a particular type of) its debts, proposes or makes any agreement for the deferral, rescheduling or other readjustment of all or (in the opinion of the Debenture Trustee) a material part of (or all of a particular type of) its debts (or of any part which it will or might otherwise be unable to pay when due), proposes or makes a general assignment or an arrangement or composition with or for the benefit of the relevant creditors in respect of any of such debts or a moratorium is agreed or declared in respect of or affecting all or any part of (or of a particular type of) the debts of our Company;

(iv) a distress, attachment, execution or other legal process is levied, enforced or sued out on or against any material part of the property, assets or revenues of our Company and is not discharged or stayed within 90 days;

(v) an order is made or an effective resolution passed for the winding-up or dissolution, judicial management or administration of our Company, or our Company ceases or threatens to cease to carry on all or substantially all of its business or operations;

(vi) an encumbrancer takes possession or an administrative or other receiver or an administrator is appointed of the whole or (in the opinion of the Trustee) any substantial part of the property, assets or revenues of our Company (as the case may be) and is not discharged within 90 days;

(vii) our Company commences a voluntary proceeding under any applicable bankruptcy, insolvency, winding up or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary proceeding under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee (or similar official) for any or a substantial part of its property or take any action towards its re-organisation, liquidation or dissolution;

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(viii) it is or will become unlawful for our Company to perform or comply with any one or more of its obligations under any of the NCDs or the Debenture Trust Deed;

(ix) any step is taken by governmental authority or agency or any other competent authority, with a view to the seizure, compulsory acquisition, expropriation or nationalisation of all or (in the opinion of the Trustee) a material part of the assets of our Company which is material to our Company; or

(x) any event occurs which under the laws of any relevant jurisdiction has an analogous effect to any of the events referred to in any of the foregoing paragraphs.

8.3 If any Event of Default or any event which, after the notice, or lapse of time, or both, would constitute an Event of Default has happened, our Company shall, forthwith give notice thereof to the Debenture Trustee in writing specifying the nature of such event of default or of such event.

8.4 The security created in favour of the Debenture Trustee under the Debenture Trust Deed shall become enforceable by the Debenture Trustee upon the occurrence of an Event of Default.

8.5 “Early redemption amount” in respect of each ` 1,00,00,000 principal amount of NCDs means the principal amount together with the interest accrued and not paid until the date of such early redemption.

9. Meetings of NCD holders, modification, waiver and substitution of terms

9.1 The regulations with regard to meetings of NCD holders will be as specified in the Debenture Trust Deed.

9.2 The terms and conditions attached to the NCDs, including these NCD Conditions, may be varied, modified or abrogated with the consent, in writing, of those NCD holders who hold at least three-fourth of the outstanding amount of the NCDs or with the sanction accorded pursuant to a resolution passed at a meeting of the NCD holders under the series, provided that nothing in such consent or resolution shall be operative against our Company where such consent or resolution modifies or varies the terms and conditions of the NCDs which are not acceptable to our Company.

10. Future borrowings

Our Company shall be entitled, from time to time, to make any further issuance of NCDs and/or other debentures and /or other instruments or securities to the public, shareholders of our Company, whether by way of a public offer, private placement or a rights issue and/or avail of further financial and/or guarantee facilities from financial institutions, banks and/or any other person on the security or otherwise of its properties without the consent of the Debenture Trustee or the NCD holders.

11. Notices

The notices to the NCD holders required to be given by our Company or the Trustee shall be deemed to have been given if sent by ordinary post to the sole/first allottee or sole/first registered NCD holders, as the case may be. All notices to be given by NCD holders shall be sent by registered post or by hand delivery to our Company at its Registered Office.

12. Replacement of NCDs

If any rematerialized NCD is mutilated, defaced, destroyed, stolen or lost, it may be replaced at the specified office of the Registrar upon payment by the claimant of such costs as may be incurred in connection therewith and on such terms as to evidence and indemnity as our Company or the Registrar may require. Mutilated or defaced NCDs must be surrendered before replacements will be issued.

13. Buyback of NCDs

Our Company may from time to time, subject to applicable law and necessary approvals, offer and undertake to buyback the NCDs on terms and conditions as may be decided by our Company.

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14. Governing law and jurisdiction

The NCDs and the Debenture Trust Deed are governed by, and shall be construed in accordance with, the laws of India and any dispute arising out of or in connection with the NCDs shall be subject to the exclusive jurisdiction of courts at Mumbai.

15. Rating Rationale

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TERMS AND CONDITIONS OF WARRANTS

The following other than the words in italics are the Terms and Conditions of the Warrants (the “Warrant Conditions”) and will appear on the reverse of each Warrant Consolidated Certificate (as defined below).

The issue of 3.65 crore warrants (the “Warrants”) each of which is exchangeable for one (1) Equity Share of face value of ` 2 each (the “Equity Shares”) of Housing Development Finance Corporation Limited (the “Company”), was authorized by a resolution of the Board of Directors and a resolution of the shareholders of our Company (the “Shareholders”) each dated July 28, 2015. The Warrants are to be issued at a warrant issue price of ` 14 per Warrant (the “Warrant Issue Price”). Bidders are requested to note that a Bid for one NCD entitles and requires a Bidder to Bid for 7,300 Warrants. Please note that submitting a Bid for NCDs and Warrants in this manner should not be taken to be indicative of the number of Securities that will be Allotted to a successful Bidder. Allotment of Securities will be undertaken by our Company, in its absolute discretion, in consultation with the Global Co-ordinators and Book Running Lead Managers.

1. Status

The Warrants constitute direct, unsubordinated, unconditional and unsecured obligations of our Company and shall, at all times, rank pari passu and without any preference or priority among themselves and shall also rank pari passu with all other present and future direct, unsubordinated, unconditional and unsecured obligations of our Company (subject to any obligations preferred under mandatory provisions of the law prevailing from time to time).

2. Form, Denomination, Title and Listing

2.1 Form

2.1.1 The allotment of Warrants in this Issue shall only be in dematerialized form (i.e., not in the form of physical certificates, but be fungible and be represented by the statement issued through the electronic mode). Our Company has made depository arrangements with National Securities Depository Limited (“NSDL”) and Central Depository Services (India) Limited (“CDSL”, and together with NSDL, the “Depositories”) for the issue of Warrants in dematerialised form. Subject to Warrant Condition, the Warrant holders will hold the Warrants in dematerialised form and deal with the same in accordance with the provisions of the Depositories Act, 1996 and the rules as notified by the Depositories from time to time.

2.1.2 The Warrant holders may rematerialize the Warrants at any time after allotment, in accordance with the provisions of the Depositories Act, 1996 /rules as notified by the Depositories from time to time.

The Warrants are subject to the provisions of the SEBI Regulations, Companies Act and the Memorandum of Association and Articles of Association. In addition, the Warrants shall also be subject to applicable laws, guidelines, notifications and regulations relating to the issue of capital and listing of securities issued from time to time by the Government of India, SEBI, RBI, NHB and/or other authorities

2.2 Denomination

Each Warrant is exchangeable for 1 (one) Equity Share only at the Warrant Exercise Price.

In case of Warrants that are rematerialized and held in physical form, our Company will issue one certificate to the Warrants holder for the aggregate amount of Warrants that are rematerialized and held by such Warrant holder (each such certificate, a “Warrant Consolidated Certificate”). In respect of the Warrant Consolidated Certificates, our Company will, upon receipt of a request from the Warrant holder within five business days of such request, split such Warrant Consolidated Certificates into smaller denominations in accordance with the Articles of Association, subject to a minimum denomination of one Warrant (“Market Lot”). No fees would be charged for splitting any Warrant Consolidated Certificate, however, stamp duty payable, if any, would be borne by the Warrant holder. The request for split of a Warrant Consolidated Certificate should be accompanied by the original Warrant Consolidated Certificate which will, upon issuance of the split Warrant Consolidated Certificates, be cancelled by our Company.

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2.3 Title

In case of: (i) Warrants held in the dematerialized form, the person for the time being appearing in the register of beneficial owners of a Depository will have the title as the holder of a Warrant, and (ii) Warrants held in physical form, the person for the time being appearing in the Register of Warrant holders will have the title as the holder of a Warrant shall be treated for all purposes by our Company, the Depositories and all other persons dealing with such person as the holder thereof and as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any interest in it or any writing on, theft or loss of the Warrant Consolidated Certificate issued in respect of the Warrant and no person will be liable for so treating the holder. In these Warrant Conditions, “Warrant holder” and “holder” means the person in whose name a Warrant is registered.

Title to the Warrants shall pass only by transfer and registration as described in Warrant Condition.

2.4 Listing

The Warrants are to be listed on the Stock Exchanges.

3. Transfers of Warrants; issue of Warrant Consolidated Certificates

3.1 Register

Our Company shall maintain at its Registered Office (or such other place as permitted by law) a register of Warrant holders (the “Register of Warrant holders”). The Register of Warrant holders maintained by a Depository for Warrants in dematerialised form shall be deemed to be a Register of Warrant holders for the purposes of this Warrant Condition.

3.2 Transfers

Subject to Warrant Conditions and:

In case of Warrants held in the dematerialized form, transfers of Warrants may be effected only through the Depository(ies) through which such Warrants to be transferred are held, in accordance with the provisions of the Depositories Act, 1996 and rules as notified by the Depositories from time to time.

In case of Warrants held in physical form, transfers of Warrants may be effected only by delivery of the Warrant Consolidated Certificate issued in respect of that Warrant, with the form of transfer on the back thereof duly completed and signed by the Warrant holder or his duly authorized attorney, to the specified office of the Registrar. No transfer of title of a Warrant will be valid unless and until entered on the Register of Warrant holders.

Transfers of interests in the Warrants in the dematerialized form will be effected in accordance with the rules of the relevant Depositories.

3.3 No transfer except on Stock Exchange for one year

The Warrants shall not be sold for a period of one year from the date of Allotment except on a recognized stock exchange.

Please note that the Securities cannot be purchased pursuant to the Issue by non-residents, or by entities, which are ‘owned’ or ‘controlled’ by non-residents / persons resident outside India and whose downstream investments are regarded as foreign investment in terms of the Consolidated FDI Policy. Furthermore, subsequent to receipt of listing and trading approvals from the Stock Exchanges and as per the extant laws, the Warrants cannot be transferred to non-residents or entities, which are ‘owned’ or ‘controlled’ by non-residents / persons resident outside India and whose downstream investments are regarded as foreign investments.

3.4 Restricted transfer period

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No Warrant holder may require the transfer of a Warrant to be registered after any Exercise Notice has been delivered in respect of the Warrant.

3.5 Formalities free of charge

Registration of a transfer of Warrants and issuance of new Warrant Consolidated Certificates will be effected without charge by or on behalf of our Company, but upon payment (or the giving of such indemnity as our Company may require) in respect of any tax or other governmental charges which may be imposed in relation to such transfer, and our Company being satisfied that the regulations concerning transfers of Warrants have been complied with.

4. Rights of Warrant holders

4.1 Subject to Warrant Conditions, and 3.4, the Warrants shall be transferable and transmittable in the same manner and to the same extent and be subject to the same restrictions and limitations and other related matters as in the case of Equity Shares.

4.2 The Warrant holders shall have no other rights or privileges except as expressly provided in these Warrant Conditions.

4.3 On exercise and subsequent allotment of Equity Shares, the Warrant holders shall enjoy the rights and privileges of Shareholders and not of Warrant holders.

4.4 The Warrants shall not confer upon the holders thereof any right to receive any notice of the meeting of the Shareholders or annual report of our Company and or to attend/vote at any of the general meetings of the Shareholders.

4.5 The Warrant holders shall not be entitled to any dividend or any other corporate benefits, which may be declared or announced by our Company from time to time, until such time that the Warrants are exchanged for the underlying Equity Shares in accordance with these Warrant Conditions.

5. Exercise Right, Warrant Exercise Period and Warrant Exercise Price

5.1 Exercise Right

5.1.1 Each Warrant entitles a Warrant holder to subscribe, at the option of the Warrant holder by way of exercise of the Warrant at any time during the Warrant Exercise Period (as defined below) at the Warrant Exercise Price (as adjusted in accordance with Warrant Condition), in the manner set forth in Warrant Condition and otherwise on the terms and subject to this Warrant Condition, to one (1) fully paid Equity Share (the “Exercise Right”).

5.1.2 The Exercise Right shall be available: (i) in case of Warrants held in the dematerialized form, to the person for the time being appearing in the register of beneficial owners of a Depository as the holder of a Warrant, and (ii) in case of Warrants held in physical form, to the person for the time being appearing in the Register of Warrant holders, at the time of exercise of the Exercise Right.

5.1.3 An Exercise Right may only be exercised in respect of one or more Warrants. Upon exercise of Exercise Rights in relation to any Warrant and the fulfillment by our Company of all its obligations in respect thereof, the relevant Warrant holder shall have no further rights in respect of such Warrant and the obligations of our Company in respect of the Warrant shall be extinguished.

5.2 Warrant Exercise Period

5.2.1 The Exercise Right may be exercised, at the option of the Warrant holder thereof, at any time during normal business hours on and after the date of the Allotment i.e. October 6, 2015, up to 5:00 p.m., in Mumbai on October 5, 2018 (i.e. within 36 months from the date of the Allotment, but in no event thereafter) (“Warrant Exercise Period”). Any Warrant which has not been exercised on or before 5:00 p.m. on October 5, 2018, will lapse and cease to be valid and any amounts paid towards them to date will stand forfeited.

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5.3 Warrant Exercise Price

The holder for the time being of each Warrant will have the right, by way of exercise of the Exercise Right attaching to such Warrant, at any time during the Warrant Exercise Period, to subscribe for a fully-paid Equity Share at a price per Equity Share (“Warrant Exercise Price”) equal to ` 1,475 or such adjusted amount as, in accordance with Warrant Condition, is applicable (disregarding any retroactive adjustment not then reflected in the Warrant Exercise Price, but without prejudice to our Company’s obligations in respect thereof) on the Warrant Exercise Date (as defined in Warrant Condition).

An Exercise Right may only be exercised in respect of one or more Warrants. If more than one Warrant held by the same holder is exercised at any one time by the same holder, the number of Equity Shares to be issued upon such exercise will be calculated on the basis of the aggregate number of Warrants to be exercised.

5.4 Procedure for Exercise of Warrants

5.4.1 Exercise Notice

(i) To exercise the Exercise Right, the Warrant holder thereof must complete, execute and deposit at his own expense, during normal business hours, at the Registered Office a notice of Exercise (the “Exercise Notice”) in the form obtainable during the Warrant Exercise Period from the Registered Office or on the website of our Company, www.hdfc.com. The form of the Exercise Notice may be obtained from any of the aforesaid locations during the period from the date of Allotment of Warrants until the termination of the Warrant Exercise Period. The duly completed Exercise Notice must be accompanied with: (i) a cheque/demand draft drawn in favour of the escrow account opened by our Company for this purpose, payable at Mumbai, for the aggregate amount of the Warrant Exercise Price in respect of all the Warrants sought to be converted pursuant to the Exercise Notice and the amounts specified in Warrant Condition 5.4.1(ii) (“Other Costs” and together with the Warrant Exercise Price, the “Exercise Amount”); and (ii) (a) in case of Warrants held in the dematerialized form, a photocopy of the delivery instruction referred to in Warrant Condition, duly authenticated by the depository participant; or (b) in case of Warrants held in physical form, the Warrant Consolidated Certificate issued in respect of that Warrant, with the form of transfer on the back thereof duly completed and signed by the Warrant holder or his duly authorized attorney; (iii) a self attested copy of the PAN card; and (iv) board resolution and/ or power of attorney along with a list of authorized signatories (for non-individual Warrant holders).

(ii) On the Warrant Exercise Date, the Warrant holder is also required to make the payment of:

(a) all (if any) such stamp, issue, registration or other similar taxes or duties arising on exercise of the relevant Warrants in the place in which such Warrants is or are deposited for exercise thereof or in consequence of the delivery of Warrant Consolidated Certificates for the Equity Shares to be issued on such exercise to or to the order of a person other than the exercising Warrant holder or the person specified in the Exercise Notice as his standing proxy or other nominee as our Company may request at the time of the said deposit of the relevant Warrants; the expenses of, and the submission of any necessary documents required in order to effect, dispatch of certificates for Equity Shares and any other securities, property or cash to be delivered upon exercise to a place other than the Registered Office;

(b) If the amount received by our Company in respect of an exercising Warrant holder’s purported payment of the Exercise Amount relating to all of the relevant Warrants is less than the full amount of the Exercise Amount, our Company shall not treat the amount so received or any part thereof as payment of the Exercise Amount, or any part thereof and, accordingly, the whole of such amount shall remain in a escrow account opened by our Company for this purpose to be maintained by our Company unless and until a further payment is made in an amount sufficient to cover the deficiency. If our Company does not receive the payment of the Exercise Amount

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relating to the exercise of particular Warrants within seven days after the Exercise Date in respect of such Warrants, our Company may (but is not obliged to), in its discretion and without liability to itself return such Warrants such amount received towards the purported payment of the Exercise Amount and the relevant Exercise Notice to the exercising Warrant holder at the risk and expense of such Warrant holder.

(iii) An Exercise Notice deposited outside the normal business hours or on a day which is not a business day at the place of the specified office of the Registrar shall for all purposes be deemed to have been deposited with the Registrar during the normal business hours on the next business day following such day.

(iv) The exercise date in respect of a Warrant (the “Warrant Exercise Date”) must fall at a time when the Exercise Right attaching to that Warrant is expressed in these Warrant Conditions to be exercisable during the Warrant Exercise Period and will be deemed to be the date of the surrender of the Warrant Consolidated Certificate in respect of such Warrant and delivery of such Exercise Notice. An Exercise Notice once delivered shall be irrevocable and may not be withdrawn unless our Company consents to such withdrawal.

5.4.2 Delivery of Equity Shares

(i) Upon exercise by a Warrant holder of his Exercise Right, our Company will, on or with effect from the relevant Exercise Date and within 15 days of the Warrant Exercise Date, cause the relevant securities account of the Warrant holder exercising his Exercise Right or of his/their nominee, to be credited with such number of relevant Equity Shares to be issued upon exercise and shall further cause the name of the concerned Warrant holder or its nominee to be registered accordingly, in the record of the beneficial holders of Equity Shares, maintained by the depository. Provided that in the event the Warrant holders holding the Warrants in the dematerialized form and not having the Warrants in their respective depository account on the relevant Warrant Exercise Date, the Warrant Exercise Date shall be the date after receipt of the Exercise Notice on which the Warrants are credited to the account of such Warrant holder.

(ii) The allotment of Equity Shares pursuant to exercise of Warrants in this Issue shall only be in dematerialized form (i.e., not in the form of physical certificates, but be fungible and be represented by the statement issued through the electronic mode). The holders thereof will hold the Equity Shares so allotted in dematerialised form and deal with the same in accordance with the provisions of the Depositories Act, 1996 and rules as notified by the Depositories from time to time.

(iii) The Shareholders may rematerialize the Equity Shares at any time after allotment of such Equity Shares, in accordance with the provisions of the Depositories Act, 1996 and rules as notified by the Depositories from time to time.

(iv) All Equity Shares issued upon exercise of Warrants shall be fully-paid and non-assessable or shares of any class or classes resulting from any subdivision, consolidation or re-classification of those Equity Shares which as between themselves have no preference in respect of dividends or amounts payable in the event of any voluntary or involuntary liquidation or dissolution of our Company and shall entitle the Warrant holders thereof to participate in full in all dividends and other distributions paid or made on the Equity Shares, the record date for which falls on or after the relevant Exercise Date. Such Equity Shares will in all other respects rank pari passu with the issued and paid-up Equity Shares on the relevant Exercise Date (except for any right the record date for which precedes such Exercise Date and any other right excluded by mandatory provisions of applicable law). The Equity Shares to be issued upon the exercise of the Exercise Right shall also be listed on the Stock Exchanges subject to receipt of necessary approvals.

(v) If the Warrant Exercise Date in relation to any Warrant shall be on or after the record date for any issue, distribution, grant, offer or other event as gives rise to the adjustment of the Warrant Exercise Price pursuant to Warrant Condition, but before the relevant adjustment becomes effective under the relevant Warrant Condition, upon the relevant adjustment

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becoming effective, our Company shall procure the issue to the exercising Warrant holder (or in accordance with the instructions contained in the Exercise Notice (subject to applicable exchange control or other laws or other regulations)), such additional number of Equity Shares (in addition to the Equity Shares issued on exercise of the relevant Warrants) as is equal to the number of Equity Shares which would have been required to be issued on exercise of such Warrant if the relevant adjustment to the Warrant Exercise Price had been made and become effective on or immediately after the relevant record date.

(vi) If the Exercise Right in respect of more than one Warrant is exercised at any one time, such that Equity Shares to be issued on exercise are to be registered in the same name, the number of such Equity Shares to be issued in respect thereof shall be calculated on the basis of the aggregate number of such Warrants being so exercised and rounded down to the nearest whole number of Equity Shares. Fractions of Equity Shares will not be issued on exercise but our Company will, including without limitation, in the event of a consolidation or re-classification of Equity Shares by operation of law or otherwise occurring after the date of allotment of the Securities which reduces the number of Equity Shares outstanding, upon exercise of the Warrants pay in cash (in ` by means of a ` cheque drawn on a bank in Mumbai) the sum equal to such portion of the Warrant Exercise Price of the Warrant or Warrants evidenced by the Warrant Consolidated Certificate deposited in connection with the exercise of Exercise Rights, as corresponds to any fraction of an Equity Share not issued if such sum exceeds ` 2. Any such sum shall be paid not later than three business days after the relevant Warrant Exercise Date.

6. Adjustments to Warrant Exercise Price and Quantum of Warrants

The Warrant Exercise Price and the quantum of Warrants will be subject to adjustment in the following events (each an “Adjustment Event”).

6.1 Consolidation, subdivision or re-classification

Warrant Exercise Price Adjustment: If and whenever there shall be an alteration to the nominal value of the Equity Shares as a result of consolidation, subdivision or reclassification, the Warrant Exercise Price shall be adjusted by multiplying the Warrant Exercise Price in force immediately before such alteration by the following fraction: A B

Where:

A is the nominal amount of one Equity Share immediately after such alteration; and

B is the nominal amount of one Equity Share immediately before such alteration.

Warrant Quantum Adjustment: If and whenever there shall be an alteration to the nominal value of the Equity Shares as a result of consolidation, subdivision or re-classification of Equity Shares, the number of Warrants shall be adjusted/altered by multiplying the total number of Warrants outstanding immediately before such alteration by the following fraction:

B A

Where:

A is the nominal amount of one Equity Share immediately after such alteration; and

B is the nominal amount of one Equity Share immediately before such alteration.

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remove any difficulties and the same shall be done such that the benefits and obligations of the Warrant holder nearly results in similar value mathematically before and after such adjustment.

Effective date of adjustment: Such adjustment shall become effective on the date the alteration takes effect or, in the case of an alteration to the nominal value of the Equity Shares as a result of consolidation, if a record date is fixed therefor immediately after such record date.

6.2 Capitalisation of profits or reserves

6.2.1 Warrant Exercise Price Adjustment: If, and whenever, our Company shall issue any Equity Shares credited as fully paid to the Shareholders by way of capitalisation of profits or reserves (including any share premium account) including, Equity Shares paid up out of distributable profits or reserves and/or share premium account (except any Scrip Dividend (as defined hereinafter)) and which would not have constituted a Capital Distribution (as defined hereinafter), the Warrant Exercise Price shall be adjusted by multiplying the Warrant Exercise Price in force immediately before such issue by the following fraction:

A B

Where:

A is the aggregate nominal amount of the issued Equity Shares immediately before such issue; and

B is the aggregate nominal amount of the issued Equity Shares immediately after such issue.

Warrant Quantum Adjustment: If and whenever our Company shall issue any Equity Shares credited as fully paid to the Shareholders by way of capitalisation of profits or reserves (including any share premium account) including, Equity Shares paid up out of distributable profits or reserves and/or share premium account (except any Scrip Dividend) and which would not have constituted a Capital Distribution, the number of Warrants shall be adjusted/altered by multiplying the total number of Warrants in force immediately before such alteration by the following fraction:

B A

Where:

A is the aggregate nominal amount of the issued Equity Shares immediately before such issue; and

B is the aggregate nominal amount of the issued Equity Shares immediately after such issue.

In the event of any fractional Warrants, if any resulting from such adjustment, such fractional Warrants shall be ignored. The Board of Directors or any duly authorized committee thereof shall have powers to remove any difficulties and the same shall be done such that the benefits and obligations of the Warrant holder nearly results in similar value mathematically before and after such adjustment.

Effective date of adjustment: Such adjustment shall become effective on the date of issue of such Equity Shares or if a record date is fixed therefor, immediately after such record date or such date as may be considered by Stock Exchanges for effecting adjustment price of Equity Shares.

6.2.2 Warrant Exercise Price Adjustment: In the case of an issue of Equity Shares by way of a Scrip Dividend where the Current Market Price (as defined hereinafter) of such Equity Shares on the date of the first public announcement of the terms of such Scrip Dividend exceeds the amount of the Relevant Cash Dividend (as defined hereinafter) or the relevant part thereof and which would not have constituted a Capital Distribution (as defined hereinafter), the Warrant Exercise Price shall be adjusted by multiplying the Warrant Exercise Price in force immediately before the issue of such Equity Shares by the following fraction:

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A + B A + C

Where:

A is the aggregate nominal amount of the issued Equity Shares immediately before such issue;

B is the aggregate nominal amount of the Equity Shares issued by way of such Scrip Dividend multiplied by a fraction of which (i) the numerator is the amount of the whole, or the relevant part, of the Relevant Cash Dividend and (ii) the denominator is the Current Market Price of the Equity Shares issued by way of Scrip Dividend in respect of each existing Equity Share in lieu of the whole, or the relevant part, of the Relevant Cash Dividend; and

C is the aggregate nominal amount of Equity Shares issued by way of such Scrip Dividend;

or by making such other adjustment as an Independent Investment Bank (as defined hereinafter) shall certify to the Warrant holders is fair and reasonable.

Effective date of adjustment: Such adjustment shall become effective on the date of issue of such Equity Shares or if a record date is fixed therefor, immediately after such record date.

6.3 Capital Distributions and extraordinary dividend

Warrant Exercise Price Adjustment: If and whenever our Company shall pay or make any Capital Distribution to the Shareholders, the Warrant Exercise Price shall be adjusted by multiplying the Warrant Exercise Price in force immediately before such Capital Distribution by the following fraction:

A - B A

Where:

A is the Current Market Price of one Equity Share on the last Trading Day preceding the date on which the Capital Distribution is publicly announced; and

B is the Fair Market Value on the date of such announcement of the portion of the Capital Distribution attributable to one Equity Share.

Effective date of adjustment: Such adjustment shall become effective on the date that such Capital Distribution is actually made or if a record date is fixed therefor, immediately after such record date. For the avoidance of doubt, when the Capital Distribution is by means of a Relevant Cash Dividend, only such portion of the cash dividend which exceeds the Threshold Percentage (the “Excess Portion”) shall be regarded as a Capital Distribution and only the Excess Portion shall be taken into account in determining the Fair Market Value of the portion of the Capital Distribution attributable to one Equity Share.

6.4 Rights issues of Equity Shares or options over Equity Shares

Warrant Exercise Price adjustment: If and whenever our Company shall issue Equity Shares or other rights to subscribe for or purchase any securities (other than Equity Shares or options, warrants or other rights to subscribe or purchase or otherwise acquire Equity Shares), to all or substantially all Shareholders as a class by way of rights, or issue or grant to all or substantially all Shareholders as a class by way of rights, of options, warrants or other rights to subscribe for or purchase or otherwise acquire any Equity Shares or other rights to subscribe for or purchase any securities (other than Equity Shares or options, warrants or other rights to subscribe or purchase or otherwise acquire Equity Shares), in each case at less than 90 per cent. of the Current Market Price per Equity Share on the last Trading Day preceding the date of the announcement of the terms of the issue or grant, the Warrant Exercise Price shall be adjusted by multiplying the Warrant Exercise Price in force immediately before such issue or grant by the following fraction:

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A + B A + C

Where:

A is the number of Equity Shares in issue immediately before such announcement;

B is the number of Equity Shares which the aggregate amount (if any) payable for the Equity Shares issued by way of rights or for the options or warrants or other rights issued by way of rights and for the total number of Equity Shares comprised therein would subscribe for or purchase or otherwise acquire at such Current Market Price per Equity Share; and

C is the aggregate number of Equity Shares issued or, as the case may be, comprised in the issue or grant.

Effective date of adjustment: Such adjustment shall become effective on the date of issue of such Equity Shares or other rights to subscribe for or purchase any securities (other than Equity Shares or options, warrants or other rights to subscribe or purchase or otherwise acquire Equity Shares), or issue or grant of such options, warrants or other rights (as the case may be) or where a record date is set, the first date on which the Equity Shares are traded ex-rights, ex-options or ex-warrants (as the case may be).

6.5 Issues at less than Current Market Price

Warrant Exercise Price Adjustment: If and whenever our Company shall issue (otherwise than as mentioned in Warrant Condition above) wholly for cash any Equity Shares (other than Equity Shares issued upon the exercise of the Exercise Rights or on the exercise of any other rights of conversion into, or exchange or subscription for, Equity Shares) or shall issue or grant (otherwise than as mentioned in Warrant Condition above) wholly for cash any options, warrants or other rights to subscribe or purchase or otherwise acquire Equity Shares in each case at a price per Equity Share which is less than the Current Market Price on the last Trading Day preceding (1) in all cases other than a Preferential Allotment, the date on which the Board decides to open the issue; and (2) in case of a Preferential Allotment, the date on which the Shareholders approve such issue, the Warrant Exercise Price shall be adjusted by multiplying the Warrant Exercise Price in force immediately before such issue by the following fraction:

A + B C

Where:

A is the number of Equity Shares in issue immediately before the issue of such additional Equity Shares or the grant of such options, warrants or other rights to subscribe for or purchase or otherwise acquire any Equity Shares;

B is the number of Equity Shares which the aggregate consideration receivable (if any) for the issue of such additional Equity Shares would purchase at such Current Market Price per Equity Share; and

C is the number of Equity Shares in issue immediately after the issue of such additional Equity Shares.

References to additional Equity Shares in the above formula shall, in the case of an issue or grant by our Company of options, warrants or other rights to subscribe or purchase or otherwise acquire Equity Shares, mean such Equity Shares to be issued, or otherwise made available, assuming that such options, warrants or other rights are exercised in full at the initial exercise price (if applicable) on the date of issue or grant of such options, warrants or other rights.

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Effective date of adjustment: Such adjustment shall become effective on the date of issue of such additional Equity Shares or, as the case may be, the issue or grant of such options, warrants or other rights.

6.6 Other Issues at less than Current Market Price

Warrant Exercise Price adjustment: Save in the case of an issue of securities arising from a conversion or exchange of other securities in accordance with the terms applicable to such securities themselves falling within this Warrant Condition, if and whenever our Company (otherwise than as mentioned in Warrant Conditions, or), or (at the direction or request of or pursuant to any arrangements with our Company) any other company, person or entity shall issue any securities (other than the Warrants) which by their terms of issue carry rights of conversion into, or exchange or subscription for, Equity Shares to be issued by our Company on conversion, exchange or subscription at a consideration per Equity Share which is less than the Current Market Price on the last Trading Day preceding (1) in all cases other than a Preferential Allotment of Equity Shares, the date on which the Board decides to open the issue; (2) in case of a Preferential Allotment, the date which the Shareholders approve such issue, the Warrant Exercise Price shall be adjusted by multiplying the Warrant Exercise Price in force immediately before such issue by the following fraction:

A + B A + C

Where:

A is the number of Equity Shares in issue immediately before such issue;

B is the number of Equity Shares which the aggregate consideration (if any) receivable by our Company for the Equity Shares to be issued, or otherwise made available, on conversion or exchange or on exercise of the right of subscription attached to such securities would purchase at such Current Market Price per Equity Share; and

C is the maximum number of Equity Shares to be issued on conversion or exchange of such securities or on the exercise of such rights of subscription attached thereto at the initial conversion, exchange or subscription price or rate.

Effective Date of adjustment: Such adjustment shall become effective on the date of issue of such securities.

6.7 Modification of rights of conversion etc.

Warrant Exercise Price Adjustment: If and whenever there shall be any modification of the rights of conversion, exchange or subscription attaching to any such securities as are mentioned in Warrant Condition (other than in accordance with the terms of such securities) so that the consideration per Equity Share (for the number of Equity Shares available on conversion, exchange or subscription following the modification) is reduced and is less than the Current Market Price on the last Trading Day preceding the date of announcement of the proposals for such modification, the Warrant Exercise Price shall be adjusted by multiplying the Warrant Exercise Price in force immediately before such modification by the following fraction:

A + B A + C

Where:

A is the number of Equity Shares in issue immediately before such modification;

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modified, would purchase at such Current Market Price per Equity Share or, if lower, the existing conversion, exchange or subscription price of such securities; and

C is the maximum number of Equity Shares to be issued, or otherwise made available, on conversion or exchange of such securities or on the exercise of such rights of subscription attached thereto at the modified conversion, exchange or subscription price or rate but giving credit in such manner as an Independent Investment Bank, consider appropriate (if at all) for any previous adjustment under this Warrant Condition or Warrant Condition.

Effective Date of adjustment: Such adjustment shall become effective on the date of modification of the rights of conversion, exchange or subscription attaching to such securities.

6.8 Other offers to Shareholders

Warrant Exercise Price adjustment: If and whenever our Company or (at the direction or request of or pursuant to any arrangements with our Company) any other company, person or entity issues, sells or distributes any securities in connection with which offer the Shareholders generally (meaning for the purposes of these presents the holders of at least 60 per cent. of Equity Shares outstanding at the time such offer is made) are entitled to participate in arrangements whereby such securities may be acquired by them (except where the Warrant Exercise Price falls to be adjusted under Warrant Condition, Warrant Condition or Warrant Condition), the Warrant Exercise Price shall be adjusted by multiplying the Warrant Exercise Price in force immediately before such issue by the following fraction:

A - B A

Where:

A is the Current Market Price of one Equity Share on the last Trading Day preceding the date on which such issue is publicly announced; and

B is the Fair Market Value on the date of such announcement of the portion of the rights attributable to one Equity Share.

Effective Date of adjustment: Such adjustment shall become effective on the date of issue, sale or distribution of the securities.

6.9 Delisting

In the event the Equity Shares are no longer listed or admitted to trading on both of the Stock Exchanges (a “Delisting”) or if either of the Stock Exchanges is notified of a proposed open offer in relation to a Delisting, the Warrant Exercise Price shall be adjusted to the amount representing the difference between the Floor Price and the Warrant Issue Price.

6.10 Other Events

If our Company determines that an adjustment should be made to the Warrant Exercise Price as a result of one or more events or circumstances not referred to in this Warrant Condition, our Company shall, at its own expense, consult an Independent Investment Bank, to determine as soon as practicable what adjustment (if any) to the Warrant Exercise Price is fair and reasonable to take account thereof, if the adjustment would result in a reduction in the Warrant Exercise Price, and the date on which such adjustment should take effect and upon such determination by the Independent Investment Bank such adjustment (if any) shall be made and shall take effect in accordance with such determination, provided that where the circumstances giving rise to any adjustment pursuant to this Warrant Condition have already resulted or will result in an adjustment to the Warrant Exercise Price or where the circumstances giving rise to any adjustment arise by virtue of circumstances which have already given rise or will give rise to an adjustment to the Warrant Exercise Price, such modification (if any) shall be made to the operation of the provisions of this Warrant Condition 6 as may be advised by the Independent Investment Bank to be in their opinion appropriate to give the intended result.

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For the purposes of these Warrant Conditions:

“Alternative Stock Exchange” means at any time, in the case of the Equity Shares, if they are not at that time listed and traded on at least one of the Stock Exchanges, the principal stock exchange or securities market on which the Shares are then listed or quoted or dealt in;

“Capital Distribution” means any dividend or distribution (whether of cash or of assets in specie) by our Company for any financial period (whenever paid or made and however described) declared after the Issue Date (and for these purposes a distribution of assets in specie includes without limitation an issue of shares or other securities credited as fully or partly paid (other than Equity Shares credited as fully paid to the extent an adjustment to the Warrant Exercise Price is made in respect thereof under Warrant Condition by way of capitalisation of reserves) and including any Scrip Dividend to the extent of the Relevant Cash Dividend unless:

(i) (and to the extent that) in the case of a Relevant Cash Dividend or a distribution in specie it does not, when taken together with any other dividend or distribution previously made or paid in respect of the same fiscal year, exceed 55 per cent. of our Company’s consolidated net profits attributable to Shareholders after deducting minority interests and tax for the fiscal year in relation to which the Relevant Cash Dividend or distribution is made (the “Threshold Percentage”); or

(ii) (and to the extent that) in the case of a distribution in specie only it does not, when taken together with any other dividend or distribution previously made or paid in respect of all periods after March 31, 2015, exceed the aggregate of the consolidated net profits for such periods (less the aggregate of any consolidated net losses) attributable to Shareholders after deducting minority interests and preference dividends (if any) but (1) deducting any amounts in respect of any asset previously credited to our Company’s reserves (in respect of any period or date up to and including March 31, 2015) pursuant to any revaluation of such asset, where amounts arising on the disposal of such asset have contributed to such profits and (2) deducting any exceptional and extraordinary items, (and for the avoidance of doubt after excluding any amount arising as a result of any reduction in registered capital, share premium account or capital redemption reserve), in each case calculated by reference to the audited consolidated profit and loss accounts for such periods of our Company; or

(iii) it comprises a purchase or redemption of Equity Shares by or on behalf of our Company, where the weighted average price (before expenses) on any one day in respect of such purchases does not exceed the Current Market Price of the Equity Shares on NSE or the equivalent quotation sheet of an Alternative Stock Exchange, as the case may be, by more than 5 per cent. either (1) on that date, or (2) where an announcement has been made of the intention to purchase Equity Shares at some future date at a specified price, on the Trading Day immediately preceding the date of such announcement and, if in the case of either (1) or (2), the relevant day is not a Trading Day, the immediately preceding Trading Day.

In making any such calculation, such adjustments (if any) shall be made as an Independent Investment Bank may consider appropriate to reflect (a) any consolidation or subdivision of the Equity Shares, (b) issues of Shares by way of capitalisation of profits or reserves, or any like or similar event or (c) the modification of any rights to dividends of Equity Shares.

“Closing Price” for the Equity Shares for any Trading Day shall be the last reported transaction price on NSE or, as the case may be, the equivalent quotation sheet of an Alternative Stock Exchange for such day.

“Current Market Price” means, in respect of a Equity Share at a particular date, the arithmetic average of the Closing Prices for one Equity Share (being an Equity Share carrying full entitlement to dividend) for the 10 consecutive Trading Days ending on the Trading Day immediately preceding such date; provided that if at any time during the said 10 Trading Day period the Equity Shares shall have been quoted ex-dividend and during some other part of that period the Equity Shares shall have been quoted cum-dividend then:

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(i) if the Equity Shares to be issued in such circumstances do not rank for the dividend in question, the quotations on the dates on which the Equity Shares shall have been quoted cum- dividend shall for the purpose of this definition be deemed to be the amount thereof reduced by an amount equal to the Fair Market Value of the amount of that dividend per Equity Share; or

(ii) if the Equity Shares to be issued in such circumstances rank for the dividend in question, the quotations on the dates on which the Equity Shares shall have been quoted ex-dividend shall for the purpose of this definition be deemed to be the amount thereof increased by the Fair Market Value of the amount of that dividend per Equity Share;

and provided further that if the Equity Shares on each of the said 10 Trading Days have been quoted cum-dividend in respect of a dividend which has been declared or announced but the Equity Shares to be issued do not rank for that dividend, the quotations on each of such dates shall for the purpose of this definition be deemed to be the amount thereof reduced by an amount equal to the Fair Market Value of that dividend per Equity Share.

“Fair Market Value” means, with respect to any assets, security, option, warrants or other right on any date, the fair market value of that asset, security, option, warrant or other right as determined by an Independent Investment Bank provided that (i) the fair market value of a cash dividend paid or to be paid per Equity Share shall be the amount of such cash dividend per Equity Share determined as at the date of announcement of such dividend; (ii) where options, warrants or other rights are publicly traded in a market of adequate liquidity (as determined by such Independent Investment Bank) the fair market value of such options, warrants or other rights shall equal the arithmetic mean of the daily closing prices of such options, warrants or other rights during the period of five trading days on the relevant market commencing on the first such trading day such options, warrants or other rights are publicly traded.

“Independent Investment Bank” means an independent investment bank of international repute (acting as expert) selected by our Company and notified to the Warrant holders in accordance with Warrant Condition.

“Preferential Allotment” shall mean preferential allotment under Chapter VII of the SEBI ICDR Regulations, as amended.

“Relevant Cash Dividend” means any cash dividend specifically declared by our Company.

“Relevant Stock Exchange” means at any time, in respect of the Equity Shares, the Stock Exchanges or the Alternative Stock Exchange.

“Scrip Dividend” means any Equity Shares issued in lieu of the whole or any part of any Relevant Cash Dividend being a dividend which the Shareholders concerned would or could otherwise have received and which would not have constituted a Capital Distribution (and for the avoidance of doubt to the extent that no adjustment is to be made under Warrant Condition in respect of the amount by which the Current Market Price of the Equity Shares exceeds the Relevant Cash Dividend or part thereof) but without prejudice to any adjustment required in such circumstances to be made under Warrant Condition.

“Trading Day” means a day when the Stock Exchanges or, as the case may be an Alternative Stock Exchange is open for trading business, provided that if no Closing Price is reported for one or more consecutive dealing days such day or days will be disregarded in any relevant calculation and shall be deemed not to have been dealing days when ascertaining any period of trading days.

6.11 The Warrant Exercise Price may not be reduced so that, on exercise of Warrants, Equity Shares would fall to be issued at a discount to their par value.

6.12 Minor adjustments

On any adjustment, the relevant Warrant Exercise Price, if not an integral multiple of one Rupee, shall be rounded down to the nearest Rupee. No adjustment shall be made to the Warrant Exercise Price

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where such adjustment (rounded down if applicable) would be less than one per cent. of the Warrant Exercise Price then in effect. Any adjustment not required to be made, and any amount by which the Warrant Exercise Price has not been rounded down, shall be carried forward and taken into account in any subsequent adjustment. Notice of any adjustment shall be given to Warrant holders in accordance with Warrant Condition as soon as practicable after the determination thereof.

6.13 Cumulative adjustments

Where more than one event which gives or may give rise to an adjustment to the Warrant Exercise Price occurs within such a short period of time that in the opinion of an Independent Investment Bank, the foregoing provisions would need to be operated subject to some modification in order to give the intended result, such modification shall be made to the operation of the foregoing provisions as may be advised by such Independent Investment Bank to be in their opinion appropriate in order to give such intended result.

6.14 Employee stock option

No adjustment will be made to the Warrant Exercise Price, when Equity Shares or other securities (including rights or options) are issued, offered or granted to employees (including directors) of our Company or any Subsidiary of our Company or any other eligible persons pursuant to any Employee Stock Option Scheme (and which Employee Stock Option Scheme is in compliance with the listing rules of the Stock Exchanges).

6.15 Notice of Change in the Warrant Exercise Price

Our Company shall give notice to the Warrant holders in accordance with Warrant Condition of any change in the Warrant Exercise Price and/or quantum of Warrants, as the case may be. Any such notice relating to a change in the Warrant Exercise Price and/or quantum of Warrants shall set forth the event giving rise to the adjustment, the Warrant Exercise Price and/or quantum of Warrants prior to such adjustment, the adjusted Warrant Exercise Price and/or quantum of Warrants and the effective date of such adjustment.

For the avoidance of doubt, nothing in this Warrant Condition shall obligate our Company to disclose any information which is not public information to the Warrant holders or where it is not legally permissible to disclose such information.

6.16 Minimum Warrant Exercise Price

Notwithstanding the provisions of this Warrant Condition, the Warrant Exercise Price shall not be reduced to an amount such that the sum of the Warrant Issue Price and the adjusted Warrant Exercise Price is less than the Floor Price as a result of any adjustment made hereunder, and in such case the reduction shall be limited to the Floor Price.

6.17 Reference to “fixed”

Any reference in these Warrant Conditions to the date on which a consideration is “fixed” shall, where the consideration is originally expressed by reference to a formula which cannot be expressed as an actual cash amount until a later date, be construed as a reference to the first day on which such actual cash amount can be ascertained.

6.18 Miscellaneous

6.1.1 No adjustment will be made to the Warrant Exercise Price when any Equity Shares are issued following the exercise of the Warrants.

6.1.2 No adjustment involving an increase in the Warrant Exercise Price in this Warrant Condition will be made, except in the case of a consolidation of the Equity Shares as referred to in Warrant Condition above.

6.19 Consolidation, Amalgamation or Merger of our Company

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In the case of any consolidation, amalgamation or merger of our Company with any other corporation or company (other than a consolidation, amalgamation or merger in which our Company is the continuing corporation or company), or in the case of any sale or transfer of all, or substantially all, of the assets of our Company, or in the case of any creation of a holding company owning all shares of our Company by way of exchange for all outstanding shares of our Company or transfer of all the outstanding shares of our Company into the holding company, our Company shall forthwith notify the Warrant holders of such event in accordance with Warrant Condition and (so far as legally possible) cause the corporation / company or the holding company resulting from such consolidation, amalgamation, merger, share exchange or share transfer or the corporation / company which shall have acquired such assets, as the case may be, to execute such instruments or other documents or assurances as may be necessary legally to ensure that the holder of each Warrant then remaining unexercised shall have the right (during the period such Warrant shall remain unexercised) by exercising such Warrant to be issued the class and number of shares and other securities and property receivable upon such consolidation, amalgamation, merger, sale, transfer, share exchange or share transfer by a holder of the number of Equity Shares which would have become liable to be issued upon exercise of such Warrant immediately after such consolidation, amalgamation, merger, sale, transfer, share exchange or share transfer (such instruments or other documents or assurances to provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in the foregoing provisions of this Warrant Condition) and the above provisions of this Warrant Condition shall apply in the same way to any subsequent consolidations, amalgamations, mergers, sales, transfers, share exchanges or share transfers.

If our Company is a party to any transaction referred to above in which it is not the continuing corporation / company, it shall use its best endeavours to obtain all consents that may be necessary or appropriate under law to enable the continuing corporation / company to give effect to the Warrants in the manner stated above and to execute such instruments or other documents or assurances as may be necessary legally to ensure that the holder of each Warrant then remaining unexercised shall have the right (during the period such Warrant shall remain unexercised) by exercising such Warrant to be issued the class and number of shares and other securities and property receivable upon such consolidation, amalgamation, merger, sale, transfer, share exchange or share transfer by a holder of the number of Equity Shares which would have become liable to be issued upon exercise of such Warrant immediately after such consolidation, amalgamation, merger, sale, transfer, share exchange or share transfer (such instruments or other documents or assurances to provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in the foregoing provisions of this Warrant Condition).

7. Undertakings

7.1 Our Company undertakes that, so long as any Warrant remains unexercised:

(i) it will use its best endeavours (a) to obtain and maintain a listing of the Warrants on the Stock Exchanges, (b) to maintain a listing for all the issued Equity Shares on the Stock Exchanges, and (c) to obtain and maintain a listing for all the Equity Shares issued on the exercise of the Exercise Rights attaching to the Warrants on the Stock Exchanges and if our Company is unable to obtain or maintain such listing, to use it best endeavours to obtain and maintain a listing for all the Equity Shares on an Alternative Stock Exchange as our Company may from time to time determine and will forthwith give notice to the Warrant holders in accordance with Warrant Condition 10 of the listing or delisting of the Equity Shares (as a class) by any such stock exchange;

(ii) it will reserve, free from any other encumbrances, pre-emptive or other similar rights, out of its authorised but unissued ordinary share capital the full number of Equity Shares liable to be issued on exercise of the Warrants and will ensure that all such Equity Shares will be duly and validly issued as fully-paid;

(iii) it will pay the expenses of the issue or delivery of, and all expenses of obtaining listing for, Equity Shares arising on exercise of the Warrants, including but not limited to stamp duties, issue expenses, registration fees and taxes;

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(iv) it will not make any reduction of its ordinary share capital or any uncalled liability in respect thereof or of any share premium account or capital redemption reserve fund (except, in each case, as permitted by law);

(v) it will not make any offer, issue or distribute or take any action the effect of which would be to reduce the Warrant Exercise Price below the face value of the Equity Shares, provided always that our Company shall not be prohibited from purchasing its Equity Shares to the extent permitted by law; and

(vi) it will not take any corporate or other action described in Warrant Condition unless, the total aggregate decrease in the Warrant Exercise Price that would result from all corporate actions or other actions provided in Warrant Condition would not result in the sum of the Warrant Issue Price and the Warrant Exercise Price being lower than the Floor Price.

8. Further issues

Our Company may from time to time without the consent of the Warrant holders create and issue new further securities either having the same terms and conditions as the Warrants in all respects so that such further issue shall be consolidated and form a single series with the outstanding securities of any series (including the Warrants) or upon such terms as our Company may determine at the time of their issue.

9. Notices

9.1 If, at any time prior to the expiration of the Warrants and prior to their exercise, any of the following events shall occur:

9.1.1 any action which would require an adjustment pursuant to Warrant Condition, or

9.1.2 a dissolution, liquidation or winding up of our Company (other than in connection with a consolidation, merger, or sale of all or substantially all of its property, assets, and business as an entirety) shall be proposed

then in any one or more of said events, our Company shall give notice in writing of such event to the Warrant holders in accordance with Warrant Condition. Failure to publish or mail such notice or any defect therein or in the publication or mailing thereof shall not affect the validity of any action taken in connection with such dividend, distribution, or subscription rights, or proposed dissolution, liquidation or winding up.

9.2 The notices to the Warrant holders required to be given by our Company shall be deemed to have been given if sent by ordinary post to the sole/first allottee or sole/first registered holder of the Warrant, as the case may be. All notices to be given by Warrant holders shall be sent by registered post or by hand delivery to our Company at its Corporate Office and be marked to the attention of our Company Secretary.

10. Replacement of Warrants

If any rematerialized Warrant is mutilated, defaced, destroyed, stolen or lost, it may be replaced at the specified office of the Registrar upon payment by the claimant of such costs as may be incurred in connection therewith and on such terms as to evidence and indemnity as our Company or the Registrar may require. Mutilated or defaced Warrant must be surrendered before replacements will be issued.

11. Amendments and supplements

11.1 These Warrant Conditions may be amended without the consent of the Warrant holders to cure ambiguities and defects or make amendments of a formal, minor or technical nature and make other changes that do not affect the Warrant holders.

11.2 These Warrant Conditions may be amended with the written consent of not less than three fourths of the Warrant holders in respect of all other matters except the preceding and expect for increasing the

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Warrant Exercise Price or decreasing the Warrant Exercise Period or entitlement. Consent of all the Warrant holders is required to increase the Warrant Exercise Price or decrease the Warrant Exercise Period or entitlement.

11.3 Once an amendment has been approved in writing by the Warrant holders, the amendment shall be given effect to.

12. Severability

If any provision of these Warrant Conditions are determined to be invalid or unenforceable in whole or in part, such invalidity or unenforceability shall attach only to such provisions or the applicable part of such of such provisions and the remaining part of such provision and all other provisions of these Warrant Conditions shall continue to remain in full force and effect.

13. Governing law and jurisdiction

The Warrants are governed by, and shall be construed in accordance with, the laws of India and any dispute arising out of or in connection with the Warrants shall be subject to the exclusive jurisdiction of courts at Mumbai.

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ISSUE PROCEDURE

Below is a summary intended to present a general outline of the procedure relating to the application payment, Allocation and Allotment of the Securities. The procedure generally followed for a QIP may differ from the summary of the procedure of the Issue set out below and prospective investors are assumed to have apprised themselves of the same from our Company or the Global Co-ordinators and Book Running Lead Managers. Our Company and the Global Co-ordinators and Book Running Lead Managers are not liable for any amendment, modification or change to applicable law or regulations, which may occur after the date of this Placement Document.

Prospective investors are advised to inform themselves of any restrictions or limitations that may be applicable to them. Investors that apply in the Issue will be required to confirm and will be deemed to have represented to our Company, the Global Co-ordinators and Book Running Lead Managers and their respective directors, officers, agents, affiliates and representatives that they are eligible under all applicable laws, rules, regulations, guidelines and approvals to acquire the Securities. Our Company and the Global Co-ordinators and Book Running Lead Managers and their respective directors, officers, agents, affiliates and representatives accept no responsibility or liability for advising any investor on whether such investor is eligible to acquire the Securities. For further details, please see sections titled “Selling Restrictions” and “Transfer Restrictions” on pages 181 and 182 of this Placement Document, respectively.

Qualified Institutions Placement

This Issue is being made only to Eligible QIBs through a QIP, in reliance upon Chapter VIII of the SEBI Regulations and Sections 42 and 71 of the Companies Act, 2013 and NCD Directions. The Securities in this Issue will not, in any circumstance, be offered to persons in any jurisdiction outside India. Furthermore, subsequent to receipt of listing and trading approvals from the Stock Exchanges, subject to applicable law, (1) the Warrants cannot be transferred to non-residents or entities, which are ‘owned’ or ‘controlled’ by non-residents / persons resident outside India, and whose downstream investments are regarded as foreign investments; and (2) the NCDs cannot be purchased by any FII, FPI or QFI.

This Placement Document has not been, and will not be, registered as a prospectus with the RoC and, no Securities will be offered in any jurisdiction outside India or to the public in India or any other class of investors, other than Eligible QIBs.

The NCDs are proposed to be listed in pursuance of the relaxation provided under Regulation 22 of the SEBI Debt Regulations from the strict applicability of Rule 19(2)(b) of the SCRR.

Our Company, being a listed housing finance company in India, may issue and allot equity shares, non- convertible debt instruments along with warrants or convertible securities other than warrants to Eligible QIBs on a private placement basis, provided that, amongst others:

 for an issuance of non-convertible debentures, our Company has in place a policy for resource planning approved by its Board, covering the planning horizon and periodicity of private placement of non- convertible debentures;

 our Board has passed a resolution approving the issue of non-convertible debentures, specifying the purpose for which the proceeds of the non-convertible debentures are being raised;

 the offer document for private placement should be issued within a period of six months from the date of the Board resolution authorizing the issue of the non-convertible debentures;

 our Shareholders have passed a special resolution approving the QIP;

 the explanatory statement along with the notice sent to the Shareholders for convening the general meeting discloses the basis or justification for the price (including premium, if any) at which the Issue is being made;

 the Issue must be made through a private placement offer letter and an application form serially numbered and addressed specifically to the Eligible QIB to whom the offer is made and is sent within 30 days of recording the names of such Eligible QIBs;

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 prior to circulating the private placement offer letter, the issuer must prepare and record a list of Eligible QIBs to whom the offer will be made. The Issue must be made only to such persons whose names are recorded by our Company prior to the invitation to subscribe;

 the offering of Securities by issue of public advertisements or utilization of any media, marketing or distribution channels or agents to inform the public about the Issue is prohibited;

 Equity Shares of the same class of our Company as are proposed to be allotted pursuant to the exchange of Warrants offered through the Issue, are listed on the Stock Exchanges that have nation-wide trading terminals for a period of at least one year as on the date of issuance of notice to our Shareholders for convening the meeting to pass the special resolution;

 the aggregate of the Issue and all previous QIPs made by our Company in the same financial year does not exceed five times the net worth (as defined in the SEBI Regulations) of our Company as per the audited balance sheet of the previous financial year and therefore, the same is compliant with Regulation 89 of the SEBI Regulations;

 our Company complies with the minimum public shareholding requirements set out in the SCRR;

 the NCDs proposed to be issued do not have a maturity of less than 12 months, no exercise date attached with the NCDs shall fall within a period of one year from the date of the Issue;

 no roll over of NCDs is permitted;

 the tenor of the NCDs is not exceeding the validity period of the credit rating of the NCDs;

 the number of subscribers for the NCDs in the current financial year, the value of whose application is less than ` 1,00,00,000, shall be less than 200 persons;

 our Company shall have completed allotments with respect to any offer or invitation previously made or shall have withdrawn or abandoned any such invitation or offer made earlier by it;

 the minimum subscription by each Allottee to the NCDs shall be such number of NCDs, which would aggregate to ` 20,000;

 there is no limit on the number of subscribers in respect of issuances with a minimum subscription of ` 1,00,00,000 and above and in such issuances, the option to create security in favour of the subscribers shall be with the issuers;

 the payment to be made for subscription to the Securities shall be made from the bank account of the person subscribing to such Securities and in case of Securities to be held by joint holders, the payment for subscription to the Securities shall be paid from the bank account of the person whose name appears first in the application;

 Bidders are not allowed to withdraw their bids after the closure of the Issue;

 our Company had Net Owned Fund of at least ` 10 crore as per the latest audited balance sheet. The Statutory Auditors, have by way of their report dated August 11, 2015 confirmed that our Company has met the eligibility criteria specified in the NCD Directions;

 our Company having obtained credit rating for the NCDs from one of the credit rating agencies specified in the NCD Directions and such rating should be of adequate degree of safety for timely servicing of financial obligations, should be current and should not have fallen due for review;

 our Company having appointed a debenture trustee, which is registered with SEBI; and

 the NCDs being fully secured at all points of time, as the case may be.

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At least 10% of equity shares issued to QIBs must be allotted to Mutual Funds, provided that, if this portion or any part thereof to be allotted to Mutual Funds remains unsubscribed, it may be allotted to other QIBs.

Bidders are not allowed to withdraw their Bids after the Bid/Issue Closing Date.

Additionally, there is a minimum pricing requirement under the SEBI Regulations. The Warrant Exercise Price shall not be less than the average of the weekly high and low of the closing prices of the related Equity Shares quoted on the Stock Exchange during the two weeks preceding the Relevant Date. Additionally, in terms of the NCD Directions, non-convertible debentures may be issued at face value carrying a coupon rate or at a discount to face value as zero coupon instruments as determined by our Company.

The “Relevant Date” referred to above, may at the option of the Issuer, be either the date of the meeting in which the Board or the Committee of Directors duly authorized by the Board decides to open the Issue or the date on which the holder of the Warrants becomes entitled to apply for the Equity Shares underlying the Warrants, and “stock exchange” means any of the recognized stock exchanges in which the equity shares of the issuer of the same class are listed and on which the highest trading volume in such shares has been recorded during the two weeks immediately preceding the relevant date.

An investor can subscribe to the combined offering of NCDs and Warrants only. Any Application Form received for subscription to either NCDs or Warrants, and not to the combined offering of NCDs and Warrants, will be rejected.

Bidders are requested to note that a Bid for one NCD entitles and requires a Bidder to Bid for 7,300, Warrants. Please note that submitting a Bid for NCDs and Warrants in this manner should not be taken to be indicative of the number of Securities that will be Allotted to a successful Bidder. Allotment of Securities will be undertaken by our Company, in its absolute discretion, in consultation with the GCBRLMs.

Securities must be allotted within 12 months from the date of the shareholders’ resolution approving the QIP and within 60 days from the date of receipt of the application money from the prospective investors. The Securities issued pursuant to the Issue must be issued on the basis of the Preliminary Placement Document and this Placement Document, each of which shall include the information specified in Schedule XVIII of the SEBI Regulations, Form PAS-4, as prescribed under Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014, the NCD Directions and the SEBI Debt Regulations, as applicable.

The Preliminary Placement Document and this Placement Document are private documents provided to only Eligible QIBs interested in applying in the Issue, through serially numbered copies, each of which is required to be placed on the websites of the Stock Exchanges and of our Company with a disclaimer to the effect that it is in connection with an issue to Eligible QIBs and no offer is being made to the public or to any category of investors.

Securities allotted to an Eligible QIB pursuant to a QIP shall not be sold for a period of one year from the date of allotment except on a recognized stock exchange in India.

The minimum number of allottees for each QIP shall not be less than:

- Two, where the issue size is less than or equal to ` 250 crore; and

- Five, where the issue size is greater than ` 250 crore.

As per the NCD Directions, the issuance of non-convertible debentures on a private placement basis, shall be in two categories:

- Investors whose maximum subscription is less than ` 1 crore; and

- Investors whose minimum subscription is ` 1 crore or more.

