DIRECTORS' REPORT

The Board of Directors of your Company (“the Board”) is pleased
to present the 16^th Annual Report of Aavas Financiers Limited
(“the Company” / “Aavas” / “Your Company”), showcasing the
operational achievements, financial performance, and strategic
developments for the Financial Year ended March 31, 2026,
together with the Audited Financial Statements.

The Board is pleased to report that Financial Year 2025-26 was
a landmark year for the Company marked by the seamless
transition of promoter ownership from Partners Group and
Kedaara Capital to Aquilo House Pte. Ltd. part of the CVC
Network, following the completion of the Share Purchase
Agreements and open offer Transaction in June 2025, ensuring
continuity of operations and reinforcing investor confidence.
The closure of this transaction positions the Company
for sustainable growth, strengthened governance, and
long-term stability.

The Board of Directors of your Company (“the Board”) is
pleased to inform that, during the year under review, the
Company’s credit rating outlook was upgraded from Stable
to Positive by both ICRA Limited and CARE Ratings Limited,
reflecting the Company’s robust financial performance,
strengthened asset quality, prudent risk management
practices, and consistent growth trajectory. This upgrade also
underscores the confidence reposed by these rating agencies
in the Company’s business model, operational resilience, and
its ability to sustain improved financial metrics going forward.

COMPANY BACKGROUND

Aavas is committed to enabling home ownership and
entrepreneurial growth for families and small businesses
across India. Its offerings include affordable housing loans,
purchase construction loans, repair & renovation loans,
loans against property, and MSME loans, designed to meet
the aspirations of customers who often operate outside the
formal income system.

Aavas operates as a Housing Finance Company ("HFC"),
registered with the National Housing Bank ("NHB").
Its activities are regulated by the Reserve Bank of India ("RBI")
under NHB’s supervision, ensuring that every aspect of the
Company’s lending practices is guided by strong governance,
compliance, and transparency. This regulatory foundation not
only strengthens operational discipline but also reinforces
customer trust, positioning Aavas as a secure and credible
partner in affordable housing finance.

By adhering to NHB’s regulatory framework and RBI’s
guidelines, Aavas not only safeguards the interests of its
customers but also reinforces its commitment to responsible
lending. With 435 branches across 13 states and 2 union
territories, Aavas continues to strengthen its presence
in emerging markets. This extensive reach ensures that
customers benefit from proximity, accessibility, and reliable
service delivery, reinforcing the Company’s position as a
leading player in affordable housing finance.

FINANCIAL PERFORMANCE AT A GLANCE

The Financial Performance for Financial Year 2025-26 is presented below in a concise summary table:

The figures presented above have been drawn from the Company’s financial statements, prepared in accordance with Indian
Accounting Standards (“Ind AS”) as notified under Sections 129 and 133 of the Companies Act, 2013 read together with the
Companies (Accounts) Rules, 2014 and other applicable provisions of the Companies Act, 2013. Detailed financial statements are
available in a dedicated section of this Annual Report.

Key Financial Benchmarks of the Company for the Financial Year 2025-26

During the Financial Year 2025-26, your Company demonstrated sustained growth in income, reflecting its robust business model,
prudent financial management, and continued focus on expanding its housing finance portfolio. The Company’s income expansion
underscores its ability to scale operations while maintaining financial stability and compliance with regulatory frameworks.

Income Growth Momentum Continues

Your Company’s Total Income for the Financial Year 2025-26
ascended to ^2,684.83 crore as compared to ^2,358.42 crore in
the previous Financial Year.

Operating & Earning Strength

For the year under review, the PBT increased to ^840.44 crore
against ^732.59 crore in the previous Financial Year.

Moreover, the PAT closed at ^654.88 crore during the year as
compared to ^574.11 crore in the previous Financial Year,
reflecting a year-on-year growth, driven by prudent financial
management.

DIVIDEND

Your Company remains committed to building sustainable
long-term value for its Stakeholders. In view of the Company’s
growth aspirations and the need to further strengthen its
financial base, the Board of Directors has not recommended
any dividend for the Financial Year under review.

The profits generated during the year are proposed to be
retained within the business to support future expansion,
reinforce the balance sheet and enhance the Company’s ability
to capitalize on growth opportunities.

The Company has in place a Dividend Distribution Policy which
lays down the framework for declaration and distribution of
dividend. The Policy has been formulated in compliance with

Regulation 43A of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (“SEBI (LODR) Regulations,
2015”) and the applicable provisions of the Reserve Bank of
India (Non-Banking Financial Companies - Prudential Norms
on Declaration of Dividends) Directions, 2025 and Reserve
Bank of India (Housing Finance Companies) Directions, 2025.
The Policy is available on the website of the Company at
https://www.aavas.in/img/pdf/dividend-distribution-policy.
pdf. and forms part of this Annual Report as ‘Annexure-5’.