Further, a private placement of non-convertible debentures in terms of the NCD Directions shall not be made to more than 200 persons in a financial year where the maximum subscription is less than ` 1 crore.

Please note that for the purposes of the Issue, the NCD Issue Price is ` 1,00,00,000.

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No single allottee shall be allotted more than 50% of the Issue Size. Eligible QIBs that belong to the same group or that are under common control shall be deemed to be a single allottee for this purpose. For details of what constitutes “same group” or “common control”, please refer to “– Application Process” on page 174 of this Placement Document.

The issuer is required to furnish a copy of the placement document to each stock exchange on which its equity shares are listed. Accordingly, our Company has filed a copy of the Preliminary Placement Document, and will file a copy of this Placement Document with the Stock Exchanges, SEBI and RoC.

The Issue has been authorized by (i) the Board pursuant to a resolution dated July 28, 2015, and (ii) the shareholders, pursuant to a resolution dated July 28, 2015.

Pursuant to a letter dated August 5, 2015, SEBI has granted an exemption from the strict applicability of Rule 19(2)(b) of the SCRR in respect of the listing of the Warrants on the Stock Exchanges.

Our Company has applied for and has on August 18, 2015 received in-principle approval of each of the Stock Exchanges for listing of the NCDs, Warrants and the Equity Shares to be issued upon exchange of the Warrants on the Stock Exchanges. Our Company has also filed a copy of the Preliminary Placement Document and this Placement Document with the Stock Exchanges.

Our Company shall also make the requisite filings with the RoC and SEBI within the stipulated period as required under the Companies Act 2013 and the Companies (Prospectus and Allotment of Securities) Rules, 2014 and the Companies (Registration of Charges) Rules, 2014, as applicable.

The Securities issued pursuant to this Issue have not been and will not be registered under the U.S. Securities Act, and will not be offered or sold within the United States (as defined in Regulation S) or any other jurisdiction, other than India.

Issue Procedure

1. Our Company and the Global Co-ordinators and Book Running Lead Managers shall circulate serially numbered copies of the Preliminary Placement Document and the serially numbered Application Forms, either in electronic or physical form, to Eligible QIBs and the Application Forms shall be addressed specifically to such Eligible QIBs. Pursuant to section 42(7) of the Companies Act, 2013, our Company shall maintain a complete record of the Eligible QIBs to whom the Preliminary Placement Document and the serially numbered Application Form have been dispatched. Our Company will make the requisite filings with the RoC and with SEBI within the stipulated time period as required under the Companies Act, 2013 and the rules made thereunder.

2. The list of Eligible QIBs to whom the Application Form is delivered shall be determined by our Company in consultation with the Global Co-ordinators and Book Running Lead Managers. Unless a serially numbered Preliminary Placement Document along with the Application Form is addressed to a particular QIB, no invitation to subscribe shall be deemed to have been made to such QIB. Even if such documentation were to come into the possession of any person other than the intended recipient, no offer or invitation to offer shall be deemed to have been made to such person and any application that does not comply with this requirement shall be treated as invalid.

3. Bidders may submit an Application Form, including any revisions thereof, during the Issue Period to the Global Co-ordinators and Book Running Lead Managers. Bidders are requested to note that a Bid for one NCD entitles and requires a Bidder to Bid for 7,300 Warrants.

4. Bidders bidding for the NCDs shall submit Bids for, and our Company shall issue and allot to each successful Allottee at least, such number of NCDs which would aggregate to ` 20,000. The NCD Issue Price is ` 1,00,00,000.

Application Form

All Application Forms duly completed along with payment and a copy of the PAN card or PAN allotment letter shall be submitted to the Global Co-ordinators and Book Running Lead Managers.

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The following details will be required to be indicated in the Application Form:

a. name of the Bidder to whom Securities are to be Allotted;

b. number of Securities Bid for;

c. price at which the Bidder is agreeable to subscribe for the Warrants, provided that Bidders may also indicate that they are agreeable to submit an Application Form at “Cut-off Price”, which shall be any price as may be determined by our Company in consultation with the Global Co-ordinators and Book Running Lead Managers at or above the Floor Price or the Floor Price, net of such discount as approved in accordance with the SEBI Regulations;

d. terms at which the Bidder is agreeable to subscribe for the NCDs;

e. the details of the depository account(s) to which the Securities should be credited; and

f. a representation that it is resident in India.

5. Once a duly completed Application Form is submitted by an Eligible QIB, such Application Form constitutes an irrevocable offer and cannot be withdrawn after the Bid/Issue Closing Date. The Bid/Issue Closing Date shall be notified to the Stock Exchanges and the Bidders shall be deemed to have been given notice of such date after the receipt of the Application Form.

6. The Bids made by asset management companies or custodians of Mutual Funds shall specifically state the names of the concerned schemes for which the Bids are made. In case of a Mutual Fund, a separate Bid can be made in respect of each scheme of the Mutual Fund registered with SEBI. Upon the receipt of the Application Form, our Company shall determine the final terms of NCDs, Warrant Issue Price and the number of Securities to be issued in consultation with the Global Co-ordinators and Book Running Lead Managers. On determination of the final terms of the NCDs and the Warrant Issue Price, the Global Co-ordinators and Book Running Lead Managers will send the CANs to the Bidders who have been Allocated Securities. The dispatch of the CAN shall be deemed a valid, binding and irrevocable contract for such Bidders to pay the entire NCD Issue Price and the Warrant Issue Price for all the Securities Allocated to such Bidders. The CAN shall contain details such as the number of Securities Allocated to the Bidder and payment instructions including the details of the amounts payable by the Bidder for Allotment of the Securities in its name and the Pay-In Date as applicable to the Bidder. Please note that the Allocation will be at the absolute discretion of our Company and in consultation with the Global Co-ordinators and Book Running Lead Managers.

7. Pursuant to receiving a CAN, each Bidder shall be required to make the payment of the entire application monies for the Securities indicated in the CAN at the applicable NCD Issue Price and Warrant Issue Price, only through electronic transfer to the HDFC Limited – QIP NCD Escrow Account and the HDFC Limited – QIP Warrant Escrow Account by the Pay-In Date as specified in the CANs sent to the respective Bidders. No payment shall be made by Bidders in cash. Please note that any payment of application money for the Securities shall be made from the bank accounts of the relevant Bidders applying for the Equity Shares. Monies payable on Securities to be held by joint holders shall be paid from the bank account of the person whose name appears first in the application. Pending Allotment, all monies received for subscription of the Securities shall be kept by our Company in a separate bank account with a scheduled bank and shall be utilised only for the purposes permitted under Companies Act 2013.

8. Upon receipt of the application monies from the Bidders, our Company shall Allot Securities as per the details in the CANs to the respective Bidders.

9. After passing the resolution for Allotment and prior to crediting the Securities into the depository participant accounts of the successful Bidders, our Company shall apply to the Stock Exchanges for listing approvals. Our Company will intimate the Stock Exchanges of the details of the Allotment and apply for approvals for listing of the Securities on the Stock Exchanges prior to crediting the Securities into the beneficiary accounts maintained with the Depository Participants by the Allottees.

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10. After receipt of the listing approval of each of the Stock Exchanges, our Company shall credit the Securities into the Depository Participant accounts of the respective Allottees in accordance with the details submitted in the Application Form.

11. Our Company shall then apply for the final listing and trading permissions from the Stock Exchanges.

12. The Securities that have been credited to the Depository Participant accounts of the Allottees shall be eligible for trading on the Stock Exchanges only upon the receipt of final trading and listing approvals from the Stock Exchanges.

13. Upon receipt of intimation of final listing and trading approvals from the Stock Exchanges, our Company shall inform the Allottees of the receipt of such approvals. Our Company and the Global Co- ordinators and Book Running Lead Mangers shall not be responsible for any delay or non-receipt of the communication of the final listing and trading permissions from the Stock Exchanges or any loss arising from such delay or non-receipt. Final listing and trading approvals granted by the Stock Exchanges are also placed on their respective websites. Allottees are advised to apprise themselves of the status of the receipt of the permissions from the Stock Exchanges or our Company.

Common form of transfer

The Securities would be issued and traded in dematerialized form. Therefore, no physical certificate shall be issued. Should there be any holding of Securities in the physical form due to depositories giving the dematerialization option to any investor, the form of transfer thereof shall be the same as prescribed for Equity Shares.

Eligible QIBs

Only Eligible QIBs who have not been prohibited by the SEBI from buying, selling or dealing in securities can participate in this Issue. Accordingly, Eligible QIBs for the purposes of this Issue shall comprise:

 insurance companies registered with the Insurance Regulatory and Development Authority;

 insurance funds set up and managed by army, navy or air force of the Government; and

 insurance funds set up and managed by the Department of Posts, India.

 Mutual Funds (not owned or controlled by non-resident investors);

 pension funds with minimum corpus of ` 25 crore;

 provident funds with minimum corpus of ` 25 crore;

 public financial institutions as defined in the Companies Act;

 scheduled commercial banks;

 state industrial development corporations; and

 the National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated November 23, 2005 of the Government published in the Gazette of India.

Eligible QIBs are advised to make their independent investigations and satisfy themselves that they are eligible to apply.

The Issue is being made only to Eligible QIBs and the Securities in this Issue are not and will not, in any circumstances, be offered and will not be allotted, to persons in any jurisdiction outside India. Any application received from such category of investors or applications wherein a foreign address is provided by the depositories would be rejected.

Our Company does not have any identifiable promoters and accordingly, no allotment shall be made in

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accordance with Regulation 86(1)(b) of the SEBI Regulations.

Our Company and the Global Co-ordinators and Book Running Lead Managers are not liable for any amendment or modification or change to applicable laws or regulations, which may occur after the date of this Placement Document. Eligible QIBs are advised to make their independent investigations and satisfy themselves that they are eligible to apply and have the requisite approvals to apply. Eligible QIBs are advised to ensure that any single application from them does not exceed the investment limits or maximum number of Equity Shares that can be held by them under applicable law or regulation or as specified in this Placement Document. Further, Eligible QIBs are required to satisfy themselves that their Application Forms would not eventually result in triggering an open offer under the Takeover Code.

Note: Global Co-ordinators and Book Running Lead Managers, or their affiliates or associates, who are Eligible QIBs may participate in the Issue in compliance with applicable law.

Our Company does not have an identifiable promoter.

A minimum of 10% of the Securities in this Issue shall be Allotted to Mutual Funds. If no Mutual Fund is agreeable to take up the minimum portion as specified above, such minimum portion or part thereof may be Allotted to other Bidders by our Company.

Application Process

Application Form

Eligible QIBs shall only use the serially numbered Application Forms (which are addressed to them) supplied by our Company and the Global Co-ordinators and Book Running Lead Managers in either electronic form or by physical delivery for the purpose of making a Bid (including revision of Bid) in terms of the Preliminary Placement Document.

By making a Bid (including the revision thereof) for the Securities through Application Forms, the Bidder will be deemed to have made the following representations and warranties and the representations, warranties and agreements appearing in the sections titled “Notice to Investors”, “Representations by Investors”, “Selling Restrictions” and “Transfer Restrictions”on pages 3, 5, 181 and 182 of this Placement Document, respectively:

1. each Bidder confirms that it is an Eligible QIB, has a valid and existing registration under applicable laws in India, and is eligible to participate in this Issue;

2. each Bidder confirms that it is a person resident in India, as defined in FEMA, and is eligible to invest in the Securities under applicable law;

3. each Bidder confirms that it is not ‘owned’ or ‘controlled’ by non-residents / persons resident outside India as defined under FEMA and that its downstream investments are not regarded as foreign investment in terms of the Consolidated FDI Policy;

4. each Bidder acknowledges and confirms that it has no rights under a shareholders’ agreement or voting agreement with our Company or any person related to our Company, no veto rights or right to appoint any nominee director on the Board other than those acquired in the capacity of a lender which shall not be deemed to be a person related to the promoters;

5. each Bidder confirms that it has no right to withdraw its Bid after the Bid/Issue Closing Date;

6. each Bidder confirms that if Securities are Allotted through this Issue, it shall not, for a period of one year from Allotment, sell such Securities otherwise than on a recognized stock exchange;

7. each Bidder confirms that it is eligible to Bid for and hold the Securities (including Equity Shares to be issued upon exchange of the Warrants) so Allotted and together with any securities (including Equity Shares) held by it prior to the Issue, the Bidder further confirms that its holding, does not and shall not, exceed the level permissible as per any applicable regulations applicable to it;

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8. each Bidder confirms that the Application Form and issuance of Equity Shares upon exchange of Warrants, to the extent applicable, would not eventually result in triggering an open offer under the Takeover Regulations;

9. each Bidder confirms that, to the best of its knowledge and belief, the number of Securities Allotted to it pursuant to the Issue, together with other Allottees that belong to the same group or are under common control, shall not exceed 50% of the Issue size. For the purposes of this statement:

a. The expression “belongs to the same group” shall derive meaning from the concept of “companies under the same group” as provided in sub-section (11) of Section 372 of the Companies Act;

b. “Control” shall have the same meaning as is assigned to it by Regulation 2(1)(e) of the Takeover Code.

10. each Bidder confirms that it shall not trade in the Securities credited to its Depository Participant account until such time that the final listing and trading approvals for the Securities are issued by the Stock Exchanges.

BIDDERS MUST PROVIDE THEIR DEPOSITORY ACCOUNT DETAILS, THEIR DEPOSITORY PARTICIPANT’S NAME, DEPOSITORY PARTICIPANT IDENTIFICATION NUMBER AND BENEFICIARY ACCOUNT NUMBER IN THE APPLICATION FORM. THE NAME GIVEN IN THE APPLICATION FORM SHOULD BE EXACTLY THE SAME AS THE NAME IN WHICH THE DEPOSITORY ACCOUNT IS HELD.

IF SO REQUIRED BY THE GCBRLMs, ELIGIBLE QIB SUBMITTING A BID, ALONG WITH THE BID CUM APPLICATION FORM, WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO THE GCBRLMs TO EVIDENCE THEIR STATUS AS A “ELIGIBLE QIB" AS DEFINED HEREINABOVE.

IF SO REQUIRED BY THE GCBRLMs, ESCROW BANK(S) OR ANY STATUTORY OR REGULATORY AUTHORITY IN THIS REGARD, INCLUDING AFTER PLACEMENT CLOSURE, THE ELIGIBLE QIB SUBMITTING A BID AND/OR BEING ALLOTTED SECURITIES IN THE PLACEMENT, WILL ALSO HAVE TO SUBMIT REQUISITE DOCUMENT(S) TO FULFILL THE KNOW YOUR CUSTOMER (KYC) NORMS.

Demographic details such as address and bank account will be obtained from the Depositories as per the Depository Participant account details given above.

The submission of an Application Form by a Bidder shall be deemed a valid, binding and irrevocable offer for the Bidder to pay the entire NCD Issue Price and Warrant Issue Price for the Securities proposed to be Allotted to it (as indicated by the CAN,) and becomes a binding contract on the Bidder, upon issuance of the CAN by our Company in favour of the Bidder.

Submission of Application Form

All Application Forms must be duly completed with information including the name of the Bidder, the price, the final terms and the number of Securities applied for. The Application Forms shall be submitted to the Global Co-ordinators and Book Running Lead Managers either through electronic form or through physical delivery at the following address:

Kotak Mahindra Capital Axis Bank Limited Axis Capital Limited Company Limited Axis House Axis House 1st Floor, 27 BKC, Plot No. C-27 4th Floor, C-2, Wadia International 5th Floor, C-2, Wadia International “G” Block Centre Centre Bandra Kurla Complex P.B. Marg P.B. Marg Bandra (East) Mumbai 400025 Mumbai 400025 Mumbai 400 051 Contact: Manoj Sukhani Contact: G. Venkatesh Contact: Karl Sahukar Tel: +91 22 2425 2870 Tel: +91 22 4325 4587 Tel: +91 22 4336 0000

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Citigroup Global Markets India HDFC Bank Limited* ICICI Bank Limited Private Limited Investment Banking Group Unit ICICI Bank Tower 1202, 12th Floor No. 401 & 402 Bandra Kurla Complex First International Financial Centre 4th Floor, Tower B Peninsula Bandra (East) G-Block, Bandra Kurla Complex Business Park, Lower Parel Mumbai 400 051 Bandra East Mumbai 400 013 Contact: Sreekanta Chatterjee Mumbai 400 051 Contact: Keyur Desai Tel. : +91 22 2653 7295 Contact: Aashray Tandon Tel: +91 22 3395 8015 Tel: +91 22 6175 9736 *HDFC Bank shall be involved only in marketing of the Issue.

ICICI Securities Limited IDFC Securities Limited IndusInd Bank Limited ICICI Centre Naman Chambers One Indiabulls Centre, Tower I, 8th H.T. Parekh Marg C-32, G Block Floor Churchgate Bandra Kurla Complex 841 Senapati Bapat Marg, Mumbai 400 020 Bandra (East), Mumbai 400 051 Elphinstone Road (W) Contact: Harsh Soni Contact: Venkatraghavan S Mumbai 400 013 Tel: +91 22 2288 2460 Tel: +91 22 6622 2600 Contact: Ashish Agrawal Tel: +91 22 2423 1999 / +91 22 3049 3999

JM Financial Institutional Securities Limited 7th Floor, Cnergy Appasaheb Marathe Marg Prabhadevi Mumbai 400 025 Contact: Dhruv Bansal Tel: +91 22 6630 3030

The Global Co-ordinators and Book Running Lead Managers shall not be required to provide any written acknowledgement of the receipt of the Application Form.

Permanent Account Number or PAN

Each Bidder should mention its PAN allotted under the I.T. Act in the Application Form. Applications without this information will be considered incomplete and are liable to be rejected. Bidders should not submit their GIR numbers instead of their PAN, as the Application Forms are liable to be rejected on this ground.

Pricing and Allocation

Build up of the book

Bidders applying for the Securities shall mention their Bids (including the revision thereof) separately for the NCDs and the Warrants through the common application form within the Issue Period to the Global Co- ordinators and Book Running Lead Managers.

Bids cannot be withdrawn after the Bid/Issue Closing Date. The book shall be maintained by the Global Co- ordinators and Book Running Lead Managers.

Price discovery, terms and allocation

Our Company, in consultation with the Global Co-ordinators and Book Running Lead Managers, shall determine the terms of the Warrants, and the Warrant Issue Price and the Warrant Exercise Price, which shall be at or above the Floor Price to be determined in accordance with Chapter VIII of the SEBI Regulations.

Our Company, in consultation with the Global Co-ordinators and Book Running Lead Manager, shall determine the terms for the NCDs and Warrants.

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After finalisation of the terms of the Securities, our Company will update the Preliminary Placement Document with the relevant details and file the same with the Stock Exchanges as the Placement Document.

Method of Allocation

Our Company shall determine the Allocation in consultation with the Global Co-ordinators and Book Running Lead Managers on a discretionary basis and in compliance with Chapter VIII of the SEBI Regulations.

Bids received from Bidders at or above the NCD Issue Price/Warrant Issue Price shall be grouped together to determine the total demand. The Allocation of the Securities to all such Bidders will be made at the NCD Issue Price/ Warrant Issue Price (as applicable). Allocation to Mutual Funds for up to a minimum of 10% of the issue size shall be undertaken subject to valid Bids being received at or above the NCD Issue Price and Warrant Issue Price.

An investor can subscribe to the combined offerings of NCDs and Warrants only. Any Application Form received for subscription to either NCDs or Warrants, and not to the combined offerings of NCDs and Warrants, will be rejected.

THE DECISION OF OUR COMPANY IN CONSULTATION WITH THE GLOBAL CO- ORDINATORS AND BOOK RUNNING LEAD MANAGERS, IN RESPECT OF ALLOCATION SHALL BE BINDING ON ALL BIDDERS. BIDDERS MAY NOTE THAT ALLOCATION OF SECURITIES IS AT THE SOLE AND ABSOLUTE DISCRETION OF OUR COMPANY, IN CONSULTATION WITH THE GCBRLMS AND BIDDERS MAY NOT RECEIVE ANY ALLOCATION EVEN IF THEY HAVE SUBMITTED VALID APPLICATION FORMS AT OR ABOVE THE NCD ISSUE PRICE/ WARRANT ISSUE PRICE. NEITHER OUR COMPANY NOR THE GLOBAL CO-ORDINATORS AND BOOK RUNNING LEAD MANAGERS ARE OBLIGED TO ASSIGN ANY REASONS FOR SUCH NON-ALLOCATION.

CAN

Based on the Application Forms received, our Company and the Global Co-ordinators and Book Running Lead Managers, in their sole and absolute discretion, shall decide the list of Bidders to whom serially numbered CANs shall be sent, pursuant to which the details of the Securities Allocated to them and the details of the amounts payable for Allotment of such Securities in their respective names shall be notified to such Bidders. Additionally, the CAN will include details of the bank account(s) for transfer of funds if done electronically, address where the application money needs to be sent, Pay-In Date as well as the probable designated date (“Designated Date”), being the date of credit of the Securities to the Allottee’s account, as applicable to the respective QIBs.

Successful Bidders would also be sent a serially numbered Placement Document, either in electronic form or by physical delivery, along with the serially numbered CAN.

The dispatch of the serially numbered Placement Document and the CAN to a successful Bidder shall be deemed a valid, binding and irrevocable contract for such Bidder to furnish all details that may be required by the Global Co-ordinators and Book Running Lead Managers and to pay the entire NCD Issue Price and Warrant Issue Price for all the Securities Allocated to such Bidder.

Bidders are advised to instruct their Depository Participant to accept the Securities that may be Allotted to them pursuant to the Issue.

Bank account for payment of application money

Our Company has opened “HDFC Limited – QIP NCD Escrow Account” and “HDFC Limited – QIP Warrant Escrow Account” with the Escrow Agent for the NCDs and the Warrants in terms of the arrangement between our Company, the Global Co-ordinators and Book Running Lead Managers and the Escrow Agent. Bidders will be required to deposit the entire amount payable for the Securities allocated to it by the Pay-In Date as mentioned in the respective CAN.

If the payment is not made favouring “HDFC Limited – QIP NCD Escrow Account” and “HDFC Limited – QIP

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Warrant Escrow Account” within the time stipulated in the CAN, the Application Form and the CAN of the Bidder are liable to be cancelled.

We undertake to utilise the amount deposited in “HDFC Limited – QIP NCD Escrow Account” and “HDFC Limited – QIP Warrant Escrow Account” only for the purposes of (i) adjustment against Allotment of Securities in the Issue; or (ii) repayment of application money if we have not been able to Allot Securities in the Issue.

In case of cancellations or default by the Bidders, our Company and the Global Co-ordinators and Book Running Lead Managers have the right to reallocate the Securities at the applicable issue price among existing or new Bidders at their sole and absolute discretion.

Payment Instructions

The payment of application money shall be made by the Bidders in the name of “HDFC Limited – QIP NCD Escrow Account” and “HDFC Limited – QIP Warrant Escrow Account” (as applicable) as per the payment instructions provided in the CAN.

Bidders may make payment only through electronic fund transfer.

Note: Payment of the amounts through cheques are liable to be rejected.

Designated Date and Allotment of Securities

1. The Securities will not be Allotted unless the Bidders pay the NCD Issue Price and the Warrant Issue Price (as applicable) to the Escrow Bank Accounts as stated above.

2. In accordance with the SEBI Regulations, Securities will be issued and Allotment shall be made only in the dematerialized form to the Allottees. Allottees will have the option to re-materialize the Securities, if they so desire, as per the provisions of the Companies Act and the Depositories Act.

3. Our Company reserves the right to cancel the Issue at any time up to Allotment without assigning any reasons whatsoever.

4. Post Allotment and credit of Securities into the Eligible QIB’s Depository Participant account, our Company would apply for final listing and trading approvals from the Stock Exchanges.

5. In the event of any delay in the Allotment or credit of Securities, or receipt of listing and trading approvals or cancellation of the Issue, no interest or penalty would be payable by our Company.

6. In relation to Allottees who have been Allotted more than 5% of the Securities in the Issue, our Company shall disclose the name and the number of the Securities Allotted to such Allottee to the Stock Exchanges and the Stock Exchanges will make the same available on their websites.

7. The Escrow Agent shall release the monies lying to the credit of the Escrow Accounts to our Company, after Allotment of the Securities to the Allottees.

8. Our Company shall credit the Securities within two Working Days from the date of Allotment.

In the event that we are unable to issue and Allot the Securities offered in the Issue or on cancellation of the Issue, within 60 days from the date of receipt of application money, we shall repay the application money within 15 days from expiry of 60 days, failing which we shall repay that money with interest at the rate of 12% per annum from expiry of the sixtieth day. The application money to be refunded by us shall be refunded to the same bank account from which application money was remitted by the Bidders.

After finalization of the terms of the Securities, our Company shall update the Preliminary Placement Document with the Issue details and file the same with the Stock Exchanges as the Placement Document.

Other Instructions

Right to Reject Applications

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Our Company, in consultation with the Global Co-ordinators and Book Running Lead Managers, may reject Bids, in part or in full, without assigning any reasons whatsoever. The decision of our Company and the Global Co-ordinators and Book Running Lead Managers in relation to the rejection of Bids shall be final and binding.

Securities in dematerialised form with NSDL or CDSL

The Allotment of each of the Securities in this Issue shall be only in dematerialized form (i.e., not in the form of physical certificates but be fungible and be represented by the statement issued through the electronic mode).

1. A Bidder applying for Securities must have at least one beneficiary account with a Depository Participant of either NSDL or CDSL prior to making the Bid. 2. Securities Allotted to a successful Bidder will be credited in electronic form directly to the relevant beneficiary account (with the Depository Participant) of the Bidder. 3. Securities in electronic form can be traded only on the stock exchanges having electronic connectivity with NSDL and CDSL. The Stock Exchanges have electronic connectivity with NSDL and CDSL. 4. The trading of each of the Securities would be in dematerialized form only for all Allottees in the demat segment of the respective Stock Exchanges. 5. Our Company and the Global Co-ordinators and Book Running Lead Managers will not be responsible or liable for the delay in the credit of any of the Securities due to errors in the Application Form or otherwise on the part of the Bidders.

Procedure for Exercise of Warrants

Warrant holders shall have the Exercise Right to convert their Warrants into Equity Shares at any time during the Warrant Exercise Period at Warrant Exercise Price. For further details, see “Terms and Conditions of the Warrants”.

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PLACEMENT

Placement Agreement

The Global Co-ordinators and Book Running Lead Managers have entered into a placement agreement dated September 30, 2015 with our Company (“Placement Agreement”), pursuant to which the Global Co-ordinators and Book Running Lead Managers have agreed to procure, on a best efforts basis, subscriptions for the Securities to be issued pursuant to the Issue on a best efforts basis by Eligible QIBs.

The Placement Agreement contains customary representations, warranties and indemnities from our Company and the Global Co-ordinators and Book Running Lead Managers, and is subject to termination in accordance with the terms contained therein.

The Global Co-ordinators and Book Running Lead Managers and their affiliates and associated of such entities may engage in transactions with and perform services for our Company and the Subsidiaries or affiliates in the ordinary course of business and have engaged, or may in the future engage, in commercial banking advisor, trading services, and investment banking transactions with our Company and the Subsidiaries or affiliates, for which they would have received compensation and may in the future receive compensation. Further, HDFC Bank is an Associate of our Company, and accordingly, HDFC Bank would be involved only in marketing of the Issue.

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SELLING RESTRICTIONS

This Issue is being made only to Eligible QIBs and the Securities in this Issue will not in any circumstance be offered to persons in any jurisdiction outside India. Persons who come into possession of this Placement Document or any offering material are advised to take legal advice with regard to any restrictions that may be applicable to them and to observe such restrictions. This Placement Document may not be used for the purpose of an offer or sale in any circumstances in which such offer or sale is not authorised or permitted.

General

This Issue is being made only to Eligible QIBs and the Securities in this Issue will not, in any circumstance, be offered to persons in any jurisdiction outside India. Accordingly, no action has been or will be taken in any jurisdiction by our Company or the Global Co-ordinators and Book Running Lead Managers that would permit a public offering of the Securities or the possession, circulation or distribution of this Placement Document or any other material relating to our Company or the Securities in the Issue in any jurisdiction where action for such purpose is required. The Issue will be made in compliance with the SEBI Regulations, the Companies Act, 2013 and the NCD Directions.

The Preliminary Placement Document and/or this Placement Document has not been and will not be registered as a prospectus with any registrar of companies in India and the Equity Shares will not be offered or sold directly or indirectly, to the public or any members of the public in India or any other class of investors other than Eligible QIBs.

The Securities have not been and will not be registered under the U.S. Securities Act or any state securities laws in the United States and will not be offered or sold within the United States or any other jurisdiction, other than India.

Each purchaser of the Equity Shares offered by this Placement Document will be deemed to have made the representations, agreements and acknowledgements as described under sections titled “Representations by Investors” and “Transfer Restrictions” on pages 5 and 182 of this Placement Document, respectively.

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TRANSFER RESTRICTIONS

Pursuant to Chapter VIII of the SEBI Regulations, any resale of Securities, except on a recognized stock exchange, is not permitted for a period of one year from the date of Allotment. Investors are advised to consult their legal counsel prior to making any resale, pledge or transfer of the Securities. For more information, see section titled “Selling Restrictions” on page 181 of this Placement Document. Furthermore, subsequent to receipt of listing and trading approvals from the Stock Exchanges, subject to applicable law, (1) the Warrants cannot be transferred to non-residents or entities, which are ‘owned’ or ‘controlled’ by non- residents / persons resident outside India, and whose downstream investments are regarded as foreign investments; and (2) the NCDs cannot be purchased by any FII, FPI or QFI.

Subject to the foregoing, by accepting this Placement Document and purchasing any Securities under this Issue, you are deemed to have represented, warranted, acknowledged and agreed with our Company and the Global Co-ordinators and Book Running Lead Managers as follows:

1. you have received a copy of this Placement Document and such other information as you deem necessary to make an informed decision and that you are not relying on any other information or the representation concerning our Company or the Securities and neither our Company nor any other person responsible for this document or any part of it or the Global Co-ordinators and Book Running Lead Managers will have any liability for any such other information or representation;

2. you are authorized to consummate the purchase of the Securities in compliance with all applicable laws and regulations;

3. you acknowledge (or if you are a broker-dealer acting on behalf of a customer, your customer has confirmed to you that such customer acknowledges) that such Securities have not been and will not be registered under the U.S. Securities Act;

4. you certify that either (A) you are the beneficial owner of the Securities and are a person resident in India or (B) you are a broker-dealer acting on behalf of your customer and your customer has confirmed to you that (i) such customer is the beneficial owner of the Securities, and (ii) such customer is a person resident in India; and

5. our Company and the Global Co-ordinators and Book Running Lead Managers, their respective affiliates and others will rely upon the truth and accuracy of your representations, warranties, acknowledgements and undertakings set out in this document, each of which is given to (a) the Global Co-ordinators and Book Running Lead Managers on your own behalf and on behalf of our Company, and (b) to our Company, and each of which is irrevocable and, if any of such representations, warranties, acknowledgements or undertakings deemed to have been made by virtue of your purchase of the Equity Shares are no longer accurate, you will promptly notify our Company.

Any resale or other transfer or attempted resale or other transfer, made other than in compliance with the above stated restrictions will not be recognized by our Company.

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THE SECURITIES MARKET OF INDIA

The information in this section has been extracted from documents available on the websites of SEBI and the Stock Exchanges and has not been prepared or independently verified by our Company or the Global Co- ordinators and Book Running Lead Managers or any of their respective affiliates or advisors.

The Indian Securities Market

India has a long history of organised securities trading. In 1875, the first stock exchange was established in Mumbai.

Stock Exchanges Regulation

Indian stock exchanges are regulated primarily by SEBI, as well as by the Government acting through the Ministry of Finance, Capital Markets Division, under the SCRA and the SCRR. SEBI, in exercise of its powers under the SCRA and the SEBI Act, notified the SCR (SECC) Rules, which regulate inter alia the recognition, ownership and internal governance of stock exchanges and clearing corporations in India together with providing for minimum capitalisation requirements for stock exchanges. The SCRA, the SCRR and the SCR (SECC) Rules along with various rules, bye-laws and regulations of the respective stock exchanges, regulate the recognition of stock exchanges, the qualifications for membership thereof and the manner, in which contracts are entered into, settled and enforced between members of the stock exchanges.

The SEBI Act empowers SEBI to regulate the Indian securities markets, including stock exchanges and intermediaries in the capital markets, promote and monitor self-regulatory organisations and prohibit fraudulent and unfair trade practices. Regulations concerning minimum disclosure requirements by public companies, rules and regulations concerning investor protection, insider trading, substantial acquisitions of shares and takeover of companies, buy-backs of securities, employee stock option schemes, stockbrokers, merchant bankers, underwriters, mutual funds, foreign institutional investors, credit rating agencies and other capital market participants have been notified by the relevant regulatory authority.

Listing and Delisting of Securities

The listing of securities on a recognised Indian stock exchange is regulated by the applicable Indian laws including the Companies Act, the SCRA, the SCRR, the SEBI Act and various guidelines and regulations issued by the SEBI and the listing agreements of the respective stock exchanges. The SCRA empowers the governing body of each recognised stock exchange to suspend trading of or withdraw admission to dealings in a listed security for breach of or non compliance with any conditions or breach of company’s obligations under such listing agreement or for any reason, subject to the issuer receiving prior written notice of the intent of the exchange and upon granting of a hearing in the matter. SEBI also has the power to amend such equity listing agreements and bye-laws of the stock exchanges in India, to overrule a stock exchange’s governing body and withdraw recognition of a recognised stock exchange.

SEBI has notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 in relation to voluntary and compulsory delisting of equity shares from the stock exchanges.

Minimum Level of Public Shareholding

Pursuant to an amendment of the SCRR in June 2010, all listed companies (except public sector undertakings) were required to maintain a minimum public shareholding of 25%. However, pursuant to a subsequent amendment to the SCRR in November 2014, a public company seeking to get a particular class or kind of securities listed shall offer and allot to the public (i) at least 25% of such class or kind of securities issued by the company, if the post issue capital is less than or equal to ` 1,600,00,00,000, (ii) at least such percentage of such class or kind of securities issued by the company equivalent to ` 4,00,00,00,000, if the post issue capital of the company is more than ` 16,000,000,000 but less than or equal to ` 40,00,00,00,000 or (iii) at least 10% of such class or kind of securities issued by the company, if the post issue capital of the company is above ` 40,00,00,00,000. In case of (ii) and (iii) above, the public shareholding is required to be increased to 25% within a period of three years from the date of listing of the securities. In this regard, SEBI has amended the listing agreement and has provided several mechanisms to comply with this requirement.

Where the public shareholding in a listed company falls below 25% at any time, such company shall bring the

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public shareholding to 25% within a maximum period of 12 months from the date of such the public shareholding having fallen below the 25% threshold.

Index-Based Market-Wide Circuit Breaker System

In order to restrict abnormal price volatility in any particular stock, the SEBI has instructed stock exchanges to apply daily circuit breakers which do not allow transactions beyond a certain level of price volatility. These circuit breakers, when triggered, bring about a co-ordinated trading halt in all equity and equity derivative markets nationwide. The market-wide circuit breakers are triggered by movement of either the SENSEX of BSE or the CNX NIFTY of NSE, whichever is breached earlier.

In addition to the market-wide index-based circuit breakers, there are currently in place individual scrip-wise. However, no price bands are applicable on scrips on which derivative products are available or scrips included in indices on which derivative products are available.

The stock exchanges in India can also exercise the power to suspend trading during periods of market volatility. Margin requirements are imposed by stock exchanges that are required to be paid by the stockbrokers.

BSE

Established in 1875, it is the oldest stock exchange in India. In 1956, it became the first stock exchange in India to obtain permanent recognition from the Government under the SCRA. It has evolved over the years into its present status as one of the premier stock exchanges of India.

NSE

NSE was established by financial institutions and banks to provide nationwide online, satellite-linked, screen- based trading facilities with market-makers and electronic clearing and settlement for securities including government securities, debentures, public sector bonds and units. It has evolved over the years into its present status as one of the premier stock exchanges of India. NSE was recognised as a stock exchange under the SCRA in April 1993 and commenced operations in the wholesale debt market segment in June 1994. The capital market (equities) segment commenced operations in November 1994 and operations in the derivatives segment commenced in June 2000. NSE launched the NSE 50 Index, now known as S&P CNX NIFTY, on April 22, 1996 and the Mid-cap Index on January 1, 1996. The securities in the NSE 50 Index are highly liquid.

Internet-based Securities Trading and Services

Internet trading takes place through order routing systems, which route client orders to exchange trading systems for execution. Stockbrokers interested in providing this service are required to apply for permission to the relevant stock exchange and also have to comply with certain minimum conditions stipulated by SEBI. NSE became the first exchange to grant approval to its members for providing internet-based trading services. Internet trading is possible on both the “equities” as well as the “derivatives” segments of NSE.

Trading Hours

Trading on both NSE and BSE occurs from Monday to Friday, between 9:15 a.m. and 3:30 p.m. IST (excluding the 15 minutes pre-open session from 9:00 a.m. to 9:15 a.m. that has been introduced recently). BSE and NSE are closed on public holidays. The recognised stock exchanges have been permitted to set their own trading hours (in the cash and derivatives segments) subject to the condition that (i) the trading hours are between 9.00 a.m. and 5.00 p.m.; and (ii) the stock exchange has in place a risk management system and infrastructure commensurate to the trading hours.

Trading Procedure

In order to facilitate smooth transactions, BSE replaced its open outcry system with BSE On-line Trading facility in 1995. This totally automated screen based trading in securities was put into practice nation-wide. This has enhanced transparency in dealings and has assisted considerably in smoothening settlement cycles and improving efficiency in back-office work. In the year 2014, BSE introduced its new generation BOLT Plus platform for the equity segment.

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NSE has introduced a fully automated trading system called NEAT, which operates on strict time/price priority besides enabling efficient trade. NEAT has provided depth in the market by enabling large number of members all over India to trade simultaneously, narrowing the spreads.

Takeover Regulations

Disclosure and mandatory open offer obligations for listed Indian companies are governed by the Takeover Regulations which provide specific regulations in relation to substantial acquisitions of shares and control. Once the equity shares of a company are listed on a stock exchange in India, the provisions of the Takeover Regulations will apply to any acquisition of the company’s shares/voting rights/control. The Takeover Regulations prescribes certain thresholds or trigger points in the shareholding a person or entity has in the listed Indian company, which give rise to certain obligations on part of the acquirer. Acquisitions up to a certain threshold prescribed under the Takeover Regulations mandate specific disclosure requirements, while acquisitions crossing particular thresholds may result in the acquirer having to make an open offer of the shares of the target company. The Takeover Regulations also provides for the possibility of indirect acquisitions, imposing specific obligations on the acquirer in case of such indirect acquisition.

Insider Trading Regulations

The SEBI Insider Trading Regulations, 2015 have been notified to prohibit and penalise insider trading in India. An insider is, among other things, prohibited from dealing in the securities of a listed company when in possession of unpublished price sensitive information. Upon notification of the SEBI Insider Trading Regulations, 2015, the SEBI Insider Trading Regulations, 1992 stand repealed.

The SEBI Insider Trading Regulations, 2015 also provide disclosure obligations for promoters, employees and directors, with respect to their shareholding in the company, and the changes therein. The definition of “insider” includes any person who is a connected person or is in possession of, or has access to, unpublished price sensitive information.

Depositories

The Depositories Act provides a legal framework for the establishment of depositories to record ownership details and effect transfer in book-entry form. Further, SEBI framed regulations in relation to the registration of such depositories, the registration of participants as well as the rights and obligations of the depositories, participants, companies and beneficial owners. The depository system has significantly improved the operation of the Indian securities markets.

Derivatives (Futures and Options)

Trading in derivatives is governed by the SCRA, the SCRR and the SEBI Act. The SCRA was amended in February 2000 and derivatives contracts were included within the term “securities”, as defined by the SCRA. Trading in derivatives in India takes place either on separate and independent derivatives exchanges or on a separate segment of an existing stock exchange. The derivatives exchange or derivatives segment of a stock exchange functions as a self-regulatory organisation under the supervision of the SEBI.

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DESCRIPTION OF THE SECURITIES

Set forth below is certain information relating to the equity share capital of our Company, including a brief summary of some of the provisions of the Memorandum and Articles of Association of our Company and the Companies Act relating to the rights attached to its NCDs, the Warrants and the Equity Shares.

General

The authorized share capital of our Company is ` 3,40,00,00,000 comprising 1,70,00,00,000 Equity Shares.

Articles of Association

Our Company is governed by its Articles of Association.

Description of the NCDs

The NCDs constitute direct and secured obligations of the Company and shall rank pari passu inter se and without any preference or priority among themselves. Subject to any obligations preferred by mandatory provisions of the law prevailing from time to time, the NCDs shall also, as regards the principal amount of the NCDs, interest, early redemption amount and all other monies secured in respect of the NCDs, rank pari passu with all other present direct and secured obligations of the Company. The claims of the NCD holders shall be superior to the claims of the unsecured creditors of the Company (subject to any obligations preferred by mandatory provisions of the law prevailing from time to time).

The Company shall maintain at its Registered Office (or such other place as permitted by law) a register of NCD holders (the “Register of NCD holders”) containing such particulars as required by Section 88 of the Companies Act, 2013 read with Rule 4 of the Companies (Management and Administration) Rules, 2014. In terms of Section 88 of the Companies Act, 2013, read with Rule 4 of the Companies (Management and Administration) Rules, 2014 the Register of NCD holders maintained by a Depository for any NCDs in dematerialized form under Section 11 of the Depositories Act shall be deemed to be a corresponding Register of NCD holders solely for the purposes of the NCD Condition.

Transfers

Subject to the NCD Conditions and, (i) in case of NCDs held in the dematerialized form, transfers of NCDs may be effected only through the Depository(ies) through which such NCDs to be transferred are held, in accordance with the provisions of the Depositories Act and the rules as notified by the Depositories from time to time, and (ii) in case of NCDs held in physical form, transfers of NCDs may be effected only by delivery of the NCD Consolidated Certificate issued in respect of that NCD, with the form of transfer on the back thereof duly completed and signed by the NCD holder or his duly authorized attorney, to the specified office of the Registrar. No transfer of title of an NCD will be valid unless and until entered on the Register of NCD holders. In accordance with Articles 51 and Article 60 of the Articles of Association, a fee not exceeding ` 1.00 may be charged by the Company for each NCD transferred and, if so required by the Directors, be paid before registration thereof.

Buy back of NCDs

The Company may from time to time, subject to applicable law and necessary approvals, buyback the NCDs on terms and conditions as may be decided by the Company.

Description of the Warrants

Each Warrant is exchangeable for 1 (one) Equity Share only at the Warrant Exercise Price.

The Company shall maintain at its Registered Office (or such other place as permitted by law) a register of Warrant holders (the “Register of Warrant holders”). The Register of Warrant holders maintained by a

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Depository for Warrants in dematerialised form shall be deemed to be a Register of Warrant holders for the purposes of the Warrant Condition.

Transfers

Subject to Warrant Conditions and, (i) in case of Warrants held in the dematerialized form, transfers of Warrants may be effected only through the Depository(ies) through which such Warrants to be transferred are held, in accordance with the provisions of the Depositories Act, 1996 and rules as notified by the Depositories from time to time, and (ii) in case of Warrants held in physical form, transfers of Warrants may be effected only by delivery of the Warrant Consolidated Certificate issued in respect of that Warrant, with the form of transfer on the back thereof duly completed and signed by the Warrant holder or his duly authorized attorney, to the specified office of the Registrar. No transfer of title of a Warrant will be valid unless and until entered on the Register of Warrant holders.

Transfers of interests in the Warrants in the dematerialized form will be effected in accordance with the rules of the relevant Depositories.

Description of the Equity Shares to be allotted pursuant to exercise of Warrants

Dividends

Under Indian law, a company pays dividends upon a recommendation by its board of directors and approval by a majority of the shareholders at the AGM held each Fiscal. Subject to certain conditions laid down by Section 123 of the Companies Act, 2013 no dividend can be declared or paid by a company for any Fiscal except out of the profits of the company for that year, calculated in accordance with the provisions of the Companies Act or out of the profits of the company for any previous Fiscal(s) arrived at as laid down by the Companies Act. Further, as per the Companies (Declaration and Payment of Dividend) Rules, 2014, in the absence of profits in any year, company may declare dividend out of surplus, provided: (a) the rate of dividend declared shall not exceed the average of the rates at which dividend was declared by it in the three years immediately preceding that year; (b) the total amount to be drawn from such accumulated profits shall not exceed one-tenth of the sum of its paid up share capital and free reserves as per the latest audited balance sheet; (c) the amount so drawn shall be first utilized to set off the losses incurred in the financial year in which the dividend is declared before any dividend in respect of equity shares is declared; (d) the balance of reserves after such withdrawal shall not fall below 15% of its paid up share capital as per the latest audited balance sheet of the company; and (e) no company shall declare dividend unless carried over previous losses and depreciation not provided in previous years are set off against profit of the company of the current year the loss or depreciation, whichever is less, in previous years is set off against the profit of the company for the year for which the dividend is declared or paid.

According to the Articles of Association, the amount of dividends shall not exceed the amount recommended by our Board of Directors. However, our Company may declare a smaller dividend in the general meeting. In addition, as is permitted by the Articles of Association, our Board of the Directors may pay interim dividend as may appear to be justified by the profits of our Company, subject to the requirements of the Companies Act.

The Equity Shares issued upon exercise of the Warrants issued pursuant to this Issue shall rank pari passu with the then existing Equity Shares in all respects including entitlements to any dividends that may be declared by our Company.

Unclaimed dividend shall not be forfeited by our Company unless the claim thereof becomes barred by law. In terms of Section 124 of the Companies Act 2013, our Company shall credit such unclaimed dividends to the unpaid dividend account of our Company, and any money transferred to the unclaimed dividend account of our Company which remains unpaid and unclaimed for a period of seven years from the date they became due for payment, shall be transferred by our Company to the ‘Investor Education and Protection Fund’, established by the GoI, in accordance with Section 125 of the Companies Act 2013.

Capitalization of Profits

In addition to permitting dividends to be paid out of current or retained earnings as described above, the Companies Act 2013 permits the board of directors of a company to issue fully paid up bonus shares to its members out of (a) the free reserves of the company, (b) the securities premium account, or (c) the capital redemption reserve account. However, a company may capitalize its profits or reserves for issue of fully paid up

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bonus shares, provided: (a) its authorized by articles, (b) it has been, on the recommendation of the board of directors, approved by the shareholders in a general meeting, (c) it has not defaulted in payment of interest or principal in respect of fixed deposits or debt securities issued by it, (d) it has not defaulted on payment of statutory dues, (e) there are no partly paid shares. The issue of bonus shares once declared cannot be withdrawn. These bonus shares must be distributed to shareholders in proportion to the number of ordinary shares owned by them as recommended by the board of directors. No issue of bonus shares may be made by capitalizing reserves created by revaluation of assets, and no bonus shares shall be issued in lieu of dividend. Further, any issue of bonus shares would be subject to SEBI Regulations.

Pre-Emptive Rights and Alteration of Share Capital

Subject to the provisions of the Companies Act, our Company may increase its share capital by issuing new shares on such terms and with such rights as it, by action of its shareholders in a general meeting may determine. According to Section 62(1)(a) of the Companies Act 2013 such new shares shall be offered to existing shareholders in proportion to the amount paid up on those shares at that date. The offer shall be made by notice specifying the number of shares offered and the date (being not less than 15 days and not exceeding 30 days from the date of the offer) within which the offer, if not accepted, will be deemed to have been declined. After such date the board may dispose of the shares offered in respect of which no acceptance has been received which shall not be disadvantageous to the shareholders of our Company. The offer is deemed to include a right exercisable by the person concerned to renounce the shares offered to him in favour of any other person.

Under the provisions of Section 62(1)(c) of the Companies Act 2013, new shares may be offered to any persons whether or not those persons include existing shareholders, either for cash of for a consideration other than cash, if the price of such shares is determined by the valuation report of a registered valuer subject to such conditions as may be prescribed, if a special resolution to that effect is passed by our Company’s shareholders in a general meeting.

Our Articles of Association permit our Company, pursuant to an ordinary resolution in a general meeting, to (a) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares; (b) convert all or any of its fully paid – up shares into stock and reconvert that stock into fully paid up shares of any denomination; (c) sub-divide its shares or any of them into shares of smaller amount than is fixed by the Memorandum of Association so, however, that in the sub-division the proportion between the amount paid and the amount if any, unpaid on each reduced share shall be the same as it was in the case of the share from which the reduced share is derived; and (d) cancel any shares which, at the date of passing of the resolution, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of shares so cancelled.

General Meetings of Shareholders

There are two types of general meetings of the shareholders, namely, AGM and EGM. Our Company is required to hold its AGM within six months after the expiry of each Fiscal provided that not more than 15 months shall elapse between one AGM and next one, unless extended by the RoC at its request for any special reason for a period not exceeding three months. Our Board of Directors may convene an EGM when necessary or at the request of a shareholder or shareholders holding in the aggregate not less than one tenth of our Company’s issued paid up capital (carrying a right to vote in respect of the relevant matter on the date of receipt of the requisition).

Notices, along with statement containing material facts concerning each special item, either in writing or through electronic mode, convening a meeting setting out the date, day, hour, place and agenda of the meeting must be given to every member or the legal representative of a deceased member, auditors of the company and every director of the company, at least 21 clear days prior to the date of the proposed meeting. A general meeting may be called after giving shorter notice if consent is received, in writing or electronic mode, from not less than 95% of the shareholders entitled to vote. Unless, the Articles of Association provide for a larger number, (i) five shareholders present in person, if the number of shareholders as on the date of meeting is not more than 1,000; (ii) 15 shareholders present in person, if the number of shareholders as on the date of the meeting is more than 1,000 but up to 5,000; and (iii) 30 shareholders present in person, if the number of shareholders as on the date of meeting exceeds 5,000, shall constitute a quorum for a general meeting of our Company, whether AGM or EGM. The quorum requirements applicable to shareholder meetings under the Companies Act have to be physically complied with.

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A company intending to pass a resolution relating to matters such as, but not limited to, amendment in the objects clause of the Memorandum, the issuing of shares with different voting or dividend rights, a variation of the rights attached to a class of shares or debentures or other securities, buy-back of shares, giving loans or extending guarantees in excess of limits prescribed, is required to obtain the resolution passed by means of a postal ballot instead of transacting the business in our Company’s general meeting. A notice to all the shareholders shall be sent along with a draft resolution explaining the reasons therefor and requesting them to send their assent or dissent in writing on a postal ballot within a period of 30 days from the date of posting the letter. Postal ballot includes voting by electronic mode.

Voting Rights

At a general meeting, upon a show of hands, every member holding shares and entitled to vote and present in person has one vote. Upon a poll, the voting rights of each shareholder entitled to vote and present in person or by proxy is in the same proportion as the capital paid up on each share held by such holder bears to our Company’s total paid up capital. Voting is by a show of hands, unless a poll is ordered by the Chairman of the meeting The Chairman of the meeting has a casting vote.

Ordinary resolutions may be passed by simple majority of those present and voting. Special resolutions require that the votes cast in favour of the resolution must be at least three times the votes cast against the resolution.

A shareholder may exercise his voting rights by proxy to be given in the form required by the Articles of Association. The instrument appointing a proxy is required to be lodged with our Company at least 48 hours before the time of the meeting. A proxy may not vote except on a poll and does not have a right to speak at meetings.

Registration of Transfers and Register of Members

Our Company is required to maintain a register of members wherein the particulars of the members of our Company are entered. For the purpose of determining the shareholders, entitled to corporate benefits declared by our Company, the register may be closed for such period not exceeding 45 days in any one year or 30 days at any one time at such times, as the Board of Directors may deem expedient in accordance with the provisions of the Companies Act. Under the listing agreements of the stock exchanges on which our Company’s outstanding Equity Shares are listed, our Company may, upon at least seven days’ advance notice to such stock exchanges, set a record date and/or close the register of shareholders in order to ascertain the identity of shareholders. The trading of Equity Shares and the delivery of certificates in respect thereof may continue while the register of shareholders is closed.

Liquidation Rights

The Articles of Association of our Company provide that if our Company shall be wound up, and the assets available for distribution among the members as such are insufficient to repay the whole of the paid up capital, such assets shall be distributed so that as nearly as may be, the losses shall be borne by the members in proportion to the capital paid up, or which ought to have been paid up, at the commencement of the winding up, on the shares held by them respectively. If in the winding up the assets available for distribution among the members shall be more than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed amongst the members in proportion to the capital, at the commencement of the winding up, paid up or which ought to have been paid up on the shares held by them respectively. This would be without prejudice to the rights of the holders of the shares issued upon special terms and conditions.

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TAXATION

REF: SVP/8952

To, Board of Directors, Housing Development Finance Corporation Limited Ramon House, H. T. Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai 400 020

Dear Sirs,

Sub: Statement of possible tax benefits available to Housing Development Finance Corporation Limited

We refer to the proposed issue of Non-convertible Debentures and warrants (“the Issue”) of Housing Development Finance Corporation Limited (“the Corporation”) and enclose the statement showing the current position of tax benefits available to the Corporation and to the investors as per the provisions of the Income-tax Act, 1961 “the I.T. Act”) for inclusion in the letter of offer.

This statement is provided for general information purposes only and each investor is advised to consult its own tax consultant with respect to specific income tax implications arising out of participation in the issue.

Unless otherwise specified, sections referred below are sections of the I.T. Act. The benefits set out below are subject to conditions specified therein read with the Income-tax Rules, 1962 presently in force.

The benefits outlined in the enclosed statement based on the information and particulars provided by the Corporation are neither exhaustive nor conclusive.

We do not express any opinion or provide any assurance as to whether:

 the Corporation and the investors will continue to obtain these benefits in future;  the conditions prescribed for availing the benefits have been/would be met with; and  the revenue authorities/courts will concur with the views expressed herein.

We hereby give our consent to include the enclosed statement regarding tax benefits available to the Corporation and to its investors in the letter for the proposed issue of Non-convertible Debentures and warrants which the Corporation intends to submit to the National Stock Exchange Limited and BSE Limited (“the Stock Exchanges”).

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Limitations

Our views expressed in the statement enclosed are based on the facts and assumptions indicated above. No assurance is given that the revenue authorities/courts will concur with the views expressed herein. Our views are based on the existing provisions of law and its interpretation, which are subject to change from time to time. We do not assume responsibility to update the views consequent to such changes. The views are exclusively for the use of the Corporation and shall not, without our prior written consent, be disclosed to any other person.

Yours faithfully

Mumbai: August 11, 2015

SVP/GKS/JP/2015

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TAXATION

The information provided below sets out the possible tax benefits available to the Corporation and to prospective investors in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the subscription, ownership and disposal of securities, under the current tax laws presently in force in India. Several of these benefits are dependent on the prospective investors fulfilling the conditions prescribed under the relevant tax laws. Hence the ability to derive the tax benefits is dependent upon fulfilling such conditions, which based on business imperatives it faces in the future, it may not choose to fulfil. The following overview is not exhaustive or comprehensive and is not intended to be a substitute for professional advice.

INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX CONSULTANT WITH RESPECT TO THE TAX IMPLICATIONS OF AN INVESTMENT IN THE SECURITIES, PARTICULARLY IN VIEW OF THE FACT THAT CERTAIN RECENTLY ENACTED LEGISLATION MAY NOT HAVE A DIRECT LEGAL PRECEDENT OR MAY HAVE A DIFFERENT INTERPRETATION ON THE BENEFITS, WHICH AN INVESTOR CAN AVAIL.

STATEMENT OF POSSIBLE DIRECT TAX BENEFITS AVAILABLE TO HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (“CORPORATION”) AND TO RESIDENT QUALIFIED INSTITUTIONAL BUYERS (“QIBs” / “INVESTORS”)

A. SPECIAL TAX BENEFITS AVAILABLE TO THE CORPORATION

1. Transfer to Special Reserve under section 36(1)(viii)

In terms of section 36(1)(viii) of the I.T. Act, Company is eligible for deduction in respect of the profits derived from eligible business of providing long-term finance for the construction or purchase of houses in India for residential purposes, provided such amount is carried to special reserve created and maintained by our Company. The amount of deduction is lower of the following:-

i. Amount transferred during the previous year to the special reserve account created for the purpose of section 36(1)(viii); or

ii. 20% of the profits derived from eligible business computed under the head “Profits and gains of business or profession” but before making any deduction under section 36(1)(viii) of the I.T. Act; or

iii. 200% of the paid-up share capital and general reserve on the last day of the previous year minus the balance of the special reserve account on the first day of the previous year.

B. TAX BENEFITS AVAILABLE TO THE INVESTORS

I. Tax benefits available to resident debenture holders

1. Interest on non-convertible debenture (“NCD”) received by resident debenture holders would be subject to tax at the normal rates of tax in accordance with and subject to the provisions of the I.T. Act.

2. As per section 2(29A) read with section 2(42A) of the I.T. Act, a listed debenture is treated as a long term capital asset if the same is held for more than 12 months immediately preceding the date of its transfer.

As per section 112 of the I.T. Act, capital gains arising in the hands of resident debenture holders on the transfer of long term capital assets being listed debentures, are subject to tax at the rate of 10% (plus applicable surcharge and cess) of capital gains calculated without indexation of the cost of acquisition. The capital gains shall be computed by deducting expenditure incurred in connection with such transfer and cost of acquisition/indexed cost of acquisition of the debentures from the sale consideration.

3. Under section 54EC of the I.T. Act and subject to the conditions and to the extent specified therein, long term capital gains arising to the debenture holders on the transfer of their debentures in our Company would be

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exempt from tax if such capital gain is invested within 6 months from the date of such transfer in a long-term specified asset. If only part of the capital gains is so invested, the exemption shall be proportionately reduced.

A “long-term specified asset” means any bond, redeemable after three years and issued on or after 1st day of April 2007 by the:

a. National Highways Authority of India constituted under section 3 of The National Highways Authority of India Act, 1988;

b. Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956

The total deduction with respect to investment in the long term specified asset is restricted to Rs.50 lakhs whether invested during the financial year in which the asset is transferred and in the subsequent year.

Where the long-term specified asset are transferred or converted into money within three years from the date of their acquisition, the amount so exempted is taxable as capital gains in the year of transfer / conversion.

4. As per section 2(42A) of the I.T. Act, a listed debenture is treated as a short term capital asset if the same is held for not more than 12 months immediately preceding the date of its transfer.

Short-term capital gains on the transfer of listed debenture, where debentures are held for a period of not more than 12 months, in the hands of resident debenture holders would be taxed at the normal rates of tax in accordance with and subject to the provisions of the I.T. Act.

5. In case debentures are held as stock in trade, the income on transfer of debentures would be taxed as business income or loss in accordance with and subject to the provisions of the I.T. Act.

6. Securities Transaction Tax (“STT”) is a tax levied on all transactions in specified securities done on the stock exchanges at rates prescribed by the Central Government from time to time. STT is not applicable on transactions in the NCDs.

7. Income tax is deductible at source on interest on debentures, payable to resident debenture holders at the time of credit/ payment as per the provisions of section 193 of the I.T. Act. However, no income tax is deductible at source in respect of the following:

a. On any security issued by a Corporation in a dematerialised form and is listed on recognised stock exchange in India in accordance with the Securities Contracts (Regulation) Act, 1956 and the rules made thereunder.

b. When the Assessing Officer issues a certificate on an application by a debenture holder on satisfaction that the total income of the debenture holder justifies no / lower deduction of tax at source as per the provisions of section 197(1) of the I.T. Act and that certificate is filed with the Corporation before the prescribed date of closure of books for payment of debenture interest.

8. Section 139A(5A) of the I.T. Act requires every person from whose income tax has been deducted at source under the provisions of Chapter XVIIB of the I.T. Act to furnish his PAN to the person responsible for deduction of tax at source.

9. Section 206AA of the I.T. Act requires every person entitled to receive any sum, on which tax is deductible under Chapter XVIIB to furnish his PAN to the person responsible for deduction of tax at source, failing which attracts tax shall be deducted at the higher of the following rates:

i. at the rate specified in the relevant provision of the I.T. Act; or ii. at the rate or rates in force; or iii. at the rate of 20%

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Where a wrong PAN is provided, it will be regarded as non furnishing of PAN to the deductor and provisions of section 206AA of the I.T. Act shall apply.