CAPITAL STRUCTURE: EQUITY BALANCE AND
DEBENTURE COMPOSITION

Authorized Capital

The Authorized Share Capital of the Company stands at
^85,00,00,000/- (Rupees eighty five crore only) divided
into 8,50,00,000 (Eight crore fifty lakh) Equity Shares of
?10/-(Rupees ten only) each as on March 31,2026.

Issued, Subscribed & Paid-up Capital

At the beginning of the Financial Year under review, the issued,
subscribed and paid-up share capital of the Company was
?79,15,36,650/-(Rupees seventy nine crore fifteen lakh thirty
six thousand six hundred and fifty only) divided into 7,91,53,665
(Seven crore ninety one lakh fifty three thousand six hundred
and sixty five) Equity Shares of Face Value ^10/- (Rupees
ten only) each.

During the year, the Company allotted 1,29,078 (One lakh
twenty nine thousand and seventy eight) Equity Shares of face
value of ^10/- (Rupees ten only) each pursuant to exercise
of employee stock options by the eligible employees of the
Company under Equity Stock Option Plans (“ESOPs”) and
Performance Stock Option Plans (“PSOPs”) of the Company.

Accordingly, the issued, subscribed and paid-up share capital
of the Company as at the end of Financial Year, increased and
stood at ^79,28,27,430 (Rupees seventy nine crore twenty

eight lakh twenty seven thousand four hundred and thirty only)
divided into 7,92,82,743 (Seven crore ninety two lakh eighty
two thousand seven hundred and forty-three) Equity Shares of
Face Value ^10/- (Rupees ten only) each.

The equity shares of the Company are listed on BSE Limited
(“BSE”) and the National Stock Exchange of India Limited
(“NSE”) and continue to be traded on both the Stock Exchanges
throughout the Financial Year, without any suspension.

Debentures

The Company has issued secured non-convertible debentures as part of its borrowing policy, including debentures listed on
BSE Limited as well as certain unlisted debentures. The details of the secured debentures outstanding as at March 31, 2026
are given below:

Note: During the year, ISININE216P07209 was fully redeemed on December 31, 2025.

During the year, your Company has issued debentures
exclusively for the deployment of funds on its own balance
sheet and not to facilitate resource requests of group entities/
parent company/ associates.

TRANSFER TO SPECIAL RESERVE (UNDER
SECTION 29C OF THE NATIONAL HOUSING BANK
(“NHB”) ACT, 1987)

The Company has transferred a sum of ^131.12 crore, to
reserve fund which is in compliance with Section 29C of the
National Housing Bank Act, 1987 wherein every Housing
Finance Companies (“HFCs”) are required to transfer a sum
not less than 20% of their net profit every year to their reserve
fund before declaration of any dividend.

COMPANY OPERATIONS AND STRATEGIC
PROGRESS

Operating at the forefront of India’s affordable housing
finance ecosystem, your Company continues to strengthen
its role as a trusted financial partner for aspiring homeowners
across the country.

With a clear strategic focus on expanding access to housing
finance for underserved, low to middle income and emerging
segments, the Company remains committed to bridging the
credit gap for individuals who are often outside the ambit of
formal banking channels. In pursuance of which, Aavas offers
'Small Ticket Size ("STS") Loan' which is one-stop solution to
fulfil small financial needs.

With a thriving community of 2.71 Lakh active customers
and cumulative loan disbursements reaching ^40,862 crore
by March 31, 2026, your Company continue to set new
benchmarks for institutional growth and social impact.

Over the years, the Company has steadily expanded its
geographical presence and operational footprint across
India. As of March 31, 2026, Aavas operates an extensive
branch network of 435 branches across 13 states and 2
union territories and during the year, the Company has added
net 38 Branches.

Comprehensive insights into the Company’s operational
dynamics and its state of affairs are elaborated in the
“Management Discussion and Analysis Report” which is an
integral component of this Annual Report.

During the year, your Company delivered a resilient and high-
growth performance, characterized by robust operational
execution as evidenced by the financial highlights summarized
below:

Loan Sanctions

•    The total Loan Sanctions of the Company reached at
^6,989.70 crore as at March 31,2026, reflecting a steady
12% year-on-year growth over the previous year’s figure of
^6,240.53 crore.