II. Tax benefits available to resident warrant holders

1. Under section 2 (29A) read with section 2 (42A) of the I.T. Act, a listed warrant is treated as a long term capital asset if the same is held for more than 12 months immediately preceding the date of its transfer.

Under section 112 of the I.T. Act, capital gains arising in the hands of resident warrant holders on the transfer of long term capital assets being listed warrant, are subject to tax at the rate of 10% (plus applicable surcharge and cess) of capital gains calculated without indexation of the cost of acquisition or at 20% (plus applicable surcharge and cess) of capital gains calculated with indexation of the cost of acquisition whichever is more beneficial to the investor. The capital gains shall be computed by deducting expenditure incurred in connection with such transfer and cost of acquisition of the warrant from the sale consideration.

2. Under section 54EC of the I.T. Act and subject to the conditions and to the extent specified therein, long term capital gains arising to the warrant holders on the transfer of their warrants in the Corporation would be exempt from tax if such capital gain is invested within 6 months from the date of such transfer in a long-term specified asset. If only part of the capital gains is so invested, the exemption shall be proportionately reduced. A “long-term specified asset” means any bond, redeemable after three years and issued on or after 1st day of April 2007 by the:

a. National Highways Authority of India constituted under section 3 of The National Highways Authority of India Act, 1988;

b. Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956

Where the long term specified asset are transferred or converted into money within three years from the date of their acquisition, the amount so exempted is taxable as capital gains in the year of transfer / conversion.

3. As per section 2(42A) of the I.T. Act, a listed warrant is treated as a short term capital asset if the same is held for not more than 12 months immediately preceding the date of its transfer.

Short-term capital gains on the transfer of listed warrants, where warrants are held for a period of not more than 12 months, in the hands of warrant holders would be taxed at the normal rates of tax in accordance with and subject to the provisions of the I.T. Act.

4. In case warrants are held as stock in trade, the income on transfer of warrant would be taxed as business income or loss in accordance with and subject to the provisions of the I.T. Act.

5. Income-tax is not deductible at source on capital gains and business income on transfer of warrant, payable to resident warrant holders as per the provisions of the I.T. Act.

III. Tax benefits available to resident shareholders

1. As per section 10(34) of the I.T. Act, any income by way of dividends referred to in section 115-O of the I.T. Act received on the shares of any Indian company is exempt from tax in the hands of the shareholders.

2. As per section 10(38) of the I.T. Act, long term capital gains arising from the transfer of a long term capital asset being an equity share of the company, where such transaction is chargeable to STT, will be exempt in the hands of the shareholders.

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3. In accordance with section 112 of the I.T. Act, long term capital gains to the extent not exempt under section 10(38) of the I.T. Act would be subject to tax at the rate of 20% (plus applicable surcharge and education cess) with indexation benefits. However, as per the proviso to section 112 of the I.T. Act, if the tax on long term capital gains is resulting from transfer of listed securities (other than a unit) or zero coupon bond, then long term capital gains will be chargeable to tax at the rate lower of the following: -

a. 20% (plus applicable surcharge and education cess) of the capital gains as computed with indexation of the cost; or

b. 10% (plus applicable surcharge and education cess) of the capital gains as computed without indexation

4. As per section 54EC of the I.T. Act and subject to the conditions and to the extent specified therein, long term capital gains (in case not covered under section 10(38) of the I.T. Act) arising on the transfer of a long term capital asset would be exempt from tax if such capital gain is invested within 6 months from the date of such transfer in a long-term specified asset.

A “long-term specified asset” means any bond, redeemable after three years and issued on or after 1st day of April 2007 by the:

a. National Highways Authority of India constituted under section 3 of The National Highways Authority of India Act, 1988;

b. Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956

5. As per section 2(42A) of the I.T. Act, a listed equity share is treated as a short term capital asset if the same is held for not more than 12 months immediately preceding the date of its transfer.

As per section 111A of the I.T. Act, short term capital gains arising from the sale of equity shares of our Company, where such transaction is chargeable to STT, will be taxable at the rate of 15% (plus applicable surcharge and education cess). Further, short term capital gains as computed above that are not liable to STT would be subject to tax as calculated under the normal provisions of the I.T. Act. As per section 111A(2) of the I.T. Act, no deduction under Chapter VI-A of the I.T. Act shall be allowed from such income.

6. In case equity shares are held as stock in trade, the income on transfer of equity shares would be taxed as business income or loss in accordance with and subject to the provisions of the I.T. Act.

7. As per section 36(1)(xv) of the I.T. Act, the amount of STT paid by a resident shareholder in respect of taxable securities transactions offered to tax as "Profits and gains of business or profession" shall be allowable as a deduction against such Business Income.

8. No income tax is deductible at source from income by way of capital gains under the present provisions of the I.T. Act in case of residents.

IV. Benefits available to Mutual Funds

As per section 10(23D) of the I.T. Act, any income of a Mutual Fund registered under the Securities and Exchange Board of India Act, 1992 or Regulations made thereunder, Mutual Fund set up by a public sector bank or a public financial institution and Mutual Fund authorised by the Reserve Bank of India will be exempt from income tax, subject to such conditions as the Central Government may, by notification in the Official Gazette,

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specify in this behalf. However, Mutual Funds will be liable to pay tax on distributed income to unit holders under section 115R of the I.T. Act.

NOTES:

1. The above benefits are as per the current tax law, i.e. Finance Act, 2015 (“FA 2015”).

2. As per the FA 2015, surcharge is to be levied on domestic companies at the rate of 7% where the income exceeds Rs 1 crore but does not exceed Rs. 10 crores and at the rate of 12% where the income exceeds Rs. 10 crores.

3. Education cess at 2% and secondary and higher education cess at 1% on the tax and surcharge is payable by all categories of taxpayers.

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LEGAL PROCEEDINGS

Our Company, its Subsidiaries and Associates are, from time to time, involved in various legal proceedings in the ordinary course of business, which involve matters pertaining to, amongst others, tax, regulatory and other disputes. As on the date of this Placement Document, except as disclosed hereunder, our Company, its Subsidiaries and Associates are not involved in any material governmental, legal or arbitration proceedings or litigation and our Company is not aware of any pending or threatened material governmental, legal or arbitration proceedings or litigation relating to them which, in either case, to the extent quantifiable, exceeds ` 85 crores or may have a significant effect on the financial condition, the results of operations or cash flows of our Company, on a consolidated basis.

Capitalised terms used herein shall, unless otherwise specified, have the meanings ascribed to such terms in this section.

Litigation against our Company

Our Company is involved in a number of legal proceedings, in the ordinary course of its business. Accordingly, we believe there are currently no legal proceedings which, if adversely determined, might materially affect our Company’s financial condition or results of operations. Set out below are details of a recent order passed by the Supreme Court of India against our Company in relation to alleged non-compliance with the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and certain outstanding disputes with the Indian tax authorities:

1. The Supreme Court of India has, by way of an order dated July 22, 2015, pursuant to an appeal filed by our Company in C.A. No. 2815 of 2005, directed our Company to pay a penalty of ` 75,000 to SEBI for a delay of 286 days in filing the report under Regulation 3(4) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 with respect to an acquisition of equity shares, constituting more than 10.92% of the voting rights in Hindustan Oil Exploration Company Limited on a rights basis.

2. Our dispute with the Indian tax authorities relates to the computation of the profit derived from the business of long-term housing finance eligible for this special deduction. The dispute revolves around the correct classification of eligible incomes and related expenses that constitute the long-term housing finance business. Our Company has recognised a contingent liability in respect of all the disputed income tax demands up to March 31, 2015 (inclusive) in the amount of ` 1,103.51 crore. We have already paid/adjusted this amount to the Indian tax authorities and will receive this amount as a refund if the disputes are resolved in our favour.

Litigation against our Subsidiaries

HDFC Life

HDFC Life is involved in a number of legal proceedings in the ordinary course of its business. Accordingly, HDFC Life believes that except as disclosed below, there are currently no legal proceedings which, if adversely determined, might materially affect HDFC Life’s financial condition or results of operations.

The Commissioner of Income Tax, Mumbai filed eight separate appeals before the Bombay High Court challenging an order dated September 20, 2013, passed by the Income Tax Appellate Tribunal, Mumbai, which partly allowed the appeals filed by HDFC Life with respect to computation of HDFC Life’s income and rate of taxation. These appeals are currently pending admission before the Bombay High Court and the aggregate amount involved in these appeals is ` 1,478.05 crore.

Litigation against our Associates

HDFC Bank

HDFC Bank is involved in a number of legal proceedings in the ordinary course of its business, including certain proceedings that HDFC Bank believes are spurious or vexatious proceedings with significant financial claims present on the face of the complaint, which, to HDFC Bank’s belief, lack any merit based on the historical dismissals of similar claims. Accordingly, HDFC Bank believes there are currently no legal proceedings which, if adversely determined, might materially affect the HDFC Bank’s financial condition or

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results of operations.

Inquiries, inspections or investigations under the Companies Act against our Company and / or its Subsidiaries in the last three years

There are no inquiries, inspections or investigations initiated or conducted under the Companies Act in the last three years immediately preceding the year of circulation of this Placement Document with respect to our Company and our Subsidiaries.

Prosecutions filed against, fines imposed on, or compounding of offences by our Company and / or its Subsidiaries under the Companies Act in the last three years

Save and except as disclosed in this Placement Document, there are no prosecutions filed (whether pending or not), fines imposed, compounding of offences in the last three years immediately preceding the year of circulation of this Placement Document with respect to our Company and our Subsidiaries.

Defaults in respect of dues payable

As of date of this Placement Document, there is no outstanding default in payment of statutory dues (except on account of certain outstanding disputes with the Indian tax authorities, as stated above), repayment of debentures and interest thereon, repayment of deposits and interest thereon and repayment of loan from any bank or financial institution and interest thereon. As at Fiscal 2015, the outstanding statutory dues of our Company relating to wealth tax, interest on lease tax and employees’ state insurance, are as follows:

Name of Statute Nature of Dues Forum where Dispute is Period to Amount Pending which the Involved Amount in ` Relates crore Assistant Commissioner of The Wealth Tax Act, 1957 Wealth Tax 1998-1999 0.12 Wealth Tax Maharashtra Sales Tax on the Interest on Commissioner of Sales Transfer of the Right to use any 1999-2000 0.02 Lease Tax Tax (Appeals) Goods for any Purpose Act, 1985 Payment towards Employees State Insurance Act, Assistant / Deputy Director Employer’s 2010-2011 0.01 1948 - ESIC Contribution to ESIC

Details of acts of material frauds committed against our Company in the last three years, if any, and if so, the action taken by our Company

There are no material frauds committed against our Company during the last three years.

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GENERAL INFORMATION

1. Our Company was incorporated as an Indian public limited company on October 17, 1977 under the Companies Act, 1956. Our Company’s registered office is located at Ramon House, H.T. Parekh Marg, 169 Backbay Reclamation Churchgate, Mumbai – 400 020, India. Our Company is registered with the RoC with CIN L70100MH1977PLC019916.

2. The Issue was authorised and approved by our Board on July 28, 2015 and approved by the Shareholders of our Company at the Annual General Meeting held on July 28, 2015.

3. We have applied for and on August 18, 2015 received an in-principle approval to list the NCDs, the Warrants and Equity Shares upon exercise of Warrants on BSE and NSE.

4. We have obtained all consents, approvals and authorizations required in connection with this Issue.

5. Copies of our Memorandum and Articles of Association will be available for inspection between 10:00 am to 12:00 pm on any weekday (except Saturdays, Sundays and public holidays) at our Registered Office.

6. There has been no material change in our financial or trading position since March 31, 2015, the date of the latest financial statements prepared in accordance with Indian GAAP included in this Placement Document, except as disclosed herein.

7. Our Company’s statutory auditors are Deloitte Haskins & Sells, LLP. The audited standalone financial statements as of and for Fiscals 2013, 2014 and 2015 and the audited consolidated financial statements as of and for Fiscals 2013, 2014 and 2015 included in this Placement Document, have been audited by Deloitte Haskins & Sells, LLP, who were the statutory auditors of our Company during this period. Deloitte Haskins and Sells, LLP, have also undertaken a limited review of the unaudited standalone and consolidated financial results of our Company as of and for the three months ended June 30, 2015.

8. The appointment of Deloitte Haskins & Sells, LLP, the statutory auditors of our Company, was recommended by our Board in the meeting held on May 6, 2014 and were appointed by way of a resolution passed by the Shareholders of our Company at the meeting held on July 21, 2014.

9. Details of changes in statutory auditors of our Company in the last three years:

Name and address of statutory Date of Date of Remarks auditor appointment cessation Deloitte Haskins & Sells, LLP July 21, 2014 N.A. Appointed as statutory auditors for a term of 3 years Address: Indiabulls Finance Centre 27th – 32nd Floor, Tower 3 Senapati Bapat Marg Elphinstone Mill Compound Elphinstone Road (W) Mumbai 400 013

10. Our Company confirms that it is in compliance with the minimum public shareholding requirements, as specified in the SCRR.

11. We had on July 17, 2015 made an application to NSE under Rule 19(7) of the SCRR for relaxation of strict enforcement of Rule 19(2)(b) of the SCRR in relation to the proposed listing of the Warrrants. SEBI has pursuant to its letter dated August 5, 2015, granted an exemption from the strict applicability of Rule 19(2)(b) of the SCRR in respect of the listing of the Warrants on the Stock Exchanges.

12. IDBI Trusteeship Services Limited is acting as the Debenture Trustee to the issue of NCDs and has consented, in writing, to include its name in this Placement Document in its capacity as Debenture Trustee and has agreed to participate in all the subsequent periodical communications sent to the holders of debt securities.

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13. Rating: The NCDs proposed to be issued have been rated by CRISIL Limited and ICRA Limited and the rating details are as below:

Rating Meaning of the Validity Rationale rating CRISIL AAA with Highest degree of January 31, 2016 The ratings on our Stable Outlook safety regarding Company’s debt timely servicing of instruments continue to financial obligations factor in our leading market position and sound track record in the housing finance business, strong asset quality, diversified and stable resource profile, and healthy capitalisation and profitability. These rating strengths are partially offset by our Company’s exposure to intense competition in the housing finance segment. [ICRA] AAA with Highest degree of November 2, 2015 The ratings factor in our Stable Outlook safety regarding Company’s strong timely servicing of franchise with financial obligations demonstrated ability to grow in a competitive mortgage finance market, consistent profitable operations on the back of strong interest margins supported by low provisions on account of sound asset quality and robust solvency indicators. The ratings also take into account the strong capital adequacy, access to diverse sources of funds and comfortable liquidity position.

14. The Floor Price for the issue of Equity Shares pursuant to exercise of Warrants is ` 1,189.66 per Warrant, calculated in accordance with the provisions of Chapter VIII of the SEBI Regulations, as certified by Deloitte Haskins & Sells, LLP.

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FINANCIAL STATEMENTS

S. Financial Statements Page number No. 1. Standalone unaudited financial results for the quarter 202 ended June 30, 2015 2. Consolidated unaudited financial results for the 206 quarter ended June 30, 2015 3. Audited standalone financial statements as at and for 212 the years ended March 31, 2013, 2014 and 2015 4. Audited consolidated financial statements as at and 261 for the years ended March 31, 2013, 2014 and 2015

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INDEPENDENT AUDITORS’ REVIEW REPORT TO THE BOARD OF DIRECTORS OF HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

1. We have reviewed the accompanying Statement of Standalone Unaudited Financial Results of HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (the “Corporation”) for the Quarter ended June 30, 2015 (the “Statement”), being submitted by the Corporation pursuant to the requirement of Clause 41 of the Listing Agreements with the Stock Exchanges, except for the disclosures in Part II - Select Information referred to in paragraph 4 below. This Statement is the responsibility of the Corporation’s Management and has been approved by the Board of Directors. Our responsibility is to issue a report on the Statement based on our review.

2. We conducted our review of the Statement in accordance with the Standard on Review Engagements (SRE) 2410 ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’, issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the Statement is free of material misstatement. A review is limited primarily to inquiries of Corporation personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

3. Based on our review conducted as stated above, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and other accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreements with the Stock Exchanges, including the manner in which it is to be disclosed, or that it contains any material misstatement.

4. Further, we also report that we have traced the number of shares as well as the percentage of shareholding in respect of the aggregate amount of public shareholding in terms of Clause 35 of the Listing Agreements with the Stock Exchanges and the particulars relating to investor complaints disclosed in Part II - Select Information for the Quarter Ended June 30, 2015 of the Statement, from the details furnished by the Management. We are informed that there is no promoter or promoter group of the Corporation.

For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm’s Registration No. 117366W/W-100018)

Sanjiv V. Pilgaonkar Partner (Membership No. 39826)

MUMBAI, July 28, 2015 SVP/GK/JP/2015-16

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PART I – STATEMENT OF STANDALONE UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED JUNE 30, 2015

Quarter ended Quarter ended Quarter ended Year ended PARTICULARS 30.06.2015 31.03.2015 30.06.2014 31.03.2015 (Reviewed) (Audited) (Reviewed) (Audited) Refer Note 8 ` in Crore Income from Operations 7,034.43 7,222.90 6,445.91 26,959.88 Profit on Sale of Investments 23.03 225.07 0.89 441.28 Total Income 7,057.46 7,447.97 6,446.80 27,401.16 Expenditure : - Interest and Other Charges 4,863.42 4,582.94 4,330.51 17,975.09 - Staff Expenses 93.40 81.43 84.90 328.46 - Provision for Contingencies 50.00 50.00 35.00 165.00 - Other Expenses 96.09 75.54 92.75 348.39 - Depreciation 13.39 13.09 (6.58) 29.78 Total Expenditure 5,116.30 4,803.00 4,536.58 18,846.72 Profit from Operations before Other Income 1,941.16 2,644.97 1,910.22 8,554.44 Other Income 10.82 8.46 14.44 69.70 Profit Before Tax 1,951.98 2,653.43 1,924.66 8,624.14 Tax Expense (refer note 3) 591.00 791.00 580.00 2,634.00 Net Profit After Tax 1,360.98 1,862.43 1,344.66 5,990.14

Earnings per Share - (`) (not annualised) - Basic 8.64 11.81 8.61 38.13 - Diluted 8.56 11.66 8.55 37.78 Paid-up Equity Share Capital (Face value ` 2) 315.20 314.94 313.39 314.94 Reserves as at March 31 30,655.03

Contd … two

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PART II – SELECT INFORMATION FOR THE QUARTER ENDED JUNE 30, 2015

Quarter ended Quarter ended Quarter ended Year ended 30.06.2015 31.03.2015 30.06.2014 31.3.2015 A] PARTICULARS OF SHAREHOLDING Public Shareholding : - Number of Shares 157,60,30,605 157,46,97,670 156,69,49,470 157,46,97,670 - Percentage of Shareholding 100 100 100 100 Promoters and Promoter Group Shareholding a) Pledged/Encumbered - Number of Shares - - - - - Percentage of Shares (to total - - - - promoter holding) - Percentage of Shares (to total share - - - - capital) b) Non-Encumbered - Number of Shares - - - - - Percentage of Shares (to total - - - - promoter holding) - Percentage of Shares (to total share capital) - - - -

B] INVESTOR COMPLAINTS Quarter ended 30.06.2015 - Pending at the beginning of the quarter - - Received during the quarter 13 - Disposed of during the quarter - - Remaining unresolved at the end of the quarter (refer note 7) 13

Notes:

1) As at June 30, 2015, the loan book stood at ` 2,31,224 crore as against ` 2,03,384 crore in the previous year. This is after considering the loans sold during the preceding 12 months amounting to ` 10,949 crore.

2) In the previous financial year, the Corporation received dividend of ` 269.35 crore from HDFC Bank in June 2014 and accordingly the income was accounted for in the first quarter. In the current year, dividend of ` 314.57 crore from HDFC Bank has been received in July 2015. This income will consequently be accounted for in the second quarter i.e., for the quarter ending September 2015.

To this extent, the results of the first quarter of the current year are not comparable with the corresponding quarter in the previous year.

Contd …three

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3) Vide circular NHB(ND)/DRS/Pol. 62/2014 dated May 27, 2014, the National Housing Bank (NHB) had directed Housing Finance Companies to provide for deferred tax liability in respect of “Special Reserve” created under section 36(1)(viii) of the Income Tax Act, 1961. Accordingly the Corporation has charged ` 89.00 crore (Previous Year ` 74.44 crore) to the Statement of Profit & Loss for the period ended June 30, 2015. This amount is reflected under the head "Tax Expense"

4) The Corporation’s main business is financing by way of loans for the purchase or construction of residential houses, commercial real estate and certain other purposes, in India. All other activities of the Corporation revolve around the main business. As such, there are no separate reportable segments, as per the Accounting Standard on ‘Segment Reporting’ (AS 17), notified by the Companies (Accounting Standards) Rules, 2006.

5) During the quarter ended June 30, 2015, the Corporation has allotted 13,32,935 equity shares of ` 2 each pursuant to exercise of stock options by certain employees / directors.

6) During the quarter ended June 30, 2015, the Corporation incorporated a new subsidiary, namely HDFC Capital Advisors Limited and have subscribed to 49,940 equity shares of ` 10 each aggregating to ` 4,99,400 representing 99.88 % of its issued and paid-up share capital.

7) During the quarter, the Corporation received 13 complaints from 5 shareholders through SEBI Complaints Redress System (SCORES). Though the said complaints were resolved by the Corporation before the quarter end, in terms of SEBI circular no. CIR/ OIAE/1/2014 dated December 18, 2014, complaints cannot be treated as resolved/ disposed till SEBI closes the said complaints on SCORES. The said complaints were closed by SEBI in the first week of July 2015.

8) Figures of the quarter ended March 31, 2015 are the balancing figures between audited figures in respect of the full financial year 2014-15 and published year to date reviewed figures up to the quarter ended December 31, 2014.

9) Figures for the previous period / year have been regrouped wherever necessary, in order to make them comparable.

The above results for the quarter ended June 30, 2015, which have been subject to a Limited Review by the Auditors of the Corporation, were reviewed by the Audit Committee of Directors and subsequently approved by the Board of Directors at its meeting held on July 28, 2015, in terms of Clause 41 of the Listing Agreements.

Keki M Mistry Vice Chairman & CEO Place: Mumbai Date: July 28, 2015

______Housing Development Finance Corporation Limited 205

INDEPENDENT AUDITORS’ REVIEW REPORT TO THE BOARD OF DIRECTORS OF HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

1. We have reviewed the accompanying Statement of Consolidated Unaudited Financial Results of HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (the “Corporation”), its subsidiaries and jointly controlled entities (the Corporation, its subsidiaries and jointly controlled entities constitute the “Group”) and its share of the profit of its associates for the Quarter ended June 30, 2015 (the “Statement”), being submitted by the Corporation pursuant to Clause 41 of the Listing Agreements with the Stock Exchanges, except for the disclosures in Part II - Select Information referred to in paragraph 7 below. The Statement is the responsibility of the Corporation’s Management and has been approved by the Board of Directors. Our responsibility is to issue a report on the Statement based on our review.

2. We conducted our review of the Statement in accordance with the Standard on Review Engagements (SRE) 2410 “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”, issued by the Institute of Chartered Accountants of India. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the Statement is free of material misstatement. A review is limited primarily to inquiries of Corporation personnel and an analytical procedure applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

3. The Statement includes the results of the following entities:

Subsidiaries: Credila Financial Services Private Limited, GRUH Finance Limited, HDFC Asset Management Company Limited, HDFC Developers Limited, HDFC Education and Development Services Private Limited, HDFC ERGO General Insurance Company Limited, HDFC Holdings Limited, HDFC Investments Limited, HDFC Property Ventures Limited, HDFC Realty Limited, HDFC Sales Private Limited, HDFC Standard Life Insurance Company Limited, HDFC Trustee Company Limited, HDFC Venture Capital Limited, HDFC Ventures Trustee Company Limited, HDFC Capital Advisors Limited, HDFC Pension Management Company Limited, Griha Investments, Griha Pte Limited, HDFC Investment Trust and HDFC Investment Trust - II.

Associates: HDFC Bank Limited and India Value Fund Advisors Private Limited.

4. We did not review the interim financial results of six subsidiaries included in the consolidated financial results, whose interim financial results reflect total revenues of ` 3,835.96 crore for the Quarter ended June 30, 2015, and total profit after tax of ` 392.38 crore for the Quarter ended June 30, 2015, as considered in the consolidated financial results. These interim financial results have been reviewed by other auditors whose reports have been furnished to us by the Management and our report on the Statement, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, is based solely on the reports of the other auditors.

206 5. Based on our review conducted as stated above and based on the consideration of the reports of the other auditors referred to in paragraph 4 above, nothing has come to our attention that causes us to believe that the accompanying Statement, prepared in accordance with the Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and other accounting principles generally accepted in India, has not disclosed the information required to be disclosed in terms of Clause 41 of the Listing Agreements with the Stock Exchanges, including the manner in which it is to be disclosed, or that it contains any material misstatement.

6. Claims paid and pertaining to Insurance business have been adjusted for the actuarial valuation of liabilities for life policies in force and for the policies in respect of which premium has been discontinued but liability exists as at reporting date, in respect of one subsidiary and the estimate of claims Incurred But Not Reported (IBNR) and claims Incurred But Not Enough Reported (IBNER), in respect of another subsidiary. These liabilities have been duly certified by the subsidiaries’ appointed actuaries, and in their respective opinions, the assumptions for such valuation are in accordance with the guidelines and norms issued by the Insurance Regulatory and Development Authority of India (“IRDA”) and the Institute of Actuaries of India in concurrence with the IRDA. The respective auditors of those subsidiaries have relied on the appointed actuaries’ certificates in this regard in forming their conclusion on the financial result of the said subsidiaries.

7. Further, we also report that we have traced the number of shares as well as the percentage of shareholding in respect of the aggregate amount of public shareholding and the number of shares in terms of Clause 35 of the Listing Agreements with the Stock Exchanges and the particulars relating to investor complaints disclosed in Part II - Select Information for the Quarter Ended June 30, 2015 of the Statement, from the details furnished by the Management. We are informed that there is no promoter or promoter group of the Corporation.

For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm’s Registration No. 117366W/W-100018)

Sanjiv V. Pilgaonkar Partner (Membership No. 39826) MUMBAI, July 28, 2015 SVP/GK/JP/2015-16

207

PPAARRTT II -- SSTTAATTEEMMEENNTT OOFF CCOONNSSOOLLIIDDAATTEEDD UUNNAAUUDDIITTEEDD FFIINNAANNCCIIAALL RREESSUULLTTSS FFOORR TTHHEE QQUUAARRTTEERR EENNDDEEDD JJUUNNEE 3300,,, 22001155

Quarter Quarter Quarter Year PARTICULARS ended ended ended ended 30.6.2015 31.3.2015 30.6.2014 31.3.2015 (Reviewed) (Audited) (Reviewed) (Audited) Refer Note 9 ` in crore Income from Operations 7,774.43 7,922.93 6,742.94 29,075.78 Premium Income from Insurance business 3,163.11 5,737.22 2,810.40 16,427.35 Other Operating Income from Insurance business 469.61 807.65 474.12 2,301.69 Profit on Sale of Investments 29.05 258.38 11.94 510.87 Total Income 11,436.20 14,726.18 10,039.40 48,315.69 Expenses: - Interest and Other Charges 5,073.88 4,783.86 4,496.56 18,710.29 - Staff Expenses 193.72 177.60 172.80 699.14 - Claims paid pertaining to Insurance Business 2,177.72 2,763.50 1,978.73 9,551.25 - Commission and Operating Expenses 417.96 618.85 417.09 2,112.45 pertaining to Insurance Business - Other expenses and appropriations 808.99 2,846.22 627.56 6,244.53 pertaining to Insurance Business - Provision for Contingencies 59.68 38.87 47.83 188.04 - Other Expenses 236.85 218.57 178.56 721.08 - Depreciation and Amortisation 18.24 18.49 (4.46) 46.63 Total Expenditure 8,987.04 11,465.96 7,914.67 38,273.41 Profit from Operations before Other Income 2,449.16 3,260.22 2,124.73 10,042.28 Other Income 4.42 11.22 16.67 74.34 Profit Before Tax 2,453.58 3,271.44 2,141.40 10,116.62 Tax Expense (Refer Note 3) 714.44 1,044.12 657.32 3,165.70 Net Profit (before profit of Associates and 1,739.14 adjustment for minority interest) 2,227.32 1,484.08 6,950.92 Net share of profit of Associates (Equity Method) 602.75 562.43 521.85 2,294.42 Share of profit of minority shareholders (137.60) (143.40) (133.03) (482.72) Profit After Tax attributable to the Corporation 2,204.29 and its Subsidiaries 2,646.35 1,872.90 8,762.62

Earnings per Share (of ` 2 each) (not annualised) - Basic 13.99 16.79 11.99 55.81 - Diluted 13.86 16.59 11.91 55.30 Paid-up Equity Share Capital (Face value ` 2) 315.20 314.94 313.39 314.94 Reserves as at March 31 44,756.69

Cont’d … two

______Housing Development Finance Corporation Limited 208

PPAARRTT IIII –– SSEELLEECCTT IINNFFOORRMMAATTIIOONN FFOORR TTHHEE QQUUAARRTTEERR EENNDDEEDD JJUUNNEE 3300,,, 22001155

Quarter Quarter Quarter Year ended ended ended ended 30.6.2015 31.3.2015 30.6.2014 31.3.2015 A] PARTICULARS OF SHAREHOLDING Public Shareholding : - Number of Shares 157,60,30,605 157,46,97,670 156,69,49,470 157,46,97,670 100 100 - Percentage of Shareholding 100 100 Promoters and promoter group shareholding

a) Pledged/Encumbered

- Number of Shares - - - - - Percentage of Shares (as a % of the total shareholding of promoter and promoter - - - - group) - Percentage of Shares (as a % of total share capital of the Corporation) - - - -

b) Non-Encumbered

- Number of Shares - Percentage of Shares (as a % of the total - - - - shareholding of promoter and promoter - - - - group) - Percentage of Shares (as a % of total share capital of the Corporation) - - - -

Quarter ended June 30, 2015 B] INVESTOR COMPLAINTS - Pending at the beginning of the quarter Nil - Received during the quarter 13 - Disposed of during the quarter - - Remaining unresolved at the end of the quarter (Refer Note 7) 13

Cont’d … three

______Housing Development Finance Corporation Limited 209

Notes:

1) The disclosure in terms of Accounting Standard 17 on ‘Segment Reporting’ as notified under the Companies (Accounting Standards) Rules, 2006. :

Quarter Quarter Quarter Year PARTICULARS ended ended ended ended 30.6.2015 31.3.2015 30.6.2014 31.3.2015 (Reviewed) (Audited) (Reviewed) (Audited) Refer Note 9 ` in crore Segment Revenues - Loans 7,429.22 7,805.98 6,480.81 28,476.86 - Life Insurance 3,220.37 6,114.01 2,882.19 17,037.52 - General Insurance 481.60 516.44 466.90 1,990.66 - Asset Management 349.99 479.11 239.51 1,254.57 - Others 64.67 72.43 50.27 236.41 Total Segment Revenues 11,545.85 14,987.97 10,119.68 48,996.02 Add : Unallocated Revenues 4.62 25.97 2.60 33.96 Less: Inter-segment Adjustments (109.85) (276.54) (66.21) (639.95) Total Revenues 11,440.62 14,737.40 10,056.07 48,390.03 Segment Results - Loans 2,042.65 2,767.31 1,727.31 8,694.04 - Life Insurance 253.49 315.74 283.51 923.91 - General Insurance 34.99 59.74 33.70 140.84 - Asset Management 173.89 292.36 127.18 754.77 - Others 4.16 5.32 (1.33) 6.37 Total Segment Results 2,509.18 3,440.48 2,170.37 10,519.93 Add / (Less) : Unallocated 4.47 25.96 2.60 33.76 Less: Inter-segment Adjustments (60.07) (195.00) (31.57) (437.07) Profit before Tax 2,453.58 3,271.44 2,141.40 10,116.62 Capital Employed - Loans 22,663.23 21,279.26 19,287.36 21,279.26 - Life Insurance 2,606.60 2,390.10 2,046.10 2,390.10 - General Insurance 1,039.11 1,016.22 908.73 1,016.22 - Asset Management 947.75 855.38 708.24 855.38 - Others 218.62 212.56 321.25 212.56 Total Segment Capital Employed 27,475.31 25,753.52 23,271.68 25,753.52 Unallocated: Banking 18,207.87 18,011.08 14,452.78 18,011.08 Others 3,106.71 3,127.11 1,160.82 3,127.11 Total 48,789.89 46,891.71 38,885.28 46,891.71 a) Loans segment mainly comprises of Group’s financing activities for housing and also includes financing of commercial real estate and others through the Corporation, its subsidiaries GRUH Finance Ltd. and Credila Financial Services Pvt. Ltd. b) Asset Management segment includes portfolio management, mutual fund and property investment management. c) Others include project management, investment consultancy and property related services. d) The Group does not have any material operations outside India and hence disclosure of geographic segments is not given.

Contd … four

______Housing Development Finance Corporation Limited 210

2) The key data relating to standalone results of Housing Development Finance Corporation Limited is as under:

Quarter Quarter Quarter Year PARTICULARS ended ended ended ended 30.6.2015 31.3.2015 30.6.2014 31.3.2015 (Reviewed) (Audited) (Reviewed) (Audited) Refer Note 9 ` in crore Total Income 7,068.28 7,456.43 6,461.24 27,470.86 Profit Before Tax 1,951.98 2,653.43 1,924.66 8,624.14 Tax Expense 591.00 791.00 580.00 2,634.00 Net Profit After Tax 1,360.98 1,862.43 1,344.66 5,990.14

In the previous financial year, the Corporation received dividend of ` 269.35 crore from HDFC Bank in June 2014 and accordingly the income was accounted for in the first quarter. In the current year, dividend of ` 314.57 crore from HDFC Bank has been received in July 2015. This will consequently be accounted for in the second quarter i.e., for the quarter ending September 2015.

To this extent, the results of the first quarter of the current year are not comparable with the corresponding quarter in the previous year.

3) Vide circular NHB(ND)/DRS/Pol. 62/2014 dated May 27, 2014, the National Housing Bank (NHB) had directed Housing Finance Companies to provide for deferred tax liability in respect of “Special Reserve” created under section 36(1)(viii) of the Income Tax Act, 1961. Accordingly the Corporation has charged ` 89.00 crore (previous year ` 74.44 crore) to the Statement of Profit & Loss for the period ended June 30, 2015. This amount is reflected under the head "Tax Expense"

4) During the quarter ended June 30, 2015, the Corporation has allotted 13,32,935 equity shares of ` 2 each pursuant to exercise of stock options by certain employees / directors.

5) During the quarter ended June 30, 2015, the Corporation incorporated a new subsidiary, namely HDFC Capital Advisors Limited and have subscribed to 49,940 equity shares of ` 10 each aggregating to ` 4,99,400 representing 99.88 % of its issued and paid-up share capital.

Contd … five

______Housing Development Finance Corporation Limited 211

6) During the quarter, the Corporation received 13 complaints from 5 shareholders through SEBI Complaints Redress System (SCORES). Though the said complaints were resolved by the Corporation before the quarter end, in terms of SEBI circular no. CIR/ OIAE/1/2014 dated December 18, 2014, complaints cannot be treated as resolved/ disposed till SEBI closes the said complaints on SCORES. The said complaints were closed by SEBI in the first week of July 2015.

7) The results of Grandeur Properties Pvt. Ltd., Winchester Properties Pvt. Ltd., Windermere Properties Pvt. Ltd., Pentagram Properties Pvt. Ltd., Haddock Properties Pvt. Ltd. and Magnum Foundations Pvt. Ltd. have not been consolidated since the Corporation proposes to dispose off these investments.

9) The standalone financial results are available on the Corporation’s website (www.hdfc.com) and on the website of BSE (www.bseindia.com) and NSE (www.nseindia.com).

10) Figures for the previous period / year have been regrouped wherever necessary, in order to make them comparable.

The above results for the quarter ended June 30, 2015 which have been subject to a limited review by the Auditors of the Corporation, were reviewed by the Audit Committee of Directors and subsequently approved by the Board of Directors at its meeting held on July 28, 2015, in terms of Clause 41 of the Listing Agreements.

Keki M Mistry Vice Chairman & CEO Place: Mumbai Date: July 28, 2015

______Housing Development Finance Corporation Limited 212

RE: SVP / 8945

REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY STANDALONE FINANCIAL STATEMENTS

To the Board of Directors of Housing Development Finance Corporation Limited

Report on the Summary Standalone Financial Statements

1. The accompanying Summary Standalone Financial Statements of HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (the “Corporation”), which comprise the Summary Standalone Balance Sheets as at March 31, 2015, March 31, 2014 and March 31, 2013, and also the Summary Standalone Statements of Profit and Loss and the Summary Standalone Cash Flow Statements for the years then ended on these dates, and a summary of the significant accounting policies and other explanatory information (together comprising the “Summary Standalone Financial Statements”) are derived from the audited Standalone Financial Statements (the “Audited Standalone Financial Statements”) of the Corporation for the respective years audited by us as detailed in paragraph 2(a) to 2(c) below.

2. (a) We expressed our opinions on the Standalone Financial Statements of the Corporation for the years ended March 31, 2015, March 31, 2014 and March 31, 2013 vide our reports dated April 29, 2015, May 6, 2014 and May 8, 2013 respectively.

(b) Our report on the Standalone Financial Statements of the Corporation for the year ended March 31, 2015 included an emphasis of matter paragraph which describes the accounting treatment used by the Corporation in creating the Deferred Tax Liability on Special Reserve under section 36(1)(viii) of the Income Tax Act, 1961 as at April 1, 2014, which is in accordance with the National Housing Bank’s Circular No. NHB (ND)/DRS/Pol. Circular No. 65/2014 dated August 22, 2014 as described in Note 3.2 to the Standalone Financial Statements.

Our opinion is not modified in respect of this matter.

(c) Our reports on the Standalone Financial Statements of the Corporation for the years ended March 31, 2015, March 31, 2014 and March 31, 2013 states that we did not audit the financial statements/information of one branch included in the standalone financial statements of the Corporation whose financial statements / financial information reflect total assets of Rs. 0.90 crore as at March 31, 2015, Rs. 1.28 crore as of March 31, 2014, Rs. 1.23 crore as of March 31, 2013 and total revenues of Rs. 2.09 crore for the year ended March 31, 2015, Rs. 3.78 crore for the year ended March 31, 2014, Rs. 4.51 crore for the year ended March 31, 2013, as considered in the Standalone Financial Statements. The financial statements/information of this branch has been audited by the branch auditor whose report has been furnished to us, and our opinion in so far as it relates to the amounts and disclosures included in respect of that branch, is based solely on the report of such branch auditor.

Our opinions are not modified in respect of this matter.

213

3. The Summary Standalone Financial Statements as at and for the years ended March 31, 2014 and March 31, 2013 have been regrouped/ reclassified wherever necessary to correspond with the presentation/disclosure requirements of the financial year ended March 31, 2015. The figures included in the Summary Standalone Financial Statements, do not reflect the effect of events that occurred subsequent to the date of our reports on the respective periods referred to in paragraph 2(a) above.

4. Management’s Responsibility for the Summary Standalone Financial Statements Management is responsible for the preparation of the Summary Standalone Financial Statements from the Audited Standalone Financial Statements of the respective years ended March 31, 2015, March 31, 2014 and March 31, 2013 on the basis described in Note 38 to the Summary Standalone Financial Statements.

5. Auditor’s Responsibility Our responsibility is to express an opinion on the Summary Standalone Financial Statements based on our procedures, which were conducted in accordance with Standard on Auditing (SA) 810, “Engagements to Report on Summary Financial Statements” issued by the Institute of Chartered Accountants of India.

6. Opinion In our opinion, the Summary Standalone Financial Statements derived from the Audited Standalone Financial Statements of the Corporation for the respective years are a compilation of those Audited Standalone Financial Statements on the basis described in Note 38 to the Summary Standalone Financial Statements.

For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm’s Registration No.117366W/ W-100018)

Sanjiv V. Pilgaonkar Partner Membership No.39826

Mumbai: August , 2015 SVP/GKS/JP 2015

214

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED Balance Sheet as at

Notes Mar 31, 2015 Mar 31, 2014 Mar 31, 2013 ` in Crore ` in Crore ` in Crore

EQUITY AND LIABILITIES

SHAREHOLDERS' FUNDS Share capital 2 314.94 312.10 309.27 Reserves and surplus 3 30,655.03 27,643.09 24,520.94 30,969.97 27,955.19 24,830.21 NON-CURRENT LIABILITIES Long-term borrowings 4 97,602.34 86,881.04 90,005.01 Deferred tax liability (Net) 14 200.67 - - Other long term liabilities 5 2,436.81 2,231.11 1,810.57 Long-term provisions 6 1,550.88 1,347.00 1,305.56 1,01,790.70 90,459.15 93,121.14 CURRENT LIABILITIES Short-term borrowings 7 33,257.71 25,317.85 18,544.56 Trade payables 8 87.80 81.82 26.89 Other current liabilities 9 - Borrowings 77,738.98 71,774.30 50,036.41 - Others 7,467.60 7,137.20 6,159.65 Short-term provisions 10 2,638.90 2,706.98 2,399.97 1,21,190.99 1,07,018.15 77,167.48

2,53,951.66 2,25,432.49 1,95,118.83

ASSETS Notes Mar 31, 2015 Mar 31, 2014 Mar 31, 2013 ` in Crore ` in Crore ` in Crore NON-CURRENT ASSETS Fixed assets (i) Tangible assets 11 671.84 275.76 232.96 (ii) Intangible assets 12 5.12 4.72 4.98 Non-current investments 13 13,691.70 13,370.29 12,531.86 Deferred tax asset (net) 14 - 629.87 631.38 Long-term loans and advances 15 - Loans 2,01,680.43 1,75,746.08 1,51,630.87 - Others 2,564.72 2,640.32 1,869.99 Other non-current assets 16 2,763.11 914.08 604.04 2,21,376.92 1,93,581.12 1,67,506.08

CURRENT ASSETS Current investments 17 602.64 542.36 1,081.60 Trade receivables 18 46.18 84.52 1.32 Cash and bank balances 19 3,364.65 7,715.52 5,751.14 Short-term loans and advances 20 - Loans 26,019.69 20,808.31 17,939.97 - Others 1,966.28 2,303.36 2,459.89 Other current assets 21 575.30 397.30 378.83 32,574.74 31,851.37 27,612.75

2,53,951.66 2,25,432.49 1,95,118.83

See accompanying notes forming part of the financial statement 215

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED Statement of Profit and Loss for year ended

Notes Mar 31, 2015 Mar 31, 2014 Mar 31, 2013 ` in Crore ` in Crore ` in Crore INCOME

Revenue from Operations 23 26,959.88 23,894.03 20,796.95 Profit on Sale of Investments 24 441.28 248.98 315.55 Other Income 25 69.70 54.66 35.12 Total Revenue 27,470.86 24,197.67 21,147.62

EXPENSES

Finance Cost 26 17,975.09 16,029.37 13,890.89 Staff Expenses 27 328.46 279.18 246.19 Establishment Expenses 28 85.76 86.98 75.68 Other Expenses 29 262.63 230.03 193.43 Depreciation and Amortisation 11&12 29.78 31.87 23.59 Provision for Contingencies 3.4 & 30.2 165.00 100.00 145.00 Total Expenses 18,846.72 16,757.43 14,574.78

PROFIT BEFORE TAX 8,624.14 7,440.24 6,572.84 Tax Expense Current Tax 2,363.00 1,973.00 1,727.68 Deferred Tax 14 271.00 27.00 (3.18) PROFIT FOR THE YEAR 5,990.14 5,440.24 4,848.34

EARNINGS PER SHARE (Face Value ` 2) 31 Basic 38.13 34.89 31.84 Diluted 37.78 34.62 31.45

See accompanying notes forming part of the financial statement

216

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

Cash Flow Statement for the year ended

Notes Mar 31, 2015 Mar 31, 2014 Mar 31, 2013 ``` in crore ` in crore ` in crore A CASH FLOW FROM OPERATING ACTIVITIES

Profit before tax 8,624.14 7,440.24 6,57 2.84 Adjustments for: Depreciation and Amortisation 11 & 12 29.78 31.87 23.59 Provision for Contingencies 3.4 165.00 100.00 145 .00 Interest Expense 26 17,864.71 15,787.38 13,633.99 Net Loss / (Gain) on translation of foreign currency monetary assets & liabilities 26.3 (19.95) 135.61 166 .96 Interest Income 23 (25,605.58) (22,693.17) (19,817.17) Utilisation of Securities Premium (192.80) (398.20) (708.71) Utilisation of Shelter Assistance Reserve 3 (0.79) (13.02) (9.13) Profit on Sale of Investments (441.28) (248.98) (315.55) Dividend Income 23 (688.28) (555.59) (480.66) Profit on Sale of Investment in Properties (6.37) (6.21) (0.12) Surplus from deployment in Cash Management Schemes of Mutual Funds 23 (364.55) (337.38) (252.34) Profit on Sale of Fixed Assets (Net) (27.34) (20.93) (0.23) Operating Profit before Working Capital changes (663.31) (778.38) (1,041.53) Adjustments for: Current and Non Current Assets 21.38 228.46 4,032.24 Current and Non Current Liabilities (48.74) (148.85) (73.85) Cash generated from Operations (690.67) (698.77) 2, 916.86 Interest Received 25,499.64 22,376.67 19,568.66 Interest Paid (17,787.00) (14,839.24) (11,771.41) Dividend Received 688.28 555.59 480 .66 Taxes Paid (2,707.81) (2,519.78) (2,197.46) Net cash from Operations 5,002.44 4,874.47 8,99 7.31 Loans disbursed (net) (30,964.16) (26,644.16) (28,993.94) Corporate Deposits (net) 492.49 300.80 344 .38 Net cash used in operating activities (25,469.23) (21,468.89) (19,652.25)

B CASH FLOW FROM INVESTING ACTIVITIES

Purchase of Fixed Assets (451.77) (79.76) (25.84) Sale of Fixed Assets 56.83 28.55 0.91 (394.94) (51.21) (24.93) Investments in Subsidiaries (60.01) (74.66) (86.58) Investment in Cash Management Schemes of Mutual Funds (3,08,896.00) (4,40,700.00) (2,26 ,559.00) Other Investments (1,743.60) (1,334.42) (3,261.08) Sale proceeds of Investments : - in Subsidiary Company 297.31 - - - in Cash Management Schemes of Mutual Funds 3,09,260.55 4,41,037.38 2,26,811.34 - in other Companies and Properties 1,733.33 1,267.26 2,24 9.46

Net cash from investing activities 196.64 144.35 (870.79)

C CASH FLOW FROM FINANCING ACTIVITIES Share Capital - Equity 2.1 2.84 2.83 13.88 Securities Premium 3 681.45 626.42 3,8 19.09 Deposits, CPs and other Short Term Borrowings (Net) 26,887.75 4,567.71 20,844.30 Proceeds from long-term borrowings 48,555.01 63,502.31 52,553.66 Repayment of long-term borrowings (50,866.15) (42,816.75) (54,011.24) Dividend paid - Equity Shares (2,502.57) (1,939.91) (1,635.57) Tax paid on Dividend (366.33) (314.98) (241.02)

Net cash from financing activities 22,392.00 23,627.63 21,343.10

Net (Decrease) / Increase in cash and cash equivalents [A+B+C] (2,880.59) 2,303.09 820. 07 Add : Cash and cash equivalents as at the beginning of the year 19 5,634.72 3,324.05 2,49 9.40 Add : Exchange difference on bank balance 2.80 7.58 4.58 Cash and cash equivalents as at the end of the year 19 2,756.93 5,634.72 3,32 4.05 Earmarked balances with banks: - Unclaimed Dividend Account 20.47 14.36 11.61 - Towards Guarantees Issued by Banks 0.13 0.14 - - Other Against Foreign Currency Loans 7.10 6.40 5.41 Short - term bank deposits 580.02 2,059.90 2,41 0.07 Cash and Bank balances at the end of the year 19 3,364.65 7,715.52 5,751.14

217 Notes forming part of the standalone financial statements

1. SIGNIFICANT ACCOUNTING POLICIES

1.1 ACCOUNTING CONVENTION These financial statements have been prepared in accordance with historical cost convention, applicable Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014, the relevant provisions of the Companies Act, 2013 and the guidelines issued by the National Housing Bank to the extent applicable.

Accounting policies applied have been consistent with previous year except where different treatment is required as per new pronouncements made by the regulatory authorities. The management evaluates, all recently issued or revised accounting pronouncements, on an ongoing basis. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.2 SYSTEM OF ACCOUNTING The Corporation adopts the accrual concept in the preparation of the financial statements. The Balance Sheet and the Statement of Profit and Loss of the Corporation are prepared in accordance with the provisions contained in Section 129 of the Companies Act 2013, read with Schedule III.

1.3 INFLATION Assets and liabilities are recorded at historical cost to the Corporation. These costs are not adjusted to reflect the changing value in the purchasing power of money.

1.4 OPERATING CYCLE Based on the nature of its activities, the Corporation has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

1.5 CASH FLOW STATEMENT Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Corporation are segregated based on the available information.

1.6 CASH AND CASH EQUIVALENTS (FOR PURPOSES OF CASH FLOW STATEMENT) Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term deposits with banks (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.7 LOANS AND RECEIVABLES AND CREDIT LOSS ALLOWANCES Loans are initially recorded at the disbursed principal amounts and are subsequently adjusted for recoveries and any unearned income. Loans are carried net of the allowances for credit losses.

A loan is recognised as non-performing (“NPA”) or as a “doubtful” or as a "loss" asset based on the period for which the repayment instalment or interest has remained in arrears as prescribed under the Housing Finance Companies (NHB) Directions, 2010, (the “NHB Directions”). Allowances for credit losses are made on an individual basis at rates prescribed under the NHB Directions unless, the management estimates that a higher individual allowance is required to reduce the carrying value of loan asset, including accrued interest, to its estimated realisable amount.The fair value of the underlying security is taken into consideration to estimate the realisable amount of the loan. When a loan is identified as a “Loss Asset” that is adversely affected by a potential threat of non-recoverability, the outstanding balance is fully written off or fully provided for.

218 1.8 INTEREST INCOME ON LOANS Repayment of housing loans is generally by way of Equated Monthly Instalments (EMIs) comprising principal and interest. EMIs commence generally once the entire loan is disbursed. Certain customers request for commencement of regular principal repayments even before the entire loan is disbursed, especially when the projects are of long gestation. A recalculated EMI based on Principal Outstanding is offered in such cases. Pending commencement of EMIs, pre-EMI interest is payable every month. Interest on loans is computed either on an annual rest or on a monthly rest basis on the principal outstanding at the beginning of the relevant period. Interest income is allocated over the contractual term of the loan by applying the committed interest rate to the outstanding amount of the loan. Interest income is accrued as earned with the passage of time.

Interest on loan assets classified as “non-performing” is recognised only on actual receipt.

1.9 DIVIDEND Dividend income is recognised when the right to receive has been established.

1.10 FEES AND OTHER REVENUE

Fees, charges and other revenue is recognised after the service is rendered to the extent that it is probable that the economic benefits will flow to the Corporation and that the revenue can be reliably measured, regardless of when the payment is being made.

1.11 INCOME FROM LEASES Leases of assets under which substantially all of the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. The Corporation has let out portions of its buildings to its subsidiaries / associates under operaing lease arrangements. Income is recognised over the period over which the property is used by the lesee based on the lease terms as the arrangements are cancellable and do not contain any minimum lease payment or contingent rent payments.

1.12 INCOME FROM INVESTMENTS The gain/loss on account of Investments in Preference Shares, Debentures/Bonds and Government Securities held as long-term investments and acquired at a discount/premium, is recognised over the life of the security on a pro-rata basis. Interest Income is accounted on accrual basis.

1.13 BORROWING AND BORROWING COSTS The Corporation borrows funds, primarily in Indian Rupees, and carry a fixed rate or floating rate of interest. As a part of its risk management strategy, the Corporation converts such borrowings into floating rate or foreign currency borrowings by entering into interest rate swaps or cross currency interest rate swaps having the same notional amount and maturity as the underlying borrowings and holds these instruments till maturity. At each reporting date these liabilities are restated at the closing rate.

Borrowing costs include interest, amortised brokerage on deposits and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Ancillary costs in connection with long-term external commercial borrowings are amortised to the Statement of Profit and Loss over the tenure of the loan. Issue expenses of certain securities are charged to the securities premium account.

1.14 TRANSLATION OF FOREIGN CURRENCY Initial recognition Transactions in foreign currencies entered into by the Corporation are accounted at the exchange rates prevailing on the date of the transaction.

Measurement at the Balance Sheet date Assets and liabilities in foreign currencies are converted at the rates of exchange prevailing at the year-end, where not covered by forward contracts. Wherever the Corporation has entered into a forward contract or an instrument that is, in substance, a forward exchange contract, the difference between the forward rate and the exchange rate on the date of the transaction is recognised as income or expense over the life of the contract. Monetary items represented by currency swap contracts are recorded at closing rate.

219 The net loss/gain on translation of long term monetary assets and liabilities in foreign currencies is amortised over the maturity period of such monetary assets and liabilities and charged to the Statement of Profit and Loss. The unamortised exchange difference is carried in the Balance Sheet as “Foreign Currency Monetary Item Translation Difference Account”. The net loss/gain on translation of short term monetary assets and liabilities in foreign currencies is recorded in the Statement of Profit and Loss.

1.15 BROKERAGE AND INCENTIVE ON DEPOSITS Brokerage and incentive brokerage on deposits is amortised over the period of the deposit.

1.16 OPERATING LEASES

Payments under a non cancellable operating lease arrangement, where the risks and rewards incidental to ownership of an asset substantially vest with the lessor, are charged to the Statement of Profit and Loss on a straight-line basis over the lease term, unless another systematic basis is more appropriate.

1.17 INVESTMENTS Investments are capitalised at cost inclusive of brokerage and stamp charges and are classified into two categories, viz. Current or Long Term. Long-term investments (excluding investment in properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Provision for diminution in the value of investments is made in accordance with the guidelines issued by the National Housing Bank and the Accounting Standard on ‘Accounting for Investments’ (AS 13), and is recognised through the Provision for Contingencies Account. Investment in properties are carried individually at cost less accumulated depreciation and impairment, if any.

1.18 TANGIBLE FIXED ASSETS Fixed Assets (including such assets which have been leased out by the Corporation) are capitalised at cost inclusive of legal and/or installation expenses.

1.19 INTANGIBLE ASSETS Intangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the same to its working condition, less accumulated amortisation. Any expenses on such software for support and maintenance payable annually are charged to the Statement of Profit and Loss.

1.20 DEPRECIATION AND AMORTISATION

Tangible Fixed Assets

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value.

Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.: Computers and data processing equipment - 4 years Vehicles - 5 years Leasehold land is amortised over the duration of the lease.

Intangible Assets

Intangible assets are amortised over their estimated useful life on straight line method as follows: Computers Software - 4 years

Investment In Properties Depreciation on Investment in properties is provided on a pro-rata basis from the date of acquisition.

The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation period is revised to reflect the changed pattern, if any.

220 1.21 PROVISIONS AND CONTINGENCIES A provision is recognised when the Corporation has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding employee benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are neither recognised nor disclosed in the financial statements.

1.22 PROVISION FOR CONTINGENCIES AND NON PERFORMING ASSETS The Corporation’s policy is to carry adequate amounts in the Provision for Non-Performing Assets Account and the Provision for Contingencies account to cover the amount outstanding in respect of all non-performing assets and standard assets respectively as also all other contingencies. All loans and other credit exposures where the instalments, interest are overdue for ninety days and more are classified as non-performing assets in accordance with the prudential norms prescribed by the National Housing Bank (NHB). The provision for non-performing assets is deducted from loans and advances. The provisioning policy of the Corporation covers the minimum provisioning required as per the NHB Guidelines.

1.23 STANDARD ASSET PROVISIONING (COLLECTIVE ALLOWANCES) Provisions are established on a collective basis against loan assets classified as “Standard” to absorb credit losses on the aggregate exposures in each of the Corporation’s loan portfolios based on the NHB Directions. A higher standard asset provision may be made based upon statistical analysis of past performance, level of allowance already in place and Management’s judgement. This estimate includes consideration of economic and business conditions. The amount of the collective allowance for credit losses is the amount that is required to establish a balance in the Provision for Standard Assets Account that the Corporation’s management considers adequate, after consideration of the prescribed minimum under the NHB Directions, to absorb credit related losses in its portfolio of loan items after individual allowances or write offs.

1.24 EMPLOYEE BENEFITS

The Corporation follows the intrinsic value method to account for its stock-based employee compensation plans. Compensation cost is measured by the excess, if any, of the market price of the underlying stock over the exercise price as determined under the option plan. The market price is the closing price on the stock exchange where there is highest trading volume on the working day immediately preceding the date of grant. Compensation cost, if any, is amortised over the vesting period.

Defined contribution plans The Corporation's contribution to provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made.These funds and the schemes thereunder are recognised by the Income-tax authorities and administered by various trustees.The Rules of the Corporation’s Provident Fund administered by a Trust require that if the Board of Trustees are unable to pay interest at the rate declared for Employees’ Provident Fund by the Government under para 60 of the Employees’ Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Corporation.

221 Defined benefit plans For defined benefit plans in the form of gratuity fund and post retirement pension scheme for whole-time Directors, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Except in case of Dubai branch of the Corporation, the provision for gratuity is made in accordance with the prevalent local laws.

Short-term employee benefits The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service.

The cost of short-term compensated absences is accounted as under: (a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and (b) in case of non-accumulating compensated absences, when the absences occur.

Long-term employee benefits Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the balance sheet date.

1.25 EARNINGS PER SHARE Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.

222 1.26 TAXES ON INCOME Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961 (the "Income Tax Act").

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise the assets.

Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each balance sheet date for their realisability.

Current and deferred tax relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss.

1.27 SERVICE TAX INPUT CREDIT Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilising the credits.

1.28 SECURITISED LOANS AND SECURITISATION LIABILITIES The Corporation periodically transfers pools of mortgages. Such assets are derecognised, if and only if, the Corporation loses control of the contractual rights that comprise the corresponding pools or mortgages transferred.

Transfers of pools of mortgages under the current programs involve transfer of proportionate shares in the pools of mortgages. Such transfers result in de-recognition only of that proportion of the mortgages as meet the de-recognition criteria. The portion retained by the Corporation continue to be accounted for as loans as described above.

On de-recognition, the difference between the book value of the securitised asset and consideration received is recognised as gain arising on securitisation in the Statement of Profit and Loss over the balance maturity period of the pool transferred. Losses, if any, arising from such transactions, are recognised immediately in the Statement of Profit and Loss.

223 2 SHARE CAPITAL As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ``` in Crore ` in Crore ` in Crore AUTHORISED 162,50,00,000 Equity Shares of ` 2 each 325.00 325.00 325.00 FY 2013-14 162,50,00,000 Equity Shares of ` 2 each FY 2012-13 162,50,00,000 Equity Shares of ` 2 each 325.00 325.00 325.00

ISSUED, SUBSCRIBED AND FULLY PAID UP 1,57,46,97,670 Equity Shares of ` 2 each 314.94 312.10 309.27 FY 2013-14 156,05,32,605 Equity Shares of ` 2 each FY 2012-13 154,63,47,255 Equity Shares of ` 2 each 314.94 312.10 309.27

2.1 Reconciliation of number of shares outstanding at the beginning and at the end of the reporting period: As at March 31, 2015 As at March 31, 2014 As at March 31, 2013 Particulars Number ` in Crore Number ` in Crore Number ` in Crore Equity shares outstanding as at the 156,05,32,605 312.10 154,63,47,255 309.2 7 147,69,70,010 295.39 beginning of the year Shares allotted pursuant to exercise of 1,41,65,065 2.84 1,41,85,350 2.83 1,46,93,995 2.94 stock options Shares allotted pursuant to exchange of - - - - - 5,46,83,250 10.94 warrants Equity shares outstanding as at the end 157,46,97,670 314.94 156,05,32,605 312.1 0 154,63,47,255 309.27 of the year

2.2 The details of each shareholder holding more than 5 percent shares in the Corporation: Outstanding as on March 31, 2015 March 31, 2014 March 31, 2013 Percentage of Percentage of Percentage of shares held Particulars Number Number shares held to Number shares held to to total total Shares total Shares Shares (%) (%) (%) Aberdeen Asset Management Asia Ltd. 8,00,17,312 5.08 11,10,21,121 7.11 12,74,90,319 8.24 (on behalf of funds advised/managed)

2.3 5,05,74,170, 3,35,28,585 and 4,77,13,935 shares of ` 2 each were reserved for issuance towards outstanding Employees Stock Options granted / available for grant, including lapsed options for the financial year 2014-15, 2013-14 and 2012-13 respectively [Refer Note 2.4].

The Corporation has only one class of shares referred to as equity shares having Face Value of ` 2 each. Each holder of equity share is entitled to one vote per share.

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

At the 37th Annual General Meeting (AGM) held on July 21, 2014, the shareholders had approved the issue of 62,42,130 stock options representing 3,12,10,650 equity shares of ` 2 each to the eligible employees and Directors of the Corporation. The Nomination and Remuneration Committee of Directors (NRC) at its meeting held on October 8, 2014, approved the grant of 62,73,064 new stock options, representing 3,13,65,320 equity shares of ` 2 each under ESOS-2014, to the eligible employees and Directors. The same represents the Options approved for grant by the shareholders at the AGM held on July 21, 2014 together with 41,810 options lapsed under previous schemes (ESOS-05 : 12,285 options, ESOS-07 : 29,267 options and ESOS-08 : 258 options), net of 10,876 options reserved. The options were granted at an exercise price of ` 5,073.25 per option (i.e. ` 1,014.65 per equity share of ` 2 each) being the latest available closing price of the equity shares of the Corporation on the stock exchange on which the shares are listed and having higher trading volume, prior

In terms of ESOS-14, the options would vest over a period of 1-3 years from the date of grant, but not later than October 7, 2017, depending upon options grantee completing continuous service of three years with the Corporation. Accordingly, no options have vested during the current year. The options can be exercised over a period of five years from the date of respective vesting.

2.4 Under Employees Stock Option Scheme - 2011 (ESOS - 11), the Corporation had on May 23, 2012, granted 61,02,475 options at an exercise price of ` 3,177.50 per option representing 3,05,12,375 equity shares of ` 2 each to the employees and directors of the Corporation. The said price was determined in accordance with the pricing formula approved by the shareholders i.e. at the latest available closing price on the stock exchange having higher trading volume, prior to grant of options.

In terms of ESOS - 11, the options would vest over a period of 1-3 years from the date of grant, but not later than May 22, 2015, depending upon option grantee completing continuous service of three years with the Corporation. Accordingly, during the year 1,80,438 options (FY 2013-14 58,26,953 options and FY 2012-13 Nil options) were vested. In the current year 13,263 options (FY 2013-14 28,787 options and FY 2012-13 31,200 options) were lapsed. The options can be exercised over a period of five years from the date of respective vesting.

224 Under Employees Stock Option Scheme – 2008 (ESOS – 08), the Corporation had on November 25, 2008, granted 57,90,000 options at an exercise price of ` 1,350.60 per option representing 57,90,000 equity shares of ` 10 each to the employees and directors of the Corporation. The said price was determined in accordance with the pricing formula approved by the shareholders i.e. at the latest available closing price on the stock exchange having higher trading volume, prior to grant of options.

In terms of ESOS - 08, the options would vest over a period of 1-3 years from the date of grant, but not later than November 24, 2011, depending upon option grantee completing continuous service of three years with the Corporation. Accordingly, all the options have been vested in the earlier years. In the current year 97 options (FY 2013-14 146 options and FY 2012-13 112 options) were lapsed after vesting. The options can be exercised over a period of five years from the date of respective vesting.

Under Employees Stock Option Scheme – 2007 (ESOS – 07), the Corporation had on September 12, 2007, granted 54,56,835 options at an exercise price of ` 2,149 per option representing 54,56,835 equity shares of ` 10 each to the employees and directors of the Corporation. The said price was determined in accordance with the pricing formula approved by the shareholders i.e. at the latest available closing price on the stock exchange having higher trading volume, prior to grant of options.

In terms of ESOS - 07, the options would vest over a period of 1-3 years from the date of grant, but not later than September 11, 2010, depending upon option grantee completing continuous service of three years with the Corporation. All the options have been vested in the earlier years. In the current year 882 options (FY 2013-14 28,742 options and FY 2012-13 525 options) were lapsed after vesting. The options can be exercised over a period of five years from the date of respective vesting.

Under Employees Stock Option Scheme – 2005 (ESOS – 05), the Corporation had on October 25, 2005, granted 74,73,621 options at an exercise price of ` 912.90 per option representing 74,73,621 equity shares of ` 10 each to the employees and directors of the Corporation. The said price was determined in accordance with the pricing formula approved by the shareholders i.e. at the latest available closing price on the stock exchange having higher trading volume, prior to grant of options.

In terms of the ESOS-05, the options would vest over a period of 2-3 years from the date of grant, but not later than October 24, 2008, depending upon option grantee completing continuous service of three years with the Corporation. All the options have been vested in the earlier years. In the current year Nil options (FY 2013-14 Nil options, FY 2012-13 12,285 options) were lapsed after vesting. The options were exercisable over a period of five years from the date of respective vesting. Accordingly, all the options vested under ESOS-05 have been exercised.

Method used for accounting for share based payment plan:

The Corporation has used intrinsic value method to account for the compensation cost of stock options to employees of the Corporation. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. Since the options under ESOS-14, ESOS-11, ESOS-08, ESOS-07 and ESOS-05 were granted at the market price, the intrinsic value of the option is Nil. Consequently the accounting value of the option (compensation cost) is also Nil.

Movement in the options under ESOS-14, ESOS-11, ESOS-08, ESOS-07 and ESOS-05 :

Particulars ESOS-14 Options Options Options March 31, 2015 March 31, 2014 March 31, 2013 Outstanding at the beginning of the year - - - Granted during the year 62,73,064 - - Vested during the year - - - Exercised during the year - - - Lapsed during the year 49,045 - - Outstanding at the end of the year 62,24,019 - - Unvested at the end of the year 62,24,019 - - Exercisable at the end of the year - - - Weighted average price per option ` 5,073.25

Particulars ESOS-11 Options Options Options March 31, 2015 March 31, 2014 March 31, 2013 Outstanding at the beginning of the year 54,06,415 60,71,275 - Granted during the year - - 61,02,475 Vested during the year 1,80,438 58,26,953 - Exercised during the year 16,47,566 6,36,073 - Lapsed during the year 13,263 28,787 31,200 Outstanding at the end of the year 37,45,586 54,06,415 60,71,275 Unvested at the end of the year 36,043 2,25,182 60,71,275 Exercisable at the end of the year 37,09,543 51,81,233 - Weighted average price per option ` 3,177.50

225 Particulars ESOS-08 Options Options Options March 31, 2015 March 31, 2014 March 31, 2013 Outstanding at the beginning of the year 11,82,357 17,56,739 22,81,083 Granted during the year - - - Vested during the year - - - Exercised during the year 11,77,158 5,74,236 5,24,232 Lapsed during the year 97 146 112 Outstanding at the end of the year 5,102 11,82,357 17,56,739 Unvested at the end of the year - - - Exercisable at the end of the year 5,102 11,82,357 17,56,739 Weighted average price per option ` 1,350.60

Particulars ESOS-07 Options Options Options March 31, 2015 March 31, 2014 March 31, 2013 Outstanding at the beginning of the year 15,148 16,70,651 37,80,574 Granted during the year - - - Vested during the year - - - Exercised during the year 8,289 16,26,761 21,09,398 Lapsed during the year 882 28,742 525 Outstanding at the end of the year 5,977 15,148 16,70,651 Unvested at the end of the year - - - Exercisable at the end of the year 5,977 15,148 16,70,651 Weighted average price per option ` 2,149.00

Particulars ESOS-05 Options Options Options March 31, 2015 Current Year Previous Year Outstanding at the beginning of the year - - 3,17,454 Granted during the year - - - Vested during the year - - - Exercised during the year - - 3,05,169 Lapsed during the year - - 12,285 Outstanding at the end of the year - - - Unvested at the end of the year - - - Exercisable at the end of the year - - - Weighted average price per option ``` 912.90

With effect from August 21, 2010, the nominal face value of equity shares of the Corporation was sub-divided from ` 10 per share to ` 2 per share. Accordingly, each options exercised after August 21, 2010 is entitled to 5 equity shares of ` 2 each.

Fair Value Methodology:

The fair value of options have been estimated on the date of grant using Black-Scholes model as under:

The key assumptions used in Black-Scholes model for calculating fair value under ESOS-14, ESOS-11, ESOS-08, ESOS-07 and ESOS-05 as on the date of grant viz. October 8, 2014, May 23, 2012, November 25, 2008, September 12, 2007 and October 25, 2005, are as follows

Particulars ESOS-2014 ESOS-2011 ESOS-2008 ESOS-2007 ESOS-2005 Risk-free interest rate (p.a.) 8.28% 8.06% 6.94% 7.70% 6.38% Expected life Upto 3 years Upto 2 years Upto 2 years Upto 2 years 2 to 3 years Expected volatility of share price 15% 15% 29% 19% 30% Expected growth in dividend (p.a.) 20% 20% 20% 20% 20% The weighted average fair value, as on the date of grant ` 1,035.91 ` 474.56 ` 238.79 ` 307.28 ` 105.50 (per Stock Option) Since all the stock options granted under ESOS-08, ESOS-07 and ESOS-05 have been vested, the stock based compensation expense determined under fair value based method is ` Nil (FY 2013-14 ` Nil, FY 2012-13 ` Nil). Accordingly there is no change in the reported and pro-forma net profit and Basic and Diluted EPS.

226 However, had the compensation cost for the stock options granted under ESOS-14 and ESOS-11 been determined based on the fair value approach, the Corporation's net profit and earnings per share would have been as per the pro-forma amounts indicated below:

Particulars 2014-15 2013-14 2012-13 ``` in Crore ``` in Crore ``` in Crore Net Profit (as reported) 5,990.14 5,440.24 4,848.34 Less : Stock-based compensation expenses determined under fair value based method, net of tax: [Gross ``` 300.92 crore (FY 2013-14 ` 52.98 crore, FY 2012-13 ` 233.78 crore)] 198.64 34.97 157.93 (pro-forma) Net Profit (pro-forma) 5,791.50 5,405.27 4,690.41 Less : Amounts utilised out of Shelter Assistance Reserve 10.83 13.02 9.13 Net Profit considered for computing EPS (pro-forma) 5,780.67 5,392.25 4,681.28

Particulars 2014-15 2013-14 2012-13 Basic earnings per share (as reported) 38.13 34.89 31.84 Basic earnings per share (pro-forma) 36.86 34.67 30.80 Diluted earnings per share (as reported) 37.78 34.62 31.45 Diluted earnings per share (pro-forma) 36.52 34.40 30.42

2.5 The Corporation has not allotted any share pursuant to contracts without payment being received in cash or as bonus shares nor has it bought back any shares during the preceding period of 5 financial years.

3 RESERVES AND SURPLUS As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore

SPECIAL RESERVE No. I [Refer Note 3.1 & 3.2] 51.23 51.23 51.23

SPECIAL RESERVE No. II [Refer Note 3.1 & 3.2] Opening Balance 6,415.95 5,525.95 4,750.95 Add: Transfer from Statement of Profit and Loss [Refer Note 3.3] 1,054.00 890.00 775.00 7,469.95 6,415.95 5,525.95

GENERAL RESERVE Opening Balance 8,097.76 7,059.78 6,103.16 Less : Utilised towards Deferred Tax Liability for Special Reserve [Refer Note 3.2] (559.54) - - Add : Transfer from Statement of Profit and Loss 2,003.33 1,037.98 956.62 9,541.55 8,097.76 7,059.78

STATUTORY RESERVE (As per Section 29C of The National Housing Bank Act, 1987) Opening Balance 3,129.42 2,278.93 1,453.93 Add : Transfer from Statement of Profit and Loss [Refer Note 3.3] 150.00 900.00 825.00 3,279.42 3,178.93 2,278.93 Less : Utilised during the Year [Refer Note 3.4] [Net of Deferred Tax of ``` Nil (FY 2013-14 ` 25.49 crore and FY 2012-13 ` Nil)] - 49.51 - 3,279.42 3,129.42 2,278.93

SECURITIES PREMIUM Opening Balance 9,990.42 9,721.17 6,038.89 Add : Transferred from Capital Reserve - - 301.23 Add : Received during the year 681.45 626.42 3,819.09 10,671.87 10,347.59 10,159.21 Less : Utilised during the year (Net) [Refer Note 3.5] [Net of tax effect of ``` 213.72 crore (FY 2013-14 ` 183.91 crore and FY 2012-13 ` 175.54 crore)] 415.06 357.17 438.04 10,256.81 9,990.42 9,721.17

227 As at As at As at March 31, 2015 March 31, 2014 March 31, 2014 ``` in Crore ` in Crore ` in Crore SHELTER ASSISTANCE RESERVE Opening Balance 100.61 53.63 22.76 Add : Transfer from Statement of Profit and Loss - 60.00 40.00 100.61 113.63 62.76 Less : Utilised during the year [Refer Note 3.6 & 29.1] 10.83 13.02 9.13 89.78 100.61 53.63

CAPITAL RESERVE Opening Balance 0.04 0.04 301.27 Less: Transferred to Securities Premium - - (301.23) 0.04 0.04 0.04

FOREIGN CURRENCY MONETARY ITEMS TRANSLATION DIFFERENCE ACCOUNT (Debit Balance) [Refer Note 3.7] Opening Balance (Debit) (142.34) (169.79) (206.24) Add/(Less): Effect of foreign exchange 35.33 80.48 89.68 Add / (Less): Amortisation for the year [Refer Note 3.8] 73.26 (53.03) (53.23) Closing balance - (Debit) (33.75) (142.34) (169.79)

SURPLUS IN THE STATEMENT OF PROFIT AND LOSS: Profit for the year 5,990.14 5,440.24 4,848.34 Amount available for appropriations 5,990.14 5,440.24 4,848.34 Appropriations: Special Reserve No. II [Refer Note 3.3] 1,054.00 890.00 775.00 General Reserve 2,003.33 1,037.98 956.62 Statutory Reserve (As per Section 29C of The National Housing Bank Act, 1987) [Refer Note 3.3] 150.00 900.00 825.00 Shelter Assistance Reserve - 60.00 40.00 Interim Dividend Paid [Refer Note 3.9] 314.94 - Tax on Interim Dividend 12.10 - Proposed Dividend 2,047.11 2,184.75 1,932.93 (Dividend ` 13.00, ` 14.00 and ` 12.50 per equity share of ` 2 each respectively) Additional Tax on Proposed Dividend 416.74 371.30 328.50 Additional Tax on Dividend [Refer Note 3.10] (18.59) (15.18) (24.62) Dividend including tax of ` 1.53 crore, ` 1.66 crore and ` 2.08 crore respectively pertaining to Previous Year paid during the year [Refer Note 3.11] 10.51 11.39 14.91 - - - 30,655.03 27,643.09 24,520.94

3.1 Special Reserve has been created over the years in terms of Section 36(1)(viii) of the Income-tax Act, out of the distributable profits of the Corporation. Special Reserve No. I relates to the amounts transferred upto the Financial Year 1996-97, whereas Special Reserve No. II relates to the amounts transferred thereafter.

3.2 Vide circular NHB(ND)/DRS/Pol. 62/2014 dated May 27, 2014, the National Housing Bank (NHB) had directed Housing Finance Companies (HFCs) to provide for deferred tax liability in respect of the balance in the “Special Reserve” created under section 36(1)(viii) of the Income Tax Act, 1961. Vide circular NHB(ND)/DRS/Pol. 65/2014 dated August 22, 2014, NHB has permitted HFCs to create the Deferred Tax Liability over a period of 3 years, in a phased manner in the ratio of 25:25:50. Accordingly, the Corporation has created 25 percent of deferred tax liability of ``` 559.54 crore (FY 2013-14 ` Nil, FY 2012-13 ` Nil) on opening balance of accumulated Special Reserve. [Refer Note 14]

3.3 As per Section 29C of The National Housing Bank Act, 1987 (the "NHB Act"), the Corporation is required to transfer at least 20% of its net profits every year to a reserve before any dividend is declared. For this purpose any Special Reserve created by the Corporation under Section 36(1)(viii) of the Income- tax Act, is considered to be an eligible transfer. The Corporation has transferred an amount of ``` 1,054 crore (FY 2013-14 ` 890 crore and FY 2012-13 ` 775 crore) to Special Reserve No. II in terms of Section 36(1)(viii) of the Income-tax Act, 1961 and an amount of ``` 150 crore (FY 2013-14 ` 900 crore and FY 2012-13 ` 825 crore) to "Statutory Reserve (As per Section 29C of The NHB Act)”.

228 In terms of requirement of NHB's Circular No. NHB(ND)/DRS/Pol.Circular.61/2013-14 dated April 7, 2014 following information on Reserve Fund under section 29C of the NHB Act is provided : ` in crore Particulars 2014-15 2013-14 2012-13 Balance at the beginning of the year a) Statutory Reserve under section 29C of The NHB Act 3,129.42 2,278.93 1,453.93 b) Amount of Special Reserve under section 36 (1)(viii) of the Income Tax Act taken into account for the purposes of Statutory Reserve under section 29C of the NHB Act Special Reserve No. II 6,113.95 5,223.95 4,448.95

c) Total 9,243.37 7,502.88 5,902.88

Addition / Appropriation / Withdrawal during the year Add : a) Amount transferred under section 29C of the NHB Act 150.00 900.00 825.00 b) Amount of Special Reserve under section 36 (1)(viii) of the Income Tax Act taken into account for the purpose of Statutory Reserve under section 29C of the NHB Act 1,054.00 890.00 775.00 Less : a) Amount appropriated from Statutory Reserve under section 29C of the NHB Act - 49.51 - [Net of Deferred Tax of ``` Nil (FY 2013-14 ` 25.49 crore, FY 2012-13 ` Nil)] b) Amount withdrawn from Special Reserve under section 36 (1)(viii) of the Income Tax - - - Act which has been taken into account for the purpose of provision under section 29C of the NHB Act 10,447.37 9,243.37 7,502.88

Balance at the end of the year a) Statutory Reserve under section 29C of the NHB Act 3,279.42 3,129.42 2,278.93 b) Amount of Special Reserve under section 36 (1)(viii) of the Income Tax Act taken into account for the purposes of Statutory Reserve under section 29C of the NHB Act Special Reserve No. II 7,167.95 6,113.95 5,223.95

c) Total 10,447.37 9,243.37 7,502.88

3.4 During the year, in addition to the charge of ``` 165 crore (FY 2013-14 ` 100 crore and FY 2012-13 ` 145 crore) to the Statement of Profit and Loss, an amount of ``` Nil (net of Deferred Tax ``` Nil) [FY 2013-14 ` 49.51 crore and FY 2012-13 ` Nil (net of Deferred Tax ` 25.49 crore and ` Nil respectively)], has been transferred from Statutory Reserve (as per Section 29C of the NHB Act) pursuant to circular NHB(ND)/DRS/Pol-No.03/2004-05 dated August 26, 2004 as under:

March 31, 2015 March 31, 2014 March 31, 2013 Particulars ``` in Crore ``` in Crore ``` in Crore To Provision for Contingencies Account (Net) [Refer Note 6.2] 202.44 58.20 54.24 To Provision for Sub-Standard & Doubtful Loans [Refer Note 15.6] (37.44) 116.80 39.05 To Provision for Doubtful Receivables [Refer Note 15] - - 51.71 165.00 175.00 145.00

3.5 During the year, the Corporation utilised ``` 415.06 crore (net of tax effect of ` 213.72 crore) [FY 2013-14 ` 357.17 crore and FY 2012-13 ` 438.04 crore (net of tax effect of ` 183.91 crore and ` 175.54 crore respectively)] in accordance with Section 52 of the Companies Act 2013, towards the proportionate premium payable on redemption of Zero Coupon Secured Redeemable Non Convertible Debentures.

3.6 Miscellaneous Expenses under Note 29.1 exclude ``` 10.83 crore (FY 2013-14 ` 13.02 crore and FY 2012-13 ` 9.13 crore) in respect of amounts utilised out of Shelter Assistance Reserve during the year.

3.7 Pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs amending the Accounting Standard 11, the Corporation has exercised the option as per Para 46A inserted in the Standard for all long term monetary assets and liabilities. Consequently, an amount of ``` 33.75 crore (without considering future tax benefit of ``` 11.47 crore) [(FY 2013-14 ` 142.34 crore and FY 2012-13 ` 169.79 crore) (without considering future tax benefits of ` 48.38 crore and ` 57.71 crore respectively)] is carried forward in the Foreign Currency Monetary Items Translation Difference Account as on March 31, 2015. This amount is to be amortised over the period of the monetary assets/liabilities ranging upto 4 years.

229 3.8 During the year, there was a net reduction of ``` 108.59 crore (FY 2013-14 ` 27.45 crore and FY 2012-13 ` 36.45 crore) in the Foreign Currency Monetary Items Translation Difference Account as under : March 31, 2015 March 31, 2014 March 31, 2013 Particulars ``` in Crore ``` in Crore ``` in Crore Net Revaluation of monetary assets & liabilities 128.54 (117.20) 4.99 Net Debit/(Credit) to the Statement of Profit & Loss on account of repayments during the year (93.21) 197.68 (46.54) Net amortisation Debit/(Credit) during the year 73.26 (53.03) 78.00 Net reduction during the year 108.59 27.45 36.45

3.9 The Board of Directors of the Corporation at its meeting held on March 19, 2015, inter alia, has approved the payment of an interim dividend of ` 2 per equity share of face value of ` 2 each of the Corporation, for the financial year 2014-15

3.10 Additional Tax on dividend FY 2013-14 credit taken, ``` 18.59 crore (FY 2013-14 ` 15.18 crore for FY 2012-13 and FY 2012-13 ` 24.62 crore for FY 2011-12), pertains to the dividend tax paid by the subsidiary companies of the Corporation on the dividend paid to the Corporation as per Section 115(O)(1A) of the Income Tax Act, 1961.

3.11 In respect of equity shares issued pursuant to Employee Stock Option Schemes, the Corporation paid dividend of ``` 8.98 crore for the year 2013-14 (` 9.73 crore for the year FY 2012-13 and ` 12.83 crore for the year FY 2011-12) and tax on dividend of ``` 1.53 crore (FY 2013-14 ` 1.66 crore and FY 2012-13 ` 2.08 crore) as approved by the shareholders at the Annual General Meeting held on July 21, 2014.

4 LONG - TERM BORROWINGS As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore

Bonds and Debentures [Refer Notes 4.3 & 4.10] 60,192.20 58,192.85 59,503.10 Term Loans : - Banks [Refer Note 4.10] 6,378.01 5,605.21 5,454.30 - External Commercial Borrowing - Low Cost Affordable Housing [Refer Note 4.5 & 4.10] 1,884.00 1,805.10 - - Others [Refer Note 4.10] 1,300.15 1,492.06 1,393.58 69,754.36 67,095.22 66,350.98

Deposits [Refer Note 4.3] 27,847.98 19,785.82 23,654.03 97,602.34 86,881.04 90,005.01

4.1 Long - term borrowings are further sub-classified as follows :

Sr.No. Particulars March 31, 2015 March 31, 2014 March 31, 2013 Secured : [Refer Note 4.2] ` in Crore ` in Crore ` in Crore a) Bonds and Debentures - Bonds 46.50 52.25 57.50 - Non Convertible Debentures 54,170.70 54,665.60 55,970.60 54,217.20 54,717.85 56,028.10 b) Term Loans from Banks

- Scheduled Banks 4,899.81 4,823.00 4,855.00 4,899.81 4,823.00 4,855.00 c) Term Loans from other parties - Asian Development Bank [Refer Note 4.4] 232.09 257.52 276.75 - Kreditanstalt für Wiederaufbau - - 10.65 - National Housing Bank 1,065.06 1,217.10 1,072.04 1,297.15 1,474.62 1,359.44 Total Secured: 60,414.16 61,015.47 62,242.54 Unsecured :

a) Bonds and Debentures - Non Convertible Subordinated Debentures [Refer Note 4.9] 5,975.00 3,475.00 3,475.00 b) Term Loans from Banks - Scheduled Banks 1,478.20 782.21 599.30

c) External Commercial Borrowing - Low Cost Affordable Housing 1,884.00 1,805.10 - d) Term Loans from other parties -Under a line from Kreditanstalt für Wiederaufbau 3.00 17.44 34.14

e) Deposits [Refer Note 4.8] 27,847.98 19,785.82 23,654.03

Total Unsecured: 37,188.18 25,865.57 27,762.47

Total 97,602.34 86,881.04 90,005.01

230 4.2 All secured long term borrowing are secured by negative lien on the assets of the Corporation and/or mortgage of property as the case may be, subject to the charge created in favour of its depositors pursuant to the regulatory requirement under section 29 B of the National Housing Bank Act, 1987.

4.3 Non-Convertible Debentures includes ``` 785.00 crore (FY 2013-14 ` 735.00 crore and FY 2012-13 ` 625.00 crore) and Deposits includes ` 2.38 crore (FY 2013-14 ` 0.88 crore and FY 2012-13 ` 3.01 crore) from related parties [Refer Note 35].

4.4 The Corporation has availed a loan of USD 100 million from the Asian Development Bank (Loan II). In respect of tranches 1 and 2 aggregating to USD 60 million, as per the agreements with a scheduled bank, the Corporation has handed over the dollar funds to the bank overseas and has obtained rupee funds in India amounting to ` 200 crore by way of a term loan and ` 100 crore through the issue of bonds which have been subscribed by the bank. In respect of tranche 3 of USD 40 million, as per the agreement with a financial institution, the Corporation has handed over the dollars to a financial institution overseas and under a back-to-back arrangement obtained rupee funds in India. All payments in foreign currency are the responsibility of the financial institution. In terms of the agreements, the Corporation’s foreign exchange liability is protected.

4.5 The Corporation has availed an External Commercial Borrowing of USD 300 million for financing prospective owners of low cost affordable housing units under “approval route” in terms of Reserve Bank of India ("RBI") guidelines dated December 17, 2012. The borrowing has a maturity of five years. In terms of the RBI guidelines, these borrowings have been swapped into rupees for the entire maturity by way of principal only swaps.

4.6 As on March 31, 2015, the Corporation has foreign currency borrowings of USD 1,013.01 million equivalent (FY 2013-14 USD 740.63 million equivalent and FY 2012-13 USD 632.96 million equivalent). The Corporation has undertaken currency swaps, options and forward contracts on a notional amount of USD 495.81 million equivalent (FY 2013-14 USD 513 million equivalent and FY 2012-13 USD 286.75 million equivalent) to hedge the foreign currency risk. As on March 31, 2015, the Corporation’s net foreign currency exposure on borrowings net of risk management arrangements is USD Nil (FY 2013-14 USD Nil, FY 2012-13 USD Nil). Further, interest rate swaps on a notional amount of USD 330 million equivalent (FY 2013-14 USD 83 million equivalent and FY 2012-13 USD 130 million equivalent) are outstanding, which have been undertaken to hedge the interest rate risk on the foreign currency borrowings. As a part of asset liability management on account of the Corporation’s Adjustable Rate Home Loan product as well as to reduce the overall cost of borrowings, the Corporation has entered into interest rate swaps wherein it has converted its fixed rate rupee liabilities of a notional amount of ` 15,240 crore (FY 2013-14 ` 19,040 crore and FY 2012-13 ` 21,185 crore) as on March 31, 2015 for varying maturities into floating rate liabilities linked to various benchmarks. In addition, the Corporation has entered into currency swaps of a notional amount of USD 408.69 million equivalent (FY 2013-14 USD 409.49 million equivalent and FY 2012-13 USD 476.45 million equivalent) through which it has converted its rupee liabilities into foreign currency liabilities and the interest rate is linked to the benchmarks of respective currencies.

4.7 Monetary assets and liabilities (including those in respect of currency swap contracts) denominated in foreign currencies are revalued at the rate of exchange prevailing at the year end. Monetary items represented by currency swap contracts are restated at closing rate.

For forward contracts or instruments that are in substance, forward exchange contracts, the exchange differences on such contracts are being amortised over the life of contracts. The amount of exchange difference in respect of such contracts to be recognised as expense in the Statement of Profit and Loss over subsequent accounting periods is ` Nil (FY 2013-14 ` 6.77 crore and FY 2012-13 ` 29.90 crore).

4.8 Public deposits as defined in paragraph 2(1)(y) of the Housing Finance Companies (NHB) Directions, 2010, are secured by floating charge on the Statutory Liquid Assets maintained in terms of sub-sections (1) & (2) of Section 29B of the National Housing Bank Act, 1987.

4.9 As at March 31, 2015, the Corporation’s outstanding subordinated debt is ``` 6,475 crore (FY 2013-14 ` 3,475 crore FY 2012-13 ` 3,475 crore). These debentures are subordinated to present and future senior indebtedness of the Corporation and qualify as Tier II capital under National Housing Bank (NHB) guidelines for assessing capital adequacy. Based on the balance term to maturity as at March 31, 2015, 84.86% (FY 2013-14 80.29% and FY 2012-13 85.90%) of the book value of the subordinated debt is considered as Tier II capital for the purpose of capital adequacy computation.

231 4.10 Terms of redemption of bonds and debentures and for repayment terms of term loans:

A) BONDS & DEBENTURES (Previous Years figures are in brackets) ` in Crore Bonds & Debentures - Secured As at Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest 6.03% - 8% March 31, 2015 800.00 - - 800.00 March 31, 2014 (1,380.60) (500.00) - (1,880.60) March 31, 2013 (2,830.60) (800.00) - (3,630.60) 8.01% - 10% March 31, 2015 24,206.00 8,174.70 10,795.00 43,175.70 March 31, 2014 (24,474.00) (10,666.00) (8,145.00) (43,285.00) March 31, 2013 (20,000.00) (13,555.00) (9,335.00) (42,890.00) 10.01% - 11.95% March 31, 2015 2,205.00 4,200.00 - 6,405.00 March 31, 2014 (1,085.00) (5,320.00) - (6,405.00) March 31, 2013 - (2,205.00) (4,200.00) (6,405.00) Zero Coupon March 31, 2015 2,990.00 800.00 - 3,790.00 March 31, 2014 (2,630.00) (360.00) - (2,990.00) March 31, 2013 (450.00) (2,490.00) - (2,940.00) Variable Rate - Linked to G Sec March 31, 2015 12.30 14.10 20.10 46.50 March 31, 2014 (116.75) (13.15) (27.35) (157.25) March 31, 2013 (116.00) (12.30) (34.20) (162.50) TOTAL-SECURED A March 31, 2015 30,213.30 13,188.80 10,815.10 54,217.20 A March 31, 2014 (29,686.35) (16,859.15) (8,172.35) (54,717.85) A March 31, 2013 (23,396.60) (19,062.30) (13,569.20) (56,028.10)

Bonds & Debentures - Unsecured Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest 7.62% - 9.6% March 31, 2015 475.00 500.00 5,000.00 5,975.00 March 31, 2014 (975.00) - (2,500.00) (3,475.00) March 31, 2013 (500.00) (475.00) (2,500.00) (3,475.00) TOTAL-UNSECURED B March 31, 2015 475.00 500.00 5,000.00 5,975.00 B March 31, 2014 (975.00) - (2,500.00) (3,475.00) B March 31, 2013 (500.00) (475.00) (2,500.00) (3,475.00) TOTAL-(SECURED-&-UNSECURED) A+B March 31, 2015 30,688.30 13,688.80 15,815.10 60,192.20 A+B March 31, 2014 (30,661.35) (16,859.15) (10,672.35) (58,192.85) A+B March 31, 2013 (23,896.60) (19,537.30) (16,069.20) (59,503.10)

B) TERM LOANS FROM BANKS (Previous Year figures are in brackets) ` in Crore Term Loans from Banks - Secured As at Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest Term Loans from Scheduled Banks - Rupee 7.01% - 9% March 31, 2015 - - - - March 31, 2014 (323.00) - - (323.00) March 31, 2013 (323.00) - - (323.00) 9.01% - 10.75% March 31, 2015 3,400.00 100.00 1,000.00 4,500.00 March 31, 2014 (1,000.00) (2,400.00) (1,100.00) (4,500.00) March 31, 2013 (1,032.00) (2,400.00) (1,100.00) (4,532.00)

Term Loans from Scheduled Banks-Foreign Currency March 31, 2015 399.81 - - 399.81 USD LIBOR +150- 200 bps March 31, 2014 - - - - March 31, 2013 - - - - TOTAL-SECURED A March 31, 2015 3,799.81 100.00 1,000.00 4,899.81 A March 31, 2014 (1,323.00) (2,400.00) (1,100.00) (4,823.00) A March 31, 2013 (1,355.00) (2,400.00) (1,100.00) (4,855.00)

Term Loans from Banks - Unsecured Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest Term Loans from Scheduled Banks - Rupee 9.01% -10.25% March 31, 2015 285.00 - - 285.00 March 31, 2014 - - - - March 31, 2013 - - - - Term Loans from Scheduled Banks - Foreign Currency USD LIBOR + 325 bps March 31, 2015 1,193.20 - - 1,193.20 March 31, 2014 (782.21) - - (782.21) March 31, 2013 - (599.30) - (599.30) TOTAL-UNSECURED B March 31, 2015 1,478.20 - - 1,478.20 B March 31, 2014 (782.21) - - (782.21) B March 31, 2013 - (599.30) - (599.30) TOTAL-(SECURED-&-UNSECURED) A+B March 31, 2015 5,278.01 100.00 1,000.00 6,378.01 A+B March 31, 2014 (2,105.21) (2,400.00) (1,100.00) (5,605.21) A+B March 31, 2013 (1,355.00) (2,999.30) (1,100.00) (5,454.30)

232 C) External Commercial Borrowing - Low Cost Affordable Housing - Unsecured (Previous Year figures are in brackets) ` in Crore Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest USD LIBOR + 175 bps March 31, 2015 - 1,884.00 - 1,884.00 March 31, 2014 - (1,805.10) - (1,805.10) March 31, 2013 - - - - TOTAL-UNSECURED March 31, 2015 - 1,884.00 - 1,884.00 March 31, 2014 - (1,805.10) - (1,805.10) March 31, 2013 - - - -

D) TERM LOANS FROM OTHER PARTIES (Previous Year figures are in brackets) ` in Crore Term Loans from Other parties - Secured As at Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest Asian Development Bank USD LIBOR + 40 bps March 31, 2015 15.57 17.61 25.28 58.46 March 31, 2014 (14.03) (15.87) (32.92) (62.82) March 31, 2013 (11.86) (13.42) (36.94) (62.22) Variable linked to Bank PLR March 31, 2015 24.80 28.04 40.26 93.10 March 31, 2014 (23.32) (26.37) (54.71) (104.40) March 31, 2013 (21.93) (24.80) (68.30) (115.03) Variable linked to G Sec March 31, 2015 21.45 24.25 34.83 80.53 March 31, 2014 (20.17) (22.80) (47.33) (90.30) March 31, 2013 (18.97) (21.45) (59.08) (99.50) Kreditanstalt für Wiederaufbau 1.70% March 31, 2015 - - - - March 31, 2014 - - - - March 31, 2013 (10.65) - - (10.65) National Housing Bank 6% - 8% March 31, 2015 225.80 112.81 127.45 466.06 March 31, 2014 (195.70) (121.39) (18.69) (335.78) March 31, 2013 (202.14) (174.20) (61.22) (437.56) 8.01% - 10% March 31, 2015 422.87 153.32 22.81 599.00 March 31, 2014 (510.10) (169.82) (91.22) (771.14) March 31, 2013 (348.21) (112.24) (80.14) (540.59) 10.01% - 10.20% March 31, 2015 - - - - March 31, 2014 (110.18) - - (110.18) March 31, 2013 (93.89) - - (93.89) TOTAL-SECURED A March 31, 2015 710.49 336.03 250.63 1,297.15 A March 31, 2014 (873.50) (356.25) (244.87) (1,474.62) A March 31, 2013 (707.65) (346.11) (305.68) (1,359.44) Term Loans from Other parties - Unsecured Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest Kreditanstalt für Wiederaufbau 6% March 31, 2015 3.00 - - 3.00 March 31, 2014 (17.44) - - (17.44) March 31, 2013 (31.14) (3.00) (34.14) TOTAL-UNSECURED B March 31, 2015 3.00 - - 3.00 B March 31, 2014 (17.44) - - (17.44) B March 31, 2013 (31.14) (3.00) - (34.14) TOTAL-(SECURED-&-UNSECURED) A+B March 31, 2015 713.49 336.03 250.63 1,300.15 A+B March 31, 2014 (890.94) (356.25) (244.87) (1,492.06) A+B March 31, 2013 (738.79) (349.11) (305.68) (1,393.58)

5 OTHER LONG - TERM LIABILITIES As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore

Amounts payable on swaps [Refer Note 4.7] 397.09 718.60 486.08 Interest accrued but not due on borrowings 772.20 741.83 947.42 Premium payable on redemption of Debentures 1,160.26 693.65 315.34 Security and other deposits received 9.50 12.55 13.11 Income received in advance 81.78 45.59 29.35 Accrued Redemption Loss on Investments 15.98 18.89 19.27 2,436.81 2,231.11 1,810.57

6 LONG-TERM PROVISIONS As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore

Provision for Employee Benefits [Refer Note 27.3] 49.44 37.96 40.32 Provision for Contingencies [Refer Note 6.1 & 6.2] 1,501.44 1,309.04 1,265.24 1,550.88 1,347.00 1,305.56

233 6.1 Provision for Contingencies includes provisions for standard assets and all other contingencies. As per National Housing Bank Circular No. NHB/HFC/DIR.4/CMD/2012 dated January 19, 2012 and NHB.HFC.DIR.9/CMD/2013 dated September 6,2013, in addition to provision for non performing assets, all housing finance companies are required to carry a general provision. (i) at the rate of 1% of Standard Assets in respect of Commercial Real Estate ("CRE") other than Residential Housing , (ii) at the rate of 0.75% Commercial Real Estate - Residential Housing and (iii) at the rate of 0.40% of the total outstanding amount of loans which are Standard Assets other than (i) & (ii) above. Loans to Individuals for 3rd dwelling units onwards are treated as CRE exposure.

Accordingly, the Corporation is required to carry a minimum provision of ``` 1,170.92 crore (FY 2013-14 ` 1,012.03 crore and FY 2012-13 ` 1,119.48 crore) towards standard assets. [Refer Note 30.1]

6.2 Movement in Provision for Contingencies Account during the year is as under: [Refer Note 32.1] Particulars March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore

Opening Balance 1,309.04 1,265.24 1,218.09 Additions during the year (Net) [Refer note 3.4] 202.44 58.20 54.24 Utilised during the year – towards Diminution in Value of Investments [Refer note 30.2] (10.04) (14.40) (7.09) Closing Balance 1,501.44 1,309.04 1,265.24

7 SHORT-TERM BORROWINGS As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore Loans repayable on demand: From Banks - Unsecured 116.46 6.12 259.27 Deposits - Unsecured [Refer note 7.2 & 4.8] 2,822.05 5,761.63 5,655.57

Other loans and advances: Scheduled Banks - Secured [Refer note 7.1] 4,660.00 9,800.00 3,285.00 National Housing Bank - Secured [Refer note 7.1] - - 36.85 Scheduled Banks - Unsecured - 500.00 - Commercial Papers - Unsecured [Refer note 7.3] 25,659.20 9,250.10 9,307.87 33,257.71 25,317.85 18,544.56

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

7.2 Deposits includes ``` 16.84 crore (FY 2013-14 ` 24.80 crore and FY 2012-13 ` 21.53 crore) from related parties [Refer Note 35].

Commercial papers of the Corporation have a maturity value of ``` 26,665.00 crore (FY 2013-14 ` 9,575.00 crore FY 2012-13 ` _ 9,550.00 7.3 crore).

8 TRADE PAYABLES As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore

Trade Payables 87.80 81.82 26.89 87.80 81.82 26.89

8.1 Trade Payables include ``` 0.07 crore (FY 2013-14 ` 0.10 crore and FY 2012-13 ` Nil) payable to “Suppliers” registered under the Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / payable by the Corporation during the year to the “Suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquiries made by the Corporation for this purpose.

8.2 As required under Section 125 of the Companies Act 2013, the Corporation has transferred ``` 2.18 crore (FY 2013-14 ` 1.65 crore and FY 2012-13 ` 1.11 crore) to the Investor Education and Protection Fund (IEPF) during the year except to the extent ` 0.87 crore and ` 1.15 crore in the FY 2013-14 and FY 2012-13 respectively in respect of claims that are disputed. As of March 31, 2015, no amount was due for transfer to the IEPF.

8.3 Trade Payables includes ``` 23.08 crore (FY 2013-14 ` 19.57 crore FY 2012-13 ` Nil) due to related parties [Refer Note 35].

234 9 OTHER CURRENT LIABILITIES As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore Current maturities of long-term borrowings [Refer Note 9.3] 77,738.98 71,774.30 50,036.41

Interest accrued but not due on borrowings 5,409.65 5,385.82 4,254.18 Premium payable on redemption of Debentures 136.54 167.17 402.62 Interest accrued and due on matured deposits 78.70 55.19 33.10 Income and other amounts received in advance 271.60 184.21 223.72 Unclaimed dividend 16.94 14.36 11.61 Interim Dividend Payable 3.53 - - Unclaimed matured deposits 617.92 442.56 310.11 Other payables - Statutory Remittances 147.37 152.75 173.86 - Financial Assistance received from Kreditanstalt für Wiederaufbau 7.78 20.93 164.78 - Amounts payable - Securitised Loans 567.73 514.84 449.39 - Amounts payable to Gratuity Fund - - - - Amounts payable on swaps [Refer Note 4.7] 172.57 167.24 102.08 - Accrued redemption loss on Investments - 2.32 9.40 - Others 37.27 29.81 24.80 7,467.60 7,137.20 6,159.65

85,206.58 78,911.50 56,196.06 9.1 Current maturities of Long term borrowings are further sub-classified as under: As at As at As at Sr.No. Particulars March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore Secured [Refer Note 9.2] (i) Bonds and Debentures - Bonds 5.75 5.25 5.00 - Non Convertible Debentures 29,959.60 26,995.00 20,013.30 (ii) Term Loans from Banks - Scheduled Banks 9,230.40 11,837.51 4,885.24 (iii) Term Loans from other parties - Asian Development Bank 28.18 26.22 24.05 - Kreditanstalt für Wiederaufbau - 12.74 10.65 - National Housing Bank 391.61 494.18 369.14 Total Secured 39,615.54 39,370.90 25,307.38

Unsecured (i) Bonds and Debentures [Refer Note 4.9 & 9.3] 500.00 - - (ii) Term Loans from Banks - Scheduled Banks 2,191.00 1,355.92 2,100.81 (iii) Term Loans from other parties - Under a line from Kreditanstalt für Wiederaufbau 14.44 16.70 5.00 (iv) Deposits [Refer Note 4.8] 35,418.00 31,030.78 22,623.22 Total Unsecured 38,123.44 32,403.40 24,729.03

Total 77,738.98 71,774.30 50,036.41

9.2 Secured Current maturities of long term borrowings are secured by negative lien on the assets of the Corporation and/or mortgage of property as the case may be, subject to the charge created in favour of its depositors pursuant to the regulatory requirement under section 29 B of the National Housing Bank Act, 1987.

9.3 Current maturities of Non-Convertible Debentures includes ``` 116.00 crore (FY 2013-14 ` 40.00 crore and FY 2012-13 ` 95.00 crore) and

Deposits includes ```___0.98 crore (FY 2013-14 ` 3.87 crore and FY 2012-13 ` 2.69 crore) from related parties [Refer Note 35].

10 SHORT-TERM PROVISIONS As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore

Provision for Employee benefits [Refer Note 27.3] 1 10.52 88.50 76.01 Provision for Tax (Net of Advance Tax) 64.53 62.43 62.53 Proposed Dividend 2,047.11 2,184.75 1,932.93 Additional Tax on Dividend 416.74 371.30 328.50 2,638.90 2,706.98 2,399.97

235 Previous Year 2013-14 figures are in (brackets) 11 Tangible assets: FY 2014-15 ``` in crore GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK As at As at As at For As at As at As at March 31, Mar 31, March 31, the Mar 31, Mar 31, March 31, 2014 Additions Deductions 2015 2014 Year Deductions 2015 2015 2014 Land : Freehold 15.70 - - 15.70 - - - - 15.70 15.70 (15.70) - - (15.70) - - - - (15.70) (15.70) Leasehold 3.45 366.80 - 370.25 0.65 2.29 - 2.94 367.31 2.80 (3.45) - - (3.45) (0.61) (0.04) - (0.65) (2.80) (2.84) Buildings : Own Use 205.78 59.40 37.02 228.16 44.41 3.08 8.14 39.35 188.81 161.37 (211.08) (2.11) (7.41) (205.78) (42.44) (3.35) (1.38) (44.41) (161.37) (168.64) Leasehold Improvements 55.07 2.17 1.28 55.96 16.22 12.81 1.27 27.76 28.20 38.85 (16.03) (39.35) (0.31) (55.07) (10.68) (5.84) (0.30) (16.22) (38.85) (5.35) Computer Hardware 66.91 12.99 2.01 77.89 56.43 4.21 2.01 58.63 19.26 10.48 (61.23) (7.83) (2.15) (66.91) (51.79) (6.79) (2.15) (56.43) (10.48) (9.44) Furniture and Fittings Own Use 61.11 2.49 4.33 59.27 42.81 (1.39) 4.17 37.25 22.02 18.30 (52.62) (13.05) (4.56) (61.11) (42.15) (4.61) (3.95) (42.81) (18.30) (10.47) Under Operating Lease 0.71 - 0.71 - 0.63 0.06 0.69 - - 0.08 (0.71) - - (0.71) (0.62) (0.01) - (0.63) (0.08) (0.09) Office Equipment etc.: Own Use 57.11 3.22 3.65 56.68 33.57 2.54 3.30 32.81 23.87 23.54 (46.36) (13.15) (2.40) (57.11) (30.42) (4.85) (1.70) (33.57) (23.54) (15.94) Under Operating Lease 0.79 - 0.79 - 0.67 0.12 0.79 - - 0.12 (0.79) - - (0.79) (0.65) (0.02) - (0.67) (0.12) (0.14) Vehicles 11.73 2.88 1.43 13.18 7.21 0.66 1.36 6.51 6.67 4.52 (11.12) (2.02) (1.41) (11.73) (6.77) (1.58) (1.14) (7.21) (4.52) (4.35) Leased Assets : Plant & Machinery * 129.18 - - 129.18 129.18 - - 129.18 - - (129.18) - - (129.18) (129.18) - - (129.18) - - Vehicles * 16.37 - - 16.37 16.37 - - 16.37 - - (16.37) - - (16.37) (16.37) - - (16.37) - - 623.91 623.91 449.95 51.22 1,022.64 348.15 24.38 21.73 350.80 671.84 275.76 Previous Year 2013-14 (564.64) (77.51) (18.24) (623.91) (331.68) (27.09) (10.62) (348.15) (275.76) (232.96) * Assets held for disposal

11.1 The Corporation has reviewed its policy of providing for depreciation on its tangible fixed assets and has also reassessed their useful lives. On and from April 1, 2014, the straight line method is being used to depreciate all classes of tangible fixed assets. Previously, the straight line method was used for depreciating Buildings, Computers, Leased Assets and Leasehold Improvements while other tangible fixed assets were being depreciated using the reducing balance method. The revised useful lives, as assessed by Management, match those specified in Part C of Schedule II to the Companies Act, 2013, for all classes of assets other than Computer Hardware and Vehicles. Management believes that the revised useful lives of the assets reflect the periods over which these assets are expected to be used. As a result of the change, the charge on account of Depreciation for year, is lower by ``` 12.94 crore compared to the method used and useful lives estimated in earlier periods. 11.2 Depreciation charge for the financial year above, excludes ` 3.98 crore (FY 2013-14 ` 2.27 crore) being depreciation charge on investment in Properties.

Previous Year 2013-14 figures are in (brackets) 12 Intangible assets : FY 2014-15 ``` in crore GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK As at As at As at For As at As at As at March 31, Mar 31, March 31, the Mar 31, Mar 31, March 31, 2014 Additions Deductions 2015 2014 Year Deductions 2015 2015 2014 Computer Software Licences 14.02 1.82 - 15.84 9.30 1.42 - 10.72 5.12 4.72 (Acquired) (11.77) (2.25) - (14.02) (6.79) (2.51) - (9.30) (4.72) (4.98) 14.02 14.02 1.82 - 15.84 9.30 1.42 - 10.72 5.12 4.72 Previous Year 2013-14 (11.77) (2.25) - (14.02) (6.79) (2.51) - (9.30) (4.72) (4.98)

236 Previous Year 2012-13 figures are in (brackets) 11 Tangible assets: FY 2013-14 ``` in crores GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK As at As at As at As at As at As at March 31, March 31, March 31, For the March 31, March 31, March 31, 2013 Additions Deductions 2014 2013 Year Deductions 2014 2014 2013 Land : Freehold 15.70 - - 15.70 - - - - 15.70 15.70 (15.70) - - (15.70) - - - - (15.70) (15.70) Leasehold 3.45 - - 3.45 0.61 0.04 - 0.65 2.80 2.84 (3.45) - - (3.45) (0.57) (0.04) - (0.61) (2.84) (2.88) Buildings : Own Use 211.08 2.11 7.41 205.78 42.44 3.35 1.38 44.41 161.37 168.64 (211.07) (0.05) (0.04) (211.08) (39.02) (3.44) (0.02) (42.44) (168.64) (172.05) Leasehold Improvements 16.03 39.35 0.31 55.07 10.68 5.84 0.30 16.22 38.85 5.35 (13.39) (3.16) (0.52) (16.03) (9.12) (2.03) (0.47) (10.68) (5.35) (4.27) Computer Hardware 61.23 7.83 2.15 66.91 51.79 6.79 2.15 56.43 10.48 9.44 (56.68) (6.26) (1.71) (61.23) (47.64) (5.85) (1.70) (51.79) (9.44) (9.04) Furniture and Fittings Own Use 52.62 13.05 4.56 61.11 42.15 4.61 3.95 42.81 18.30 10.47 (49.18) (3.84) (0.40) (52.62) (39.48) (3.02) (0.35) (42.15) (10.47) (9.70) Under Operating Lease 0.71 - - 0.71 0.62 0.01 - 0.63 0.08 0.09 (0.71) - - (0.71) (0.60) (0.02) - (0.62) (0.09) (0.11) Office Equipment etc.: Own Use 46.36 13.15 2.40 57.11 30.42 4.85 1.70 33.57 23.54 15.94 (42.86) (4.45) (0.95) (46.36) (28.28) (2.85) (0.71) (30.42) (15.94) (14.58) Under Operating Lease 0.79 - - 0.79 0.65 0.02 - 0.67 0.12 0.14 (0.79) - - (0.79) (0.63) (0.02) - (0.65) (0.14) (0.16) Vehicles 11.12 2.02 1.41 11.73 6.77 1.58 1.14 7.21 4.52 4.35 (10.32) (2.19) (1.39) (11.12) (6.33) (1.52) (1.08) (6.77) (4.35) (3.99) Leased Assets : Plant & Machinery * 129.18 - - 129.18 129.18 - - 129.18 - - (129.18) - - (129.18) (129.18) - - (129.18) - - Vehicles * 16.37 - - 16.37 16.37 - - 16.37 - - (16.37) - - (16.37) (16.37) - - (16.37) - - 564.64 77.51 18.24 623.91 331.68 27.09 10.62 348.15 275.76 232.96 Previous Year 2012-13 (549.70) (19.95) (5.01) (564.64) (317.22) (18.79) (4.33) (331.68) (232.96) (232.48) * Assets held for disposal

Notes : 1) Buildings include ``` Nil (FY 2012-13 ` 0.01 crores) being the cost of shares in Co-operative Housing Societies and Limited Companies. 2) Depreciation charge for the financial year, excludes ``` 2.27 crores (FY 2012-13 ` 2.42 crores) being depreciation charge on investment in Properties.

Previous Year 2012-13 figures are in (brackets) 12 Intangible assets : FY 2013-14 ``` in crores GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK As at As at As at As at As at As at March 31, March 31, March 31, For the March 31, March 31, March 31, 2013 Additions Deductions 2014 2013 Year Deductions 2014 2014 2013 Computer Software 11.77 2.25 - 14.02 6.79 2.51 - 9.30 4.72 4. 98 (5.88) (5.89) - (11.77) (4.41) (2.38) - (6.79) (4.98) (1.47)

11.77 2.25 - 14.02 6.79 2.51 - 9.30 4.72 4.98 Previous Year 2012-13 (5.88) (5.89) - (11.77) (4.41) (2.38) - (6.79) (4.98) (1.47)

237 13 Non-current investments As at As at As at March 31, 2015March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore INVESTMENTS (At Cost)

Trade Investments : Equity Shares - Subsidiaries and Associate Companies 8,250.18 8,242.05 8,217.70 Preference Shares - Convertible - Subsidiary Company 67.00 67.00 85.00 Debentures - Redeemable - Subsidiary Company 79.00 74.00 30.00 Venture Funds 223.49 182.80 176.80

Non Trade Investments : Equity Shares 552.70 745.59 772.07 Preference Shares - Convertible 0.50 0.50 0.50 Preference Shares - Cumulative Redeemable 5.99 5.99 5.99 Debentures and Bonds - Redeemable - for Financing Real Estate Projects 63.33 163.33 163.33 Debentures and Bonds - Redeemable - Others - 20.00 59.98 Pass Through Certificates and Security Receipts - for Financing Real Estate Projects 37.10 41.91 48.77 Security Receipts - Others 8.11 21.97 22.28 Government Securities 4,087.64 3,719.77 2,762.58 Mutual Funds 10.00 10.00 5.00 Venture Funds 110.08 54.22 110.80 Properties [Net of Depreciation of ` 15.11 crore (FY 2013-14 ` 13.13 crore, FY 2012-13 ` 15.86 crore) 270.93 102.88 141.54 13,766.05 13,452.01 12,602.34

Less : Provision for other than temporary Diminution in Value of Investments 74.35 81.72 70.48 13,691.70 13,370.29 12,531.86

Book Value Market Value ` in Crore ` in Crore

Aggregate of Quoted Investments 5,806.92 45,661.78 2013-14 5,966.95 32,982.31 2012-13 5,982.39 27,365.06

Aggregate of Investments listed but not quoted 4,150.97 2013-14 3,883.10 2012-13 2,925.91

Aggregate of Investments in Unquoted Mutual Funds (Refer note 2 below) 10.00 10.20 2013-14 10.00 10.06 2012-13 5.00 5.02

Aggregate of Unquoted Investments (Others) 3,452.88 2013-14 3,407.36 2012-13 3,477.02

Properties 270.93 2013-14 102.88 2012-13 141.54 13,691.70 2013-14 13,370.29 2012-13 12,531.86

238 Trade Investments : Face Face Face Value As at Value As at Value As at Number per March 31, Number per March 31, Number per March 31, of Share 2015 of Share 2014 of Share 2013 Shares ` ` in Crore Shares ` ` in Crore Shares ` ` in Crore Equity Shares - Subsidiaries and Associate Companies (fully paid)

Subsidiaries Credila Financial Services Pvt. Ltd. 4,22,72,003 10 47.97 4,22,72,003 10 47.97 1,89,38,670 10 22.97 GRUH Finance Ltd. * 21,30,77,850 2 60.74 10,65,38,925 2 60.74 10,65,38,925 2 60.74 HDFC Asset Management Co. Ltd. 1,50,96,600 10 235.88 1,50,96,600 10 235.88 1,50,96,600 10 235.88 HDFC Developers Ltd. 30,50,000 10 3.05 50,000 10 0.05 50,000 10 0.05 HDFC Education and Development Services Pvt. Ltd. 1,51,00,000 10 15.10 1,01,00,000 10 10.10 51,00,000 10 5.10 HDFC ERGO General Insurance Co. Ltd. 39,66,08,250 10 644.96 39,07,32,250 10 597.96 39,06,40,750 10 597.30 HDFC Holdings Ltd. 18,00,070 10 102.40 18,00,070 10 102.40 18,00,070 10 102.40 HDFC Investments Ltd. 2,66,70,500 10 66.15 2,66,70,500 10 66.15 2,66,70,500 10 66.15 HDFC Property Ventures Ltd. 10,00,000 10 1.00 10,00,000 10 1.00 10,00,000 10 1.00 HDFC Realty Ltd. 77,50,070 10 7.31 77,50,070 10 7.31 77,50,070 10 7.31 HDFC Sales Pvt. Ltd. 40,10,000 10 4.02 40,10,000 10 4.02 40,10,000 10 4.02 HDFC Standard Life Insurance Co. Ltd. 1,40,92,99,334 10 1,508.78 1,44,37,33,842 10 1,545.64 1,44,37,33,842 10 1,545.64 HDFC Trustee Co. Ltd. 1,00,000 10 0.10 1,00,000 10 0.10 1,00,000 10 0.10 HDFC Venture Capital Ltd. 4,02,500 10 0.40 4,02,500 10 0.40 4,02,500 10 0.40 HDFC Ventures Trustee Co. Ltd. 50,000 10 0.05 50,000 10 0.05 50,000 10 0.05 H T Parekh Foundation - 1,00,09,990 10 10.01 1,00,09,990 10 10.01 2,697.91 2,689.78 2,659.12

Associate Companies HDFC Bank Ltd. * 39,32,11,100 2 5,549.74 39,32,11,100 2 5,549.74 39,32,11,100 2 5,549.74 IPFonline Ltd. 0 - - - - - 3,79,860 10 6.31 India Value Fund Advisors Pvt. Ltd. 9,75,002 4 0.03 9,75,002 4 0.03 9,75,002 4 0.03 RuralShores Business Services Pvt. Ltd. 4,76,351 10 2.50 4,76,351 10 2.50 4,76,351 10 2.50 5,552.27 5,552.27 5,558.58 8,250.18 8,242.05 8,217.70 * listed shares Preference Shares - Convertible - Subsidiary Company (fully paid) 0.01% Credila Financial Services Pvt. Ltd. 6,69,99,956 10 67.00 6,69,99,956 10 67.00 4,99,99,972 10 50.00 (Compulsorily Fully Convertible) 0.01% Credila Financial Services Pvt. Ltd. ------3,49,99,984 10 35.00 (Optionally Fully Convertible) 67.00 67.00 85.00 Face Face Face Value Value Value Number per As at Number per As at Number per As at of Debenture/ March 31, of Debenture/ March 31, of Debenture/ March 31, Debentures/ Bond 2015 Debentures/ Bond 2014 Debentures/ Bond 2013 Bonds (`) ` in Crore Bonds (`) ` in Crore Bonds (`) ` in Crore Debentures - Redeemable - Subsidiary Company (fully paid) 12.75% Credila Financial Services Pvt. Ltd. 100 10,00,000 10.00 100 10,00,000 10.00 100 10,00,000 10.00 12.75% Credila Financial Services Pvt. Ltd. 100 10,00,000 10.00 100 10,00,000 10.00 100 10,00,000 10.00 12.75% Credila Financial Services Pvt. Ltd. 100 10,00,000 10.00 100 10,00,000 10.00 100 10,00,000 10.00 12.75% Credila Financial Services Pvt. Ltd. 100 10,00,000 10.00 100 10,00,000 10.00 - - - 12.75% Credila Financial Services Pvt. Ltd. 100 10,00,000 10.00 100 10,00,000 10.00 - - - 12.75% Credila Financial Services Pvt. Ltd. 90 10,00,000 9.00 90 10,00,000 9.00 - - - 12.75% Credila Financial Services Pvt. Ltd. 100 10,00,000 10.00 100 10,00,000 10.00 - - - 12.75% Credila Financial Services Pvt. Ltd. 50 10,00,000 5.00 50 10,00,000 5.00 - - - 12.75% Credila Financial Services Pvt. Ltd. 50 10,00,000 5.00 - - 79.00 74.00 30.00

Venture Funds HDFC Investment Trust 172.35 182.80 176.80 HDFC Investment Trust II 51.14 - 223.49 182.80 176.80 Non - Trade Investments: Face Face Face Value As at Value As at Value As at Number per March 31, Number per March 31, Number per March 31, of Share 2015 of Share 2014 of Share 2013 Shares ` ` in Crore Shares ` ` in Crore Shares ` ` in Crore Equity Shares (fully paid)

Unlisted : AEC Cements and Constructions Ltd. 2,80,000 10 0.28 2,80,000 10 0.28 2,80,000 10 0.28 Avantha Power & Infrastructure Ltd. - 1,45,35,188 10 45.00 1,45,35,188 10 45.00 Asset Reconstruction Co. (India) Ltd. 75,41,137 10 46.37 75,41,137 10 46.37 75,41,137 10 46.37 Career Launcher Education Infrastructure & Services Ltd. - 9,38,028 10 21.18 9,38,028 10 21.18 Computer Age Management Services Pvt. Ltd. 54,06,680 10 1.51 54,06,680 10 1.51 73,57,080 10 2.05 Citrus Processing India Pvt Ltd. 11,51,234 10 34.09 9,28,414 10 27.49 12,50,000 10 1.25 CL Educate Ltd. 5,94,233 10 35.08 - 0 - - Feedback Ventures Pvt. Ltd. 18,10,515 10 8.97 18,10,515 10 8.97 18,10,515 10 8.97 GVFL Ltd. 1,50,000 10 0.27 1,50,000 10 0.27 1,50,000 10 0.27 Goods & Services Tax Network 10,00,000 10 1.00 97,143 10 0.10 0 0 0.00 Idhasoft Ltd. 4,71,06,525 1 8.21 4,71,06,525 1 8.21 4,71,06,525 1 8.21 INCAB Industries Ltd. 76,188 10 0.23 76,188 10 0.23 76,188 10 0.23 Infrastructure Development Corporation (Karnataka) Ltd. 1,50,000 10 0.15 1,50,000 10 0.15 1,50,000 10 0.15 Infrastructure Leasing & Financial Services Ltd. 1,15,87,194 10 78.11 1,15,87,194 10 78.11 1,15,87,194 10 78.11 IVF Advisors Pvt. Ltd. 2,000 10 0.01 2,000 10 0.01 2,000 10 0.01 Kesoram Textile Mills Ltd. (received on demerger in 1999-2000) 22,258 2 - 22,258 2 - 22,258 2 - Mahindra First Choice Wheels Ltd. 31,82,000 10 4.84 31,82,000 10 4.84 31,82,000 10 4.84 MIEL e-Security Pvt. Ltd. 1,11,112 10 4.11 1,11,112 10 4.11 1,11,112 10 4.11

Carried forward 223.23 246.82 221.03

239 Face Face Face Value Value Value Number per As at Number per As at Number per As at of Share March 31, 2015 of Share March 31, 2014 of Share March 31, 2013 Shares ` ` in Crore Shares ` ` in Crore Shares ` ` in Crore

Brought forward 223.23 246.82 221.03

National Stock Exchange of India Ltd. 73,750 10 21.45 73,750 10 21.45 73,750 10 21.45 Next Gen Publishing Ltd. 19,35,911 10 1.70 19,35,911 10 1.70 19,35,911 10 1.70 Novacel Life Sciences Ltd. 7,50,000 10 0.75 7,50,000 10 0.75 7,50,000 10 0.75 New India Co-Operative Bank Ltd. * ------250 10 - OCM India Ltd. 22,56,295 10 3.41 22,56,295 10 3.41 250 10 3.41 PPN Power Generating Co. Pvt. Ltd. ------34,25,953 100 35.37 Tamil Nadu Urban Infrastructure Financial Services Ltd. 1,50,000 10 0.15 1,50,000 10 0.15 1,50,000 10 0.15 Tamil Nadu Urban Infrastructure Trustee Co. Ltd. 15,000 10 0.02 15,000 10 0.02 15,000 10 0.02 The Greater Bombay Co-operative Bank Ltd. * - 40 25 - 40 25 - The Ratnakar Bank Ltd. 88,04,680 10 58.99 88,04,680 10 58.99 15,000 10 58.99 TVS Credit Services Ltd. 50,00,000 10 10.00 50,00,000 10 10.00 40 25 10.00 VBHC Value Homes Private Limited [Erstwhile Value & Budget Housing Corporation (India) Pvt. Ltd.] 1,89,394 10 6.08 2,63,626 10 8.46 88,04,680 10 20.95 Vayana Enterprises Pvt. Ltd. 10,44,776 10 3.47 10,44,776 10 3.47 50,00,000 10 3.47 329.25 355.23 377.29 Listed :

Axis Bank Ltd. - 1,31,377 10 16.52 92,000 10 11.61 Andhra Cements Ltd. 2,59,57,055 10 49.82 2,59,57,055 10 49.82 2,59,57,055 10 49.82 BASF India Ltd. - 1,89,635 10 12.74 1,89,635 10 12.74 Bharat Bijlee Ltd. 1,22,480 10 2.65 1,22,480 10 2.65 1,22,480 10 2.65 Credit Analysis and Research Ltd. - 2,422 10 0.18 2,422 10 0.18 Castrol India Ltd. - 1,87,483 10 3.14 2,71,970 10 4.69 Coromandel International Ltd. 2,69,330 2 - 2,69,330 2 - 2,69,330 2 - (received under Scheme of Arrangement in 2003-04) - Crompton Greaves Ltd. - 1,68,750 2 4.27 1,68,750 2 4.27 DCB Bank Ltd. (Erstwhile Development Credit Bank Ltd.) 40,47,926 10 16.89 40,47,926 10 16.89 40,47,926 10 16.89 Engineers India Ltd. - 3,11,992 5 10.86 3,11,992 5 10.86 Grasim Industries Ltd. - 37,300 10 11.50 35,000 10 10.86 Hindustan Oil Exploration Co. Ltd. 1,48,26,303 10 105.50 1,48,26,303 10 105.50 1,48,26,303 10 105.50 Indian Oil Corporation Ltd. - 1,51,000 10 4.94 1,51,000 10 4.94 ICICI Bank Ltd. - 48,000 10 4.98 0 0 - Indraprastha Medical Corporation Ltd. 90,00,000 10 38.65 90,00,000 10 38.65 90,00,000 10 38.65 Infosys Technologies Ltd. - 33,000 5 9.69 33,000 5 9.69 IDFC Ltd. 27,94,319 10 2.79 27,94,319 10 2.79 1,70,00,000 10 17.00 ITC Ltd. - 2,51,000 1 4.07 2,51,000 1 4.07 Larsen & Toubro Ltd. - 52,500 2 4.88 0 0 - Mahindra & Mahindra Ltd. - 3,15,000 5 5.87 3,15,000 5 5.87 Nestle India Ltd. 8,200 10 3.49 8,200 10 3.49 Nirlon Ltd. - 9,09,000 10 5.00 9,09,000 10 5.00 NMDC Ltd. - 1,66,660 1 5.00 1,66,660 1 5.00 Oil & Natural Gas Corporation Ltd. - 2,10,000 5 6.97 2,10,000 5 6.97 Reliance Industries Ltd. - 1,41,169 10 14.36 1,41,169 10 14.36 Shipping Corporation Of India Ltd. 1,28,439 10 1.80 1,28,439 10 1.80 Siemens Ltd. 2,02,707 2 7.15 7,87,707 2 27.81 10,43,100 2 36.83 State Bank of India - 40,000 10 8.09 15,000 10 3.14 Tata Steel Ltd. - 1,36,448 10 7.90 1,36,448 10 7.90 223.45 390.36 394.78 * Amount less than ` 50,000 552.70 745.59 772.07

240 Face Face Face Value Value Value Number per As at Number per As at Number per As at Preference Shares - Convertible (fully paid) of Share March 31, 2015 of Share March 31, 2014 of Share March 31, 2013 Shares ` ` in Crore Shares ` ` in Crore Shares ` ` in Crore

0.02% Ziqitza Healthcare Ltd. 2,350 10 0.50 2,350 10 0.50 2,350 10 0.50 (Compulsorily Fully Convertible Preference Shares) 0.50 0.50 0.50

Preference Shares - Cumulative Redeemable (fully paid)

0.001% BPL Ltd. 5,99,014 100 5.99 5,99,014 100 5.99 5,99,014 100 5.99 5.99 5.99 5.99 5.99

Face Face Face Value Value Value Number per Number per Number per of Debenture/ As at of Debenture/ As at of Debenture/ As at Debentures/ Bond March 31, 2015 Debentures/ Bond March 31, 2014 Debentures/ Bond March 31, 2013 Bonds (`) ` in Crore Bonds (`) ` in Crore Bonds (`) ` in Crore Debentures and Bonds - Redeemable - for financing Real Estate Projects (fully paid)

- Zero Coupon Bonds - Listed Unquoted

NHB Sumeru Zero Coupon Bonds (Refer Note 3 below) 1,50,000 10,000 63.33 1,50,000 10,000 63.33 1,50,000 10,000 63.33 (yield to maturity - 9%) Trent Ltd. (yield to maturity - 10%) - 1,000 10,00,000 100.00 1,000 10,00,000 100.00

63.33 163.33 163.33

Debentures and Bonds - Redeemable - Others (fully paid) - Unlisted 5.64% Mandava Holdings Private Limited - - 8 5,00,00,000 39.98 (yield to maturity -14.10%) 3% Feedback Infra Private Ltd. - 2,00,000 1,000 20.00 2,00,000 1,000 20.00 (yield to maturity -13%) - 20.00 59.98

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore Pass Through Certificates & Security Receipts - for financing Real Estate Projects Pass Through Certificates 17.13 21.94 28.80 Security Receipts 19.97 19.97 19.97 37.10 41.91 48.77

- Others Security Receipts 8.11 21.97 22.28 8.11 21.97 22.28

Government Securities

Government of India Loans 4,087.64 3,719.77 2,762.58

Schemes of Mutual Funds HDFC Mutual Fund 10.00 10.00 5.00 10.00 10.00 5.00

Venture Funds Faering Capital India Evolving Fund 27.11 17.06 11.54 Gaja Capital India Fund - 8.40 8.10 India Value Fund 47.24 12.98 37.90 India Venture Trust 5.00 5.00 38.85 Kaizen Domestic Scheme 1 7.29 5.50 4.85 Tata Capital Growth Fund 6.72 5.28 4.50 Tamil Nadu Urban Development Fund 16.72 - 5.06 110.08 54.22 110.80

Notes :

1) Unquoted investments include ``` Nil (FY 2013-14 ` 6.08 crore, FY 2012-13 ` 9.71 crore) in respect of equity shares, which are subject to a lock-in period and include ``` 40.17 crore (FY 2013- 14 ` 35.96 crore, FY 2012-13 ` 20.95 crore) in respect of equity shares, which are subject to restrictive covenant. Quoted investments include ``` 60.74 crore (FY 2013-14 ` 60.74 crore, FY 2012-13 ` 60.74 crore) in respect of equity shares, which are subject to restrictive covenant.

2) Market value of Investments in Unquoted Mutual Funds represents the repurchase price of the units issued by the Mutual Funds.

3) NHB Sumeru Zero Coupon Bonds are held as Capital Assets under Section 2(48) of the Income Tax Act, 1961.

241 14 DEFERRED TAX ASSET / LIABILITY:

In compliance with the Accounting Standard relating to ‘Accounting for Taxes on Income’ (AS 22), the Corporation has taken debit of ` 271.00 crore (FY 2013-14 debit of ` 27.00 crore and FY 2012-13 credit of ` 3.18 crore) in the Statement of Profit and Loss for the year ended March 31, 2015 towards deferred tax liability (net) for the year, arising on account of timing differences, ``` 559.54 crore (FY 2013-14 ` Nil, FY 2012-13 ` Nil) has been adjusted against utilisation from the General Reserve (as per Note 3.2) and ``` Nil (FY 2013-14 ` 25.49 crore and FY 2012-13 ` Nil) has been adjusted against the utilisation from Statutory Reserve (As per Section 29C of National Housing Bank Act, 1987) as per Note 3.4.

The major components of deferred tax assets and liabilities are : ` in Crore Assets Liabilities Particulars 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 a) Depreciation - - - 61.92 50.66 49.82 b) Special Reserve I & II - - - 924.31 - - c) Provision for Contingencies 726.81 669.62 630.67 - - - d) Provision for Employee Benefits 43.48 31.16 26.12 - - - e) Accrued Redemption Loss (net) 5.53 7.21 9.74 - - - f) Others (net) 9.74 - 14.67 - 27.46 - Total 785.56 707.99 681.20 986.23 78.12 49.82 Net Deferred Tax Asset / Liability 629.87 631.38 200.67

15 LONG-TERM LOANS AND ADVANCES As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore Loans: [Refer Notes 15.3, 15.4 & 15.5]

- Individuals 1,46,668.23 1,25,768.44 1,04,820.04 - Corporate Bodies 52,768.61 48,785.08 46,037.06 - Others 2,724.33 1,738.52 1,249.10 2,02,161.17 1,76,292.04 1,52,106.20 Less: Provision for Sub-Standard and Doubtful loans [Refer Note 15.6 & 30.1] (480.74) (545.96) (475.33) (including additional provision made by the Corporation in the previous year) 2,01,680.43 1,75,746.08 1,51,630.87 Others: Corporate Deposits - Unsecured; Considered doubtful 2.00 2.00 2.00

Capital Advances - Unsecured; considered good 10.70 3.99 11.45

Advance against Investment in 0.59 184.82 52.43 Properties

Security Deposits - Unsecured; considered good 18.69 311.35 166.98

Instalments due from borrowers - Secured; Considered doubtful 99.39 83.92 79.17

Others - Unsecured; Considered doubtful 49.71 49.71 49.71

Other Long-term Loans and Advances: - Staff Loans Others - Secured; considered good [Refer Note 15.1] 17.53 14.95 14.75 - Prepaid Expenses - Unsecured; considered good 91.16 61.54 112.14 - Advance Tax (Net of Provision) 2,326.66 1,979.75 1,433.07 2,616.43 2,692.03 1,921.70 Less : Provision for Doubtful Corporate Deposit & Other Receivables 51.71 51.71 51.71 [Refer Notes 32.1] 2,564.72 2,640.32 1,869.99

2,04,245.15 1,78,386.40 1,53,500.86

242 15.1 Loans includes amounts due from the directors ``` 0.08 crore (FY 2013-14 ` 0.13 crore, FY 2012-13 ` 0.15 crore) [Refer Note 35].

15.2 Investments in Debentures, Pass Through Certificates and Security Receipts amounting to ``` 100.44 crore (FY 2013-14 ` 205.24 crore, FY 2012-13 ` 212.10 crore) are towards financing Real Estate Projects. The Debentures, Pass Through Certificates and Security Receipts are reflected in Note 13.

15.3 Loans granted by the Corporation aggregating to ``` 1,99,935.60 crore (FY 2013-14 ` 1,74,277.73 crore, FY 2012-13 ` 1,50,245.05 crore) are secured or partly secured by: (a) Equitable mortgage of property and / or (b) Pledge of shares, units, other securities, assignment of life insurance policies and / or (c) Hypothecation of assets and / or (d) Bank guarantees, company guarantees or personal guarantees and / or (e) Negative lien and / or (f) Assignment of hire purchase receivables and / or (g) Undertaking to create a security.

15.4 Loans include ``` 198.33 crore (FY 2013-14 ` 35.31 crore, FY 2012-13 ` 27.99 crore) in respect of properties held for disposal under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

15.5 Long term loans and advances includes Sub-Standard and Doubtful Loans of ``` 1,542.36 crore (FY 2013-14 ` 1,413.12 crore, FY 2012-13 ` 1,198.86 crore). [Refer note 30.1]

15.6 Movement in Provision for Sub-Standard and Doubtful Loans is as under: [Refer Note 32.1] As at As at As at Particulars March 31, 2015 March 31, 2014 March 31, 2013 ``` in Crore ` in Crore ` in Crore Opening Balance 545.96 475.33 452.89 Additions/(Reversal) during the year (Net) [Refer Note 3.2 and 3.4] (37.44) 116.80 39.05 Utilised during the year – towards Loans written off (27.78) (46.17) (16.61) Closing Balance 480.74 545.96 475.33

16 OTHER NON-CURRENT ASSETS As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore

Unamortised discount on Non-Convertible Debentures - 2.24 20.22 Receivables on Securitised Loans 353.19 331.57 269.63 Forward Receivable 104.00 104.00 - Interest accrued but not due on Loans 373.24 356.99 230.20 Interest accrued but not due on Bank Deposits 26.16 0.02 0.01 Income accrued but not due on Investments 42.93 56.31 21.64 Bank Deposits with maturities beyond twelve months from the Balance Sheet date [Refer Note 16.1] 1,863.59 62.95 62.34 2,763.11 914.08 604.04

16.1 Bank deposits, with maturities beyond twelve months from the balance sheet date, includes earmarked balances ``` 58.46 crore (FY 2013- 14 ` 62.82 crore, FY 2012-13 ` 62.23 crore) against foreign currency loans [Refer note 4.4] and ``` 0.13 crore (FY 2013-14 ` 0.13 crore, FY 2012-13 ` 0.11 crore) towards letter of credit issued by Bank.

243 Note 17 Current Investments As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore Held as current Investments (At lower of cost and fair value unless stated otherwise stated) Trade Equity Shares - Subsidiary Companies 108.67 108.67 - Debentures - Convertible - Subsidiary Companies - for Financing Real Estate Projects - Redeemable [Refer Note 20.5] 265.18 265.18 Non Trade Equity Shares - Unlisted 45.00 - Debentures and Bonds - Redeemable 10.00 20.00 45.00 Current portion of Long Term Investments (at cost) 522.99 Debentures and Bonds - Redeemable - for Financing Real Estate Projects [Refer Note 20.5] 100.00 - Debentures and Bonds - Redeemable - Others 20.00 19.99 Pass Through Certificates and Security Receipts - for Financing Real Estate Projects 13.11 - 2.00 Government Securities - 42.60 74.69 Venture Funds & Other Funds 44.77 86.07 437.06 606.73 542.51 1,081.74 Less : Provision for Diminution in Value of Investments 4.09 0.15 0.14 602.64 542.36 1,081.60

Book Value Market Value ` in Crore ` in Crore

Aggregate of Quoted Investments - - 2013-14 10.00 9.85 2012-13 34.86 36.14

Aggregate of Investments listed but not quoted 110.00 2013-14 52.60 2012-13 84.69

Aggregate of Unquoted Investments (Others) 492.64 2013-14 479.76 2012-13 962.05

602.64 2013-14 542.36 2012-13 1,081.60

244 Held as Current Investments Trade Investments : Face Face Face Value As at Value As at Value As at Number per March 31, 2015 Number per March 31, 2014 Number per March 31, 2013 of Share of Share of Share Shares ` ` in Crore Shares ` ` in Crore Shares ` ` in Crore

Equity Shares - Subsidiary Companies (fully paid) *

Grandeur Properties Pvt. Ltd. 10,000 10 49.80 10,000 10 49.80 - - - Windermere Properties Pvt. Ltd. 10,000 10 56.68 10,000 10 56.68 - - - Winchester Properties Pvt. Ltd. 10,000 10 2.19 10,000 10 2.19 - - - Pentagram Properties Pvt. Ltd. 10,000 10 - 10,000 10 - - - - Haddock Properties Pvt. Ltd. 10,000 10 - 10,000 10 - - - - 108.67 108.67 -

Face Face Face Value Value Value Number per As at Number per As at Number per As at of Debenture/ March 31, 2015 of Debenture/ March 31, 2014 of Debenture/ March 31, 2013 Debentures/ Bond Debentures/ Bond Debentures/ Bond Bonds (`) ` in Crore Bonds (`) ` in Crore Bonds (`) ` in Crore

Debentures - Convertible - Subsidiary Companies - for Financing Real Estate Projects - Redeemable (fully paid)*

6.40% Haddock Properties Pvt Ltd 6,981 1,00,000 56.39 6,981 1,00,000 56.39 - - - 9.00% Pentagram Properties Pvt Ltd 5,532 1,00,000 54.47 5,532 1,00,000 54.47 - - - 6.50% Winchester Properties Pvt Ltd 3,912 1,00,000 39.12 3,912 1,00,000 39.12 - - - 7.70% Windermere Properties Pvt Ltd 11,520 1,00,000 115.20 11,520 1,00,000 115.20 - - - 265.18 265.18 - * received in specie distribution

Non - Trade Investments: Face Face Face Value As at Value As at Value As at Number per March 31, 2015 Number per March 31, 2014 Number per March 31, 2013 of Share of Share of Share Shares ` ` in Crore Shares ` ` in Crore Shares ` ` in Crore Equity Shares - Unlisted Avantha Power & Infrastructure Ltd. 145,35,188 10 45.00 ------

45.00 - -

- Listed Unquoted 11.25% DCB Bank Ltd. (Erstwhile Development Credit Bank Ltd.) 100 10,00,000 10.00 100 10,00,000 10.00 100 10,00,000 10.00 - Listed Quoted 9.00% Coromandel International Ltd. (bonus) ------2,69,330 15 - 12.00% Muthoot Finance Ltd. ------2,50,000 1,000 25.00 12.15% Religare Finvest Ltd. - - - 1,00,000 1,000 10.00 1,00,000 1,000 10.00

10.00 20.00 45.00

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore Certificate of Deposits

State Bank of Bikaner and Jaipur (yield to maturity - 14%) - - 99.58 Corporation Bank (yield to maturity - 14%) - - 248.95 Kotak Mahindra Bank Ltd. (yield to maturity - 14%) - - 174.46 - - 522.99

245 Current portion of Long Term Investments Face Face Face Value Value Value Number per As at Number per As at Number per As at of Debenture/ March 31, 2015 of Debenture/ March 31, 2014 of Debenture/ March 31, 2013 Debentures/ Bond Debentures/ Bond Debentures/ Bond Bonds (`) ` in Crore Bonds (`) ` in Crore Bonds (`) ` in Crore Debentures and Bonds - Redeemable - for financing Real Estate Projects (fully paid) - Zero Coupon Bonds - Listed Unquoted

Trent Ltd. (yield to maturity - 10%) 1,000 10,00,000 100.00 ------

100.00 - - Debentures and Bonds - Redeemable - Others (fully paid) - Unlisted 5.64% Mandava Holdings Private Limited - - - 4 5,00,00,000 19.99 - (yield to maturity - 14.10%) 3.00% Feedback Infra Private Ltd. 2,00,000 1,000 20.00 (yield to maturity -13%) 6.50% Indian Association for Savings and Credit 20,00,000 10 2.00

20.00 19.99 2.00

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013

` in Crore ` in Crore ` in Crore

Pass Through Certificates & Security Receipts - for financing Real Estate Projects Pass Through Certificates 1.59 Security Receipts 11.52 - - 13.11 - -

Government Securities Government of India Loans - 42.60 74.69

Venture Funds and Other Funds India Value Fund 8.99 41.98 11.06 Gaja Capital India Fund 8.40 - 16.72 Tamil Nadu Urban Development Fund - 16.71 - HDFC Property Fund - Scheme HDFC India Real Estate Fund 27.38 27.38 409.28 44.77 86.07 437.06

246 18 TRADE RECEIVABLES As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore

Trade Receivables - Unsecured; Considered Good, less than six months 46.18 84.52 1.32 46.18 84.52 1.32

18.1 Trade Receivables includes amounts due from the related parties ``` 45.14 crore (FY 2013-14 ` 71.60 crore, FY 2012-13 ` 0.01 crore) [Refer Note 35].

19 CASH AND BANK BALANCES As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore (a) Cash and cash equivalents (i) Balances with banks: In Current Accounts 61.50 2,083.40 786.20 In Deposit accounts with original maturity less than 3 months 2,600.00 3,525.00 2,500.00 (ii) Cash on hand 0.31 0.50 0.88 (iii) Cheques on hand 95.12 25.82 36.97 2,756.93 5,634.72 3,324.05 (b) Other Bank balances (i) Earmarked balance with banks - Unclaimed Dividend Account 20.47 14.36 11.61 - Towards Guarantees Issued by Banks 0.13 0.14 0.12 - Other - Against Foreign Currency Loans [Refer Note 4.4] 7.10 6.40 5.41 (ii) Short - term bank deposits 580.02 2,059.90 2,409.95

3,364.65 7,715.52 5,751.14

20 SHORT-TERM LOANS AND ADVANCES As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore Loans: [Refer Note 20.1] Current maturities of long-term loans and advances 23,569.97 18,310.72 16,784.61 Corporate Bodies 2,449.72 2,497.59 1,155.36 26,019.69 20,808.31 17,939.97 Others: Current maturities of Staff Loans - others -Secured; Considered good [Refer Note 20.6] 4.35 3.75 3.54 Corporate Deposits [Refer Notes 20.2, 20.3 & 20.5] 921.34 1,403.01 1,686.72 Instalments due from borrowers - Secured; Considered good 900.88 763.72 706.71 Other Advances - Unsecured; Considered good [Refer Note 20.4] 33.26 24.97 28.53 Prepaid Expenses - Unsecured; Considered good 99.22 96.46 28.27 Security Deposits - Unsecured; Considered good 7.23 11.45 6.12 1,966.28 2,303.36 2,459.89

27,985.97 23,111.67 20,399.86

20.1 Loans granted by the Corporation, aggregating ``` 22,922.81 crore (FY 2013-14 ` 19,343.97 crore, FY 2012-13 ` 16,933.97 crore) are secured and considered good [Refer Note 15.3].

20.2 Out of the Corporate Deposits, amounts aggregating to ``` 253.40 crore (FY 2013-14 ` 601.65 crore, FY 2012-13 ` 1,192.42 crore) are secured and considered good [Refer Note 15.3].

20.3 Corporate Deposits includes amounts due from the related parties ``` 23.58 crore (FY 2013-14 ` 25.00 crore, FY 2012-13 ` 10.00 crore) [Refer Note 35].

20.4 Other Advances includes amounts due from the related parties ``` 9.48 crore (FY 2013-14 ` 9.51 crore, FY 2012-13 ` 10.05 crore) [Refer Note 35].

20.5 Investments in Debentures and Corporate Deposits amounting to ``` 604.77 crore (FY 2013-14 ` 547.93 crore, FY 2012-13 ` 1,017.66 crore) are towards financing Real Estate Projects. The Debentures are reflected in Note 17.

20.6 Current maturities of staff loans includes amounts due from the directors ``` 0.05 crore (FY 2013-14 ` 0.02 crore, FY 2012-13 ` 0.02 crore) [Refer Note 35].

247 21 OTHER CURRENT ASSETS As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore

Receivables on Securitised Loans 53.30 30.11 18.04 Interest accrued but not due on Loans 343.13 206.31 160.45 Interest accrued and due on Loans 0.22 5.65 - Income accrued but not due on Investments 166.81 105.41 73.41 Interest accrued but not due on Corporate Deposits 11.12 38.53 125.93 Interest accrued and due on Corporate Deposits 0.72 10.39 - Application money - Investments - 0.90 1.00

575.30 397.30 378.83

22 CONTINGENT LIABILITIES AND COMMITMENTS:

The Company has certain matters in appellate, judicial and arbitration proceedings (including those described below), arising in the course of conduct of the Company’s businesses and is exposed to other contingencies arising from having issued guarantees and undertakings. Some of these proceedings in respect of matters under litigation are in various stages, and in some other cases, the claims are indeterminate.

22.1 Given below are amounts in respect of claims asserted by revenue authorities and others;

a) Contingent liability in respect of income-tax demands, net of amounts provided for and disputed by the Corporation, amounts to ``` 1,103.51 crore (FY 2013-14 ` 919.19 crore, FY 2012-13 ` 818.73 crore). The said amount has been paid/adjusted and will be received as refund if the matters are decided in favour of the Corporation. b) Contingent liability in respect of disputed dues towards wealth tax, interest on lease tax, and payment towards employers’ contribution to ESIC not provided for by the Corporation amounts to ``` 0.15 crore (FY 2013-14 ` 0.15 crore, FY 2012-13 ` 0.15 crore).

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

22.2 Contingent liability in respect of guarantees and undertakings comprise of the following;

a) Guarantees ``` 361.68 crore (FY 2013-14 ` 435.26 crore, FY 2012-13 ` 203.00 crore). b) Corporate undertakings for securitisation of receivables aggregated to ``` 1,919.65 crore (FY 2013-14 ` 1,943.05 crore, FY 2012-13 ` 1,939.31 crore). The outflows would arise in the event of a shortfall, if any, in the cash flows of the pool of the securitised receivables.

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

22.5 Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is ``` 252.82 crore (FY 2013-14 ` 59.30 crore, FY 2012-13 ` 102.34 crore).

248 2014-15 2013-14 2012-13 23 REVENUE FROM OPERATIONS ``` in Crore ` in Crore ` in Crore

Interest Income : - Interest on Loans 24,713.80 21,870.87 18,989.90 - Other Interest [Refer Note 23.1] 891.79 822.30 827.27 - Net Gain on foreign currency transactions and translation 0.18 1.78 1.18 Income from Leases 10.38 10.92 4.26 Dividends [Refer Note 23.2] 688.28 555.59 480.66 Surplus from deployment in Cash Management Schemes of Mutual Funds [Refer Note 23.3] 364.55 337.38 252.34 Fees and Other Charges [Refer Note 23.4] 290.90 295.19 241.34 26,959.88 23,894.03 20,796.95

23.1 a) Other Interest includes interest on investments amounting to ``` 387.05 crore (FY 2013-14 ` 372.38 crore, FY 2012-13 ` 328.99 crore), including ` 43.03 crore (FY 2013-14 ` 8.18 crore, FY 2012-13 ` 9.79 crore) in respect of investments classified as current investments. b) Other Interest includes interest on income tax refund ``` 44.31 crore (FY 2013-14 ` 33.78 crore, FY 2012-13 ` 5.83 crore) .

23.2 a) Dividend income includes ``` 400.02 crore (FY 2013-14 ` 308.86 crore, FY 2012-13 ` 269.42 crore) received from subsidiary companies [Refer Note 35]. b) Dividend income includes ``` Nil (FY 2013-14 ` Nil, FY 2012-13 ` 0.38 crore) in respect of current investments.

23.3 Surplus from deployment in Cash Management Schemes of Mutual Funds amounting to ``` 364.55 crore (FY 2013-14 `_337.38 crore, FY 2012-13 ` 252.34 crore) is in respect of investments held as current investments.

23.4 Fees and Other Charges is net of the amounts paid to Direct Selling Agents ``` 354.75 crore (FY 2013-14 ` 307.82 crore, FY 2012-13 ` 264.00 crore).

24 Profit on sale of investments includes profit of ``` 260.47 crore (FY 2013-14 ` Nil, FY 2012-13 ` Nil) on account of sale of shares of HDFC Standard Life Insurance Company Ltd. (Subsidiary Company) and is net of loss of ``` Nil (FY 2013-14 ` 0.01 crore, FY 2012-13 ` Nil) on account of sale of IPF Online Ltd. (Associate Company)

25 Other Income includes rent of ``` 12.56 crore (FY 2013-14 ` 9.19 crore, FY 2012-13 ` 10.15 crore), of which ` Nil (FY 2013-14 ` NIl, FY 2012-13 ` 0.10 crore) is in respect of rent for certain assets given on operating lease and also includes sub-lease payments received ` Nil (FY 2013-14 ` Nil, FY 2012-13 ` 0.31 crore) in respect of a property acquired under operating lease as per Note 28.1.

25.1 Earnings in foreign currency : ` in crore Particulars 2014-15 2013-14 2012-13 Interest on Bank Deposits 2.43 2.87 3.59 Consultancy and other fees 5.32 9.71 12.52

25.2 In accordance with the Accounting Standard on ‘Leases’ (AS 19), the following disclosures in respect of Operating Leases are made :

Income from Leases includes ``` 4.01 crore (FY 2013-14 ` 4.71 crore, FY 2012-13 ` 4.14 crore) in respect of properties and certain assets leased out by the Corporation under Operating Leases. Out of the above, in respect of the non-cancellable leases, the future minimum lease payments are as follows: ` in crore Period 2014-15 2013-14 2012-13 Not later than one year 3.37 4.11 2.63 Later than one year but not later than five 2.19 5.02 3.58 yearsLater than five years - - -

249 25.3 Other Income includes brokerage of ``` 0.08 crore (FY 2013-14 ` 0.06 crore, FY 2012-13 ` 0.09 crore) received in respect of insurance/agency business undertaken by the Corporation.

26 FINANCE COST 2014-15 2013-14 2012-13 ``` in Crore ` in Crore ` in Crore Interest - Loans 2,332.01 2,060.83 2,187.03 - Deposits 6,139.40 5,274.26 4,456.86 - Bonds and Debentures 7,646.40 7,567.45 5,916.46 - Commercial Paper 1,746.90 884.84 1,073.64 17,864.71 15,787.38 13,633.99

Net (Gain) / Loss on foreign currency transactions and translation [Refer Note 26.2] (19.77) 137.39 165.78

Other charges [Refer Note 26.1] 130.15 104.60 91.12

17,975.09 16,029.37 13,890.89

26.1 Other Charges is net of exchange loss ``` 0.32 crore (FY 2013-14 includes exchange gain of ` 0.66 crore and FY 2012-13 includes exchange loss of ` 0.10 crore).

26.2 A net gain of ``` 19.95 crore (FY 2013-14 loss of ` 135.61 crore, FY 2012-13 loss of ` 164.60 crore) has been recognised in the Statement of Profit and Loss being net gain on transaction and translation of foreign currency monetary assets and liabilities as shown below: ` in crore Particulars 2014-15 2013-14 2012-13 Exchange (Gain) / Loss on Translation - Foreign Currency Denominated Assets and Foreign Currency Borrowings [Refer Note 3.7] (34.72) (198.80) (131.72) - Cross Currency Interest Rate Swaps [Refer Note 4.7] 107.98 145.77 78.49 Net Exchange (Gain) / Loss on Translation [Refer Note 3.7] 73.26 (53.03) (53.23) Realised (Gain) / Loss (93.03) 190.42 219.01 Net (Gain)/Loss on foreign currency transaction and translation recognised in Finance cost (19.77) 137.39 165.78 Realised (Gain) / Loss recognised in Revenue from operations [Refer Note 23] (0.18) (1.78) (1.18) Net (Gain)/Loss recognised in Statement of Profit and Loss (19.95) 135.61 164.60

26.3 Expenditure in foreign currency : ` in crore Particulars 2014-15 2013-14 2012-13 Interest and Other Charges on Loans 41.01 7.39 27.95 Others 16.17 22.91 23.01

27 STAFF EXPENSES [Refer Notes 27.3] 2014-15 2013-14 2012-13 ``` in Crore ` in Crore ` in Crore

Salaries and Bonus [Refer Notes 27.1 & 27.2] 263.87 225.96 196.84 Contribution to Provident Fund and Other Funds 51.34 40.68 38.02 Staff Training and Welfare Expenses 13.25 12.54 11.33 328.46 279.18 246.19

27.1 Salaries and Bonus include ``` 22.02 crore (FY 2013-14 ` 12.49 crore, FY 2012-13 ` 12.03 crore) towards provision made in respect of accumulated leave salary and leave travel assistance which is in the nature of Long Term Employee Benefits and has been actuarially determined as per the Accounting Standard on Employee Benefits (AS 15).

27.2 Expenditure shown in Note 27 is net of recovery from subsidiary companies in respect of Salaries ``` 3.53 crore (FY 2013-14 ` 2.68 crore, FY 2012- 13 ` 3.00 crore).

250 27.3 Employee Benefits

(a) Defined contribution plans The Company makes Provident Fund and Superannuation Fund contributions to defined contribution retirement benefit plans for eligible employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions as specified under the law are paid to the provident fund set up as a trust by the Company. The Company is liable for annual contributions and any deficiency in interest cost compared to interest computed based on the rate of interest declared by the Central Government under the Employees’ Provident Fund Scheme, 1952 and recognises, if any, as an expense in the year it is determined.

The fair value of the assets of the provident fund and the accumulated members’ corpus is ``` 245.40 crore and ``` 244.59 crore respectively (FY 2013-14 ` 207.38 crore and ` 207.04 crore respectively, FY 2012-13 ` 174.85 crore and ` 174.60 crore respectively). In accordance with an actuarial valuation, there is no deficiency in the interest cost as the present value of the expected future earnings on the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of 8.75% (FY 2013-14 8.75%, FY 2012-13 8.50%). The actuarial assumptions include discount rate of 7.96% (FY 2013-14 9.31%, FY 2012-13 8.25%) and an average expected future period of 21.75 years (FY 2013-14 22 years, FY 2012-13 21.86 years).

The Company recognised ` 12.55 crore (FY 2013-14 ` 11.88 crore, FY 2012-13 ` 9.96 crore) for provident fund contributions and ``` 10.17 crore (FY 2013-14 ` 8.69 crore, FY 2012-13 ` 7.14 crore) for superannuation contributions in the statement of profit and loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

(b) Defined benefit plans The details of the Corporation’s post-retirement benefit plans for its employees including whole-time directors are given below which is as certified by the actuary and relied upon by the auditors: ` in crore Particulars 2014-15 2013-14 2012-13 Change in the Benefit Obligations: Liability at the beginning of the year 146.36 128.13 107.69 Current Service Cost 5.09 4.94 4.21 Interest Cost 13.63 10.53 9.14 Benefits Paid (8.37) (7.74) (6.48) Actuarial loss 23.67 10.50 13.57 Liability at the end of the year * 180.38 146.36 128.13 * The Liability at the end of the year ``` 180.38 crore (FY 2013-14 ` 146.36 crore, FY 2012-13 ` 128.13 crore) includes ``` 44.12 crore (FY 2013-14 ` 37.12 crore, FY 2012-13 ` 34.52 crore) in respect of an un-funded plan.

Fair Value of Plan Assets: Fair Value of Plan Assets at the beginning of the year 108.14 87.51 75.56 Expected Return on Plan Assets 9.41 7.53 7.65 Contributions 13.50 16.11 10.46 Actuarial loss on Plan Assets (0.58) (3.01) (6.16) Fair Value of Plan Assets at the end of the year 130.47 108.14 87.51 Total Actuarial loss to be recognised (24.25) (13.51) (19.73)

Actual Return on Plan Assets: Expected Return on Plan Assets 9.41 7.53 7.65 Actuarial loss on Plan Assets (0.58) (3.01) (6.16) Actual Return on Plan Assets 8.83 4.52 1.49

Reconciliation of the Liability Recognised in the Balance Sheet: Opening Net Liability 38.22 40.62 32.13 Expense recognised 33.56 21.45 25.43 Contribution by the Corporation (13.50) (16.11) (10.46) Benefits paid by the Corporation / Insurance Companies (8.37) (7.74) (6.48) Amount recognised in the Balance Sheet under “Long term Provision for Employee Benefits” ```_49.38 crore (FY 2013-14 ` 37.69 crore, FY 2012-13 ` 40.09 crore) and under “Short term 49.91 38.22 40.62 Provision for Employee Benefits" ```___0.53 crore (FY 2013-14 ` 0.53 crore, FY 2012-13 ` 0.53 crore).

Expense Recognised in the Statement of Profit and Loss : Current Service Cost 5.09 4.94 4.21 Interest Cost 13.63 10.53 9.14 Expected Return on Plan Assets (9.41) (7.53) (7.65) Net Actuarial loss to be recognised 24.25 13.51 19.73 Expense recognised in the Statement of Profit and Loss under “Staff Expenses” 33.56 21.45 25.43

251 ` in crore Particulars 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 Amount Recognised in the Balance Sheet:

Liability at the end of the year 180.38 146.36 128.13 107.69 94.24 81.40 Fair Value of Plan Assets at the end of the 130.47 108.14 87.51 75.56 60.17 53.86 year Amount recognised in the Balance Sheet under “Long term Provision for Employee 49.91 38.22 40.62 32.13 34.07 27.54 Benefits” and “Short term Provision for Employee Benefits”

Experience Adjustment : On Plan Liabilities 23.67 20.44 17.25 10.58 7.13 7.04 On Plan Assets (0.58) (3.01) (6.16) (4.61) (3.36) (2.91) Estimated Contribution for next year 10.49 6.19 8.03 6.79 5.79 4.72

Investment Pattern:

% Invested % Invested March % Invested Particulars March 31, 2015 31, 2014 March 31, 2013 Central Government securities 26.91 17.37 23.13 State Government securities / securities guaranteed by State / Central Government 17.05 12.00 1.00 Public Sector / Financial Institutional Bonds 12.10 23.75 27.56 Private Sector Bonds 19.98 16.90 10.91 Special Deposit Scheme 1.69 2.04 2.52 Certificate of Deposits - 1.31 1.69 Deposits with Banks and Financial Institutions 1.02 3.07 3.47 Equity Shares 17.76 19.37 20.52 Others (including bank balances) 3.49 4.19 9.20 Total 100.00 100.00 100.00

Based on the above allocation and the prevailing yields on these assets, the long term estimate of the expected rate of return on fund assets has been arrived at.

Principal Assumptions:

2014-15 2013-14 2012-13 Particulars % % % Discount Rate 7.96 9.31 8.25 Return on Plan Assets 7.96 8.70 8.60 Salary Escalation 5.00 5.00 5.00

The estimate of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.

28 ESTABLISHMENT EXPENSES 2014-15 2013-14 2012-13 ``` in Crore ` in Crore ` in Crore

Rent [Refer Note 28.1] 59.68 60.54 52.73 Rates and Taxes 2.72 3.54 3.34 Repairs and Maintenance - Buildings 6.26 5.80 5.72 General Office Expenses 2.36 2.58 1.97 Electricity Charges 13.95 13.80 11.30 Insurance Charges 0.79 0.72 0.62 85.76 86.98 75.68

252 28.1 In accordance with the Accounting Standard on ‘Leases’ (AS 19), the following disclosures in respect of Operating Leases are made :

The Corporation has acquired properties under non-cancellable operating leases for periods ranging from 12 months to 60 months. The total minimum lease payments for the current year, in respect thereof, included under Rent, amounts to ``` 23.50 crore (FY 2013-14 ` 32.72 crore, FY 2012-13 ` 26.79 crore). Out of the above, the Corporation has sub-leased a property, the total sub-lease payments received in respect thereof amounting to ``` 14.09 crore (FY 2013-14 ` 18.79 crore, FY 2012-13 ` 14.09 crore) have been netted off from rent expenses and an amount of ` Nil (FY 2013-14 ` Nil, FY 2012-13 ` 0.31 crore) has been included under Other Income. The future minimum lease payments in respect of the properties acquired under non-cancellable operating leases are as follows: ` in crore Period 2014-15 2013-14 2012-13 Not later than one year 0.17 31.39 32.50 Later than one year but not later than five years - 75.26 106.54 Later than five years - - -

29 OTHER EXPENSES 2014-15 2013-14 2012-13 ``` in Crore ` in Crore ` in Crore

Travelling and Conveyance 16.73 17.03 16.63 Printing and Stationery 8.89 8.06 7.00 Postage, Telephone and Fax 23.67 21.28 19.92 Advertising 27.42 35.07 24.06 Repairs and Maintenance - Other than Buildings 7.89 7.07 6.75 Office Maintenance 22.16 19.56 16.97 Legal Expenses 12.49 9.63 14.45 Computer Expenses 14.91 12.60 10.17 Directors' Fees and Commission 3.90 3.34 3.13 Miscellaneous Expenses [Refer Note 29.1, 29.2 & 29.3 ] 120.61 93.08 71.27 Auditors' Remuneration [Refer Note 29.4] 3.96 3.31 3.08 262.63 230.03 193.43

29.1 Miscellaneous Expenses exclude ``` 10.83 crore (FY 2013-14 ` 13.02 crore, FY 2012-13 ` 9.13 crore) in respect of amounts utilised out of Shelter Assistance Reserve during the year.

29.2 Miscellaneous Expenses include Provision for Wealth Tax amounting to ``` 2.51 crore (FY 2013-14 ` 0.60 crore, FY 2012-13 ` 0.60 crore) and Securities Transaction Tax amounting to ``` 0.29 crore (FY 2013-14 ` 0.26 crore, FY 2012-13 ` 0.45 crore).

29.3 Miscellaneous Expenses includes ``` 18.07 crore (FY 2013-14 ` Nil, FY 2012-13 ` Nil) towards Corporate Social Responsibility (CSR) under Section 135 of the Companies Act, 2013.

29.4 Auditors’ Remuneration: 2014-15 2013-14 2012-13 ``` in Crore ` in Crore ` in Crore

Audit Fees 1.23 1.05 1.05 Tax Matters 0.96 0.79 0.84 Other Matters 1.76 1.43 1.00 Reimbursement of Expenses 0.01 0.04 0.01 Service Tax 0.48 0.42 0.36 Less: Service tax input credit availed / to be availed (0.24) (0.21) (0.18) Less: Service tax input credit expensed (0.24) (0.21) 3.96 3.31 3.08 Audit Fees include ``` 0.04 crore (FY 2013-14 ` 0.03 crore, FY 2012-13 ` 0.03 crore) paid to Branch Auditors.

253 30 PROVISION FOR NON PERFORMING LOANS

30.1 As per the Housing Finance Companies (NHB) Directions, 2010, non-performing assets are recognised on the basis of ninety days overdue. The total provision carried by the Corporation in terms of paragraph 29 (2) of the Housing Finance Companies (NHB) Directions, 2010, and subsequent NHB Circulars - NHB.HFC.DIR.3/CMD/2011 dated August 5, 2011, NHB.HFC.DIR.4/CMD/2012 dated January 19, 2012 and NHB.HFC.DIR.9/CMD/2013 dated September 6, 2013 in respect of Housing and Non-Housing Loans is as follows [Refer Note 6.1 & 15]: ` in crore Housing Non-Housing Particulars 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 Standard Assets - Principal Outstanding 1,64,249.91 1,44,698.29 1,22,097.12 65,728.85 53,232.96 48,978.02 - Provisions 756.66 670.84 876.44 414.26 341.19 243.04 Sub-Standard Assets - Principal Outstanding 411.83 410.56 350.66 335.54 603.01 530.18 - Provisions 64.50 61.58 52.60 50.33 90.45 121.78 Doubtful Assets - Principal Outstanding 406.71 319.25 306.98 439.99 132.01 62.75 - Provisions 229.27 195.95 179.31 188.35 100.24 32.48 Total - Principal Outstanding 1,65,068.45 1,45,428.10 1,22,754.77 66,504.38 53,967.98 49,570.95 - Provisions 1,050.43 928.37 1,108.35 652.94 531.88 397.30

30.2 Provision for Contingencies debited to the Statement of Profit and Loss includes Provision for Diminution in the Value of Investments amounting to ``` 10.04 crore (FY 2013-14 ` 14.40 crore, FY 2012-13 ` 7.09 crore). The balance of the Provision represents provision made against non- performing assets and other contingencies [Refer Note 6.2].

31 In accordance with the Accounting Standard on ‘Earnings Per Share’ (AS 20):

(i) In calculating the Basic Earnings Per Share, the Profit After Tax of ``` 5,990.14 crore (FY 2013-14 ` 5,440.24 crore, FY 2012-13 ` 4,848.34 crore) has been adjusted for amounts utilised out of Shelter Assistance Reserve of ` 10.83 crore (FY 2013-14 ` 13.02 crore, FY 2012-13 ` 9.13 crore).

Accordingly the Basic Earnings Per Share has been calculated based on the adjusted Profit After Tax of ``` 5,979.31 crore (FY 2013-14 ` 5,427.22 crore, FY 2012-13 ` 4,839.21 crore) and the weighted average number of shares during the year of 156.82 crore (FY 2013-14 155.54 crore, FY 2012-13 151.97 crore).

(ii) The reconciliation between the Basic and the Diluted Earnings Per Share is as follows : Amount in ` Particulars 2014-15 2013-14 2012-13 Basic Earnings Per Share 38.13 34.89 31.84 Effect of outstanding Stock Options (0.35) (0.27) (0.39) Diluted Earnings Per Share 37.78 34.62 31.45

(iii) The Basic Earnings Per Share has been computed by dividing the adjusted Profit After Tax by the weighted average number of equity shares for the respective periods; whereas the Diluted Earnings Per Share has been computed by dividing the adjusted Profit After Tax by the weighted average number of equity shares, after giving dilutive effect of the outstanding Stock Options for the respective periods. The relevant details as described above are as follows : Number in Crore Particulars 2014-15 2013-14 2012-13 Weighted average number of shares for computation of Basic Earnings Per Share 156.82 155.54 151.97 Diluted effect of outstanding Stock Options 1.45 1.23 1.90 Weighted average number of shares for computation of Diluted Earnings Per Share 158.27 156.77 153.87

254 32 Summary of total Borrowings, Loans and Investments

Borrowings ` in crore Term-wise Break-up 2014-15 2013-14 2012-13 Long-term borrowings 97,602.34 86,881.04 90 ,005.01 Short -term borrowings 33,257.71 25,317.85 18 ,544.56 Current maturities of long-term borrowings 77,738.98 71,774.30 50 ,036.41 Unclaimed matured deposits 617.92 442.56 310.11 Total Borrowings 2,09,216.95 1,84,415.75 1,58,896.09 Category-wise Break-up Bonds and Debentures 90,657.55 85,193.10 79 ,521.40 Term Loans : - Banks 22,575.87 29,104.76 1 5,984.62 - External Commercial Borrowing 1,884.00 1,805.10 - - Others 1,734.37 2,041.90 1 ,839.27 Commercial Papers 25,659.20 9,250.10 9 ,307.87 Deposits 66,705.96 57,020.79 52 ,242.93 Total Borrowings 2,09,216.95 1,84,415.75 1,58,896.09

Loans ` in crore Term-wise Break-up 2014-15 2013-14 2012-13 Long-term loans 2,02,161.17 1,76,292.04 1,52,106.20 Current maturities of long-term loans 23,569.97 18,310.72 16 ,784.61 Short term loans 2,449.72 2,497.59 1 ,155.36 2,28,180.86 1,97,100.35 1,70,046.17 Less: Provision for Sub-Standard and Doubtful loans (480.74) (545.96) (475.33) Net Loan Book 2,27,700.12 1,96,554.39 1,69,570.84 Category-wise Break-up Individual 1,55,689.71 1,33,281.08 1,11,320.65 Corporate Bodies 69,144.76 61,624.77 56 ,956.65 Others 3,346.39 2,194.50 1 ,768.87 2,28,180.86 1,97,100.35 1,70,046.17 Less: Provision for Sub-Standard and Doubtful loans (480.74) (545.96) (475.33) Net Loan Book 2,27,700.12 1,96,554.39 1,69,570.84

Investments ` in crore Particulars 2014-15 2013-14 2012-13 Non-Current Investments 13,691.70 13,370.29 12 ,531.86 Current Investments 602.64 542.36 1,081.60 Total Investments 14,294.34 13,912.65 13 ,613.46

32.1 Summary of total Provision for Contingencies: ` in crore Particulars 2014-15 2013-14 2012-13 Provision for Contingencies Account [Refer Note 6.2] 1,501.44 1,309.04 1,265.24 Provision for Sub-Standard and Doubtful Loans [Refer Note 15.6] 480.74 545.96 475.33 Provision for Doubtful Corporate Deposit and Other Receivables [Refer Note 15] 51.71 51.71 51.71 2,033.89 1,906.71 1,792.28

255 33 Disclosures Required by the National Housing Bank

The following additional disclosures have been given in terms of the circular no. NHB/ND/DRS/Pol-No.35/2010-11 dated October 11, 2010 issued by the National Housing Bank.

(a) Capital to Risk Assets Ratio (CRAR) Particulars 2014-15 2013-14 2012-13 1) CRAR (%) 16.11 14.55 16.35 2) CRAR – Tier I Capital (%) 12.47 12.10 13.85 3) CRAR – Tier II Capital (%) 3.64 2.45 2.50

(b) Exposure to Real Estate Sector ` in crore Particulars 2014-15 2013-14 2012-13 1. Direct Exposure A Residential Mortgages : Lending fully secured by mortgages on residential property that is or will be occupied by the borrower or that is rented. Individual Housing Loans upto ` 15 Lacs: ``` 23,132.28 crore (FY 2013- 1,50,587.27 1,29,128.39 1,08,054.76 14 ` 22,557.61 crore, FY 2012-13 ` 22,582.15 crore) B Commercial Real Estate : Lending secured by mortgages on commercial real estates (office buildings, retail space, multipurpose commercial premises, multi-family residential buildings, 52,038.26 44,785.78 27,828.64 multi-tenanted commercial premises, industrial or warehouse space, hotels, land acquisition, development and construction, etc.). Exposure would also include non-fund based (NFB) limits;

C Investments in Mortgage Backed Securities (MBS) and other securitised exposures – (i) Residential 18.73 21.94 28.80 (ii) Commercial Real Estate - - - 2. Indirect Exposure Fund based and non-fund based exposures on National Housing Bank (NHB) and Housing Finance Companies (HFCs) 165.88 151.50 150.18

In computing the above information, certain estimates, assumptions and adjustments have been made by the Management which have been relied upon by the auditors.

Assets and Liabilities are classified in the maturity buckets as per the guidelines issued by the National Housing Bank

Maturity pattern of certain items of assets and liabilities as on March 31, 2015, March 31, 2014 and March 31, 2013

March 31, 2015 ` in crore Liabilities Assets Borrowings Market Maturity Buckets Advances Investments from Banks Borrowings 1 day to 30-31 days (one month) 1,466.46 1,545.98 3,517.52 137.38 Over one month to 2 months 241.56 1,910.99 3,651.55 200.00 Over 2 to 3 months 942.93 3,635.48 5,271.02 1,196.43 Over 3 to 6 months 956.52 8,105.56 13,746.75 2,297.74 Over 6 months to 1 year 3,745.62 8,900.30 24,593.70 899.90 Over 1 to 3 years 8,870.14 34,029.98 71,215.10 256.21 Over 3 to 5 years 5,891.61 27,788.63 47,830.53 810.60 Over 5 to 7 years 2,345.03 21,895.63 22,699.28 8,444.94 Over 7 to 10 years - 7,504.20 21,735.59 - Over 10 years - 1,000.00 13,439.08 51.14 Total 24,459.87 1,16,316.75 2,27,700.12 14,294.34

256 March 31, 2014 ` in crore Liabilities Assets Borrowings Market Maturity Buckets Advances Investments from Banks Borrowings 1 day to 30-31 days (one month) 906.12 2,443.75 3,143.97 - Over one month to 2 months 1,353.74 4,155.00 3,450.90 - Over 2 to 3 months 1,361.51 2,715.00 3,259.93 1,883.84 Over 3 to 6 months 5,091.75 3,866.25 11,439.89 2,009.85 Over 6 months to 1 year 1,865.05 10,999.00 21,914.74 341.06 Over 1 to 3 years 10,287.45 32,048.23 62,540.57 619.63 Over 3 to 5 years 7,177.30 22,799.23 40,335.23 612.75 Over 5 to 7 years 1,866.94 9,734.24 22,266.28 8,423.72 Over 7 to 10 years 1,000.00 5,007.40 17,517.15 21.80 Over 10 years - 1,000.00 10,685.73 - Total 30,909.86 94,768.10 1,96,554.39 13,912.65

March 31, 2013 ` in crore Liabilities Assets Borrowings Market Maturity Buckets Advances Investments from Banks Borrowings 1 day to 30-31 days (one month) 709.27 2,223.75 2,594.45 524.99 Over one month to 2 months 353.25 355.00 2,629.28 - Over 2 to 3 months 476.51 1,347.50 2,843.57 1,009.28 Over 3 to 6 months 867.24 3,326.25 8,929.89 403.90 Over 6 months to 1 year 2,474.98 8,468.30 15,865.27 2,285.04 Over 1 to 3 years 4,557.90 25,631.17 52,850.07 267.89 Over 3 to 5 years 3,611.72 26,594.18 36,811.29 229.09 Over 5 to 7 years 1,933.75 11,210.15 22,156.78 8,393.94 Over 7 to 10 years 1,000.00 8,915.10 14,903.68 - Over 10 years - 1,000.00 9,986.56 499.33 Total 15,984.62 89,071.40 1,69,570.84 13,613.46

In computing the above information, certain estimates, assumptions and adjustments have been made by the Management which have been relied upon by the auditors.

34 DIVIDEND PAYABLE TO NON-RESIDENT SHAREHOLDERS

The Corporation has not remitted any amount in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders. The particulars of dividends payable to non-resident shareholders (including Foreign Institutional Investors) are as under:

March 31, 2015 March 31, 2014 March 31, 2013 Particulars Interim Annual Annual Annual Year to which the dividend relates 2014-15 2013-14 2012-13 2011-12 Number of non-resident shareholders 5,110 4,495 4,442 4,750 Number of shares held by them of Face Value of ` 2 each 126,10,53,766 122,23,33,357 115,22,95,895 105,85,88,251 Gross amount of dividend (in `) 252,21,07,532 1711,26,66,998 1440,36,99,371 1164,44,70,761

257 35 RELATED PARTY TRANSACTIONS

As per the Accounting Standard on 'Related Party Disclosures' (AS 18), the related parties of the Corporation are as follows:

A) Subsidiary Companies HDFC Developers Ltd. HDFC Asset Management Company Ltd. HDFC Holdings Ltd. HDFC Realty Ltd. HDFC Trustee Company Ltd. HDFC ERGO General Insurance Company Ltd. HDFC Standard Life Insurance Company Ltd. HDFC Sales Pvt. Ltd HDFC Venture Capital Ltd. HDFC Property Ventures Ltd. HDFC Ventures Trustee Company Ltd. Credila Financial Services Pvt. Ltd GRUH Finance Ltd. Griha Pte. Ltd. (Subsidiary of HDFC Investments Ltd.) Griha Investments (Subsidiary of HDFC Holdings Ltd.) HDFC Pension Management Company Ltd HDFC Education and Development Services Pvt. Ltd. (subsidiary of HDFC Standard Life Insurance Company Ltd.) H. T. Parekh Foundation (Up to 30th March 2015) Grandeur Properties Pvt. Ltd. Windermere Properties Pvt. Ltd. Pentagram Properties Pvt. Ltd. Winchester Properties Pvt. Ltd. Haddock Properties Pvt. Ltd. HDFC Investments Ltd.

B) Associate Companies C) Entities over which control is exercised HDFC Bank Ltd. HDFC Investment Trust (HIT) India Value Fund Advisors Pvt. Ltd HDFC Investment Trust - II (HIT- II) (with effect from 24th June, 2014) RuralShores Business Services Pvt. Ltd. HDFC Property Fund - Scheme - HDFC IT Corridor Fund (Up to 28th March, 2014) IPF Online Ltd (Up to 12th November, 2013)

D) Key Management Personnel E) Relatives of Key Management Personnel Mr. Keki M. Mistry (Where there are transactions) Ms. Renu Sud Karnad Ms Arnaaz K. Mistry Mr Rishi R. Sud Mr. V. Srinivasa Rangan Mr Ashok Sud Ms Riti Karnad Mr Ketan Karnad Ms Swarn Sud Ms Abinaya S. Rangan Ms S. Anuradha

The nature and volume of transactions of the Corporation during the year, with the above related parties were as follows: ` in Crore

Entities over which control is Relatives of Key Subsidiary Companies Associates Key Management Personnel Particulars exercised Management Personnel

2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 Dividend Income - HDFC Asset management Co. Ltd. 98.13 75.48 66.43 ------HDFC Bank Ltd. - - - 269.35 216.27 169.08 ------HDFC Holdings Ltd. 1.62 9.00 50.85 ------HDFC Standard Life Insurance Co. Ltd. 101.06 72.19 ------HDFC Investments Ltd. 94.68 89.35 120.02 ------Others 104.53 62.84 32.12 0.16 0.27 0.30 0.05 0.05 0.05 ------Interest Income - - Credila Financial Services Pvt. Ltd. 9.92 10.92 1.51 ------Windermere Properties Pvt Ltd 10.98 0.10 ------HDFC Bank Ltd. - - - 7.51 8.83 9.76 ------Pentagram Properties Pvt Ltd 5.54 0.12 ------HDFC Property Fund - Scheme - HDFC IT Corridor Fund ------76.26 94.67 ------Others 14.42 2.48 4.04 - 0.08 0.12 5.46 - 5.43 - - - 0.03 0.03 0.03 Consultancy & Other Fees Income - HDFC Asset management Co. Ltd. 42.36 59.01 14.38 ------Others 0.26 2.17 0.22 ------Rent Income - HDFC Asset management Co. Ltd. 10.03 11.17 9.87 ------HDFC ERGO General Insurance Co. Ltd. 6.49 6.49 4.96 ------Others 4.78 4.00 2.92 2.01 1.74 1.71 ------0.01 0.01 Support Cost Recovered - HDFC Asset management Co. Ltd. 1.86 1.45 0.48 ------HDFC Sales Pvt. Ltd. 2.04 1.37 1.41 ------HDFC ERGO General Insurance Co. Ltd. 1.19 0.81 0.14 ------HDFC Education and Development Services Pvt. Ltd. 0.35 0.32 0.53 ------HDFC Realty Ltd. 0.84 0.80 0.79 ------Others 0.78 0.45 0.35 0.37 0.25 0.32 ------Other Income - HDFC Bank Ltd. - - - 116.77 80.46 44.64 ------Others 3.65 1.20 0.26 ------Interest Expense - HDFC ERGO General Insurance Co. Ltd. 12.39 10.58 7.99 ------HDFC Standard Life Insurance Co. Ltd. 54.28 44.02 37.59 ------Others 1.76 2.18 7.50 2.45 4.57 3.71 - - - 0.48 0.53 0.47 - 0.02 0.05 Bank & Other Charges - HDFC Bank Ltd. - - - 0.53 0.68 1.49 ------Remuneration - Mr. Keki M. Mistry ------8.12 7.78 6.67 - - - - Ms. Renu S. Karnad ------7.39 7.16 6.20 - - - - Mr. V. S. Rangan ------4.85 4.54 3.85 - - - Donations - H. T. Parekh Foundation 13.87 ------Other Expenses - HDFC Sales Pvt. Ltd. 165.89 150.80 133.61 ------HDFC Bank Ltd. - - - 143.52 130.07 138.16 ------Others 9.23 8.71 7.07 0.10 0.15 0.13 ------0.09 0.09 0.09 Investments made - HIT- II - - - - - 51.14 ------Windermere Properties Pvt Ltd - 171.88 ------Haddock Properties Pvt Ltd - 56.39 ------Pentagram Properties Pvt Ltd - 54.47 ------Credila Financial Services Pvt. Ltd 5.00 51.00 50.00 ------Grandeur Properties Pvt. Ltd. - 49.80 ------H. T. Parekh Foundation - 10.01 ------HDFC ERGO General Insurance Co. Ltd. 47.01 0.66 22.56 ------Others 8.00 46.32 4.00 - - - 4.00 20.57 ------Investments sold / redeemed - HIT ------14.45 ------HDFC Property Fund - Scheme - HDFC IT Corridor Fund ------423.85 41.13 ------Others - - - - 6.31 0.30 ------

258 ` in Crore

Entities over which control is Relatives of Key Subsidiary Companies Associates Key Management Personnel Particulars exercised Management Personnel

2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 Investments - HDFC Bank Ltd. - - - 5,549.74 5,549.74 5,549.74 ------HDFC Standard Life Insurance Co. Ltd. 1,508.77 1,545.64 1,545.64 ------Others 1,708.97 1,658.98 1,228.48 2.53 2.53 8.84 223.49 182.80 586.08 ------Loans given - HDFC Property Ventures Pvt. Ltd. 113.00 ------HDFC Sales Pvt. Ltd. 16.85 ------Pentagram Properties Pvt Ltd 3.85 1.00 ------Grandeur Properties Pvt. Ltd. 1.19 8.00 ------Winchester Properties Pvt. Ltd 2.73 3.54 ------Haddock Properties Pvt Ltd 3.46 1.86 ------Credila Financial Services Pvt. Ltd - 392.00 ------GRUH Finance Ltd. - - 14.00 ------Others 4.00 1.00 ------0.13 Loans repaid - GRUH Finance Ltd. 1.02 0.95 0.73 ------Credila Financial Services Pvt. Ltd - 392.00 ------Others - 1.00 ------0.02 0.02 0.02 0.01 0.01 0.01 Loans sold - HDFC Bank Ltd. - - - 8,249.21 5,556.07 5,125.00 ------Loans - HDFC Property Ventures Pvt. Ltd. 113.00 ------HDFC Sales Pvt. Ltd. 16.85 ------GRUH Finance Ltd. 11.31 12.32 13.27 ------Grandeur Properties Pvt. Ltd. 9.19 8.00 ------Winchester Properties Pvt Ltd 6.27 3.54 ------Haddock Properties Pvt Ltd 5.32 1.86 ------Pentagram Properties Pvt Ltd 4.85 1.00 ------Others 4.00 ------0.13 0.15 0.17 0.30 0.31 0.32 Bank Deposits placed - HDFC Bank Ltd. - - - 1,070.00 3,234.92 1,550.01 ------Bank Deposits repaid / matured - HDFC Bank Ltd. - - - 2,559.90 1,734.90 1,252.99 ------Bank balance and Deposits - HDFC Bank Ltd. - - - 975.25 4,610.46 821.68 ------Corporate Deposits placed - Credila Financial Services Pvt. Ltd - - 23.00 ------Grandeur Properties Pvt. Ltd. - 95.00 ------HDFC Venture Capital Ltd. 22.58 20.50 ------Others 2.00 9.50 - - - 3.00 ------Corporate Deposits repaid / matured - Credila Financial Services Pvt. Ltd - - 26.00 ------Grandeur Properties Pvt. Ltd. - 95.00 ------HDFC Sales Pvt. Ltd. - 12.00 19.10 ------HDFC Venture Capital Ltd. 20.50 ------Others 5.50 - - - 3.00 ------Corporate Deposits - HDFC Venture Capital Ltd 22.58 20.50 ------HDFC Sales Pvt. Ltd. - - 7.00 ------RuralShores Business Services Pvt. Ltd. - - - - - 3.00 ------Others 1.00 4.50 ------Trade Receivable - HDFC Asset management Co. Ltd. 39.53 57.12 ------HDFC Bank Ltd. - - - 5.07 13.11 ------HDFC Standard Life Insurance Co. Ltd. 0.01 0.01 0.01 ------Others 0.53 1.36 ------Other Advances / Receivables - HDFC ERGO General Insurance Co. Ltd. 1.56 1.58 1.44 ------HDFC Standard Life Insurance Co. Ltd. 7.60 7.60 7.60 ------HDFC Bank Ltd. - - - 4.26 3.28 2.19 ------Others 0.87 0.37 0.96 ------0.06 0.06 - Deposits placed - HDFC Holdings Ltd. 16.84 23.22 90.07 ------HDFC Developers Ltd - 5.40 ------HDFC Education and Development Services Pvt. Ltd. 2.51 2.82 1.72 ------RuralShores Business Services Pvt. Ltd. - - - 1.05 16.10 ------Ms. Renu S. Karnad ------2.38 0.02 2.03 - - - - Others 0.20 2.20 ------1.75 2.00 0.01 - 0.27 Deposits repaid / matured - HDFC Holdings Ltd. 19.22 25.03 188.48 ------HDFC Investments Ltd. - - 107.15 ------RuralShores Business Services Pvt. Ltd. - - - 4.13 13.02 ------Others 5.21 8.42 2.76 ------3.75 2.42 2.60 0.03 0.29 0.45 Deposits - HDFC Holdings Ltd. 16.84 19.22 21.03 ------RuralShores Business Services Pvt. Ltd - - - - 3.08 ------Ms. Renu S. Karnad ------2.40 2.02 2.02 - - - - Mr. Keki M. Mistry ------0.87 2.61 3.28 - - - - Others - 2.50 0.50 ------0.09 0.12 0.40 Non-Convertible Debentures - HDFC ERGO General Insurance Co. Ltd. 125.00 110.00 105.00 ------HDFC Standard Life Insurance Co. Ltd. 776.00 665.00 615.00 ------Other Liabilities / Payables - HDFC Bank Ltd. - - - 15.73 14.44 1.21 ------HDFC Sales Pvt. Ltd. 7.49 6.57 0.01 ------HDFC ERGO General Insurance Co. Ltd. 6.02 5.87 4.72 ------HDFC Standard Life Insurance Co. Ltd. 30.51 27.03 22.52 ------Others 1.36 1.50 0.02 - 0.04 - - - - 0.33 0.48 0.21 - 0.01 0.03

259 36 SEGMENT REPORTING

The Corporation’s main business is financing by way of loans for the purchase or construction of residential houses, commercial real estate and certain other purposes, in India. All other activities of the Corporation revolve around the main business. As such, there are no separate reportable segments, as per the Accounting Standard on ‘Segment Reporting’ (AS 17).

37 INTEREST IN JOINT VENTURES

In compliance with the Accounting Standard relating to ‘Financial Reporting of Interests in Joint Ventures’ (AS 27), the Corporation has interests in the following jointly controlled entities, which are incorporated in India.

Names of Companies HDFC Standard Life Insurance Co. Ltd. HDFC ERGO General Insurance Co. Ltd.

2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 Percentage of Shareholding 70.65 72.37 72.37 73.63 73.82 73.91

Amount of Interest based on the last Audited Accounts ``` in crore Assets 49,017.54 37,903.85 30,390.96 3,335.42 2,940.07 2 ,412.81 Liabilities 47,186.48 36,471.84 29,405.80 2,581.67 2,276.35 1 ,883.28 Income 19,280.48 12,593.20 10,059.54 1,465.80 1,366.35 1 ,075.73 Expenditure 18,712.08 12,128.20 9,729.73 1,362.10 1,200.76 941.28 Capital Commitment 411.97 365.94 274.66 6.59 9.59 5.10 Contingent Liability 124.37 105.36 245.45 0.01 - -

38 Other Notes

(i) As the figures disclosed in the Financial Statements are extracted from the audited accounts for the years ended March 31, 2015, 2014 and 2013, approved by the Board of Directors on April 29, 2015, May 06, 2014 and May 08, 2013 respectively, and on which auditors have based their opinions dated April 29, 2015, May 06, 2014 and May 08, 2013 respectively, any events subsequent to the said dates has not been considered / adjusted.

(ii) These financial statements have been prepared on the basis of the format of the financial statements for 2015. The financial statements for 2014 and 2013 have been reformatted to conform to 2015 presentations.

260

RE: SVP / 8946

REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS

To the Board of Directors of Housing Development Finance Corporation Limited

Report on the Summary Consolidated Financial Statements

1. The accompanying Summary Consolidated Financial Statements of HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (the “Corporation”), its subsidiaries (the Corporation and its subsidiaries constitute “the Group”), which comprise the Summary Consolidated Balance Sheets as at March 31, 2015, March 31, 2014 and March 31, 2013, and also the Summary Consolidated Statements of Profit and Loss and the Summary Consolidated Cash Flow Statements for the years then ended on these dates, and a summary of the significant accounting policies and other explanatory information (together comprising the “Summary Consolidated Financial Statements”) are derived from the audited Consolidated Financial Statements (the “Audited Consolidated Financial Statements”) of the Corporation for the respective years audited by us as detailed in paragraph 2(a) to 2(c) below.

2. (a) We expressed our opinions on the Consolidated Financial Statements of the Corporation for the years ended March 31, 2015, March 31, 2014 and March 31, 2013 vide our reports dated April 29, 2015, May 6, 2014 and May 8, 2013 respectively.

(b) Our report on the Consolidated Financial Statements of the Corporation for the year ended March 31, 2015 included an emphasis of matter paragraph which describes the accounting treatment used by the Corporation and one of its Subsidiary Company in creating the Deferred Tax Liability on Special Reserve under section 36(1)(viii) of the Income Tax Act, 1961 as at April 1, 2014, which is in accordance with the National Housing Bank’s Circular No. NHB (ND)/DRS/Pol. Circular No. 65/2014 dated August 22, 2014 as described in Note 5.2 to the Consolidated Financial Statements. Our opinion is not modified in respect of this matter.

(c) Our reports on the Consolidated Financial Statements of the Corporation for the years ended March 31, 2015, March 31, 2014 and March 31, 2013 states that we did not audit the financial statements of a branch, certain subsidiaries and associates of the Corporation, whose financial statements reflect the financial information as considered in the Consolidated Financial Statements for the respective years then ended to the extent set out in Annexure 1. These financial statements and other financial information were audited by other auditors whose reports were furnished to us, and our audit opinions on the Consolidated Financial Statements of the Corporation for the years ended March 31, 2015, March 31, 2014 and March 31, 2013 to the extent they relate to the figures for the respective years included in Annexure 1, is solely based on the reports of the other auditors. Our opinion is not modified in respect of this matter.

261

3. The Summary Consolidated Financial Statements as at and for the years ended March 31, 2014 and March 31, 2013 have been regrouped/ reclassified wherever necessary to correspond with the presentation/disclosure requirements of the financial year ended March 31, 2015. The figures included in the Summary Consolidated Financial Statements, do not reflect the effect of events that occurred subsequent to the date of our reports on the respective periods referred to in paragraph 2(a) above.

4. Management’s Responsibility for the Summary Consolidated Financial Statements Management is responsible for the preparation of the Summary Consolidated Financial Statements from the Audited Consolidated Financial Statements of the respective years ended March 31, 2015, March 31, 2014 and March 31, 2013 on the basis described in Note 38 to the Summary Consolidated Financial Statements.

5. Auditor’s Responsibility Our responsibility is to express an opinion on the Summary Consolidated Financial Statements based on our procedures, which were conducted in accordance with Standard on Auditing (SA) 810, “Engagements to Report on Summary Financial Statements” issued by the Institute of Chartered Accountants of India.

6. Opinion In our opinion, the Summary Consolidated Financial Statements derived from the Audited Consolidated Financial Statements of the Corporation for the respective years are a compilation of those Audited Consolidated Financial Statements on the basis described in Note 38 to the Summary Consolidated Financial Statements.

For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm’s Registration No.117366W/ W-100018)

Sanjiv V. Pilgaonkar Partner Membership No.39826

Mumbai: August , 2015 SVP/GKS/JP 2015

262

Annexure 1 to the report on the Summary Consolidated Financial Statements (referred to in paragraph 2 (c) of the report)

Financial information of a branch, certain subsidiaries and associates audited by other auditors, as considered in the Summary Consolidated Financial Statements of the Corporation:

Particulars As at and for the year ended

March 31, 2015 March 31, 2014 March 31, 2013 (Rs. in crore) (Rs. in crore) (Rs. in crore) Relating to certain subsidiaries / Branch Assets 80,204.30 9,169.88 1,280.91 Revenue 19,181.02 1,814.09 1,476.00 Cash flows – (outflows) / inflows 125.03 88.57 161.63

Relating to Associates Share of profits 0.34 1,914.91 1,515.55

263

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

Consolidated Balance Sheet as at

Notes March 31, 2015 March 31, 2014 March 31, 2013 EQUITY AND LIABILITIES ``` in Crore ` in Crore ` in Crore SHAREHOLDERS' FUNDS Share Capital 4 314.94 312.10 309.27 Reserves and Surplus 5 44,756.69 37,262.51 31,581.29 45,071.63 37,574.61 31,890.56 MINORITY INTEREST 1,820.08 1,423.88 1,071.47 NON-CURRENT LIABILITIES Policy Liabilities (Policyholder's Fund) 54,924.28 45,003.25 35,086.09 Long-term borrowings 7 104,545.72 91,757.78 93,618.53 Deferred tax liabilities (net) 17 231.32 15.82 - Other Long-term liabilities 8 2,546.12 2,288.20 2,021.30 Long-term provisions 9 1,998.04 1,682.20 1,557.14 164,245.48 140,747.25 132,283.06 CURRENT LIABILITIES Short-term borrowings 10 34,420.05 26,012.51 18,683.78 Trade Payables 11 2,984.85 2,371.99 1,780.70 Other current liabilities 12 - Policy Liabilities (Policyholder's Fund) 10,531.68 4,300.42 4,238.40 - Borrowings 78,390.95 72,831.68 51,114.90 - Others 7,864.17 7,559.93 6,856.91

Short-term provisions 13 4,196.29 4,082.38 3,613.18 138,387.99 117,158.91 86,287.87 349,525.18 296,904.65 251,532.96

ASSETS NON-CURRENT ASSETS: Fixed assets (i) Tangible assets 14 1,203.17 746.16 611.11 (ii) Intangible assets 15 79.25 70.49 54.39 (iii) Capital work in Progress 5.60 21.01 32.43 (iv) Intangible assets under Development 3.38 0.03 0.03 GOODWILL ON CONSOLIDATION 187.81 185.59 185.08 Non-current investments 16 86,887.59 65,377.26 53,616.24 Deferred tax asset (net) 17 18.55 663.34 659.60 Long-term loans and advances 18 - Loans 211,531.09 183,423.95 157,407.24 - Others 3,150.97 3,084.79 2,188.37 Other non-current assets 19 2,799.52 930.61 831.07 305,866.93 254,503.23 215,585.56 CURRENT ASSETS: Current investments 20 6,894.83 7,536.95 5,876.18 Trade receivables 21 457.79 376.79 216.02 Cash and bank balances 22 4,261.92 8,588.11 7,071.67 Short-term loans and advances 23 - Loans 26,674.83 21,324.43 18,418.46 - Others 3,679.28 3,259.49 3,333.97 Other current assets 24 1,689.60 1,315.65 1,031.10 43,658.25 42,401.42 35,947.40 349,525.18 296,904.65 251,532.96 See accompanying notes forming part of the financial statements

264

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

Consolidated Statement of Profit and Loss for the year ended

Notes March 31, 2015 March 31, 2014 March 31, 2013 INCOME ``` in Crore ` in Crore ` in Crore

Revenue from Operations 26 29,075.78 25,583.15 22,032.46 Profit on sale of Investments 27 510.87 294.03 378.35 Other Income 26.6 74.34 61.39 38.75 Premium from Insurance Business 16,427.35 13,539.59 12,650.29 Other Operating Income from Insurance Business 2,301.69 1,336.40 887.08 Total Revenue 48,390.03 40,814.56 35,986.93

EXPENSES

Finance Cost 28 18,710.29 16,607.89 14,295.52 Employee Benefits Expenses 29 699.14 597.24 528.13 Establishment Expenses 30 136.95 143.14 125.54 Other Expenses 31 584.13 465.07 429.97 Claims paid pertaining to Insurance Business 9,551.25 5,969.83 4,866.93 Commission and operating expenses pertaining to Insurance 2,112.45 1,924.34 2,278.56 Business Other expenses pertaining to Insurance Business 6,244.53 6,103.93 5,792.21 Depreciation and Amortisation 14 & 15 46.63 46.85 54.20 Provision for Contingencies 188.04 110.42 148.59 Total Expenses 38,273.41 31,968.71 28,519.65

PROFIT BEFORE TAX 10,116.62 8,845.85 7,467.28 Tax Expense Current Tax 2,883.62 2,317.05 2,007.28 Deferred Tax 17 282.08 41.29 (5.25) PROFIT FOR THE YEAR 6,950.92 6,487.51 5 ,465.25

Share of profit of Minority Interest (482.72) (454.89) (341.80) Net share of Profit from Associates 2,294.42 1,915.20 1,516.27

PROFIT AFTER TAX ATTRIBUTABLE TO THE 5.1 8,762.62 7,947.82 6 ,639.72 CORPORATION

EARNINGS PER SHARE (Face Value ` 2) 36 Basic (`) 55.81 51.01 43.63 Diluted (`) 55.30 50.61 43.09

See accompanying notes forming part of the financial statements

265 HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED Consolidated Cash flow Statement for the year ended March 31, 2015 March 31, 2014 March 31, 2013 Notes ` in Crore ` in Crore ` in Crore A CASH FLOW FROM OPERATING ACTIVITIES Profit After tax Attributable to the Group 8,762.62 7,947.82 6,639.72 Add: Provision for Taxation 3,165.70 2,358.34 2,002.03 Profit Before Tax 11,928.32 10,306.16 8,641.75 Adjustments for: Depreciation and Amortisation * 14 & 15 130.73 108.87 101.33 Provision for Contingencies 5.3 188.04 110.20 148.59 Interest Expense 28 18,589.83 16,357.10 14,033.19 Net (Gain) / Loss on translation of foreign currency monetary assets and liabilities (16.28) 138.76 168.18 Interest Income 26 (26,994.73) (23,774.91) (20,523.01) Employee Stock Option Expense (net of options exercised) - - (4.54) Premium paid on redemption of Debentures (192.80) (398.20) (708.71) Shelter Assistance Reserve - utilisation 5.10 (10.83) (13.02) (9.82) Corporate Social Responsibility Account - utilisation 5.10 - (0.46) - Reserve for Unexpired Risk 104.41 180.83 228.96 Policy Liabilities (net) 16,152.28 9,979.18 7,699.08 Surplus from Deployment in Cash Management Schemes of Mutual Funds 26 (369.48) (344.01) (256.74) Profit on Sale of Investments (510.87) (294.03) (378.35) Dividend Income 26 (41.16) (47.64) (68.30) Provision for Diminution in Value of Investments 5.06 (0.38) 6.22 Bad debts written off 4.60 1.89 3.37 (Profit) / Loss on Sale of Fixed Assets (net) (27.64) (22.41) (0.57) Operating Profit before Working Capital changes 18,939.49 12,287.93 9,080.63 Adjustments for: Current and Non Current Assets (978.49) 266.46 2,223.04 Current and Non Current Liabilities 759.49 14.08 523.52 Cash generated from operations 18,720.49 12,568.47 11,827.19 Interest Received 26,682.39 23,271.11 20,053.35 Interest Paid (18,519.42) (15,418.73) (12,125.73) Dividend Received 41.16 47.64 68.30 Taxes Paid (3,227.77) (2,910.84) (2,493.30) Net cash from operation 23,696.84 17,557.65 17,329.81 Loans disbursed (net) (33,281.47) (28,586.35) (30,731.11) Corporate Deposits (net) 466.44 293.80 1,646.78 Net cash used in operating activities [ A ] (9,118.18) (10,734.90) (11,754.52) * Includes depreciation included under Other expenses pertaining to Insurance Business

C CASH FLOW FROM FINANCING ACTIVITIES Share Capital - Equity 4.1 2.84 2.83 13.88 Utilisation of Reserves for Buy back of Equity Shares by one of the Subsidiary Company - (20.92) (48.65) Securities Premium 5 726.52 651.41 3,863.34 Deposits, CPs and other Short Term Borrowings (Net) 27,136.33 5,377.93 21,006.00 Proceeds from long-term borrowings 64,672.33 71,905.16 58,182.51 Repayment of long-term borrowings (65,098.31) (50,231.75) (58,355.87) Dividend paid (2,505.94) (1,939.91) (1,635.56) Tax paid on Dividend (485.43) (385.73) (294.09) Bonus and Securities Issue Expenses (22.01) (0.30) (18.69) Increase in Minority Interest 394.05 359.81 245.94 Net cash from financing activities [ C ] 24,820.38 25,718.53 22,958.81 Net (Decrease) / Increase in cash and cash equivalents [A+B+C] (2,852.73) 1,992.61 987.76 Add: Cash and cash equivalents as at the beginning of the year 22 6,397.65 4,397.46 3,405.11 Add: Exchange difference on bank balance 2.80 7.58 4.58 Cash and cash equivalents as at the end of the year 22 3,547.72 6,397.65 4,397.46 Earmarked balances with banks: - Unclaimed dividend account 21.52 15.26 12.38 - Other against Foreign Currency Loans 7.20 6.39 5.42 - Guarantees issued by banks 0.13 0.24 - - Others 2.59 2.59 2.68 Short - term bank deposits 682.76 2,165.98 2,653.73 Cash and Bank balances at the end of the year 22 4,261.92 8,588.11 7,071.67

266 Notes forming part of consolidated financial statements

1 SIGNIFICANT ACCOUNTING POLICIES

1.1 ACCOUNTING CONVENTION OTHER THAN INSURANCE COMPANIES These financial statements have been prepared in accordance with historical cost convention, applicable Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014, the relevant provisions of the Companies Act, 2013 and the guidelines issued by the National Housing Bank and Reserve Bank of India to the extent applicable.

INSURANCE COMPANIES The financial statements are prepared under the historical cost convention on accrual basis of accounting in accordance with the accounting principles prescribed by the Insurance Regulatory and Development Authority of India (Preparation of Financial Statements and Auditor’s Report of Insurance Companies) Regulations, 2002, (‘the IRDA Financial Statements Regulations’), provisions of the Insurance Regulatory and Development Authority Act, 1999, the Insurance Act, 1938, circulars/notifications issued by the Insurance Regulatory and Development Authority of India ('the IRDAI') from time to time, the Companies Act 2013 and applicable Accounting Standards specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. The preparation of financial statements requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.2 GAIN OR LOSS ON DILUTION The gain or loss on account of dilution of stake of HDFC Ltd. in its subsidiaries, associates and entities over which control is exercised is accounted through General Reserve.

1.3 SYSTEM OF ACCOUNTING The Group adopts the accrual concept in the preparation of the financial statements.

The Balance Sheet and the Statement of Profit and Loss of the Group are prepared in accordance with the provisions contained contained in Section 129 of the Companies Act 2013, read with Schedule III thereto to the extent possible (except the insurance subsidiaries).

1.4 USE OF ESTIMATES The preparation of the consolidated financial statements in conformity with Generally Accepted Accounting Principles in India (Indian GAAP) requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.5 INFLATION Assets and liabilities are recorded at historical cost to the Group. These costs are not adjusted to reflect the changing value in the purchasing power of money.

1.6 OPERATING CYCLE Based on the nature of its activities, the Corporation has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

1.7 CASH FLOW STATEMENT Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Group are segregated based on the available information.

267 1.8 CASH AND CASH EQUIVALENTS (FOR PURPOSES OF CASH FLOW STATEMENT) Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term deposits with banks (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.9 LOANS AND RECEIVABLES AND CREDIT LOSS ALLOWANCES Loans are initially recorded at the disbursed principal amounts and are subsequently adjusted for recoveries and any unearned income. Loans are carried net of the allowances for credit losses. A loan is recognised as non-performing (“NPA”) or as a “doubtful” or as a "loss" asset based on the period for which the repayment instalment or interest has remained in arrears as prescribed under the Housing Finance Companies (NHB) Directions, 2010, (the “NHB Directions”). Allowances for credit losses are made on an individual basis at rates prescribed under the NHB Directions unless, the management estimates that a higher individual allowance is required to reduce the carrying value of loan asset, including accrued interest, to its estimated realisable amount. The fair value of the underlying security is taken into consideration to estimate the realisable amount of the loan. When a loan is identified as a “Loss Asset” that is adversely affected by a potential threat of non- recoverability, the outstanding balance is fully written off or fully provided for.

1.10 INTEREST INCOME ON LOANS Repayment of housing loans is generally by way of Equated Monthly Instalments (EMIs) comprising principal and interest. EMIs commence generally once the entire loan is disbursed. Certain customers request for commencement of regular principal repayments even before the entire loan is disbursed, especially when the projects are of long gestation. A recalculated EMI based on Principal Outstanding is offered in such cases. Pending commencement of EMIs, pre-EMI interest is payable every month. Interest on loans is computed either on an annual rest or on a monthly rest basis on the principal outstanding at the beginning of the relevant period. Interest income is allocated over the contractual term of the loan by applying the committed interest rate to the outstanding amount of the loan. Interest income is accrued as earned with the passage of time. Interest on loan assets classified as “non-performing” is recognised only on actual receipt.

1.11 DIVIDEND Dividend income is recognised when the right to receive has been established.

1.12 FEES AND OTHER REVENUE Fees, charges and other revenue is recognised after the service is rendered to the extent that it is probable that the economic benefits will flow to the Corporation and that the revenue can be reliably measured, regardless of when the payment is being made.

1.13 PREMIUM INCOME FROM INSURANCE BUSINESS LIFE INSURANCE BUSINESS Premium Income Premium income is accounted for when due from the policyholders and reduced for lapsation expected based on the experience of the Company. In case of linked business, premium income is accounted for when the associated units are created. Premium on lapsed policies is accounted for as income when such policies are reinstated. Top up premium is considered as single premium.

Income from Linked Policies Income from linked policies, which include fund management charges, policy administration charges, mortality charges and other charges, wherever applicable, is recovered from the linked funds in accordance with the terms and conditions of the insurance contracts and is accounted for as income when due.

Reinsurance Premium Ceded Reinsurance premium ceded is accounted for on due basis, at the time when related premium income is accounted for in accordance with the terms and conditions of the reinsurance treaties. Profit commission on reinsurance ceded is netted off against premium ceded on reinsurance

GENERAL INSURANCE BUSINESS Premium Income Premium including Reinsurance accepted (net of service tax) is recognised as income over the contract period or period of risk, as appropriate, after adjusting for unearned premium (unexpired risk). Any subsequent revisions to or cancellations of premiums are accounted for in the year in which they occur. Instalment cases are recorded on instalment due dates. Premium received in advance represents premium received prior to commencement of the risk.

268 Reinsurance Premium Ceded Reinsurance premium ceded is accounted in the year in which the risk commences and over the period of risk in accordance with the treaty arrangements with the reinsurers. Reinsurance premium ceded on unearned premium is carried forward to the period of risk and is set off against related unearned premium. Any subsequent revisions to or cancellations of premiums are accounted for in the year in which they occur. Premium on excess of loss reinsurance cover is accounted as per the terms of the reinsurance arrangements.

Commission received Commission on reinsurance ceded is recognised as income on ceding of reinsurance premium. Profit commission under reinsurance treaties, wherever applicable, is recognised in the year of final determination of the profits and as intimated by the Reinsurer.

1.14 INCOME FROM LEASES Leases of assets under which substantially all of the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. The Corporation has let out portions of its buildings to its subsidiaries / associates under operating lease arrangements. Income is recognised over the period over which the property is used by the lessee based on the lease terms as the arrangements are cancellable and do not confirm any minimum lease payment or contingent rent payments.

1.15 MANAGEMENT AND TRUSTEESHIP FEES Management and Trusteeship fees are accounted on accrual basis.

1.16 INCOME FROM INVESTMENTS The gain/loss on account of Investments in Preference Shares, Debentures/Bonds and Government Securities held as long-term investments and acquired at a discount/premium, is recognised over the life of the security on a pro-rata basis. Interest income on investments is accounted for on accrual basis. Amortisation of premium or accretion of discount at the time of purchase of debt securities is amortised over the remaining period of maturity/holding on a straight line basis.

1.17 BORROWING AND BORROWING COSTS The Corporation borrows funds, primarily in Indian Rupees, and carry a fixed rate or floating rate of interest. As a part of its risk management strategy, the Corporation converts such borrowings into floating rate or foreign currency borrowings by entering into interest rate swaps or cross currency interest rate swaps having the same notional amount and maturity as the underlying borrowings and holds these instruments till maturity. At each reporting date, these liabilities are restated at the closing rate. Borrowing costs include interest, amortised brokerage on deposits and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Ancillary costs in connection with long-term external commercial borrowings are amortised to the Statement of Profit and Loss over the tenure of the loan. Issue expenses of certain securities are charged to the securities premium.

1.18 TRANSLATION OF FOREIGN CURRENCY Initial recognition Transactions in foreign currencies entered into by the Group are accounted at the exchange rates prevailing on the date of the transaction.

The net loss/gain on translation of long term monetary assets and liabilities in foreign currencies is amortised over the maturity period of such monetary assets and liabilities and charged to the Statement of Profit and Loss. The unamortised exchange difference is carried in the Balance Sheet as “Foreign currency monetary item translation difference account”. The net loss/gain on translation of short term monetary assets and liabilities in foreign currencies is recorded in the Statement of Profit and Loss.

1.19 BROKERAGE AND INCENTIVE ON DEPOSITS Brokerage and incentive brokerage on deposits is amortised over the period of the deposit.

269 1.20 BROKERAGE - MUTUAL FUND EXPENSE Brokerage paid on investment in Equity Linked Saving Schemes and Closed Ended Schemes is amortised over a period of 36 months and over the tenure of the scheme respectively. Brokerage paid in advance in respect of Portfolio Management Business is amortised over the contractual period. Recurring expenses of schemes of HDFC Mutual Fund are borne by one of the subsidiary company, including the amounts in excess of the limits prescribed by the Securities and Exchange Board of India, are accounted in the respective heads in the Statement of Profit and Loss.

1.21 INVESTMENTS

(i) OTHER THAN INSURANCE COMPANIES Investments are capitalised at cost inclusive of brokerage and stamp charges and are classified into two categories, viz. Current or Long Term. Long-term investments (excluding investment in properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Provision for diminution in the value of investments is made in accordance with the guidelines issued by the National Housing Bank and the Accounting Standard on ‘Accounting for Investments’ (AS 13) and is recognised through the Provision for Contingencies Account. Investment in properties are carried individually at cost less accumulated depreciation and impairment, if any.

(ii) INSURANCE COMPANIES Investments are made in accordance with the provisions of the Insurance Act,1938, the Insurance Regulatory and Development Authority (Investment) Regulations, 2000, the Insurance Regulatory and Development Authority of India (Investment) (Amendment) Regulations, 2001, the Insurance Regulatory and Development Authority of India (Investment) (Fourth Amendment) Regulations, 2008, the Insurance Regulatory and Development Authority of India (Investment) (Fifth Amendment) Regulations, 2013, wherever applicable and various other circulars/notifications/clarifications issued by the IRDA in this context from time to time.

Investments are recognised at cost on the date of purchase, which includes brokerage and taxes if any, and excluding accrued interest (i.e. since the previous coupon date) as on the date of purchase. In case of one of the subsidiary company (HDFC Standard Life Insurance Co. Ltd.), Investment property represents land or building held for use other than in services or for administrative purposes. The investment in the real estate investment property is valued at historical cost plus revaluation if any. Revaluation of the investment property is done at least once in three years. The change in the carrying amount of the investment property is taken to Revaluation Reserve in the Balance Sheet. Impairment loss, if any, exceeding the amount in Revaluation Reserve is recognised as an expense in the Revenue Account or the Profit and Loss Account.

1.22 TANGIBLE FIXED ASSETS Fixed Assets (including such assets which have been leased out by the Corporation) are capitalised at cost inclusive of legal and/or installation expenses.

1.23 INTANGIBLE ASSETS Intangible Assets comprising of system software are stated at cost of acquisition, including any cost attributable for bringing the same to its working condition, less accumulated amortisation and Goodwill arising on account of a scheme of amalgamation in a subsidiary company and a scheme of de-merger in a jointly controlled entity. Any expenses on such software for support and maintenance payable annually are charged to the Statement of Profit and Loss.

1.24 CAPITAL WORK IN PROGRESS Capital work in progress includes assets not ready for the intended use and are carried at cost, comprising direct cost and related incidental expenses.

1.25 IMPAIRMENT OF ASSETS The carrying values of assets forming part of any cash generating units at Balance Sheet date are reviewed for impairment at each Balance Sheet date. If any indication for such impairment exists, the recoverable amounts of those assets are estimated and impairment loss is recognised, if the carrying amount of those assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the estimated future cash flows to their present value based on appropriate discount factor. If at the Balance Sheet date there is any indication that a previously assessed impairment loss no longer exists, then such loss is reversed and the asset is restated to that extent.

270 1.26 DEPRECIATION AND AMORTISATION

Tangible Fixed Assets Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful life prescribed in Schedule II to the Companies Act, 2013 except in respect of the following categories of assets, in whose case the life of the assets has been assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.: Computers and data processing equipment - 4 years Vehicles - 5 years Leasehold land is amortised over the duration of the lease.

Intangible Assets Intangible assets are amortised over their estimated useful life on straight line method as follows: Computers Software - 4 years

Investment In Properties Depreciation on Investment in properties is provided on a pro-rata basis from the date of acquisition.

1.27 PROVISIONS AND CONTINGENCIES A provision is recognised when the Group has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes. Contingent assets are neither recognised nor disclosed in the financial statements.

1.28 PROVISION FOR CONTINGENCIES AND NON PERFORMING ASSETS The Group’s policy is to carry adequate amounts in the Provision for Non-Performing Assets Account and the Provision for Contingencies account to cover the amount outstanding in respect of all non-performing assets and standard assets respectively as also all other contingencies. All loans and other credit exposures where the interest and/or instalments are overdue for specified number of days and more are classified as non-performing assets in accordance with the prudential norms prescribed by the National Housing Bank, the Reserve Bank of India and the IRDA Regulations. The provision for non-performing assets is deducted from loans and advances. The provisioning policy of the Group covers the minimum provisioning required as per the NHB, the Reserve Bank of India and the IRDA Regulations.

1.29 STANDARD ASSET PROVISIONING (COLLECTIVE ALLOWANCES) Provisions are established on a collective basis against loan assets classified as “Standard” to absorb credit losses on the aggregate exposures in each of the Corporation’s loan portfolios based on the NHB Directions. A higher standard asset provision may be made based upon statistical analysis of past performance, level of allowance already in place and Management’s judgement. This estimate includes consideration of economic and business conditions. The amount of the collective allowance for credit losses is the amount that is required to establish a balance in the Provision for Standard Assets Account that the Corporation’s management considers adequate, after consideration of the prescribed minimum under the NHB Directions, to absorb credit related losses in its portfolio of loan items after individual allowances or write offs.

271 1.30 EMPLOYEE BENEFITS

Employee Stock Option Scheme (‘ESOS’) The Employee Stock Option Scheme (‘the Scheme’) provides for the grant of options to acquire equity shares of the Corporation to its employees. The options granted to employees vest in a graded manner and these may be exercised by the employees within a specified period. The Corporation follows the intrinsic value method to account for its stock-based employee compensation plans. Compensation cost is measured by the excess, if any, of the market price of the underlying stock over the exercise price as determined under the option plan. The market price is the closing price on the stock exchange where there is highest trading volume on the working day immediately preceding the date of grant. Compensation cost, if any, is amortised over the vesting period.

Defined contribution plans The Corporation's contribution to provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made. These funds and the schemes thereunder are recognised by the Income-tax authorities and administered by various trustees. The Rules of the Corporation’s Provident Fund administered by a Trust require that if the Board of Trustees are unable to pay interest at the rate declared for Employees’ Provident Fund by the Government under para 60 of the Employees’ Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Corporation. The Contributions made to the Recognised Provident Funds are charged to the Statement of Profit and Loss.

Defined benefit plans For defined benefit plans in the form of leave encashment / compensated absences, gratuity fund and post retirement pension scheme for whole-time Directors, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Except in case of Dubai branch of the Corporation, the provision for gratuity is made in accordance with the prevalent local laws.

Actuarial gain and losses comprises of experience adjustments and the effects of changes in actuarial assumptions and are recognised immediately in the Statement of Profit and Loss as Income or Expense.

272 1.31 CLAIMS PAID AND OTHER EXPENSES PERTAINING TO INSURANCE BUSINESS

(i) LIFE INSURANCE BUSINESS

Benefits paid Benefits paid consist of policy benefit amounts and claim settlement costs, where applicable. Non-linked business Death and rider claims are accounted for on receipt of intimation. Annuity benefits, money back payment and maturity claims are accounted for when due. Surrenders are accounted for on the receipt of consent from the insured to the quote provided by the Company. Linked business Death and rider claims are accounted for on receipt of intimation. Maturity claims are accounted for on due basis when the associated units are de-allocated. Surrenders and withdrawals are accounted for on receipt on intimation when associated units are de-allocated. Amounts payable on lapsed policies are accounted for on expiry of lock in period, which is the period after which policies cannot be revived. Surrenders and lapsation are disclosed at net of charges recoverable. Reinsurance claims receivable are accounted for in the period in which the concerned claims are intimated. Repudiated claims and other claims disputed before judicial authorities are provided for on prudent basis as considered appropriate by management.

Policy acquisition costs Policy acquisition costs mainly consist of commission to insurance intermediaries, sales staff costs, office rent, medical examination costs, policy printing expenses, stamp duty and other related expenses incurred to source and issue the policy. These costs are expensed in the period in which they are incurred.

(ii) GENERAL INSURANCE BUSINESS

Claims incurred Claims incurred comprises of claims paid (net of salvage and other recoveries), change in the estimate liability for outstanding claims made following a loss occurrence reported, change in estimated liability for claims incurred but not reported (IBNR) & claims incurred but not enough reported (IBMER) and specific settlement costs comprising survey, legal and other directly attributable expenses.

Provision is made for estimated value of outstanding claims at the Balance Sheet date net of reinsurance, salvage and other recoveries. Such provision is made on the basis of the ultimate amounts that are likely to be paid on each claim, established by the management in the light of past experience and progressively modified for changes as appropriate on availability of further information and include insurance claim settlement costs likely to be incurred to settle outstanding claims.

Claims (net of amounts receivable from reinsurers / coinsurers) are recognised on the date of intimation based on estimates from surveyors/insured in the respective revenue accounts.

The estimated liability for claims incurred but not reported (IBNR) and claims incurred but not enough reported (IBNER) has been estimated by the Appointed Actuary in compliance with guidelines issued by IRDA vide circular No. 11/IRDA/ACTL/IBNR/2005-06 dated June 8, 2005 and applicable provisions of the Guidance Note 21 issued by the Institute of Actuaries of India. The Appointed Actuary has used alternative methods for each product category as considered appropriate depending upon the availability of past data as well as appropriateness of the different methods to the different lines of businesses.

Acquisition costs Acquisition costs are defined as costs that vary with, and are primarily related to the acquisition of new and renewal insurance contracts viz. commission. These costs are expensed out in the period in which they are incurred.

Premium Deficiency Premium deficiency is recognised for the Company as a whole on an annual basis. Premium deficiency is recognised if the sum of the expected claim costs, related expenses and maintenance cost (related to claims handling) exceeds related reserve for unexpired risk.

273 1.32 LEASES (i) Finance leases Finance leases, which effectively transfer substantially all the risks and benefits incidental to ownership of the leased item to the Company, are capitalised at the lower of the fair value of the asset and present value of the minimum lease payments at the inception of the lease term and are disclosed as leased assets. Lease payments are apportioned between the finance charges and the corresponding liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the Statement of Profit and Loss. Leased assets capitalised under finance lease are depreciated on a straight line basis over the lease term.

(ii) Operating leases Leases where the lessor effectively retains substantially all the risk and the benefits of ownership over the leased term are classified as operating leases. Leased rental payments under operating leases including committed increase in rentals are accounted for as an expense, on a straight line basis, over the non -cancellable lease period.

1.33 EARNINGS PER SHARE Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.

1.34 TAXES ON INCOME Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted as at the reporting date. Deferred tax assets are recognised for timing differences of items other than unabsorbed depreciation and carry forward losses only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. However, if there are unabsorbed depreciation and carry forward of losses, deferred tax assets are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise the assets. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

Current and deferred tax relating to items directly recognised in reserves are recognised in reserves and not in the Statement of Profit and Loss. WEALTH TAX Provision for wealth tax is made at the appropriate rates, as per the applicable provisions of the Wealth Tax Act, 1957.

1.35 SERVICE TAX INPUT CREDIT Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilising the credits.

1.36 SECURITISED LOANS AND SECURITISATION LIABILITIES The Corporation periodically transfers pools of mortgages. Such assets are derecognised, if and only if, the Corporation loses control of the contractual rights that comprise the corresponding pools or mortgages transferred. Transfers of pools of mortgages under the current programs involve transfer of proportionate shares in the pools of mortgages. Such transfers result in de-recognition only of that proportion of the mortgages as meet the de-recognition criteria. The portion retained by the Corporation continue to be accounted for as loans as described above. On de-recognition, the difference between the book value of the securitised asset and consideration received is recognised as gain arising on securitisation in the Statement of Profit and Loss over the balance maturity period of the pool transferred. Losses, if any, arising from such transactions, are recognised immediately in the Statement of Profit and Loss. 274 1.37 POLICY LIABILITIES Actuarial liabilities, for all inforce policies and policies where premiums are discontinued, but a liability exists as at the valuation date, are calculated in accordance with the generally accepted actuarial principles and practices, requirements of Insurance Act, 1938, regulations notified by the IRDA and Actuarial Practice Standard (APS) issued by the Institute of Actuaries of India with the concurrence of the IRDA. The specific principles adopted for the valuation of policy liabilities are set out as per the IRDA (Assets, Liabilities and Solvency Margin) Regulations, 2000 and the APS2 & APS7 issued by the Institute of Actuaries of India.

1.38 RESERVE FOR UNEXPIRED RISK OF GENERAL INSURANCE BUSINESS: Reserve for Unexpired Risk represents proportion of net premium written relating to the period of insurance subsequent to the Balance Sheet date, calculated on the basis of 1/365th method, or as required under Section 64V(1)(ii)(b) of the Insurance Act, 1938, i.e., subject to a minimum of 100% in case of marine hull business and 50% in case of other businesses based on net premium written during the year, whichever is higher. As per the Master Circular on preparation of financial statements General Insurance Business the net Premium Written is to be considered only in respect of policies written during the year and unexpired on the Balance sheet date.

2 The consolidated financial statements relate to Housing Development Finance Corporation Limited (“HDFC Ltd.” or “the Corporation”), its subsidiaries, jointly controlled entities and Group's share of profit / loss in its associates as on March 31, 2015 and for the year ended on that date. The consolidated financial statements have been prepared on the following basis:

(i) The financial statements of the Corporation and its subsidiaries have been combined on a line-by-line basis by consolidating the book values of like items of assets, liabilities, income and expenses, after eliminating intra-group balances and intra-group transactions, resulting in unrealised profits or losses as per Accounting Standard 21 on ‘Consolidated Financial Statements’ (AS 21).

(ii) The Corporation’s investments in equity shares of associates are accounted for under the equity method and its share of pre- acquisition profits/losses is reflected as goodwill / capital reserve in the carrying value of investments in accordance with the Accounting Standard 23 on `Accounting for Investments in Associates in Consolidated Financial Statements’ (AS 23).

(iii) The financial statements of the subsidiaries and the associates used in the consolidation are drawn up to the same reporting date as that of the Corporation, i.e. March 31, 2015.

(iv) The excess of cost to the Corporation, of its investment in the subsidiaries over the Corporation’s portion of equity is recognised in the financial statements as Goodwill.

(v) The excess of the Corporation’s portion of equity of the subsidiaries on the acquisition date over its cost of investment is treated as Capital Reserve.

(vi) Minority Interest in the net assets of consolidated subsidiaries consists of: a) The amount of equity attributable to minorities at the date on which investment in a subsidiary is made; and b) The minorities’ share of movements in equity since the date the relationship came into existence.

(vii) Minority interest’s share of net profit/loss for the year of the consolidated subsidiaries is identified and adjusted against the profit after tax of the group.

(viii) In case of foreign subsidiaries, being non-integral operations, revenue items are consolidated at the average rate prevailing during the year. All assets and liabilities are converted at the rates prevailing at the end of the year. Any exchange difference arising on consolidation is recognised in the Foreign Currency Translation Reserve.

275 2.1 The financial statements of the following subsidiary companies have been consolidated as per Accounting Standard on Consolidated Financial Statements (AS 21).

All the below mentioned subsidiaries have been incorporated in India, other than Griha Investments which has been incorporated in Mauritius and Griha Pte. Ltd. which has been incorporated in Singapore.

Proportion of Ownership Interest (%) Name of Subsidiary 2014-15 2013-14 2012-13 HDFC Developers Ltd. 100.00 100.00 100.00 HDFC Investments Ltd. 100.00 100.00 100.00 HDFC Holdings Ltd. 100.00 100.00 100.00 HDFC Asset Management Co. Ltd. 59.81 59.81 59.81 HDFC Trustee Co. Ltd. 100.00 100.00 100.00 HDFC Realty Ltd. 100.00 100.00 100.00 GRUH Finance Ltd. 58.64 59.15 59.69 HDFC Venture Capital Ltd. 80.50 80.50 80.50 HDFC Ventures Trustee Co. Ltd. 100.00 100.00 100.00 HDFC Sales Pvt. Ltd. 100.00 100.00 100.00 HDFC Property Ventures Ltd. 100.00 100.00 100.00 HDFC Investment Trust 100.00 100.00 100.00 HDFC Property Fund - Scheme - HDFC IT Corridor Fund - - 100.00 (upto March 28, 2014) HDFC Investment Trust - II 100.00 - - (w.e.f June 24, 2014) Griha Investments (Subsidiary of HDFC Holdings Ltd.) 100.00 100.00 100.00 Griha Pte Ltd. (Subsidiary of HDFC Investments Ltd.) 100.00 100.00 100.00 (w.e.f December 28, 2012) Credila Financial Services Pvt. Ltd. 78.66 78.66 62.28 HDFC Education and Development Services Pvt. Ltd. 100.00 100.00 100.00

2.2 During the previous year, the Corporation acquired the undermentioned companies, all incorporated in India, as an inspecie distribution from HDFC Property Fund - Scheme HDFC IT Corridor Fund. As per the Accounting Standard on Consolidated Financial Statements, (AS 21), those companies have been excluded from consolidation, since they are held exclusively with a view to their subsequent disposal in the near future.

Proportion of Ownership Interest (%) Name of Subsidiary 2014-15 2013-14 2012-13 Grandeur Properties Pvt. Ltd. 100.00 100.00 100.00 Haddock Properties Pvt. Ltd. 100.00 100.00 100.00 Pentagram Properties Pvt. Ltd. 100.00 100.00 100.00 Windermere Properties Pvt. Ltd. 100.00 100.00 100.00 Winchester Properties Pvt. Ltd. 100.00 100.00 100.00

2.3 The financial statements of the following subsidiary companies, all incorporated in India, which are in the nature of jointly controlled entities, have been consolidated as per Accounting Standard on Consolidated Financial Statements (AS 21).

Proportion of Ownership Interest (%) Name of Subsidiary (Jointly Controlled Entity) 2014-15 2013-14 2012-13 HDFC Standard Life Insurance Co. Ltd. 70.65 72.37 72.37 HDFC Pension Management Co. Ltd. 70.65 72.37 72.37 (Subsidiary of HDFC Standard Life Insurance Co. Ltd.) HDFC ERGO General Insurance Co. Ltd. 73.63 73.82 73.91

276 2.4 Consequent to the above changes in the ownership interest, certain previous year balances have been considered on current ownership and accordingly the same is reflected in the Reserves and Surplus as ‘Opening Adjustments’.

2.5 H. T. Parekh Foundation, a section 8 Company under the Companies Act, 2013, wherein the profits were applied for promoting its objects. The Accounts of H. T. Parekh Foundation were not consolidated in financial statements, since the Corporation would not derive any economic benefits from its investments in H. T. Parekh Foundation. During the current year, the Corporation sold its investment in H. T. Parekh Foundation.

3 Investment made by the Corporation and its subsidiaries in the following associates, have been accounted for, under the equity method, in accordance with the Accounting Standard 23 on ‘Accounting for Investments in Associates in Consolidated Financial Statements’ (AS 23):

Proportion of Ownership Interest (%) Name of Associate Nature of Business 2014-15 2013-14 2012-13 HDFC Bank Ltd. Banking Services 21.67 22.64 22.83 India Value Fund Advisors Pvt. Ltd. Venture Capital 21.51 21.51 21.51 RuralShores Business Services Pvt. Ltd. # BPO 27.47 27.47 34.04 Magnum Foundations Pvt. Ltd. * Real Estate 50.00 - - IPFONLINE Ltd. (w.e.f. January 3, 2012 upto November 12, Publishing - - 28.73 2013)

# As per Accounting Standard 23 on ‘Accounting for Investments in Associates in Consolidated Financial Statements’ (AS 23), the investments in RuralShores Business Services Pvt. Ltd has been excluded from consolidation since the share of losses exceeded the carrying amount of investment and the same has been fully provided for in the books of accounts of HDFC Ltd.

* During the current year, Magnum Foundations Pvt. Ltd was acquired as an associate by one of the subsidiary company. As per the Accounting Standard on Consolidated Financial Statements (AS 23), the same has been excluded from consolidation, since it is exclusively held with a view to their subsequent disposal in the near future by such subsidiary company.

HDFC Ltd.’s share of profit in HDFC Bank Ltd. has been accounted for based on their consolidated financial statements.

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 4 SHARE CAPITAL ``` in Crore ` in Crore ` in Crore

AUTHORISED 162,50,00,000 Equity Shares of ` 2 each 325.00 325.00 325.00 (FY 2013-14 162,50,00,000 Equity Shares of ` 2 each) (FY 2012-13 162,50,00,000 Equity Shares of ` 2 each) 325.00 325.00 325.00

ISSUED, SUBSCRIBED AND PAID-UP 1,57,46,97,670 Equity Shares of ` 2 each 314.94 312.10 309.27 (FY 2013-14 156,05,32,605 Equity Shares of ` 2 each) (FY 2012-13 154,63,47,255 Equity Shares of ` 2 each) 314.94 312.10 309.27

4.1 Reconciliation of number of shares outstanding at the beginning and at the end of the reporting period: Particulars As at March 31, 2015 As at March 31, 2014 As at March 31, 2013 Number ``` in Crore Number ` in Crore Number ` in Crore Equity shares outstanding as at the beginning of the year 156,05,32,605 312.10 154,63,47,255 309.27 147,69,70,010 295.39 Shares allotted pursuant to exercise of stock options 1,41,65,065 2.84 1,41,85,350 2.83 1,46,93,995 2.94 Shares allotted pursuant to exchange of warrants - - - - 5,46,83,250 10.94 Equity shares outstanding as at the end of the year 157,46,97,670 314.94 156,05,32,605 312.10 154,63,47,255 309.27

277 4.2 The details of each shareholder holding more than 5 percent shares in the Corporation: Particulars Outstanding as on March 31, 2015 Outstanding as on March 31, 2014 Outstanding as on March 31, 2013 Number Percentage of Number Percentage of Number Percentage of shares held to shares held to shares held to total Shares total Shares total Shares (%) (%) (%)\ Aberdeen Asset Management Asia Ltd. 8,00,17,312 5.08% 11,10,21,121 7.11% 12,74,90,319 8.24% (on behalf of funds advised/managed)

4.3 5,05,74,170 shares of ` 2 each (FY 2013-14 3,35,28,585 shares of ` 2 each, FY 2012-13 4,77,13,935 shares of ` 2 each) were reserved for issuance towards outstanding Employees Stock Options granted / available for grant, including lapsed options [Refer Note 4.4].

The Corporation has only one class of shares referred to as equity shares having Face Value of ` 2 each. Each holder of equity share is entitled to one vote per share.

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

At the 37th Annual General Meeting (AGM) held on July 21, 2014, the shareholders had approved the issue of 62,42,130 stock options representing 3,12,10,650 equity shares of ` 2 each to the eligible employees and Directors of the Corporation. The Nomination and Remuneration Committee of Directors (NRC) at its meeting held on October 8, 2014, approved the grant of 62,73,064 new stock options, representing 3,13,65,320 equity shares of ` 2 each under ESOS-2014, to the eligible employees and Directors. The same represents the Options approved for grant by the shareholders at the AGM held on July 21, 2014 plus 41,810 options lapsed under previous schemes (ESOS-05 : 12,285 options, ESOS-07 : 29,267 options, and ESOS-08 : 258 options), net of 10,876 options reserved. The options were granted at an exercise price of ` 5,073.25 per option (i.e. ` 1,014.65 per equity share of ` 2 each) being the latest available closing price of the equity shares of the Corporation on the stock exchange on which the shares are listed and having higher trading volume, prior to the meeting of the NRC at which the options were granted.

4.4 Under Employees Stock Option Scheme - 2011 (ESOS - 11), the Corporation had on May 23, 2012, granted 61,02,475 options at an exercise price of ` 3,177.50 per option representing 3,05,12,375 equity shares of ` 2 each to the employees and directors of the Corporation. The said price was determined in accordance with the pricing formula approved by the shareholders i.e. at the latest available closing price on the stock exchange having higher trading volume, prior to grant of options.

In terms of ESOS - 11, the options would vest over a period of 1-3 years from the date of grant, but not later than May 22, 2015, depending upon option grantee completing continuous service of three years with the Corporation. Accordingly, during the year 1,80,438 options (2013-14 58,26,953 options, 2012-13 NIL options) were vested. In the current year 13,263 options (2013-14 28,787 options, 2012-13 31,200) were lapsed. The options can be exercised over a period of five years from the date of respective vesting.

Under Employees Stock Option Scheme – 2008 (ESOS – 08), the Corporation had on November 25, 2008, granted 57,90,000 options at an exercise price of `1,350.60 per option representing 57,90,000 equity shares of ` 10 each to the employees and directors of the Corporation. The said price was determined in accordance with the pricing formula approved by the shareholders i.e. at the latest available closing price on the stock exchange having higher trading volume, prior to grant of options.

In terms of ESOS - 08, the options would vest over a period of 1-3 years from the date of grant, but not later than November 24, 2011, depending upon option grantee completing continuous service of three years with the Corporation. Accordingly, all the options have been vested in the earlier years. In the current year 97 options (2013-14 146 options, 2012-13 112 options) were lapsed after vesting. The options can be exercised over a period of five years from the date of respective vesting.

In terms of ESOS - 07, the options would vest over a period of 1-3 years from the date of grant, but not later than September 11, 2010, depending upon option grantee completing continuous service of three years with the Corporation. All the options have been vested in the earlier years. In the current year 882 options (2013-14 28,742 options, 2012-13 525 options) were lapsed after vesting. The options can be exercised over a period of five years from the date of respective vesting.

In terms of the ESOS-05, the options would vest over a period of 2-3 years from the date of grant, but not later than October 24, 2008, depending upon option grantee completing continuous service of three years with the Corporation. All the options have been vested in the earlier years. In the current year Nil options (2013-14 Nil options, 2012-13 12,285 options) were lapsed after vesting. The options were exercisable over a period of five years from the date of respective vesting. Accordingly, all the options vested under ESOS-05 have been exercised.

Method used for accounting for share based payment plan:

The Corporation has used intrinsic value method to account for the compensation cost of stock options to employees of the Corporation. Intrinsic value is the amount by which the quoted market price of the underlying share exceeds the exercise price of the option. Since the options under ESOS-14, ESOS-11, ESOS-08 and ESOS-07 were granted at the market price, the intrinsic value of the option is Nil. Consequently the accounting value of the option (compensation cost) is also Nil.

278 Movement in the options under ESOS-14, ESOS-11, ESOS-08, ESOS-07 and ESOS-05:

Particulars ESOS-14 Options Options Options 2014-15 2013-14 2012-13 Outstanding at the beginning of the year - - - Granted during the year 62,73,064 - - Vested during the year - - - Exercised during the year - - - Lapsed during the year 49,045 - - Outstanding at the end of the year 62,24,019 - - Unvested at the end of the year 62,24,019 - - Exercisable at the end of the year - - - Weighted average price per option ``` 5,073.25

Particulars ESOS – 11 Options Options Options 2014-15 2013-14 2012-13 Outstanding at the beginning of the year 54,06,415 6,071,275 - Granted during the year - - 6,102,475 Vested during the year 1,80,438 5,826,953 - Exercised during the year 16,47,566 636,073 - Lapsed during the year 13,263 28,787 31,200 Outstanding at the end of the year 37,45,586 5,406,415 6,071,275 Unvested at the end of the year 36,043 225,182 6,071,275 Exercisable at the end of the year 3,709,543 5,181,233 - Weighted average price per option ``` 3,177.50

Particulars ESOS – 08 Options Options Options 2014-15 2013-14 2012-13 Outstanding at the beginning of the year 11,82,357 17,56,739 22,81,083 Granted during the year - - - Vested during the year - - - Exercised during the year 11,77,158 5,74,236 5,24,232 Lapsed during the year 97 146 112 Outstanding at the end of the year 5,102 11,82,357 17,56,739 Unvested at the end of the year - - - Exercisable at the end of the year 5,102 11,82,357 17,56,739 Weighted average price per option ``` 1,350.60

Particulars ESOS – 07 Options Options Options 2014-15 2013-14 2012-13 Outstanding at the beginning of the year 15,148 16,70,651 37,80,574 Granted during the year - - - Vested during the year - - - Exercised during the year 8,289 16,26,761 21,09,398 Lapsed during the year 882 28,742 525 Outstanding at the end of the year 5,977 15,148 16,70,651 Unvested at the end of the year - - - Exercisable at the end of the year 5,977 15,148 16,70,651 Weighted average price per option ``` 2,149.00

Particulars ESOS – 05 Options Options Options 2014-15 2013-14 2012-13 Outstanding at the beginning of the year - - 3,17,454 Granted during the year - - - Vested during the year - - - Exercised during the year - - 3,05,169 Lapsed during the year - - 12,285 Outstanding at the end of the year - - - Unvested at the end of the year - - - Exercisable at the end of the year - - - Weighted average price per option ``` 912.90

279 Fair Value Methodology:

The fair value of options have been estimated on the date of grant using Black-Scholes model as under:

The key assumptions used in Black-Scholes model for calculating fair value under ESOS-2014, ESOS-2011, ESOS-2008, ESOS-2007 and ESOS – 2005 as on the date of grant viz. October 8, 2014, May 23, 2012, November 25, 2008, September 12, 2007 and October 25, 2005 are as follows :

Particulars ESOS-2014 ESOS-2011 ESOS-2008 ESOS-2007 ESOS – 2005 Risk-free interest rate (p.a.) 8.28% 8.06% 6.94% 7.70% 6.38% Expected life Upto 3 years Upto 2 years Upto 2 years Upto 2 years 2 to 3 years Expected volatility of share price 15% 15% 29% 19% 30% Expected growth in dividend (p.a.) 20% 20% 20% 20% 20% The weighted average fair value, as on the date of grant (per ` 1,035.91 ` 474.56 ` 238.79 ` 307.28 ` 105.50 Stock Option)

Since all the stock options granted under ESOS-2008, ESOS-2007 and ESOS-2005 have been vested, the stock based compensation expense determined under fair value based method is ``` Nil (FY 2013-14 ` Nil, FY 2012-13 ` Nil). Accordingly there is no change in the reported and pro-forma net profit and Basic and Diluted EPS.

However, had the compensation cost for the stock options granted under ESOS-14 and ESOS-11 been determined based on the fair value approach, the Corporation's net profit and earnings per share would have been as per the pro-forma amounts indicated below:

``` in Crore Particulars 2014-15 2013-14 2012-13 Net Profit (as reported) 8,762.62 7,947.82 6,639.72 Less : Stock-based compensation expenses determined under fair value based method, net of tax: 198.64 198.64 34.97 157.93 [Gross ``` 300.92 crore (FY 2013-14 ` 52.98 crore, FY 2012-13 ` 233.78 crore)] (pro-forma) Net Profit (pro-forma) 8,563.98 7,912.85 6,481.79 Less : Amounts utilised out of Shelter Assistance Reserve 10.83 13.02 9.13 Less : Proportionate share of amounts utilised out of Corporate Social Responsibility Fund of HDFC - - 0.46 0.69 Asset Management Company Limited. Net Profit considered for computing EPS (pro-forma) 8,553.15 7,899.37 6,471.97 Amount in ``` Particulars 2014-15 2013-14 2012-13 Basic earnings per share (as reported) 55.81 51.01 43.63 Basic earnings per share (pro-forma) 54.54 50.79 42.59 Diluted earnings per share (as reported) 55.30 50.61 43.09 Diluted earnings per share (pro-forma) 54.04 50.39 42.06

4.5 The Corporation has not allotted any shares pursuant to contracts without payment being received in cash or as bonus shares not has it bought back any shares during the preceding period of 5 financial years.

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 5 RESERVES AND SURPLUS ``` in Crore ` in Crore ` in Crore

Special Reserve No. I [Refer Note 5.2] 51.23 51.23 51.23 Special Reserve No. II [Refer Note 5.2] 7,637.70 6,551.53 5,635.91 Special Reserve Under Section 45-IC(1) of the Reserve Bank of India Act, 1934 40.86 33.04 26.73 General Reserve 13,552.92 10,246.11 9,073.00 Statutory Reserve 3,295.69 3,145.83 2,290.87 (As per Section 29C of the National Housing Bank Act, 1987) [Refer Note 5.3] Revaluation Reserve [Refer Note 5.4] 35.36 36.22 39.28 Securities Premium [Refer Note 5.5] 10,315.44 10,047.34 9,774.02 EMPLOYEE STOCK OPTION OUTSTANDING - - - Capital Redemption Reserve [Refer Note 5.6] 27.11 27.11 27.02 Shelter Assistance Reserve [Refer Note 5.9] 89.79 100.61 53.63 Corporate Social Responsibility Account [Refer Note 5.9] 1.55 1.55 2.01 Foreign Currency Translation Reserve 7.46 3.47 (0.05) Foreign Currency Monetory Item Translation Difference Account (33.75) (142.34) (169.79) (Debit Balance) [Refer Note 5.10 and 5.11] Capital Reserve 0.04 0.04 0.04 Capital Reserve on Consolidation 48.30 48.30 48.30 Surplus in the Statement of Profit and Loss 9,686.99 7,112.48 4,729.09 (of subsidiaries and associates) [ Refer Note 5.1] 44,756.69 37,262.51 31,581.29

280 As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ``` in Crore ` in Crore ` in Crore 5.1 SURPLUS IN THE STATEMENT OF PROFIT AND LOSS Opening Balance 7,112.48 4,729.09 3,097.76 Add: Opening Adjustment [Refer Note 2.4] 1.41 37.90 (0.91) 7,113.89 7,113.89 4,766.99 3,096.85 Add: Profit after Tax for the year attributable to the Corporation 8,762.62 7,947.82 6,639.72 15,876.51 15,876.51 12,714.81 9,736.57 APPROPRIATIONS: Special Reserve No. II [Refer Note 5.2] 1,087.35 916.62 797.09 Special Reserve (under Section 45-IC(1) of the Reserve Bank of India Act, 1934) 7.81 6.01 5.76 General Reserve 2,051.64 1,083.55 996.05 Statutory Reserve (As per Section 29C of the National Housing Bank Act, 1987) [Refer Note 5.3] 150.00 908.87 832.46 Shelter Assistance Reserve - 60.00 40.00 Corporate Social Responsibility Fund - - Capital Redemption Reserve [Refer Note 5.6] - 0.08 32.84 Buyback of equity shares by a subsidiary company [ Refer Note 5.3] Proposed Dividend 2,047.11 2,184.75 1,932.93 [Dividend @ ` 13 per equity share of ` 2 each (Previous year @ ` 14 per equity share of ` 2 each)] Additional Tax on Dividend 538.75 446.07 379.89 Additional Tax on Dividend FY 2012-13 [Refer Note 5.7] (18.59) (15.18) (24.62) Interim Dividend Paid [Refer Note 5.12] 314.93 - - Dividend [including tax of ` 1.53 crore (Previous Year ` 1.70 crore)] pertaining to 10.52 11.56 15.08 previous year paid during the year [Refer Note 5.8] 9,686.99 9,686.99 7,112.48 4,729.09

5.2 Special Reserve has been created over the years in terms of Section 36(1)(viii) of the Income-tax Act, 1961 out of the distributable profits of HDFC Ltd. and a Subsidiary. Special Reserve No. I relates to the amounts transferred upto Financial Year 1996-97, whereas Special Reserve No. II relates to the amounts transferred thereafter. Vide circular NHB(ND)/DRS/Pol. 62/2014 dated May 27, 2014, the National Housing Bank (NHB) had directed Housing Finance Companies (HFCs) to provide for deferred tax liability in respect of the balance in the “Special Reserve” created under section 36(1)(viii) of the Income Tax Act, 1961. Vide circular NHB(ND)/DRS/Pol. 65/2014 dated August 22, 2014, NHB has permitted HFCs to create the Deferred Tax Liability over a period of 3 years, in a phased manner in the ratio of 25:25:50. Accordingly, the Corporation and one of its subsidiary company has created 25 percent of deferred tax liability of ``` 578.74 crore (FY 2013-14 ` Nil, FY 2012-13 ` Nil ) on opening balance of accumulated Special Reserve.

5.3 During the year, in addition to the charge of ``` 188.04 crore (FY 2013-14 ` 110.42 crore, FY 2012-13 ` 148.59 crore) to the Statement of Profit and Loss, an amount of ``` Nil (net of deferred tax of ``` Nil) [(FY 2013-14 ` 56.77 crore, FY 2012-13 ` Nil) (net of Deferred Tax of FY 2013-14 ` 29.23 crore, FY 2012-13 `Nil)], has been transferred from Statutory Reserve as per Section 29C of the National Housing Bank Act, 1987 by HDFC Ltd. and by one of the subsidiary company pursuant to circular NHB(ND)/DRS/Pol-No.03/2004-05 dated August 26, 2004 as under:

` in Crore As at As at As at Particulars March 31, 2015 March 31, 2014 March 31, 2013 To Provision for Contingencies Account (Net) [Refer Note 9.2] 216.56 75.17 57.77 To Provision for Non-Performing Loans [Refer Note 18.3] (36.54) 117.97 39.11 To Provision for Diminution in value of Investments 4.14 - 51.71 To Provision for Doubtful Receivables [Refer Note 21] 3.88 0.22 - To Minority Interest - 3.06 - 188.04 196.42 148.59

5.4 During the previous year, one of the subsidiary company (HDFC Standard Life Insurance Co. Ltd.) had decided to use the investment property for use in service and administrative purpose. Consequently value of the property so used for own business ``` Nil (FY 2013-14 ` 41.37 crore, FY 2012-13 ` Nil) has been reclassified from investment property to fixed assets. Thus, the Revaluation Reserve has been adjusted for ``` Nil (FY 2013-14 ` 3.06 crore, FY 2012-13 ` Nil), being depreciation on revalued amount from date of its classification as investment in properties till its reclassification to fixed assets.

5.5 During the year, ``` 437.07 crore (FY 2013-14 ` 374.85 crore, FY 2012-13 ` 456.73 ) has been utilised out of the Securities Premium in accordance with Section 78 of the Companies Act, 1956. Out of the above, ``` 22.01 crore (FY 2013-14 ` 0.28 crore, FY 2012-13 ` 0.17 crore) has been utilised by one of the subsidiary companies towards issue of Bonus equity shares, expenses thereon and debenture issue expenses, ``` Nil (FY 2013-14 ` 17.40 crore, FY 2012-13 ` 18.52 crore) has been utilised by one of the subsidiary companies towards buy-back of equity shares and ``` 415.06 crore (net of tax ` 213.72 crore) [(FY 2013-14 ` 357.17 crore, FY 2012-13 ` 438.04 crore) (net of tax FY 2013-14 ` 183.91 crore, FY 2012-13 ` 175.54 crore)] has been utilised by HDFC Ltd. towards the proportionate premium payable on the redemption of Zero Coupon Secured Redeemable Non Convertible Debentures.

5.6 HDFC Asset Management Company Limited (HDFC AMC), pursuant to the approval of its shareholders at the Extra General Meeting and in accordance with the provisions of the Companies Act, 1956 (Act) and Private Company and Unlisted Public Limited Company (Buy-back of Securities) Rules, 1999, has bought back Nil equity shares during the year (FY 2013-14 141,500, FY 2012-13 484,650) aattaannaaggggrreeggaatteevvaalluueeooff ``` NNiill ((FFYY22001133--1144 `` 3355..1133ccrroorree,,FFYY22001122--1133 `` 111122..7788ccrroorree))..HHDDFFCCAAMMCChhaassuuttiilliisseeddtthheeSSeeccuurriittiieessPPrreemmiiuummaannddGGeenneerraall RReesseerrvveessffoorrtthhiissppuurrppoossee..AAssuummooff `````` NNiill ((FFYY 2013-14 ` 0.08 crore, FY 2012-13 ` 0.29 crore) has been transferred to Capital Redemption Reserve in terms of Section 77AA of the Act.

5.7 Additional Tax on dividend Financial Year (FY) 2013-14 credit taken, ``` 18.59 crore (2013-14 ` 15.18 crore for FY 2012-13, 2012-13 ` 24.62 crore for FY 2011-12), pertains to the dividend tax paid by the subsidiary companies of the Corporation on the dividend paid to the Corporation as per Section 115(O)(1A) of the Income Tax Act, 1961.

281 5.8 In respect of equity shares issued pursuant to Employee Stock Option Schemes, HDFC Ltd. paid dividend of ``` 8.98 crore for the FY 2013-14 (` 9.73 crore for the FY 2012-13, ` 12.83 crore for FY 2011-12) and tax on dividend of ``` 1.53 crore (FY 2013-14 ` 1.66 crore, FY 2012-13 ` 2.08 crore) as approved by the shareholders at the Annual General Meeting held on July 21, 2014 and GRUH Finance Ltd. paid dividend of ``` Nil for the FY 2013-14 (` 0.13 crore for the FY 2012-13, ` 0.13 crore for the FY 2011-12) and tax on dividend of ``` Nil (2013-14 ` 0.04 crore, 2012-13 ` 0.04 crore) as approved by the shareholders at the Annual General Meeting held on May 28, 2014.

5.9 Miscellaneous Expenses under Note 31 exclude ` 10.83 crore (FY 2013-14 ` 13.02 crore, FY 2012-13 ` 9.13 crore) in respect of amounts utilised out of Shelter Assistance Reserve and ` Nil (FY 2013-14 ` 0.46 crore, FY 2012-13 ` 0.69 crore) in respect of amounts utilised out of Corporate Social Responsibility Account during the year.

5.10 Pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs amending the Accounting Standard 11, the Corporation has exercised the option as per Para 46A inserted in the Standard for all long term monetary assets and liabilities. Consequently, an amount of ``` 33.75 crore (without considering future tax benefit of ``` 11.47 crore) [(PY 2013-14 ` 142.34 crore, 2012-13 `169.79 crore) (without considering future tax benefits of PY 2013-14 ` 48.38 crore, PY 2012-13 ` 169.79 crore)] is carried forward in the Foreign Currency Monetary Items Translation Difference Account as on March 31, 2015. This amount is to be amortised over the period of the monetary assets/liabilities ranging upto 4 years.

5.11 During the year, there was a net reduction of ``` 108.59 crore (PY 2013-14 ` 27.45 crore, PY 2012-13 ` 36.45 crore) in the Foreign Currency Monetary Items Translation Difference Account as under :

` in Crore Particulars 2014-15 2013-14 2012-13 Net Revaluation of monetary assets & liabilities 128.54 (117.20) 4.99 Net (Debit) Credit to the Statement of Profit & Loss on account of repayments during the year (93.21) 197.68 (46.54) Net amortisation credit (debit) during the year 73.26 (53.03) 78.00 Net reduction during the year 108.59 27.45 36.45

5.12 The Board of Directors of the Company at its meeting held on March 19, 2015, inter alia, has approved the payment of an interim dividend of ` 2 per equity share of face value of ` 2 each of the Corporation, for the financial year 2014-15

5.13 During the year 2009-10, the Corporation had made a simultaneous issue of Zero Coupon Secured Redeemable Non-Convertible Debentures (ZCD) aggregating to ``` 4,000 crore and 1,09,53,706 warrants at a issue price of ``` 275 per warrant aggregating to ``` 301.23 crore. Each of the warrants entitled the holder to acquire one equity share of the Corporation at an exercise price of ``` 3,000 per share of face value of ` 10 each (now exercise price of ` 600 per share of face value of ` 2 each) on or before August 23, 2012. The said issue of ZCD and Warrants was made under Chapter XIII-A of the Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines, 2000. In the FY 2012-13, the Subscription amount received on Issue of warrants has been transferred from Capital Reserve to Securities Premium Account as the same is not refundable / adjustable in future.

6 The Funds for Future Appropriations (FFA), in the participating segment, represents the surplus, which is not allocated to policyholders or shareholders as at the Balance Sheet date. Transfers to and from the fund reflect the excess/deficit of income over expenses/expenses over income respectively and appropriations in each accounting period arising in the Company’s policyholders’ fund. Any allocation to the par policyholders would also give rise to a transfer to Shareholders’ Profit and Loss Account in the required proportion.

The FFA in the linked segment represents surplus on the lapsed policies unlikely to be revived. This surplus is required to be held within the policyholders’ fund till the time policyholders are eligible for revival of their policies.

282 As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 7 LONG TERM BORROWINGS ``` in Crore ` in Crore ` in Crore

Bonds and Debentures [Refer Note 7.8] 60,149.20 57,480.85 58,993.80 Term Loans : [Refer Note 7.5, 7.6 and 7.8] - Banks 9,960.44 7,900.92 7,233.80 - External Commercial Borrowing - Low Cost Affordable Housing 1,884.00 1,805.10 - - Others 3,678.77 4,039.77 3,180.08 Deposits 28,873.31 20,531.13 24,210.78 Others (Finance Lease) - 0.01 0.07 104,545.72 91,757.78 93,618.53 7.1 Long Term Borrowings are further sub classified as follows: Sr.No. Particulars Secured : [Refer Note 7.2] a) Bonds and Debentures - Bonds 46.50 52.25 57.50 - Non Convertible Debentures 54,004.70 53,930.60 55,426.30 b) Term Loans from Banks - Scheduled Banks 8,482.24 7,118.71 6,534.50 c) Term Loans from other parties - Asian Development Bank [Refer Note 7.3] 232.09 257.52 276.75 - Kreditanstalt für Wiederaufbau - - 10.65 - National Housing Bank 3,443.68 3,764.81 2,858.54 d) Others (Finance Lease) - 0.01 0.07 Total Secured 66,209.21 65,123.90 65,164.31 Unsecured : a) Bonds and Debentures - Non Convertible Subordinated Debentures 5,998.00 3,498.00 3,510.00 - Perpetual Debt Instrument 100.00 b) Term Loans from Banks - Scheduled Banks 1,478.20 782.21 699.30

c) External Commercial Borrowing - Low Cost Affordable Housing 1,884.00 1,805.10 -

d) Term Loans from other parties - Under a line from Kreditanstalt für Wiederaufbau 3.00 17.44 34.14

e) Deposits [Refer Note 7.7] 28,873.31 20,531.13 24,210.78 Total Unsecured 38,336.51 26,633.88 28,454.22 104,545.72 91,757.78 93,618.53 7.2 All secured Long Term Borrowings are secured by (i) Negative lien on the assets of the Corporation and GRUH Finance Ltd and/or mortgage of property as the case may be, subject to the charge created in favour of its depositors pursuant to the regulatory requirement under Section 29B of the National Housing Bank Act, 1987. (ii) First charge by way of hypothecation of education loan receivables of one of the subsidiary company's underlying portfolio of education loans and related collaterals. (iii) Encumbrance on leased vehicles of one of the subsidiary company, in respect of its finance lease arrangement.

7.3 The Corporation has availed a loan of USD 100 million from the Asian Development Bank (Loan II). In respect of tranches 1 and 2 aggregating to USD 60 million, as per the agreements with a scheduled bank, the Corporation has handed over the dollar funds to the bank overseas and has obtained rupee funds in India amounting to ` 200 crore by way of a term loan and ` 100 crore through the issue of bonds which have been subscribed by the bank. In respect of tranche 3 of USD 40 million, as per the agreement with a financial institution, the Corporation has handed over the dollars to a financial institution overseas and under a back-to-back arrangement obtained rupee funds in India. All payments in foreign currency are the responsibility of the financial institution. In terms of the agreements, the Corporation’s foreign exchange liability is protected.

283 7.4 The Corporation has availed an External Commercial Borrowing of USD 300 million for financing prospective owners of low cost affordable housing units under “approval route” in terms of Reserve Bank of India guidelines dated December 17, 2012. The borrowing has a maturity of five years. In terms of the RBI guidelines, these borrowings have been swapped into rupees for the entire maturity by way of principal only swaps. 7.5 As on March 31, 2015, the Corporation has foreign currency borrowings of USD 1,013.01 million equivalent (PY 2013-14 USD 740.63 million, PY 2012-13 USD 632.96 million equivalent). The Corporation has undertaken currency swaps, options and forward contracts on a notional amount of USD 495.81 million equivalent (FY 2013-14 USD 513 million, FY 2012-13 USD 286.75 million equivalent) to hedge the foreign currency risk. As on March 31, 2015, the Corporation’s net foreign currency exposure on borrowings net of risk management arrangements is USD Nil (FY 2013-14 USD Nil, FY 2012-13 USD Nil). Further, interest rate swaps on a notional amount of USD 330 million equivalent (FY 2013-14 USD 83 million equivalent, FY 2012-13 USD 130 million equivalent) are outstanding, which have been undertaken to hedge the interest rate risk on the foreign currency borrowings. As a part of asset liability management on account of the Corporation’s Adjustable Rate Home Loan product as well as to reduce the overall cost of borrowings, the Corporation has entered into interest rate swaps wherein it has converted its fixed rate rupee liabilities of a notional amount of ` 15,240 crore (FY 2013-14 ` 19,040 crore, FY 2012-13 ` 21,185 crore) as on March 31, 2015 for varying maturities into floating rate liabilities linked to various benchmarks. In addition, the Corporation has entered into currency swaps of a notional amount of USD 408.69 million equivalent (FY 2013-14 USD 409.49 million, FY 2012-13 USD 476.45 million equivalent) through which it has converted its rupee liabilities into foreign currency liabilities and the interest rate is linked to the benchmarks of respective currencies.

7.6 Monetary assets and liabilities (including those in respect of currency swap contracts) denominated in foreign currencies are revalued at the rate of exchange prevailing at the year end. Monetary items represented by currency swap contracts are restated at closing rate.

For forward contracts or instruments that are in substance, forward exchange contracts, the premiums on such contracts are being amortised over the life of contracts. The amount of exchange difference in respect of such contracts to be recognised as expense in the Statement of Profit and Loss over subsequent accounting periods is ` Nil (FY 2013-14 ` 6.77 crore, FY 2012-13 ` 29.90 crore).

7.7 Public deposits as defined in paragraph 2(1)(y) of the Housing Finance Companies (NHB) Directions, 2010, are secured by floating charge on the Statutory Liquid Assets maintained in terms of sub- sections (1) & (2) of Section 29B of the National Housing Bank Act, 1987.

7.8 Terms of redemption of bonds and debentures and for repayment terms of term loans:

A) BONDS & DEBENTURES (Previous Year figures are in brackets) ` in Crore Bonds & Debentures - Secured Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest 6.03% - 8% 800.00 - - 800.00 2013-14 (1,380.60) (500.00) - (1,880.60) 2012-13 (2,820.60) (800.00) - (3,620.60) 8.01% - 10% 24,366.00 8,353.70 10,495.00 43,214.70 2013-14 (24,349.00) (10,511.00) (7,910.00) (42,770.00) 2012-13 (20,020.70) (13,425.00) (9,105.00) (42,550.70) 10.01% - 11.95% 2,195.00 4,185.00 - 6,380.00 2013-14 (1,085.00) (5,295.00) - (6,380.00) 2012-13 - (2,195.00) (4,185.00) (6,380.00) Zero Coupon 2,810.00 800.00 - 3,610.00 2013-14 (2,435.00) (360.00) - (2,795.00) 2012-13 (450.00) (2,320.00) - (2,770.00) Variable Rate - Linked to G Sec 12.30 14.10 20.10 46.50 2013-14 (116.75) (13.15) (27.35) (157.25) 2012-13 (116.00) (12.30) (34.20) (162.50) TOTAL-SECURED A 30,183.30 13,352.80 10,515.10 54,051.20 2013-14 A (29,366.35) (16,679.15) (7,937.35) (53,982.85) 2012-13 A (23,407.30) (18,752.30) (13,324.20) (55,483.80)

Bonds & Debentures - Unsecured Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest 7.62% - 10% 475.00 500.00 5,023.00 5,998.00 2013-14 (975.00) - (2,523.00) (3,498.00) 2012-13 (500.00) (475.00) (2,535.00) (3,510.00) 10.01% - 11.95% - - 100.00 100.00 2013-14 - - - - 2012-13 - - - - TOTAL-UNSECURED B 475.00 500.00 5,123.00 6,098.00 2013-14 B (975.00) - (2,523.00) (3,498.00) 2012-13 B (500.00) (475.00) (2,535.00) (3,510.00) TOTAL-(SECURED-&-UNSECURED) A+B 30,658.30 13,852.80 15,638.10 60,149.20 2013-14 A+B (30,341.35) (16,679.15) (10,460.35) (57,480.85) 2012-13 A+B (23,907.30) (19,227.30) (15,859.20) (58,993.80)

284 B) TERM LOANS FROM BANKS (Previous Year figures are in brackets) ` in Crore Term Loans from Banks - Secured Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest Term Loans from Scheduled Banks - Rupee 7.01% - 9% - - - - 2013-14 (323.00) - - (323.00) 2012-13 (323.00) - - (323.00) 9.01% - 12.00% 4,354.85 963.70 2,763.88 8,082.43 2013-14 (1,620.24) (2,952.38) (2,223.09) (6,795.71) 2012-13 (1,398.61) (2,809.65) (2,003.24) (6,211.50) Term Loans from Scheduled Banks - Rupee Term Loans from Scheduled Banks - Foreign Currency USD LIBOR +150- 200 bps 399.81 - - 399.81 2013-14 - - - - 2012-13 - - - - TOTAL-SECURED A 4,754.66 963.70 2,763.88 8,482.24 2013-14 A (1,943.24) (2,952.38) (2,223.09) (7,118.71) 2012-13 A (1,721.61) (2,809.65) (2,003.24) (6,534.50) Term Loans from Banks - Unsecured Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest Term Loans from Scheduled Banks - Rupee 9.01% - 10.50% 285.00 - - 285.00 2013-14 - - - - 2012-13 (100.00) - - (100.00) Term Loans from Scheduled Banks - Foreign Currency USD LIBOR + 325 bps 1,193.20 - - 1,193.20 2013-14 (782.21) - - (782.21) 2012-13 - (599.30) - (599.30) TOTAL-UNSECURED B 1,478.20 - - 1,478.20 2013-14 B (782.21) - - (782.21) 2012-13 B (100.00) (599.30) - (699.30) TOTAL-(SECURED-&-UNSECURED) A+B 6,232.86 963.70 2,763.88 9,960.44 2013-14 A+B (2,725.45) (2,952.38) (2,223.09) (7,900.92) 2012-13 A+B (1,821.61) (3,408.95) (2,003.24) (7,233.80)

C) External Commercial Borrowing - Low Cost Affordable Housing - Unsecured Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest USD LIBOR + 175 bps - 1,884.00 - 1,884.00 2013-14 - (1,805.10) - (1,805.10) 2012-13 - - - - TOTAL-UNSECURED - 1,884.00 - 1,884.00 2013-14 - (1,805.10) - (1,805.10) 2012-13 - - - -

D) TERM LOANS FROM OTHER PARTIES Term Loans from Other parties - Secured Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest Asian Development Bank USD LIBOR + 40 bps 15.57 17.61 25.28 58.46 2013-14 (14.03) (15.87) (32.92) (62.82) 2012-13 (11.86) (13.42) (36.94) (62.22) Variable linked to Bank PLR 24.80 28.04 40.26 93.10 2013-14 (23.32) (26.37) (54.71) (104.40) 2012-13 (21.93) (24.80) (68.30) (115.03) Variable linked to G Sec 21.45 24.25 34.82 80.52 2013-14 (20.17) (22.81) (47.32) (90.30) 2012-13 (18.97) (21.45) (59.08) (99.50) Kreditanstalt für Wiederaufbau 1.70% - - - - 2013-14 - - - - 2012-13 (10.65) - - (10.65) National Housing Bank 5.50% - 8% 399.01 189.51 183.47 771.99 2013-14 (389.43) (216.49) (31.38) (637.30) 2012-13 (456.40) (309.75) (100.62) (866.77) 8.01% - 10% 931.11 585.33 1,155.26 2,671.70 2013-14 (927.81) (535.27) (879.34) (2,342.42) 2012-13 (776.75) (442.18) (678.95) (1,897.88) 10.01% -12% - - - - 2013-14 (217.62) (107.44) (460.03) (785.09) 2012-13 (93.89) - - (93.89) TOTAL-SECURED A 1,391.94 844.74 1,439.09 3,675.77 2013-14 A (1,592.38) (924.25) (1,505.70) (4,022.33) 2012-13 A (1,390.46) (811.60) (943.89) (3,145.94) Term Loans from Other parties - Unsecured Maturities - 1-3 years 3-5 years > 5 years TOTAL Rates of Interest Kreditanstalt für Wiederaufbau - 6% 3.00 - - 3.00 2013-14 (17.44) - - (17.44) 2012-13 (31.14) (3.00) - (34.14) TOTAL-UNSECURED B 3.00 - - 3.00 2013-14 B (17.44) - - (17.44) 2012-13 B (31.14) (3.00) - (34.14) TOTAL-(SECURED-&-UNSECURED) A+B 1,394.94 844.74 1,439.09 3,678.77 2013-14 A+B (1,609.82) (924.26) (1,505.70) (4,039.77) 2012-13 A+B (1,421.60) (814.59) (943.89) (3,180.08)

285 As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ``` in Crore ` in Crore ` in Crore 8 OTHER LONG TERM LIABILITIES Particulars Amounts payable on swaps [Refer Note 7.5 and 7.6] 397.08 718.60 486.08 Interest Accrued but not due on Borrowings 807.62 755.83 967.48 Premium payable on redemption of Debentures 1,160.26 693.65 315.34 Security and Other Deposits Received 9.97 14.05 15.11 Income Received in Advance 82.24 45.99 31.13 Trade Payables 72.97 41.19 186.82 0.02 Accrued Redemption Loss on Investments 15.98 18.89 19.27 Others - - 0.07 Others - - - 2,546.12 2,288.20 2,021.30

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ``` in Crore ` in Crore ` in Crore 9 LONG TERM PROVISIONS Particulars Provision for Employee Benefits [Refer Note 29.2] 73.20 43.64 43.69 Provision for Contingencies [Refer Notes 9.1 and 9.2] 1,576.47 1,370.14 1,315.40 Reserve for Unexpired Risk (Includes Insurance Reserve) 348.37 268.42 198.05 1,998.04 1,682.20 1,557.14

9.1 Provision for Contingencies includes provisions for standard assets and all other contingencies. In accordance with the prudential norms of National Housing Bank and Reserve Bank of India, the minimum provision required to be carried forward is ``` 1,210.03 crore (FY 2013-14 ` 1,042.85 crore, FY 2012-13 ` 1,150.58 crore) and ` 4.33 crore (FY 2013-14 ` 3.04 crore, FY 2012-13 ` 1.99 crore) respectively.

9.2 Movement in Provision for Contingencies Account during the year is as under: Particulars 2014-15 2013-14 2012-13 ` in Crore ` in Crore ` in Crore Opening Balance 1,370.14 1,315.40 1,270.04 Additions during the year (Net) [Refer Note 5.3] 216.56 75.17 57.77 Utilised during the year towards Diminution in Value of Investments, etc. (10.23) (20.43) (12.41) Closing Balance 1,576.47 1,370.14 1,315.40

286 As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 10 SHORT-TERM BORROWINGS ``` in Crore ` in Crore ` in Crore Particulars Loans repayable on demand: - from Banks - Unsecured 291.46 9.64 279.60 Deposits - Unsecured [Refer Note 7.7] 2,853.39 5,757.90 5,652.81 Other loans and advances - Scheduled Banks - Secured [ Refer Note 10.1] 4,668.26 9,845.00 3,285.00 - National Housing Bank - Secured [Refer Note 10.1] - - 36.85 - Scheduled Banks - Unsecured - 500.00 - - Commercial Papers - Unsecured 26,606.94 9,899.97 9,429.52 34,420.05 26,012.51 18,683.78

10.1 All secured Short Term Borrowings are secured by; (i) Negative lien on the assets of the Corporation and GRUH Finance Ltd and/or mortgage of property as the case may be, subject to the charge created in favour of its depositors pursuant to the regulatory requirement under Section 29B of the National Housing Bank Act, 1987. (ii) First charge by way of hypothecation of education loan receivables of one of the subsidiary company's underlying portfolio of education loans and related collaterals.

10.2 Commercial papers of the Corporation have a maturity value of ``` 27,615.00 crore (FY 2013-14 ` 10,230.00 crore, FY 2012-13 ` 9,675.00 crore)

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 11 TRADE PAYABLES ``` in Crore ` in Crore ` in Crore Particulars Trade payables 2,984.85 2,371.99 1,780.70 2,984.85 2,371.99 1,780.70

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 12 OTHER CURRENT LIABILITIES ``` in Crore ` in Crore ` in Crore Particulars Policy Liabilities (Policyholder's Fund) 10,531.68 4,300.42 4,238.40 Current maturities of long-term borrowings 78,390.95 72,831.68 51,114.90 Interest accrued but not due on borrowings 5,393.38 5,393.57 4,268.05 Interest accrued and due on borrowings 2.67 7.37 4.96 Premium payable on redemption of debentures 136.54 167.17 402.62 Interest accrued and due on matured deposits 78.70 55.19 33.10 Income and other amounts received in advance 295.30 218.06 249.69 Interim Dividend Payable 3.53 - Unclaimed dividend 17.99 15.26 12.38 Unclaimed matured deposits 626.32 446.13 313.15 Current Maturities Of Finance Lease Obligations [Refer Note 12.3] 0.01 0.05 0.11 Other payables - Statutory Remittances 220.94 186.23 203.69 - Financial Assistance from Kreditanstalt für Wiederaufbau 7.78 20.93 164.78 - Amounts payable - Securitised Loans 567.73 514.84 449.39 - Amounts payable to Gratuity Fund - - 6.34 - Amounts payable on swaps [Refer Note 7.5 and 7.6] 172.57 167.24 102.09 - Accrued Redemption Loss on Investments - 2.32 9.40 - Others 340.71 365.57 637.16 7,864.17 7,559.93 6,856.91 96,786.80 84,692.03 62,210.21

287 12.1 Current maturities of Long Term Borrowings are further sub classified as follows: As at As at As at S.No. Particulars March 31, 2015 March 31, 2014 March 31, 2013 ``` in Crore ` in Crore ` in Crore Secured [Refer Note 12.2] a) Bonds and Debentures - Bonds 5.75 5.25 5.00 - Non-Convertible Debentures 29,874.60 26,955.00 19,918.30 b) Term Loans from Banks - Scheduled Banks 9,358.62 12,119.30 5,052.74 c) Term Loans from other parties - Asian Development Bank 28.17 26.22 24.05 - Kreditanstalt für Wiederaufbau - 12.74 10.65 - National Housing Bank 790.16 893.06 892.75

Unsecured a) Bonds and Debentures - Non-Convertible Subordinated Debentures 500.00 80.70 411.00 b) Term Loans from Banks - Scheduled Banks 2,191.00 1,455.92 2,100.81 c) Term Loans from other parties - Under a line from Kreditanstalt für Wiederaufbau 14.44 16.70 5.00 d) Deposits [Refer Note 7.7] 35,628.20 31,266.79 22,694.60 78,390.95 72,831.68 51,114.90

12.2 Secured Current maturities of Long Term Borrowings are secured by; (i) Negative lien on the assets of the Corporation and GRUH Finance Ltd and/or mortgage of property as the case may be, subject to the charge created in favour of its depositors pursuant to the regulatory requirement under Section 29B of the National Housing Bank Act, 1987. (ii) First charge by way of hypothecation of education loan receivables of one of the subsidiary company's underlying portfolio of education loans and related collaterals. 12.3 Current maturities of Finance lease obligation are secured by encumbrance on leased vehicles of one of the subsidiary company, in respect of its finance lease arrangement.

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ``` in Crore ` in Crore ` in Crore 13 SHORT-TERM PROVISIONS

Provision for Employee benefits [Refer Note 29.2] 188.28 163.66 144.06 Provision for Tax (net of Advance Tax) 87.73 75.00 74.79 Proposed Dividend 2,047.12 2,184.75 1,932.93 Additional Tax on Proposed Dividend 431.54 380.48 336.08 Claims Incurred but not reported (IBNR) and Incurred but not enough reported (IBNER) 569.94 431.28 388.57 Reserve for Unexpired Risk (Includes Insurance Reserve) 871.68 847.21 736.75 4,196.29 4,082.38 3,613.18

288 Previous Year 2013-14 figures are in (brackets) 14 TANGIBLE ASSETS FY 2014-15 ` in Crore GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK As at As at As at As at As at As at March 31, March 31, March 31, March 31, March 31, March 31, 2014 Additions Deductions 2015 2014 For the Year Deductions 2015 2015 2014 Land : Freehold 16.67 - - 16.67 - - - - 16.67 16.67 (16.67) - - (16.67) - - - - (16.67) (16.67) Leasehold 3.44 366.80 - 370.24 0.66 2.29 - 2.95 367.29 2.78 (3.44) - - (3.44) (0.62) (0.04) - (0.66) (2.78) (2.82) Buildings : Own Use 573.64 119.90 37.03 656.51 71.06 3.25 - 74.31 582.20 502.58 Under Operating Lease ------(519.37) (61.90) (7.63) (573.64) (58.40) (3.54) 9.12 (71.06) (502.58) (460.97) Leasehold Improvements 110.72 11.81 2.93 119.60 48.43 18.81 (1.41) 68.65 50.95 62.29 (60.19) (57.32) (6.79) (110.72) (42.95) (10.57) (5.09) (48.43) (62.29) (17.24) Computer Hardware 215.61 43.41 11.98 247.04 151.25 9.05 (14.43) 174.73 72.31 64.36 (210.69) (39.96) (38.24) (212.41) (160.91) (10.48) (22.84) (148.55) (63.86) (49.78) Furniture & Fittings Own Use 155.00 10.00 8.15 156.85 117.61 (1.00) 4.31 112.30 44.55 37.39 (138.89) (27.46) (11.35) (155.00) (118.75) (5.72) (6.86) (117.61) (37.39) (20.14) Under Operating Lease 0.71 - 0.71 0.00 0.63 0.07 0.70 - 0.00 0.08 (0.71) - - (0.71) (0.62) (0.01) - (0.63) (0.08) (0.09) Office Equipment etc. Own Use 155.04 15.52 9.11 161.45 107.03 4.94 1.11 110.86 50.59 48.01 (138.80) (27.58) (11.34) (155.04) (106.40) (6.84) (6.21) (107.03) (48.01) (32.40) Under Operating Lease 0.80 0.80 - 0.67 0.12 0.79 - 0.00 0.13 (0.80) - - (0.80) (0.65) (0.02) - (0.67) (0.13) (0.15) Vehicles : Owned 24.85 10.54 2.32 33.07 12.53 1.35 (0.60) 14.48 18.59 12.32 (20.76) (5.82) (1.73) (24.85) (10.04) (2.21) 0.28 (12.53) (12.32) (10.72)

Under Finance Lease 0.29 - 0.17 0.12 0.24 - 0.14 0.10 0.02 0.05 (0.66) - (0.37) (0.29) (0.53) - (0.29) (0.24) (0.05) (0.13) Leased Assets : Plant & Machinery * 129.18 - - 129.18 129.18 - 129.18 - - (130.65) - (1.47) (129.18) (130.65) - (1.47) (129.18) - - Vehicles * 16.37 - - 16.37 16.37 - - 16.37 - - (16.37) - - (16.37) (16.37) - - (16.37) - - Computers * ------(0.20) - (0.20) - (0.20) - (0.20) - - - 1,402.32 577.98 73.20 1,907.10 655.66(2) 38.88(1) (9.39) 703.93 1,203.17 746.66

Previous Year 2013-14 (1,258.20) (220.04) (79.12) (1,399.12) (647.09) (39.43) (33.56) (652.96) (746.16) (611.11) (*) Assets held for disposal

14.1 The Corporation has reviewed its policy of providing for depreciation on its tangible fixed assets and has also reassessed their useful lives. On and from April 1, 2014, the straight line method is being used to depreciate all classes of tangible fixed assets. Previously, the straight line method was used for depreciating Buildings, Computers, Leased Assets and Leasehold Improvements while other tangible fixed assets were being depreciated using the reducing balance method. The revised useful lives, as assessed by Management, match those specified in Part C of Schedule II to the Companies Act, 2013, for all classes of assets other than Computer Hardware and Vehicles. Management believes that the revised useful lives of the assets reflect the periods over which these assets are expected to be used.

As a result of the change, the charge on account of Depreciation for year, is lower by ``` 18.78 crore compared to the method used and useful lives estimated in earlier periods. Notes (1) Net of depreciation for the year amounting to ``` 52.49 crore (FY 2013-14 ` 36.76 crore) included in Other expenses pertaining to Insurance Business. (2) Depreciation for the financial year excludes ``` 3.98 crore (FY 2013-14 ` 2.27 crore) being depreciation charge on Investment in Properties.

289 Previous Year 2013-14 figures are in (brackets) 15 INTANGIBLE ASSETS FY 2014-15 ` in Crore GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK As at As at As at As at As at As at March 31, March 31, March 31, March 31, March 31, March 31, 2014 Additions Deductions 2015 2014 For the Year Deductions 2015 2015 2014 Computer Software Owned 185.05 36.14 - 221.19 115.13 3.09 (31.68) 149.90 71.29 69.92 (141.79) (46.46) - (188.25) (87.57) (4.98) 25.28 (117.83) (70.42) (54.22) Goodwill 149.41 8.33 - 157.74 149.36 0.63 - 149.99 7.75 0.05 (149.41) - - (149.41) (149.36) - - (149.36) (0.05) (0.05) Website Development 2.52 0.22 - 2.74 2.50 0.03 - 2.53 0.21 0.02 (2.45) (0.07) - (2.52) (2.33) (0.17) - (2.50) (0.02) (0.12) 336.98 44.69 - 381.67 266.99(1) 3.75 (31.68) 302.42 79.25 69.99 Previous Year 2013-14 (293.65) (46.53) - (340.18) (239.26) (5.15) 25.28 (269.69) (70.49) (54.39) Notes (1) Net of depreciation for the year amounting to ``` 31.61 crore (FY 2013-14 ` 25.26 crore) included in Other expenses pertaining to Insurance Business.

290 14 TANGIBLE ASSETS FY 2013-14 (Previous Year 2012-13 figures are in brackets) ` in Crore GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK As at As at As at As at As at As at March 31, March 31, March 31, March 31, March 31, March 31, 2013 Additions Deductions 2014 2013 For the Year Deductions 2014 2014 2013 Land : Freehold 16.67 - - 16.67 - - - - 16.67 16.67 (16.67) - - (16.67) - - - - (16.67) (16.67) Leasehold 3.44 - - 3.44 0.62 0.04 - 0.66 2.78 2.82 (3.44) - - (3.44) (0.58) (0.04) - (0.62) (2.82) (2.86) Buildings : Own Use 519.37 61.90 7.63 573.64 58.40 3.54 (9.12) 71.06 502.58 460.97 (519.36) (0.05) (0.04) (519.37) (49.93) (3.62) 4.85 (58.40) (460.97) (469.43)

Leasehold Improvements 60.19 57.32 6.79 110.72 42.95 10.57 5.09 48.43 62.29 17.24 (53.61) (8.85) (2.27) (60.19) (36.35) (7.77) (1.17) (42.95) (17.24) (17.26)

Computer Hardware 210.69 39.96 38.24 212.41 160.91 10.48 22.84 148.55 63.86 49.78 (197.14) (31.05) (17.50) (210.69) (157.15) (9.10) (5.34) (160.91) (49.78) (39.99)

Furniture & Fittings: Own Use 138.89 27.46 11.35 155.00 118.75 5.72 6.86 117.61 37.39 20.14 (137.69) (8.26) (7.06) (138.89) (115.01) (3.95) (0.21) (118.75) (20.14) (22.68) Under Operating Lease 0.71 - - 0.71 0.62 0.01 - 0.63 0.08 0.09 (0.71) - - (0.71) (0.60) (0.02) - (0.62) (0.09) (0.11) Office Equipment etc.: Own Use 138.80 27.58 11.34 155.04 106.40 6.84 6.21 107.03 48.01 32.40 (136.47) (9.73) (7.40) (138.80) (100.83) (5.58) (0.01) (106.40) (32.40) (35.64) Under Operating Lease 0.80 - - 0.80 0.65 0.02 - 0.67 0.13 0.15 (0.80) - - (0.80) (0.63) (0.02) - (0.65) (0.15) (0.17) Vehicles : Owned 20.76 5.82 1.73 24.85 10.04 2.21 (0.28) 12.53 12.32 10.72 (15.33) (7.45) (2.02) (20.76) (8.49) (2.20) (0.65) (10.04) (10.72) (6.84) Under Finance Lease 0.66 - 0.37 0.29 0.53 - 0.29 0.24 0.05 0.13 (0.66) - - (0.66) (0.40) - 0.13 (0.53) (0.13) (0.26) Leased Assets : Plant & Machinery * 130.65 - 1.47 129.18 130.65 - 1.47 129.18 - - (130.65) - - (130.65) (130.65) - - (130.65) - - Vehicles * 16.37 - - 16.37 16.37 - - 16.37 - - (16.37) - - (16.37) (16.37) - - (16.37) - - Computers * 0.20 - 0.20 - 0.20 - 0.20 - - - (0.20) - - (0.20) (0.20) - - (0.20) - - 1,258.20 1,258.20 220.04 79.12 1,399.12 647.09 (2) 39.43 (1) 33.56 652.96 746.16 611.11 Previous Year 2012-13 (1,229.10) (65.39) (36.29) (1,258.20) (617.19) (32.30) (2.40) (647.09) (611.11) (611.91) (*) Assets held for disposal

Notes (1) Net of depreciation for the year amounting to ``` 36.76 crore (FY 2012-13 ` 31.83 crore) included in Other expenses pertaining to Insurance Business. (2) Depreciation for the financial year excludes ``` 2.27 crore (FY 2012-13 ` 2.42 crore) being depreciation charge on Investment in Properties.

15 INTANGIBLE ASSETS FY 2013-14 (Previous Year 2012-13 figures are in brackets) ` in Crore GROSS BLOCK DEPRECIATION AND AMORTISATION NET BLOCK As at As at As at As at As at As at March 31, March 31, March 31, March 31, March 31, March 31, 2013 Additions Deductions 2014 2013 For the Year Deductions 2014 2014 2013 Computer Software Owned 141.79 46.46 - 188.25 87.57 4.98 (25.28) 117.83 70.42 54.22 (105.12) (105.12) (36.67) - (141.79) (67.86) (4.42) 15.29 (87.57) (54.22) (37.26)

Goodwill 149.41 - - 149.41 149.36 - - 149.36 0.05 0.05 (149.41) (149.41) - - (149.41) (134.44) (14.92) - (149.36) (0.05) (14.97)

Website Development 2.45 0.07 - 2.52 2.33 0.17 - 2.50 0.02 0.12 (2.39) (2.39) (0.06) - (2.45) (2.19) (0.14) - (2.33) (0.12) (0.20) 293.65 46.53 - 340.18 239.26 5.15 (1) (25.28) 269.69 70.49 54.39 Previous Year 2012-13 (256.92) (36.73) - (293.65) (204.49) (19.48) 15.29 (239.26) (54.39) (52.43)

Notes (1) Net of depreciation for the year amounting to ``` 25.26 crore (FY 2012-13 ` 15.30291 crore) included in Other expenses pertaining to Insurance Business. 16 Non Current Investments As at As at As at Particulars March 31, 2015 March 31, 2014 March 31, 2013 ``` in Crore ` in Crore ` in Crore Investment in Associates: Equity Shares Equity Investments in Associates by the Holding Company 1,468.97 1,468.97 1,468.59 Equity Investments in Associate by Subsidiaries 73.32 73.32 73.32 1,542.29 1,542.29 1,541.91 Add: Goodwill on Acquisition of Associates (share of pre-acquisition of losses) 3,891.12 3,891.12 3,897.81 5,433.41 5,433.41 5,439.72 Add: Adjustment of post-acquisition share of profit of Associates (Equity 12,581.71 8,833.19 7,123.13 Method) 18,015.12 14,266.60 12,562.85 Less: Provision for Diminution in Value of Investments (2.50) (2.50) - (A) 18,012.62 14,264.10 12,562.85

Other Investments Insurance Companies Equity Shares - Other Companies 32,201.78 23,124.73 18,235.16 Preference Shares 69.36 55.19 - Non Convertible Debentures and Bonds 12,275.45 10,523.37 8,704.28 Pass Through Certificates & Security Receipts 3.70 37.37 112.69 Government Securities 18,548.00 11,929.09 8,966.39 Mutual Funds and Other Funds 3.18 14.04 15.20 Fixed Deposits 227.15 199.25 241.25 Properties (Net of Depreciation) - - 41.37 63,328.62 63,328.62 45,883.04 36,316.34 Add: Fair Value Adjustment (23.71) (7.93) 10.84 (B) 63,304.91 45,875.11 36,327.18

As at As at As at Particulars March 31, 2015 March 31, 2014 March 31, 2013 ``` in Crore ` in Crore ` in Crore Investments related to Policy Holders 18,290.85 12,561.57 9,013.94 Investments to cover linked liabilities 4,869.85 30,020.18 24,902.14 Investments related to Shareholders 40,144.21 3,293.36 2,411.10 3,304.91 63,304.91 45,875.11 36,327.18

292 16.1 Encumbrances The assets of the subsidiary company (HDFC Standard Life Insurance Company Limited) are free from any encumbrances at March 31, 2015, except for Fixed Deposits and Government Securities, mentioned below, kept as margin against bank guarantees/ margin with exchange and collateral securities issued.

As at As at As at Particulars March 31, 2015 March 31, 2014 March 31, 2013 ` in Crore ` in Crore ` in Crore (i) issued in India 88.50 88.01 68.09 (ii) issued outside India 0.09 0.08 0.07 Total 88.59 88.09 68.16

As at As at As at Particulars March 31, 2015 March 31, 2014 March 31, 2013 ``` iinn CCrroorree `` iinn CCrroorree `` iinn CCrroorree Other Investments Other than Insurance Companies Equity Shares - Subsidiary and Associate - 10.01 10.44 Equity Shares - Other Companies 613.69 810.66 822.16 Preference Shares 97.98 97.75 57.75 Debentures and Bonds 313.94 394.41 777.43 Pass Through Securities & Security Receipts 45.22 63.88 71.05 Government Securities 4,140.95 3,765.29 2,804.32 Mutual Funds and Other Funds 166.70 77.09 124.99 Properties (Net of Depreciation) 270.93 102.88 141.55 5,649.41 5,649.41 5,321.97 4,809.69 Less: Provision for Diminution in Value of Investments (79.35) (83.92) (83.48) (C) 5,570.06 5,238.05 4,726.21 Total (A) + (B) + (C) 86,887.59 65,377.26 53,616.24

Book Value Market Value ``` in Crore ` in Crore

Aggregate book value of Quoted Investments 286.10 443.65 2013-14 443.09 572.79 2012-13 417.61 682.55

Aggregate book value of Investments listed but not quoted 4,248.97 2013-14 3,926.38 2012-13 2,966.24

Aggregate book value of Investments in Unquoted Mutual Funds 34.54 * 32.50 2013-14 10.00 10.06 2012-13 5.00 5.02

Aggregate book value of Unquoted Investments (Others) 729.52 2013-14 755.70 2012-13 1,195.81

Properties 270.93 2013-14 102.88 2012-13 141.55 5,570.06 5,570.06 2013-14 5,238.05 2012-13 4,726.21

* Market value of investments in Unquoted Mutual Funds represents repurchase price of units issued by Mutual Funds.

Note: Unquoted investments include ``` Nil (FY 2013-14 ` 6.08 crore, FY 2012-13 `9.71 crore) in respect of equity shares, which are subject to a lock-in period and include ``` 40.17 crore (FY 2013-14 ` 35.96 crore, FY 2012-13 ` 20.95 crore)293 in respect of equity shares, which are subject to restrictive covenant. 17 DEFERRED TAX ASSET / LIABILITIES: In compliance with the Accounting Standard 22 on ‘Accounting for Taxes on Income’ (AS 22), debit has been taken for ``` 282.08 crore (FY 2013-14 debit had been taken ` 41.29 crore, FY 2012-13 credit had been taken ` 5.25 crore) in the Statement of Profit and Loss for the year ended March 31, 2015 towards deferred tax asset (net) for the year, arising on account of timing differences, ` 578.74 crore (FY 2013-14 ` Nil, FY 2012-13 ` Nil) has been adjusted against utilisation from the General Reserve (as per Note 5.2) and ``` Nil (FY 2013-14 ` 29.23 crore, FY 2012-13 ` Nil) has been adjusted against the utilisation from Statutory Reserve u/s 29C of National Housing Bank Act, 1987 as per Note 5.3.

Major components of deferred tax assets and liabilities arising on account of timing differences are : ` in Crore Deferred Tax Liability Deferred Tax Assets Particulars Assets / (Liabilities) Assets / (Liabilities) 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 (a) Depreciation (76.25) (17.15) - 8.65 (42.86) (56.55) (b) Preliminary Expenses - - - 0.01 0.02 0.03 (c) Special Reserve II (924.31) - - - - - (d) Provision for Contingencies 748.63 - - 6.77 691.88 648.65 (e) Provision for Employee Benefits 46.04 1.03 - 3.19 34.82 29.80 (f) Accrued Redemption Loss (net) 5.93 - - - 8.11 10.61 (g) Unabsorbed Depreciation - - - - 13.55 (h) Others (net) (31.36) 0.30 - (0.07) (28.63) 13.49 Total (231.32) (15.82) - 18.55 663.34 659.58

17.1 In the previous year, in respect of HDFC ERGO General Insurance Company Limited, in view of the existence of unabsorbed depreciation and carried forward business loss, the recognition of deferred tax assets is restricted to the extent of deferred tax liability arising from timing differences on account of depreciation, reversal of which is virtually certain.

17.2 In respect of Credila Financial Services Pvt. Ltd., the deferred tax assets are recognised only to the extent that there are timing differences and there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. 17.3 In respect of HDFC Standard Life Insurance Company Ltd., during the year provision for tax (net) amounting to ``` 138.40 crore (FY 2013-14 ` 68.83 crore, FY 2012-13 ` 55.86 crore), ``` 119.34 core charged to the Revenue Account (FY 2013-14 ` 151.60 crore, FY 2012-13 ` 51.62 crore) and ``` 19.07 crore charged/(credited) in the Profit and Loss Account [FY 2013-14 (` 82.77) crore, FY 2012-13 ` 4.24 crore], in accordance with the Income tax Act, 1961 and Rules and Regulations there under as applicable to the Company.

Pursuant to the order of the Tax Appellate Authorities dated September 20, 2013, received during the financial year 2013-14, in accordance to the Accounting Standard 22, specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014, the Company has reassessed the unrecognised Deferred Tax Asset on carried forward losses in each line of business (segments) and has recognized previously unrecognized Deferred Tax Assets to the extent that it has become virtually certain that sufficient taxable income is available against which the Deferred Tax Asset can be utilised. Form A-RA and Part V of Schedule A of the IRDA Financial Statements Regulations, requires tax expense to be charged to each line of business (segments). Accordingly, the company has charged tax expense in respective lines of business, based on taxable income computed arising out of the actuarial surplus of each line of business. In order to maintain equity amongst the various segments, the said taxable income is calculated after considering the brought forward tax losses and exempt income, if any, based on the above order, as considered appropriate, for each line of business.

Provision for tax in Profit and Loss Account for the financial year 2013-14, a credit of ` 82.77 crore represents deferred tax credit which has been utilised for setting off the tax charge in the Revenue Account. As at March 31, 2014 deferred tax asset on carry forward unabsorbed losses is ` Nil (FY 2012-13 ` Nil)

294 As at As at As at 18 LONG-TERM LOANS AND ADVANCES March 31, 2015 March 31, 2014 March 31, 2013 Particulars ``` in Crore ` in Crore ` in Crore Loans: [Refer Notes 18.1,18.2 & 18.4] - Individuals 156,462.80 133,374.31 110,449.14 - Corporate Bodies 52,653.39 48,786.76 46,084.74 - Others 2,904.35 1,816.65 1,355.34 212,020.54 183,977.72 157,889.22 Less: Provision for Sub-Standard and Doubtful Loans 553.77 481.98 [Refer Note 18.3] 489.45 (Including additional provision made by HDFC Ltd. and GRUH Finance Ltd.) 211,531.09 183,423.95 157,407.24 Others: Corporate Deposits - Unsecured; Considered doubtful 2.00 2.00 2.00 Capital Advances - Unsecured; Considered good 17.64 6.75 12.78 Advance against Investment in Properties 0.59 184.82 52.43 Security Deposits - Unsecured; Considered good 66.18 366.56 220.28 Instalment due from Borrowers - Secured; Considered doubtful 99.39 83.92 79.17 Other Long Term Loans and Advances - Staff Loan others - Secured, Considered good 17.53 15.04 14.82 - Prepaid Expenses - Unsecured, Considered good 241.11 158.78 130.92 - Advance Tax (Net of Provision) 2,587.88 2,231.01 1,637.01 - Others - Unsecured, Considered good 120.65 37.91 40.96 - Others - Unsecured, Considered doubfful 49.71 49.71 49.71 3,202.68 3,136.50 2,240.08 Less : Provision for Doubtful Receivables 51.71 51.71 51.71 3,150.97 3,084.79 2,188.37

221,139.14 186,508.74 159,595.61

18.1 Out of Loans, amounts aggregating to ``` 2,09,268.48 crore (FY 2013-14 ` 1,81,512.35 crore, FY 2012-13 ` 1,55,734.24 crore) are secured or partly secured by:

(a) Equitable mortgage of property and / or (b) Pledge of shares, units, other securities, fixed deposits, assignment of life insurance policies and / or (c) Hypothecation of assets and / or (d) Bank guarantees, company guarantees or personal guarantees and / or (e) Negative lien and / or (f) Assignment of hire purchase receivables and / or (g) Undertaking to create a security.

18.2 Long Term Loans and Advances include Sub-Standard and Doubtful loans of ``` 1,568.33 crore (FY 2013-14 ` 1,433.06 crore, FY 2012-13 ` 1,217.10 crore).

18.3 Movement in Provision for Sub-Standard and Doubtful Loans is as under: As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ``` in Crore ` in Crore ` in Crore Opening Balance 553.77 481.98 460.07 Additions during the year [Refer Note 5.3] (36.54) 117.97 39.11 Utilised during the year – towards Loans written off (27.78) (46.18) (17.20) Closing Balance 489.45 553.77 481.98

18.4 Loans include ``` 198.33 crore (FY 2013-14 ` 35.31 crore, FY 2012-13 ` 27.99 crore) in respect of properties held for disposal under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. As at As at As at 19 OTHER NON-CURRENT ASSETS March 31, 2015 March 31, 2014 March 31, 2013 Particulars ``` in Crore ` in Crore ` in Crore Unamortised discount on Non Convertible Debentures - 2.24 20.22 Receivable on Securitised Loans 353.18 331.57 246.14 Forward Receivable 104.00 104.00 - Interest Accrued but not due on Loans 373.24 356.99 230.20 Interest accrued but not due on Bank Deposits 31.08 5.74 2.20 Income accrued but not due on Investments 51.62 61.84 132.84 Bank deposit with maturities beyond twelve months from theBalance Sheet date [Refer Note 19.1] 1,886.40 68.23 199.47 2,799.52 930.61 831.07

19.1 Bank deposits with maturities beyond twelve months includes earmarked balances ``` 58.46 crore (FY 2013-14 ` 62.82 crore, FY 2012-13 ` 62.23 crore) against foreign currency loans, ``` 0.13 crore (FY 2013-14 ` 0.13 crore, FY 2012-13 ` 0.11 crore) towards letter of credit issued by bank and ` 0.21 crore (FY 2013-14 ` 0.20 crore, FY 2012-13 ` Nil) against letter of guarantee issued by the bank to one of the subsidiary company.

295 20 Current Investments As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 Insurance Companies [Refer Note 16.1] ``` in Crore ` in Crore ` in Crore

Particulars Non Convertible Debentures and Bonds 821.13 905.88 417.50 Investment: Insurance Co - Preference Shares 19.67 - - Pass Through Certificates & Security Receipts 31.21 76.28 32.49 Government Securities 943.04 204.40 31.51 Investment: Insurance Co - Securities Receipts 4.23 - 0 Mutual Funds and Other Funds 63.10 3.32 90.00 Fixed Deposits 328.00 720.69 212.00 Commercial Papers 83.34 95.73 - Certificate of Deposits 844.30 954.29 1,549.68 Treasury Bills 762.52 2,235.43 998.59 Repo Investments 1,777.36 1,128.02 1,185.95 Investment: Insurance Co - Less: Fair Value Change (2.09) (0.00) - 5,675.81 6,324.04 4,517.72 Add/(Less): Fair Value Adjustment Less: Provision for Diminution in Value of Investments - - - (A) 5,675.81 6,324.04 4,517.72

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 ``` in Crore ` in Crore ` in Crore Investments related to Policy Holders 1,266.10 1,937.82 1,590.91 Investments to cover linked liabilities 936.37 3,058.72 2,069.17 Investments related to Shareholders 3,473.34 1,327.50 857.64 5,675.81 6,324.04 4,517.72

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 Other than Insurance Companies ``` in Crore ` in Crore ` in Crore

Particulars Held as Current Investments (At cost or market value whichever is lower unless stated otherwise) Equity Shares - Subsidiary Companies 131.92 108.67 - Equity Shares - Unlisted Company 45.00 - - Debentures - Convertible - Subsidiary Companies 265.18 265.18 - Non Convertible Debentures and Bonds 9.25 20.00 45.00 Certificate of Deposits - - 522.99 Mutual Funds 554.58 660.87 661.34 Current Maturities of Long Term Investments (At cost) Security Receipts 13.11 - - Government Securities 30.60 52.70 100.79 Venture Funds and Other Funds 44.77 86.07 27.78 Non Convertible Debentures and Bonds 130.00 19.99 2.00 1,224.41 1,213.48 1,359.90 Less: Provision for Diminution in Value of Investments (5.39) (0.57) (1.44) (B) 1,219.02 1,212.91 1,358.46 Total (A) + (B) 6,894.83 7,536.95 5,876.18

Book Value Market Value ``` in Crore ` in Crore

Aggregate book value of Quoted Investments 137.86 137.86 2013-14 200.00 199.85 2012-13 75.10 76.14

Aggregate book value of Investments listed but not quoted 139.32 2013-14 62.28 2012-13 109.50

Aggregate book value of Investments in Unquoted Mutual Funds 416.70 * 533.58 2013-14 470.87 496.50 2012-13 621.23 622.05

Aggregate book value of Unquoted Investments (Others) 525.14 2013-14 479.76 2012-13 552.63 1,219.02 2013-14 1,212.91 2012-13 1,358.46

* Market value of investments in Unquoted Mutual Funds represents repurchase price of units issued by Mutual Funds. 296 As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 21 TRADE RECEIVABLES ``` in Crore ` in Crore ` in Crore Particulars Trade Receivables – Unsecured; Considered good, less than six months 456.42 369.99 206.95 Trade Receivables – Unsecured; Considered good, more than six months 5.47 7.02 9.07 461.89 377.01 216.02 Less : Provision for Doubtful Receivables [Refer Note 5.3] 4.10 0.22 - 457.79 376.79 216.02

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 22 CASH AND BANK BALANCES ``` in Crore ` in Crore ` in Crore Particulars (a) Cash and cash equivalents (i) Balances with banks: - In Current Accounts 527.83 2,506.77 1,177.42 - In Deposit Accounts with original maturity less than 3 months 2,621.92 3,532.61 2,888.70 (ii) Cash on Hand 0.39 0.57 0.96 (iii) Cheques on Hand 397.58 357.70 330.38 Sub total 3,547.72 6,397.65 4,397.46

(b) Other Bank balances: (i) Earmarked balances with banks - Unclaimed Dividend Account 21.52 15.26 12.38 - Against Foreign Currency Loans [Refer Note 7.3] 7.20 6.39 5.42 - Towards Guarantees Issued by Banks 0.13 0.24 0.21 - Others [Refer Note 22.1] 2.59 2.59 2.59 (ii) Short - term bank deposits [Refer Note 22.2] 682.76 2,165.98 2,653.61

4,261.92 8,588.11 7,071.67

22.1 Earmarked balances with banks - Others include an amount of ``` 2.59 crore (FY 2013-14 ` 2.59 crore, FY 2012-13 ` 2.59 crore) given by HDFC Asset Management Company Limited (HDFC AMC) to HDFC Trustee Company Limited and held in a designated account maintained by the latter. This is in terms of an interim order dated June 17, 2010 and letter dated July 5, 2011 received from Securities and Exchange Board of India, representing the estimated losses incurred by the schemes of HDFC Mutual Fund/clients of HDFC AMC on suspected "front running" of the orders of HDFC Mutual Fund by a dealer of HDFC AMC. The exact liability, if any, in this matter cannot be determined at this stage.

22.2 Bank Deposits of the subsidiary companies of ``` 1.25 crore (FY 2013-14 ` 1.25 crore, FY 2012-13 ` 1.20 crore) are marked as lien for overdraft facility. As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 23 SHORT TERM LOANS AND ADVANCES ``` in Crore ` in Crore ` in Crore Particulars Loans: [Refer Note 23.1] Current maturities of long-term loans and advances 25,173.71 18,826.84 17,263.10 Corporate Bodies 1,501.12 2,497.59 1,155.36 26,674.83 21,324.43 18,418.46 Others: Current maturities of Staff Loans - Others - Secured; Considered good 4.43 3.75 3.54 Corporate Deposits [Refer Note 23.2] 947.39 1,403.01 1,679.72 Instalments due from borrowers - Secured, Considered good 1,295.76 1,184.38 1,270.23 Prepaid Expenses - Unsecured; Considered good 99.35 209.66 96.87 Sundry Deposits - Unsecured, Considered good 16.70 17.11 9.96 Other Advances - Unsecured, Considered good 1,284.15 441.58 273.65 Loans and Advances to Related parties 31.50 - - Others - Unsecured, Considered doubtful - - -

3,679.28 3,259.49 3,333.97

30,354.11 24,583.92 21,752.43

297 23.1 Out of Loans, amounts aggregating to ` 22,844.03 crore (FY 2013-14 ` 19,812.80 crore, FY 2012-13 ` 17,381.49 crore) are secured and considered good [Refer Note 18.1].

23.2 Out of Corporate deposits, amounts aggregating to ` 299.30 crore (FY 2013-14 ` 601.65 crore, FY 2012-13 ` 1,192.42 crore) are secured and considered good [Refer Note 18.1].

As at As at As at March 31, 2015 March 31, 2014 March 31, 2013 24 OTHER CURRENT ASSETS ``` in Crore ` in Crore ` in Crore Particulars Unamortised Discount on Commercial Paper - - - Receivables on Securitised Loans 53.30 30.11 18.04 Accrued gain/loss on Interest Rate Swaps - - - Fx Forward Receivable - Different Banks Interest Accrued but not due on Loans 350.83 211.64 164.55 Interest accrued and due on Loans 0.22 5.65 - Income Accrued but not due on Investments 1,208.36 953.96 681.69 Income Accrued and due on Investments 48.93 39.22 23.31 Interest Accrued but not due on Corporate Deposits 25.23 63.78 136.12 Interest accrued and due on Corporate Deposits 0.72 10.39 - Application Money - Investments 2.00 0.90 7.39

1,689.60 1,315.65 1,031.10

25 CONTINGENT LIABILITIES AND COMMITMENTS

The Group is involved in certain appellate, judicial and arbitration proceedings (including those described below) concerning matters arising in the course of conduct of the Company’s businesses and is exposed to other contingencies arising from having issued guarantees to lenders and other entities. Some of these proceedings in respect of matters under litigation are in various stages, and in some other cases, the claims are indeterminate.

25.1 Given below are amounts in respect of claims asserted by revenue authorities and others;

a) Contingent liability in respect of income-tax demands, net of amounts provided for and disputed, amounts to ``` 1,129.72 crore (FY 2013-14 ` 944.28 crore, FY 2012-13 ` 1,037.67 crore). The matters in dispute are under appeal. Out of the above an amount of ``` 1,119.09 crore (FY 2013-14 ` 933.67 crore, FY 2012-13 ` 832.52 crore) has been paid/adjusted against refund and the same will be received as refund if the matters are decided in the favour of HDFC Ltd. and the respective subsidiary companies.

b) Contingent Liability in respect of disputed dues towards wealth tax, interest on lease tax and payment towards employers’ contribution to ESIC not provided for by HDFC Ltd. and one of the subsidiary company amounts to ``` 0.15 crore (FY 2013-14 ` 5.05 crore, 2012-13 ` 0.15 crore).

c) Contingent liability in respect of Interest tax demands, net of amount provided for and disputed in respect of one subsidiary company amounts to ``` 0.07 crore (FY 2013-14 ` 0.07 crore, FY 2012-13 ` 0.07 crore). The matter in dispute is under appeal. The subsidiary expects to succeed in the proceedings and hence no additional provision is considered necessary.

d) The subsidiary companies have received show cause cum demand notices, amounting to ``` 189.75 crore (FY 2013-14 ` 133.21 crore, FY 2012-13 ` 134.55 crore), from the Office of the Commissioner, Service Tax, Mumbai on various grounds. One of the subsidiary has filed appeals to the appellate authorities on the said show cause notices. The subsidiary has been advised by an expert that their grounds of appeal are well supported in law. As a result, the subsidiary is confident to defend the appeal against the demand and does not expect the demand to crystalise into a liability.

e) During the current year, one the subsidiary company has received show cause notice in respect of a Service tax matter amounting to ``` 21.69 Crore (FY 2013-14 ` Nil, FY 2012-13 ` Nil). Based on expert advice in respect of these matters, the Management does not expect any outflow of economic benefits and assessed the likelihood of outflow of resources as remote.

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

25.2 Contingent liability in respect of guarantees and undertakings comprise of the following;

a) Guarantees ``` 361.89 crore (2013-14 ` 435.35 crore, 2012-13 ` 203.17 crore).

b) Corporate undertakings provided by HDFC Ltd. for securitisation of receivables aggregated to ` 1,919.65 crore (FY 2013-14 ` 1,943.05 crore, FY 2012-13 ` 1,939.31 crore). The outflows would arise in the event of a shortfall, if any, in the cash flows of the pool of the securitised receivables.

25.3 Proportionate share of claims not acknowledged as debt and other contingent liabilities in respect of associate companies amounts to ``` 556.82 crore (FY 2013-14 ` 673.34 crore, FY 2012-13 ` 1,238.57 crore). Claims not acknowledged as debt and other contingent liabilities in respect of a subsidiary company amounts to ``` 0.86 crore (FY 2013-14 ` 0.39 crore, FY 2012-13 ` 1.37 crore).

25.4 Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is ``` 426.84 crore (FY 2013-14 ` 160.61 crore, FY 2012-13 ` 179.87 crore).

298 2014-15 2013-14 2012-13 ``` in Crore ` in Crore ` in Crore 26 REVENUE FROM OPERATIONS Particulars Interest Income : - Interest on Loans 25,919.84 22,797.42 19,633.71 - Other Interest [Refer Note 26.1] 1,074.89 977.49 889.30 Net Gain on foreign currency transactions and translation 0.18 1.78 1.18 Dividends [Refer Note 26.2] 41.16 47.64 68.30 Management & Trusteeship Fees 1,181.96 961.34 776.24 Income from Leases [Refer Note 26.4] 10.38 15.02 7.96 Surplus from deployment in Cash Management Schemes of Mutual Funds [Refer Note 26.3] 369.48 344.01 256.74 Fees and Other Charges [Refer Note 26.5] 477.89 438.44 399.03

29,075.78 25,583.15 22,032.46

26.1 a) Other Interest includes interest on investments amounting to ` 420.04 crore (FY 2013-14 ` 400.94 crore, FY 2012-13 ` 381.12 crore). b) Other Interest includes interest on investments amounting to ``` 43.03 crore (FY 2013-14 ` 9.21 crore, FY 2012-13 ` 7.59 crore) in respect of current investments. c) Other Interest includes Interest on Income Tax Refund ``` 44.31 crore (FY 2013-14 ` 34.65 crore, FY 2012-13 ` 6.87 crore).

26.2 Dividend income includes ``` 11.17 crore (FY 2013-14 ` 14.16 crore, FY 2012-13 ` 20.67 crore) in respect of current investments.

26.3 Surplus from deployment in Cash Management Schemes of Mutual Funds amounting to ` 369.48 crore (FY 2013-14 ` 344.01 crore, FY 2012-13 ` 256.74 crore) is in respect of investments held as current investments.

26.4 In accordance with the Accounting Standard on ‘Leases’ (AS 19), the following disclosures are made in respect of Operating Leases : Income from Leases includes ``` 4.01 crore (FY 2013-14 ` 4.71 crore, FY 2012-13 ` 4.14 crore) in respect of properties and certain assets leased out under Operating Leases. Out of the above, in respect of the non-cancellable leases, the future minimum lease payments are as follows :

2014-15 2013-14 2012-13 Period ``` in Crore ` in Crore ` in Crore Not later than one year 3.37 4.11 2.63 Later than one year but not later than five years 2.19 5.02 3.58

26.5 Fees and other charges is net off the amounts paid to Direct Selling Agent ``` 362.85 crore (FY 2013-14 ` 315.85 crore, FY 2012-13 ` 269.90 crore).

26.6 Other Income includes rent of ``` 12.56 crore (FY 2013-14 ` 9.19 crore, FY 2012-13 ` 10.15 crore), of which ``` Nil (FY 2013-14 ` Nil, FY 2012-13 ` 0.10 crore) is in respect of rent for certain assets given on operating lease and also includes sub-lease payments received ``` Nil (FY 2013-14 ` Nil, FY 2012-13 ` 0.31 crore) in respect of a property acquired under operating lease as per Note 30.1.

27 Profit on sale of investments includes ``` 19.35 crore (FY 2013-14 ` 18.10 crore, FY 2012-13 ` 35.17 crore) in respect of current investments.

299 2014-15 2013-14 2012-13 28 FINANCE COST ``` in Crore ` in Crore ` in Crore

Interest - Loans 2,768.54 2,434.95 2,489.65 - Deposits 6,255.58 5,353.33 4,506.44 - Bonds and Debentures 7,597.80 7,541.42 5,918.37 - Commercial Paper 1,967.91 1,027.39 1,118.73 18,589.83 16,357.10 14,033.19

Net Loss on foreign currency transactions and translation [Refer Note 28.1] (20.09) 137.02 165.75

Other Charges [Refer Note 28.2] 140.54 113.77 96.58

18,710.29 16,607.89 14,295.52

28.1 ``` 20.27 crore (FY 2013-14 loss ` 135.24 crore, FY 2012-13 loss ` 164.57 crore) has been recognised in the Statement of Profit and Loss being net gain on transaction and translation of foreign currency monetary assets and liabilities as shown below:

2014-15 2013-14 2012-13 Particulars ``` in Crore ` in Crore ` in Crore Exchange (Gain) / Loss on Translation - Foreign Currency Denominated Assets and Foreign Currency Borrowings (34.72) (198.80) (131.72) - Cross Currency Interest Rate Swaps [Refer Note 7.6] 107.98 145.77 78.49 Net Exchange (Gain) / Loss on Translation [Refer Note 5.11] 73.26 (53.03) (53.23) Realised (Gain) / Loss (93.35) 190.05 218.98 Net (Gain) / Loss on translation and transactions recognised in Finance cost (20.09) 137.02 165.75 Realised (Gain) / Loss recognised in Revenue from Operations [Refer Note 26] (0.18) (1.78) (1.18) Net (Gain) / Loss recognised in Statement of Profit and Loss (20.27) 135.24 164.57

28.2 Other Charges is net of Exchange gain ``` 0.32 crore (FY 2013-14 and FY 2012-13 include exchange loss of ` 0.66 crore and ` 0.10 crore respectively).

29 EMPLOYEE BENEFITS EXPENSES 2014-15 2013-14 2012-13 Particulars ``` in Crore ` in Crore ` in Crore

Salaries and Bonus [Refer Note 29.1 & 29.2] 612.43 529.49 463.16 Contribution to Provident Fund and Other Funds [Refer Note 29.3] 68.02 52.27 49.35 Gratuity Expenses 2.55 0.42 1.55 Staff Training and Welfare Expenses 16.13 15.06 14.07 699.14 597.24 528.13

29.1 Salaries and Bonus include ` 25.90 crore (FY 2013-14 ` 15.77 crore, FY 2012-13 ` 15.81 crore) and other expenses pertaining to Insurance Business include ` 15.80 crore (FY 2013-14 ` 12.96 crore, FY 2012-13 ` 12.65 crore) towards provision made in respect of accumulated leave salary and leave travel assistance and has been actuarially determined as per the Accounting Standard 15 on Employee Benefits (AS15).

300 29.2 Employee Benefits In accordance with the Accounting Standard 15 on Employee Benefits (AS 15), the following disclosures have been made:

The following amounts are recognised in the Statement of Profit and Loss which are included as under: ` in Crore Contributions to Provident Fund and Other Funds Other expenses pertaining to Insurance under Staff Expenses Business Particulars 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 Provident Fund [Refer Note 29.3] 22.57 20.96 17.87 26.25 24.97 22.50 Superannuation Fund [Refer Note 29.3] 10.85 9.30 7.67 0.42 0.34 0.49 Employees’ Pension Scheme-1995 2.75 1.60 1.51 - - - Employees’ State Insurance Corporation 2.04 1.84 1.70 (2.62) 17.66 3.19 Labour Welfare Fund 0.01 0.01 0.01 0.05 0.07 0.06

29.3 The Corporation makes Provident Fund and Superannuation Fund contributions to defined contribution retirement benefit plans for eligible employees. Under the schemes, the Company is required to contribute a specified percentage of the payroll costs to fund the benefits. The contributions as specified under the law are paid to the provident fund set up as a trust by the Company. The Company is liable for annual contributions and any deficiency in interest cost compared to interest computed based on the rate of interest declared by the Central Government under the Employees’ Provident Fund Scheme, 1952 and recognises, if any, as an expense in the year it is determined.

The fair value of the assets of the provident fund and the accumulated members’ corpus is ` 245.40 crore and ` 244.59 crore respectively (FY 2013-14 ` 207.38 crore and ` 207.04 crore respectively, FY 2012-13 ` 174.85 crore and ` 174.60 crore respectively). In accordance with an actuarial valuation, there is no deficiency in the interest cost as the present value of the expected future earnings on the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rate of interest of 8.75% (FY 2013-14 8.75%, FY 2012-13 8.50%). The actuarial assumptions include discount rate of 7.96% (FY 2013-14 9.31%, FY 2012-13 8.25%) and an average expected future period of 21.75 years (FY 2013-14 22 years, FY 2012-13 21.86 years).

The Company recognised ` 12.55 crore (FY 2013-14 ` 11.88 crore, FY 2012-13 ` 9.96 crore) for provident fund contributions and ` 10.17 crore (FY 2013-14 ` 8.69 crore, FY 2012-13 ` 7.14 crore) for superannuation contributions in the statement of profit and loss. The contributions payable to these plans by the Company are at rates specified in the rules of the schemes.

29.4 The details of the Group’s post-retirement benefit plans for its employees including whole-time directors are given below which is as certified by the actuaries and relied upon by the auditors:

2014-15 2013-14 2012-13 Particulars ``` in Crore ` in Crore ` in Crore Change in the Benefit Obligations: Liability at the beginning of the year 190.67 165.02 133.13 Current Service Cost 13.39 12.44 10.27 Interest Cost 17.74 13.44 11.30 Benefits Paid (13.18) (11.25) (10.30) Actuarial loss 35.80 11.02 20.62 Liability at the end of the year * 244.42 190.67 165.02 * The Liability at the end of the year ``` 244.42 crore (FY 2013-14 ` 190.67 crore, FY 2012-13 ` 165.02 crore) includes ``` 50.20 crore (FY 2013-14 ` 41.43 crore, FY 2012-13 ` 38.73 crore) in respect of un-funded plans.

Fair Value of Plan Assets: Fair Value of Plan Assets at the beginning of the year 141.56 110.02 94.08 Expected Return on Plan Assets 12.43 9.36 9.22 Contributions 24.55 28.41 22.41 Benefits Paid (4.43) (3.14) (9.96) Actuarial loss on Plan Assets 1.59 (3.09) (5.73) Fair Value of Plan Assets at the end of the year 175.70 141.56 110.02 Total Actuarial loss to be recognised (34.21) (14.11) (26.35)

Actual Return on Plan Assets: Expected Return on Plan Assets 12.43 9.36 9.22 Actuarial loss on Plan Assets 1.59 (3.09) (5.73) Actual Return on Plan Assets 14.02 6.27 3.49

301 Expense Recognised in the Statement of Profit and Loss : Current Service Cost 13.39 12.44 10.27 Interest Cost 17.74 13.44 11.30 Expected Return on Plan Assets (12.43) (9.36) (9.22) Net Actuarial loss to be recognised 34.21 14.11 26.35 Expense recognised in the Statement of Profit and Loss included under Contribution to Provident Fund and Other Funds 41.75 23.43 29.68 included under Other expenses pertaining to Insurance Business 11.16 7.20 9.02 52.91 30.63 38.70

Particulars 2014-15 2013-14 2012-13 ``` in Crore ` in Crore ` in Crore Reconciliation of the Liability Recognised in the Balance Sheet: Opening Net Liability 49.11 55.00 39.05 Expense recognised 52.91 30.63 38.70 Contribution by the Corporation (24.55) (28.41) (22.41) Benefits paid in respect of unfunded plans (8.75) (8.11) (0.34) Amount recognised in the Balance Sheet under "Provision for Retirement Benefits" and "Other 68.72 49.11 55.00 Current Liabilities"

` in Crore Particulars 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 Amount Recognised in the Balance Sheet: Liability at the end of the year 244.42 190.67 165.02 133.13 114.30 96.06 Fair Value of Plan Assets at the end of the year 175.70 141.56 110.02 94.08 74.13 66.60 Amount recognised in the Balance Sheet under " Provision for Employee Benefits" and 68.72 49.11 55.00 39.05 40.17 29.46 "Other Current Liabilities"

Experience Adjustment : On Plan Liabilities 26.81 22.14 21.16 10.09 7.39 7.50 On Plan Assets 1.59 (3.09) (5.74) (4.44) (3.76) (2.40) Estimated Contribution for next year 28.18 19.54 22.55 13.09 9.37 9.27

Investment Pattern: Particulars % Invested % Invested % Invested 2014-15 2013-14 2012-13 Central Government securities 24.45 17.81 23.19 State Government securities / securities guaranteed by State / Central Government 1.80 9.44 1.35 Public Sector / Financial Institutional Bonds 16.23 24.23 25.58 Private Sector Bonds 0.61 12.92 8.86 Special Deposit Scheme 0.02 1.54 2.01 Certificate of Deposits - 0.98 1.34 Deposits with Banks and Financial Institutions 2.64 2.31 2.76 Investment in Insurance Companies * 31.31 10.72 9.57 Investment in Equity Shares 5.69 16.15 17.16 Others (including bank balances) 17.25 3.90 8.18 Total 100.00 100.00 100.00

Based on the above allocation and the prevailing yields on these assets, the long term estimate of the expected rate of return on fund assets has been arrived at.

* As the gratuity fund is managed by a life insurance company, details of investment are not available with the Company.

Principal Assumptions:

Particulars 2014-15 2013-14 2012-13 % % % Discount Rate 7.50 to 9.31 9.00 to 9.36 8.00 to 8.25 Return on Plan Assets 7.9 to 8 7 to 9.36 8.00 to 8.70 Salary Escalation 5 to 10 5 to 10 5 to 10

The estimate of future salary increase, considered in the actuarial valuation takes account of inflation, seniority, promotion and other relevant factors.

302 2014-15 2013-14 2012-13 30 ESTABLISHMENT EXPENSES ``` in Crore ` in Crore ` in Crore

Rent [Refer Note 30.1] 101.11 107.21 94.48 Rates and Taxes 3.93 4.65 4.05 Repairs and Maintenance - Buildings 6.67 6.52 6.40 General Office Expenses 2.64 2.84 2.29 Electricity Charges 21.18 20.55 17.30 Insurance Charges 1.42 1.37 1.02 136.95 143.14 125.54

30.1 In accordance with the Accounting Standard 19 on ‘Leases’ (AS 19), the following disclosures are made in respect of Operating and Finance Leases :

(a) Properties under non-cancellable operating leases have been acquired, both for commercial and residential purposes for periods ranging from 12 months to 60 months. The total minimum lease payments for the current year, in respect thereof, included under Rent, amount to ``` 176.76 crore (FY 2013-14 ` 141.48 crore, FY 2012-13 ` 115.62 crore). Out of the above, the Corporation has sub-leased a property, the total sub-lease payments received in respect thereof amounting to ``` 14.09 crore (FY 2013-14 ` 18.79 crore, FY 2012-13 ` 14.09 crore) have been netted off from rent expense.

The future lease payments in respect of the above are as follows: 2014-15 2013-14 2012-13 Period ``` in Crore ` in Crore ` in Crore Not later than one year 36.92 74.89 81.46 Later than one year but not later than five years 36.24 123.10 84.69

(b) Certain motor cars have been acquired under Operating Lease by subsidiary companies. In respect of these operating leases, the lease rentals charged to the Statement of Profit and Loss are ``` 1.08 crore (FY 2013-14 ` 1.28 crore, FY 2012-13 ` 0.85 crore) included under Other expenses pertaining to Insurance business. The minimum future lease rentals payable for specified duration in respect of such leases amount to the following : 2014-15 2013-14 2012-13 Period ``` in Crore ` in Crore ` in Crore Not later than one year 0.72 1.16 1.04 Later than one year but not later than five years 0.65 1.78 1.74

(c) Certain motor cars have been acquired under Finance Lease by a subsidiary for an aggregate fair value of ``` 0.01 crore (FY 2013-14 ` 0.06 crore, FY 2012-13 ` 0.18 crore). The total minimum lease payments (MLP) in respect thereof and the present value of the future lease payments, discounted at the interest rate implicit in the lease are: 2014-15 ``` in Crore Period Total MLP Interest Principal Not later than one year 0.01 - 0.01 Later than one year but not later than five years - - -

2013-14 ` in Crore Period Total MLP Interest Principal Not later than one year 0.05 - 0.05 Later than one year but not later than five years 0.01 - 0.01

2012-13 ` in Crore Period Total MLP Interest Principal Not later than one year 0.12 0.01 0.11 Later than one year but not later than five years 0.06 - 0.06

303 2014-15 2013-14 2012-13 31 OTHER EXPENSES ``` in Crore ` in Crore ` in Crore

Travelling and Conveyance 28.54 27.80 27.59 Printing and Stationery 22.42 18.05 13.68 Postage, Telephone and Fax 32.45 29.07 28.01 Advertising 104.15 83.16 49.43 Repairs and Maintenance - Other than Buildings 17.94 17.40 15.96 Office Maintenance 29.03 25.40 21.82 Legal Expenses 19.14 14.01 17.84 Computer Expenses 16.52 13.38 10.55 Directors' Fees and Commission 7.25 5.27 4.67 Miscellaneous Expenses [Refer Note 5.9 and 31.1] 300.25 226.25 235.70 Auditors' Remuneration [Refer Note 32] 6.44 5.29 4.72 584.13 465.07 429.97

31.1 i) Miscellaneous Expenses includes ``` 35.23 crore (FY 2013-14 ` Nil, FY 2012-13 ` Nil) towards Corporate Social Responsibility (CSR) under Section 135 of the Companies Act, 2013. ii) Miscellaneous Expenses exclude ` 10.83 crore (FY 2013-14 ` 13.02 crore, FY 2012-13 ` 9.13 crore) in respect of amounts utilised out of Shelter Assistance Reserve and ` Nil (FY 2013-14 ` 0.46 crore, FY 2012-13 ` 0.69) in respect of amounts utilised out of Corporate Social Responsibility Account during the year.

2014-15 2013-14 2012-13 32 Auditors' Remuneration: ``` in Crore ` in Crore ` in Crore Particulars Audit Fees 3.90 3.22 2.90 Tax Matters 1.4 8 1.19 1.03 Other Matters 2 .75 2.24 1.78 Reimbursement of Expenses 0.10 0.08 0.03 Service Tax 0.63 0.56 0.49 Less: Service tax input credit availed (0.33) (0.30) (0.22) Less: Service tax input credit expensed (0.30) (0.26) (0.03) 8.23 6.73 5.98 Less: Included under commission and operating expenses pertaining to Insurance Business 1.79 1.44 1.26 6.44 5.29 4.72

33 PROVISION FOR NON PERFORMING LOANS

33.1 As per the Housing Finance Companies (NHB) Directions, 2010, non-performing assets are recognised on the basis of ninety days overdue. The total provision carried by the Corporation in terms of paragraph 29 (2) of the Housing Finance Companies (NHB) Directions, 2010, and subsequent NHB Circulars - NHB.HFC.DIR.3/CMD/2011 dated August 5, 2011, NHB.HFC.DIR.4/CMD/2012 dated January 19, 2012 and NHB.HFC.DIR.9/CMD/2013 dated September 6, 2013 in respect of Housing and Non-Housing Loans is as follows [Refer Note 18]: ` in Crore Housing Non-Housing Particulars 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 Standard Assets - Principal Outstanding 172,732.67 151,311.99 127,261.32 66,136.39 53,609.43 49,233.9 9 - Provisions 791.69 697.90 896.23 418.34 344.95 247.77 Sub-Standard Assets - Principal Outstanding 423.40 417.67 357.80 336.37 603.32 530.29 - Provisions 66.24 62.65 53.67 50.45 90.50 121.80 Doubtful Assets - Principal Outstanding 418.00 329.95 316.53 441.35 132.76 63.58 - Provisions 235.11 202.12 184.47 189.12 100.55 32.81 Total - Principal Outstanding 173,574.07 152,059.61 127,935.65 66,914.11 54,345.51 49,827.86 - Provisions 1,093.01 962.67 1,134.37 657.91 536.00 402.38

Provision for Contingencies debited to the Statement of Profit and Loss includes Provision for Diminution in Value of Investments amounting to ``` 12.19 crore (FY 2013- 14 ` 21.51 crore, FY 2012-13 ` 10.01 crore).

304 34. As per the Accounting Standard 17 on 'Segment Reporting' (AS 17), the main segments and the relevant disclosures relating thereto are as follows:

` in Crore

Particulars Loans Life Insurance General Insurance Asset Management Others Inter-segment adjustments Unassociated Total 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 Segment Revenue 28,476.86 24,973.38 21,653.40 17,037.52 13,231.44 12,217.18 1,990.66 1,850.86 1,455.50 1,254.57 1,007.21 851.50 236.41 232.13 286.82 (639.95) (520.90) (533.69) 33.96 40.44 56.22 48,390.03 40,814.56 35,986.93

Segment Result 8,694.04 7,491.19 6,543.66 923.91 794.11 507.33 140.84 224.31 181.92 754.77 572.71 455.10 6.37 43.50 114.58 (437.07) (320.33) (388.54) 33.76 40.36 53.23 10,116.62 8,845.85 7,467.28 Income-tax (Current) 2,883.62 2,317.05 2,007.28 2,883.62 2,317.05 2,007.28 Deferred tax 282.08 41.29 (5.25) 282.08 41.29 (5.25) Total Result 8,694.04 7,491.19 6,543.66 923.91 794.11 507.33 140.84 224.31 181.92 754.77 572.71 455.10 6.37 43.50 114.58 (437.07) (320.33) (388.54) (3,131.94) (2,317.98) (1,948.80) 6,950.92 6,487.51 5,465.25 Capital Employed Segment Assets Assets 254,021.78 223,111.15 190,792.31 69,387.43 52,179.33 41,852.72 4,521.80 3,967.68 3,282.46 1,223.93 854.97 908.78 261.79 247.06 251.40 (1,276.11) (1,026.27) (835.21) 21,384.54 17,900.76 15,526.00 3,49,525.16 297,234.68 251,778.46 Liabilities 232,742.52 205,473.47 176,226.01 66,997.34 50,391.52 40,627.13 3,505.58 3,083.03 2,548.14 368.55 254.30 141.85 49.22 23.36 33.72 (1,348.81) (1,080.31) (835.21) 319.05 90.82 74.78 3,02,633.45 258,236.19 218,816.42 Net Assets 21,279.26 17,637.68 14,566.30 2,390.09 1,787.81 1,225.59 1,016.22 884.65 734.32 855.38 600.68 766.93 212.57 223.70 217.68 72.70 54.04 - 21,065.49 17,809.93 15,451.22 46,891.71 38,998.49 32,962.04 Other Information Capital Expenditure 456.31 82.08 28.04 106.09 81.89 106.67 30.05 67.44 24.91 16.29 18.84 9.54 7.58 4.88 3.07 ------616.32 255.13 172.23 Depreciation 31.85 34.76 26.01 * 42.71 * 44.93 35.49 41.39 * 17.09 11.64 10.55 8.80 16.59 4.23 3.29 3.35 - - 8.25 - - - 130.73 108.87 101.33 Non cash expenses other than Depreciation 322.74 115.76 118.42 30.22 29.90 23.96 6.23 5.01 4.51 0.99 0.07 1.09 8.41 2.50 3.58 ------368.59 153.24 151.56 a) Asset Management segment includes portfolio management, mutual fund and property investment management. b) Others includes project management, investment consultancy and property related services. c) The group does not have any material operations outside India and hence disclosure of geographic segments is not given.

* Included in Other expenses relating to Insurance Business

305 35 RELATED PARTY TRANSACTIONS

As per the Accounting Standard 18 on 'Related Party Disclosures' (AS 18), the related parties of the Corporation are as follows:

A) Associate Companies B) Investing Party and its Group Companies HDFC Bank Ltd. Standard Life Investments Ltd. India Value Fund Advisors Pvt. Ltd Standard Life (Mauritius Holdings) 2006 Ltd. RuralShores Business Services Pvt. Ltd. ERGO International AG Magnum Foundations Pvt Ltd Munich Re

C) Key Management Personnel D) Relatives of Key Management Personnel - (Where there are transactions) Mr. Keki M. Mistry Ms. Arnaaz K. Mistry Mr. Rishi R. Sud Mr. Ketan Karnad Ms. Renu Sud Karnad Mr. Ashok Sud Ms. Swarn Sud Mr. Bharat Karnad Mr. V. Srinivasa Rangan Ms. Tinaz Mistry Ms. S. Anuradha Ms. Abhinaya S. Rangan

The nature and volume of transactions of the Corporation during the year, with the above related parties were as follows:

` in Crore Investing Party and its Group Relatives of Key Management Associates Key Management Personnel Particulars Companies Personnel 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 Dividend Income - HDFC Bank Ltd. 372.10 298.77 233.58 ------Others 0.16 0.27 0.30 ------Interest Income - HDFC Bank Ltd. 37.26 33.81 29.25 ------Others - 0.08 0.12 ------0.03 0.03 - Consultancy and Other Fees Income - Standard Life Investments Ltd - - - 0.51 0.32 0.40 ------HDFC Bank Ltd. 0.23 0.04 ------Rent Income - HDFC Bank Ltd. 2.01 1.74 1.71 ------Others ------0.01 0.01 Reinsurance Income - Munich Re - - - 1.50 0.14 0.03 ------Support Cost Recovered - HDFC Bank Ltd. 0.37 0.25 0.32 ------Miscellaneous Services rendered - HDFC Bank Ltd. 152.95 241.34 120.66 ------Others 0.10 0.08 - - - - 0.01 0.01 - - - 0.01 Interest Expense - HDFC Bank Ltd. 2.40 4.23 3.71 ------Others 0.05 0.34 - - - - 0.48 0.53 0.47 - 0.02 0.05 Bank and Other Charges - HDFC Bank Ltd. 28.21 24.65 23.92 ------Reinsurance Expense - Munich Re - - - 12.09 3.51 2.65 ------Remuneration - Mr. Keki M. Mistry ------8.43 7.87 6.77 - - - - Ms. Renu Sud Karnad ------7.62 7.23 6.29 - - - - Mr. V. Srinivasa Rangan ------5.03 4.57 3.87 - - - Dividend Payments - Standard Life (Mauritius - - - - 36.31 25.93 ------Holdings) 2006 Ltd - Standard Life Investments Ltd - - - 65.42 50.32 44.28 ------ERGO International AG - - - 10.44 6.86 ------Other Expenses - HDFC Bank Ltd. 756.30 601.78 736.31 ------Others 0.36 0.42 0.28 - - 0.09 - - - 0.09 0.09 0.08

306 ` in Crore Investing Party and its Group Relatives of Key Management Associates Key Management Personnel Particulars Companies Personnel 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 Investments made - HDFC Bank Ltd. 827.03 327.51 363.74 ------Investments sold - HDFC Bank Ltd - - 40.00 ------IPF Online Ltd - 6.31 ------Others - - 0.30 ------Securities purchased - HDFC Bank Ltd 337.67 374.16 ------Investments - HDFC Bank Ltd. 7,545.35 6,714.35 6,437.47 ------Others 35.03 2.53 8.83 ------Bank Deposits placed - HDFC Bank Ltd. 1,492.69 4,088.82 2,418.97 ------Bank Deposits repaid / withdrawn - HDFC Bank Ltd. 2,969.81 2,605.26 1,981.77 ------Bank Balance and Deposits - HDFC Bank Ltd. 1,628.31 5,200.79 1,366.99 ------Corporate Deposits repaid / matured - RuralShores Business Services Pvt. Ltd. - 3.00 3.00 ------Corporate Deposits - RuralShores Business Services Pvt. Ltd. - - 3.00 ------Loans given - Magnum Foundations Pvt. Ltd. 31.50 ------Loans repaid - Ms. Renu Sud Karnad ------0.01 0.01 0.01 - - - - Mr. V. Srinivasa Rangan 0.01 0.01 0.01 - Ms. S. Anuradha ------0.01 0.01 - Loans sold - HDFC Bank Ltd. 8,249.21 5,556.07 5,125.00 ------Loans - Magnum Foundations Pvt. Ltd. 31.50 ------Ms. Renu Sud Karnad ------0.08 0.10 0.11 - - - - Mr. V. Srinivasa Rangan ------0.04 0.05 0.06 - - - - Others ------0.30 0.31 - Trade Receivable - HDFC Bank Ltd. 5.07 13.11 ------Other Advances / Receivables - HDFC Bank Ltd. 10.74 5.88 8.61 ------Others - - 0.17 0.05 0.10 0.02 - - 0.06 0.06 0.06 Deposits placed - RuralShores Business Services Pvt. Ltd. 1.05 16.10 ------Mr. Keki M. Mistry ------1.75 2.03 - - - - Ms. Renu Sud Karnad ------2.38 0.02 2.01 - - - - Others ------0.01 - 0.27 Deposits repaid / matured - RuralShores Business Services Pvt. Ltd. 4.13 13.02 ------Mr. Keki M. Mistry ------1.75 2.41 2.60 - - - - Ms. Renu Sud Karnad ------2.00 0.01 - - - - - Others ------0.03 0.29 0.45 Deposits - Mr. Keki M. Mistry ------0.87 2.61 3.28 - - - - Ms. Renu Sud Karnad ------2.40 2.02 2.02 - - - - RuralShores Business Services Pvt. Ltd. - 3.08 ------Others ------0.09 0.12 0.40 Other Liabilities / Payables - HDFC Bank Ltd. 50.50 64.40 158.72 ------Munich Re - - - 6.21 0.16 ------Others 0.01 0.04 - - - - 0.33 0.48 0.21 - 0.01 0.03

307 36 In accordance with the Accounting Standard 20 on "Earning per Share" (AS 20), the following disclosures have been made: (i) In calculating the Basic Earnings Per Share, the Profit After Tax attributable to the Group of ``` 8,762.62 crore (FY 2013-14 ` 7,947.82 crore, FY 2012-13 ` 6,639.72 crore) has been adjusted for amounts utilised out of Shelter Assistance Reserve of ``` 10.83 crore (FY 2013-14 ` 13.02 crore, FY 2012-13 ` 9.13 crore) and for proportionate share of utilisation out of Corporate Social Responsibility Account of ``` Nil (FY 2013-14 ` 0.46 crore, FY 2012-13 ` 0.69 crore) of one of the subsidiary company. Accordingly the Basic Earnings Per Share has been calculated based on the adjusted Profit After Tax attributable to Group of ``` 8,751.79 crore (FY 2013-14 ` 7,934.34 crore, FY 2012-13 ` 6,629.90 crore) and the weighted average number of shares during the year of 156.82 crore (FY 2013-14 155.54 crore, FY 2012-13 151.97 crore). (ii) The reconciliation between the Basic and the Diluted Earnings Per Share is as follows : Amount in ` Particulars 2014-15 2013-14 2012-13

Basic Earnings Per Share 55.81 51.01 43.63 Effect of outstanding Stock Options (0.51) (0.40) (0.54) Diluted Earnings Per Share 55.30 50.61 43.09

37 Additional Information as required by Paragraph 2 of the General Instructions for Preparation of Consolidated Financial Statements to Schedule III to the Compaines Act, (As on/for the year ended March 31, 2015)

Net assets i.e. Total Assets minus Total Share of Profit / (Loss) Sr. No. Name of the Entity Liabilities As % of consolidated As % of consolidated Amount (In Crore) Amount (In Crore) net assets Profit or loss Parent 1 Housing Development Finance Corporation Limited 30,969.97 5,990.14 Less: Inter Company eliminations (7,663.39) (537.64) Net of eliminations 49.70% 23,306.58 62.22% 5,452.50 Subsidiaries Indian 1 Gruh Finance Ltd. 1.00% 471.10 2.33% 204.24 2 HDFC Standard Life Insurance Co. Ltd. 2.14% 999.10 8.41% 737.23 3 HDFC ERGO General Insurance Co. Ltd. 1.27% 597.60 1.19% 104.00 4 HDFC Asset Management Co. Ltd. 1.50% 703.08 5.28% 462.63 5 HDFC Trustee Co. Ltd. 0.01% 5.91 0.00% 0.01 6 HDFC Investment Trust 0.42% 198.81 0.34% 29.79 7 HDFC Investment Trust - II 0.11% 50.46 0.03% 2.33 8 HDFC Venture Capital Ltd. 0.07% 34.26 0.68% 60.34 9 HDFC Ventures Trustee Co. Ltd. 0.00% 0.91 0.00% 0.13 10 HDFC Property Venture Ltd. 0.25% 115.50 -0.20% (17.96) 11 HDFC Pension Management Co. Ltd. 0.06% 27.62 0.00% 0.02 12 HDFC Investments Ltd. 0.09% 44.21 0.04% 3.47 13 HDFC Holdings Ltd. 0.32% 147.42 0.02% 1.67 14 HDFC Developers Ltd. 0.00% 0.21 -0.08% (6.82) 15 HDFC Sales Pvt. Ltd. 0.04% 19.00 -2.02% (177.29) 16 HDFC Realty Ltd. 0.02% 9.68 -0.03% (2.96) 17 Credila Financial Services Pvt. Ltd. 0.47% 214.92 0.43% 37.72 18 HDFC Education and Development Services Pvt. Ltd. 0.01% 5.13 -0.02% (1.88) Foreign 1 Griha Investments 0.22% 101.62 0.68% 59.15 2 Griha Pte. Ltd. 0.01% 5.89 0.03% 2.60

Share of Minorities 3.88% 1,820.08 -5.51% (482.72) Associates (Investment as per the equity method) Indian 1 HDFC Bank Limited 38.41% 18,011.08 26.18% 2,294.37 2 India Value Fund Advisors Pvt Ltd. 0.00% 1.54 0.00% 0.05 Total 100.00% 46,891.71 100.00% 8,762.62

38 Other Notes

308

DECLARATION

Our Company certifies that all relevant provisions of Chapter VIII and Schedule XVIII of the SEBI Regulations and Regulation 21 read with Schedule I of the SEBI Debt Regulations have been complied with and no statement made in this Placement Document is contrary to the provisions of Chapter VIII and Schedule XVIII of the SEBI Regulations and that all approvals and permissions required to carry on our Company’s business have been obtained, are currently valid and have been complied with. Our Company further certifies that all the statements in this Placement Document are true and correct.

Signed by:

______-Sd- Mr. V. Srinivasa Rangan, Executive Director

Date: October 1, 2015 Place: Mumbai

309

DECLARATION

We, the Board of Directors of our Company certify that:

(i) our Company has complied with the provisions of the Companies Act, 2013 and the rules made thereunder;

(ii) the compliance with the Companies Act, 2013 and the rules does not imply that payment of dividend or interest or repayment of debentures, if applicable, is guaranteed by the Central Government;

(iii) the monies received under the offer shall be used only for the purposes and objects indicated in this Placement Document (which includes disclosures prescribed under Form PAS-4).

Signed by:

______-Sd- Mr. V. Srinivasa Rangan, Executive Director

I am authorized by the Committee of the Board of Directors of our Company, vide resolution no. 4 dated September 30, 2015, to sign this form and declare that all the requirements of Companies Act, 2013 and the rules made thereunder in respect of the subject matter of this form and matters incidental thereto have been complied with. Whatever is stated in this form and in the attachments thereto is true, correct and complete and no information material to the subject matter of this form has been suppressed or concealed and is as per the original records maintained by the members subscribing to the Memorandum of Association and the Articles of Association.

It is further declared and verified that all the required attachments have been completely, correctly and legibly attached to this form.

Signed: ______

Mr. Ajay Agarwal, Company Secretary and Compliance Officer

Date: October 1, 2015 Place: Mumbai

310

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

Registered Office Corporate Office Ramon House, H.T. Parekh Marg HDFC House, H.T. Parekh Marg 169, Backbay Reclamation, Churchgate 165-166, Backbay Reclamation, Churchgate Mumbai 400 020, India Mumbai 400 020, India Website: www.hdfc.com; CIN: L70100MH1977PLC019916

Compliance Officer: Mr. Ajay Agarwal Chief Financial Officer: Mr. V. Srinivasa Rangan Tel: +91 (22) 6176 6000; Fax: +91 (22) 2281 1205 Tel: +91 (22) 6631 6520; Fax: +91 (22) 2281 1205 E-mail: [email protected] E-mail: [email protected]

GLOBAL CO-ORDINATORS AND BOOK RUNNING LEAD MANAGERS Kotak Axis Bank Axis Capital Citigroup HDFC Bank ICICI Bank ICICI IDFC IndusInd JM Mahindra Limited Limited Global Limited* Limited Securities Securities Bank Limited Financial Capital Axis House, Axis House, Markets India Investment ICICI Bank Limited Limited One Indiabulls Institutional Company 8th Floor, C-2, Level 1, Private Banking Tower ICICI Centre Naman Centre, Tower Securities Limited Wadia C-2 Wadia Limited Group Unit Bandra-Kurla H.T. Parekh Chambers I, 8th Floor Limited 27 BKC, C-27, International International 1202, 12th No. 401 & 402 Complex Marg C-32, G Block 841 Senapati 7th Floor, “G” Block Centre, P.B. Centre Floor 4th Floor, Bandra (East) Churchgate Bandra Kurla Bapat Marg, Cnergy Bandra Kurla Marg P.B. Marg, First Tower B Mumbai 400 Mumbai 400 Complex Elphinstone Appasaheb Complex Worli Worli International Peninsula 051 020 Bandra (East) Road (W) Marathe Bandra (East) Mumbai 400 Mumbai 400 Financial Business Park, Mumbai 400 Mumbai 400 Marg Mumbai 400 025 025 Centre, G- Lower Parel 051 013 Prabhadevi 051 Block Mumbai 400 Mumbai 400 Bandra Kurla 013 025 Complex Bandra East Mumbai 400 051

*HDFC Bank shall be involved only in marketing of the Issue.

STATUTORY AUDITORS OF THE COMPANY DEBENTURE TRUSTEE

Deloitte Haskins & Sells LLP IDBI Trusteeship Services Limited Indiabulls Finance Centre “Asian Building”, Ground floor th nd 27 – 32 Floor, Tower 3 17, R. Kamani Marg, Ballard Estate Senapati Bapat Marg Mumbai 400 001 Elphinstone Mill Compound Elphinstone Road (W) Mumbai 400 013 REGISTRAR TO THE ISSUE

Housing Development Finance Corporation Limited Ramon House, 5th Floor H. T. Parekh Marg, 169, Backbay Reclamation Churchgate Mumbai 400 020

CREDIT RATING AGENCIES CRISIL Limited ICRA Limited CRISIL House Electric Mansion, 3rd Floor Central Avenue, Hiranandani Business Park Appasaheb Marathe Marg, Prabhadevi Powai Mumbai 400 025 Mumbai 400 076

LEGAL ADVISERS Domestic legal counsel to the Company Domestic legal counsel to the Global Co-ordinators and Book Running Lead Managers AZB & Partners AZB House Cyril Amarchand Mangaldas Peninsula Corporate Park Peninsula Chambers Ganpatrao Kadam Marg Peninsula Corporate Park Lower Parel Ganpatrao Kadam Marg Mumbai 400 013 Lower Parel Mumbai 400 013

311

July 31, 2015 Mumbai Housing Development Finance Corporation Limited

'CRISIL AAA/Stable' assigned to NCD issue

Rs.50 Billion Non Convertible Debenture CRISIL AAA/Stable (Assigned) Issue * Non-Convertible Debentures aggregating Rs. CRISIL AAA/Stable (Reaffirmed) 1528.68 Billion Rs.350 Billion Non Convertible Debenture CRISIL AAA/Stable (Reaffirmed) Issue Rs.250 Billion Non Convertible Debenture Issue CRISIL AAA/Stable (Reaffirmed) Rs.250 Billion Non Convertible Debenture Issue CRISIL AAA/Stable (Reaffirmed) Subordinated Debt aggregating Rs.30 Billion CRISIL AAA/Stable (Reaffirmed) Subordinated Debt aggregating Rs.50 Billion CRISIL AAA/Stable (Reaffirmed) Fixed Deposits FAAA/Stable (Reaffirmed) Bonds aggregating Rs.1.0085 Billion CRISIL AAA/Stable (Reaffirmed) Rs.500 Billion Short Term Debt CRISIL A1+ (Reaffirmed) * with warrants

CRISIL has assigned its 'CRISIL AAA/Stable' rating to the Rs.50 Billion Non-convertible Debenture Issue* of Housing Development Finance Corporation (HDFC) Ltd. CRISIL has also reaffirmed its ratings on the existing debt instruments of HDFC Ltd at 'CRISIL AAA/FAAA/Stable/CRISIL A1+'.

CRISIL's ratings on HDFC's debt instruments continue to factor in its leading market position and sound track record in the housing finance business, strong asset quality, diversified and stable resource profile, and healthy capitalisation and profitability. These rating strengths are partially offset by HDFC's exposure to intense competition in the housing finance segment.

HDFC is India's largest housing finance company, with profitable growth over the past 38 years in the individual housing and corporate segments. While competition has increased over time, with the entry of new players and greater focus by banks on this segment, HDFC has maintained its market share. As on June 30, 2015, HDFC's loan book (net of loans sold) stood at Rs. 2312.2 billion, a growth of 13.7 per cent over the previous year. Total loans, including the securitized portfolio, stood at Rs.2589.9 billion as on the same date.

HDFC has strong asset quality, with gross non-performing assets (NPAs) of 0.69 per cent as on June 30, 2015 (0.67 per cent as on March 31, 2015).Gross NPAs in the individual portfolio stood at 0.54 per cent, while gross NPAs in the non-individual portfolio stood at 1.04 per cent. Nevertheless, HDFC's sizeable exposure to the builder and corporate segments will remain a sensitivity factor. The resource profile continues to be well-diversified, lending flexibility to HDFC's borrowings. HDFC's borrowing mix primarily comprises of market borrowings (57 per cent) and fixed deposits (34 per cent). The share of bank borrowings in overall borrowing stood at 9 per cent.

HDFC's financial risk profile remains sound, marked by good capitalisation and profitability. As on June 30, 2015, HDFC's capital adequacy ratio (CAR), after reducing the investment in HDFC Bank from tier 1 capital stood at 15.8 per cent, of which tier 1 capital was 12.4 per cent. (16.1 per cent and 12.5 per cent respectively as on March 31, 2015). HDFC's net worth was Rs.323.2 billion as on June 30, 2015 (Rs. 309.7 billion as on March 31, 2015). HDFC's earnings profile is marked by healthy interest spreads, low expense levels, and good returns on net worth. The company has maintained an interest spread of 2.15 to 2.35 per cent over the past four years (2.32 per cent in 2014-15 [refers to financial year, April 1 to March 31]).

July 31, 2015 http://www.crisil.com Outlook: Stable CRISIL believes that HDFC will maintain a robust credit risk profile over the medium term, backed by its strong asset quality, and its healthy capitalisation and profitability. CRISIL also believes that HDFC's strong franchise and fundamentals will enable the company to maintain its competitive position, supporting its present ratings. The outlook may be revised to 'Negative' if HDFC's asset quality or profitability weakens significantly.

About the Company HDFC, a housing finance company, was incorporated in 1977; its initial shareholders included the International Finance Corporation, Washington, and the Aga Khan Trust. As on March 31, 2015, HDFC's gross loans i.e. including loans securitized, stood at Rs.2533.3 billion (Rs.2177.6 billion as on March 31, 2014). HDFC's outstanding loan book stood at Rs.2282.0 billion as on March 31, 2015, of which 71 per cent consisted of loans to individuals, while loans to corporate entities, rental discounting, and construction finance accounted for the remainder.

For 2014-15 (HDFC reported a profit after tax (PAT) of Rs.59.9 billion (after providing for deferred tax liability (DTL) of Rs.3.6 billion) on a total income (net of interest expense) of Rs.95.0 billion (Rs.54.4 billion and Rs.81.7 billion, respectively, for the previous year). For the quarter ended June 30, 2015, HDFC reported PAT of Rs.13.6 billion ( after providing for DTL of Rs.0.9 billion) on total income ( net of interest expense) of Rs.22.0 billion ( Rs.13.4 billion [after providing for DTL of Rs.0.7 billion]and Rs.21.3 billion respectively for the corresponding quarter of the previous year)

Media Contacts Analytical Contacts Customer Service Helpdesk Tanuja Abhinandan Pawan Agrawal Timings: 10.00 am TO 7.00 pm Media Relations Senior Director - CRISIL Ratings Toll free Number:1800 267 1301 CRISIL Limited Phone:+91 22 3342 3301 Email: [email protected] Phone: +91 22 3342 1818 Email: [email protected] Email:[email protected] Rajat Bahl Jyoti Parmar Director - CRISIL Ratings Media Relations Phone:+91 22 3342 8274 CRISIL Limited Email: [email protected] Phone: +91 22 3342 1835 E-mail: [email protected]

July 31, 2015 http://www.crisil.com Note: This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper / magazine / agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL. However, CRISIL alone has the sole right of distribution of its rationales for consideration or otherwise through any media including websites, portals etc.

Crisil complexity levels are assigned to various types of financial instruments. The crisil complexity levels are available on www.crisil.com/complexity-levels.investors are advised to refer to the crisil complexity levels for instruments that they desire to invest in. Investors may also call the Customer Service Helpdesk with queries on specific instruments.

About CRISIL LIMITED CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations.

About CRISIL Ratings CRISIL Ratings is India's leading rating agency. We pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we have a leadership position. We have rated over 75,000 entities, by far the largest number in India. We are a full- service rating agency. We rate the entire range of debt instruments: bank loans, certificates of deposit, commercial paper, non-convertible debentures, bank hybrid capital instruments, asset-backed securities, mortgage-backed securities, perpetual bonds, and partial guarantees. CRISIL sets the standards in every aspect of the credit rating business. We have instituted several innovations in India including rating municipal bonds, partially guaranteed instruments and microfinance institutions. We pioneered a globally unique and affordable rating service for Small and Medium Enterprises (SMEs).This has significantly expanded the market for ratings and is improving SMEs' access to affordable finance. We have an active outreach programme with issuers, investors and regulators to maintain a high level of transparency regarding our rating criteria and to disseminate our analytical insights and knowledge.

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Disclaimer:A CRISIL rating reflects CRISIL's current opinion on the likelihood of timely payment of the obligations under the rated instrument and does not constitute an audit of the rated entity by CRISIL. CRISIL ratings are based on information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the rating is based. A CRISIL rating is not a recommendation to buy, sell, or hold the rated instrument; it does not comment on the market price or suitability for a particular investor. Rating action may be initiated as and when circumstances so warrant. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this product. CRISIL Ratings' rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For the latest rating information on any instrument of any company rated by CRISIL, please contact CRISIL RATING DESK at [email protected], or at (+91 22) 3342 3000.

July 31, 2015 http://www.crisil.com

Housing Development Finance Corporation Limited

ICRA assigns highest credit quality rating to the NCD programme of Housing Development Finance Corporation Limited

Amount Rated Instrument Rating Action (in Rs Cr ) Aug-15 Non-Convertible Debentures† 5,000 [ICRA]AAA(stable) assigned ICRA has assigned [ICRA]AAA (pronounced ICRA Triple A) rating with a stable outlook to Rs. 5,000 crore of Non Convertible Debenture programme† of Housing Development Finance Corporation Limited (HDFC or Corporation)‡. HDFC Limited has rating of [ICRA]AAA(stable) outstanding on Non-Convertible Debentures and Subordinated Debt Programme, MAAA (stable) on Fixed Deposit Programme and [ICRA]A1+ on the Short Term Debt Programme. HDFC also has an issuer rating of IrAAA (stable) outstanding. The ratings factor in HDFC’s strong franchise with demonstrated ability to grow in a competitive mortgage finance market, consistent profitable operations on the back of strong interest margins supported by low provisions on account of sound asset quality and robust solvency indicators. The ratings also take into account the strong capital adequacy, access to diverse sources of funds and comfortable liquidity position. Going forward, in ICRA view, HDFC’s focus to grow while maintaining healthy interest spread, competitive operating cost structure and a tight control on asset quality would be beneficial to the earnings and solvency of HDFC. The overall loan book (net of loans sold) of the company has witnessed a Y-o-Y growth of 16% for the year ended March 2015 while the individual loan segment witnessed a growth of 17%. In terms of mix, the individual loan segment contributed ~71% of the overall portfolio (similar as on Mar-14) while the balance 29% comprised of non-individual loans/ICDs, primarily corporate loans, construction finance loans to builders and lease rental discounting. The gross NPAs of HDFC declined marginally to 0.67% as on March 31, 2015 from to 0.69% as on March 31, 2014 with the gross NPAs in ‘Individual Loan Segment’ witnessing a marginal improvement (0.51% as on March 31, 2015 from 0.53% as on March 31, 2014) and that in case of the ‘Non-Individual Loan Segment’ remaining stable at 1.01% as on March 31, 2015 (as against 1.01% as on March 31, 2014). On the back of excess provisions held by the company in FY15, the Net NPA continued to remain Nil. HDFC’s tight originations as well as its proactive recovery procedures should help it limit slippages and consequently the adverse impact on profitability indictors. HDFC has a fairly diverse mix of resources to fund its operations. This gives the company flexibility to change its borrowing mix to maintain a competitive cost of funds. In FY15, with benign interest rates, the borrowing mix shifted in favour of Debt market borrowings whose share increased to 56% in FY15 as compared to 51% in FY14. Consequently, the share of term loans declined to 12% in FY 15 from 18% in FY 14. Going forward, given its financial flexibility, in order to keep the borrowing costs lower, the Corporation may continue their dependence on debt market borrowings at least in the near term. During FY15, the company reported a growth of ~11% in its total Income to Rs 27,030 crore from Rs 23,949 crore in FY14. With increase in revenues and stable expenses, the company reported a PAT of Rs 5,990 crore (after providing Rs 364 crore for Deferred Tax Liability on Special Reserve) in FY15 as compared to Rs 5,440 crs in FY14. The ROE of the company was at 19.34% (19.46% in FY14) with a Networth of Rs 30,970 crore as at March 31, 2015 and it reported a Capital Adequacy Ratio of 16.1% (Tier I at 12.5%) as on March 31, 2015.

† With Warrants ‡ For complete rating scale and definitions please refer to ICRA's Website www.icra.in or other ICRA Rating Publications

Company Profile HDFC is India’s premier housing finance entity in existence for over 35 years. With a presence in banking, insurance and asset management, the HDFC group is an important part of the Indian financial services sector. During the year ended March 31, 2015 HDFC reported a total income of Rs 27,030 crore and had an asset base of Rs 253,952 crore as compared to a total income of Rs. 23,949 crore and an asset base of Rs. 2,25,432 crore in FY14. The company’s Profit After Tax (PAT) stood at Rs. 5,990 crore during the year ended March 31, 2015 as compared with Rs. 5,440 crore during the year ended March 31, 2014.

Recent Results During the quarter ended June 30, 2015, the company’s PAT stood at Rs. 1,361 crore on a total income base of Rs. 7,045 crore.

August 2015

For further details please contact:

Analyst Contacts: Mr Karthik Srinivasan (Tel. No. +91 22 6114 3444) [email protected]

Relationship Contacts: Mr. L. Shivakumar (Tel. No. +91-22- 6114 3406) [email protected]

© Copyright, 2015, ICRA Limited. All Rights Reserved. Contents may be used freely with due acknowledgement to ICRA ICRA ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments. ICRA ratings are subject to a process of surveillance, which may lead to revision in ratings. An ICRA rating is a symbolic indicator of ICRA’s current opinion on the relative capability of the issuer concerned to timely service debts and obligations, with reference to the instrument rated. Please visit our website www.icra.in or contact any ICRA office for the latest information on ICRA ratings outstanding. All information contained herein has been obtained by ICRA from sources believed by it to be accurate and reliable, including the rated issuer. ICRA however has not conducted any audit of the rated issuer or of the information provided by it. While reasonable care has been taken to ensure that the information herein is true, such information is provided ‘as is’ without any warranty of any kind, and ICRA in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness or completeness of any such information. Also, ICRA or any of its group companies may have provided services other than rating to the issuer rated. All information contained herein must be construed solely as statements of opinion, and ICRA shall not be liable for any losses incurred by users from any use of this publication or its contents.