•    Cumulative loan sanctions since inception, have scaled
to ^42,290.95 crore as of March 31, 2026 and the
Company has not granted any loan against the collateral
of Gold Jewellery and loan against shares during the year.

Loan Disbursements

•    The total housing loan disbursement reached at ?6,775.09
crore as at March 31,2026 compared to T6,123.01 crore in the
previous Financial Year registering an annual growth of 11%.

•    The cumulative loan disbursement since inception as at
March 31,2026 was ^40,862 crore.

Assets Under Management (“AUM”)

•    Driven by a robust expansion in our lending segments,
the Company’s AUM reached a high of ^23,451.71 crore
(including assignment and PTC of ^5,911.58 crore) as
of March 31, 2026. This represents a resilience of 15%
year-on-year growth from ^20,420.18 crore (including
assignment and PTC of ^4,529.17 crore).

•    The Company continues to prioritize a diversified and
granular risk profile. As of March 31, 2026, our average
ticket size for sanctioned loans was maintained at ^10.2
lakh, with a weighted average tenure of 184 months on an
origination basis, ensuring long-term yield stability and
reduced concentration risk.

The Company further confirms that throughout the Financial
Year under review, there were no alterations/changes in

the core operations or activities or nature of the business
of the Company.

Capital Adequacy and Liquidity Coverage

•    Your Company continues to maintain a fortified capital
position, with the Capital Adequacy Ratio ("CRAR")
strengthening to 44.56%. This high ratio significantly
surpasses the 15% statutory threshold mandated by
the RBI Master Directions, providing the Company with
substantial leverage for future growth.

•    Reflecting a commitment to prudent cash flow
management, the Liquidity Coverage Ratio ("LCR") stood
at 147.71% as of March 31, 2026. This comfortably
exceeds the regulatory requirement of 100%.

Non-Performing Assets (“NPA”)

The Company maintains a proactive and stringent approach to
risk management, ensuring the long-term health of our credit
portfolio through advanced monitoring and early intervention.

Your Company remains fully compliant with Ind AS concerning
the classification and provisioning of Stage-3 Assets ("NPA").
Asset classification is rigorously determined based on
expected performance models, with Exposure at Default
("EAD") encompassing the total outstanding amount, inclusive
of accrued interest, as of the reporting date.

Through a combination of granular monitoring, early-warning
signals and swift remedial actions, the Company continues
to safeguard its portfolio integrity. This multi-layered risk
framework allows us to identify and address potential stress
points before they escalate.

As at March 31, 2026 Gross Non-Performing Assets ("GNPA")
and Net Non-Performing Assets ("NNPA") were recorded at
1.05% and 0.68% respectively, compared to 1.08% and 0.73%
in the preceding Financial Year. This performance reflects our
resilient collections mechanism and disciplined underwriting
standards amidst a dynamic credit environment.

RATINGS OF THE COMPANY- HIGHLIGHTING GROWTH & RESILIENCE

Credit Rating

As at March 31,2026, the Credit Ratings assigned by Credit Rating Agencies are as under:

During the Financial Year under review, the Company’s credit rating outlook has been revised from ‘Stable to Positive’ by ICRA and
CARE Limited. A comprehensive overview of the Company’s credit ratings, is available on the website of the Company athttps://
www.aavas.in/investor-relations/credit-rating.

Environmental, Social, and Governance (“ESG”) Rating

The Company has gained notable recognition in the field of ESG practices, demonstrating its steadfast dedication to sustainability.
The Company’s below ESG ratings illustrate its strong performance and commitment to sustainability metrics:

*Morningstar (Sustainalytics) ratings assess risk, where a lower risk rating indicates a better rating.

The Company has not engaged with any ESG Rating Provider for rating. They have independently assigned the rating on the
basis of Company's disclosures and other publicly available data. For more details on ESG ratings, kindly visit to website of the
Company at https://www.aavas.in/esg.

REGULATORY & STATUTORY COMPLIANCES

In line with the commitment to ethical governance and
transparent operations, the Company accords utmost
importance to compliance with all applicable regulatory and
statutory requirements. It operates within a well-defined
compliance framework that ensures adherence to all relevant
laws, rules and standards.

Your Company ensures strict adherence to all relevant
guidelines, circulars, notifications and directions issued by
our regulators which includes but not limited to Reserve Bank
of India (“RBI”), National Housing Bank (“NHB”), Ministry of
Corporate Affairs (“MCA”), Securities and Exchange Board
of India (“SEBI”), Insurance Regulatory and Development
Authority of India (“IRDAI”), BSE Limited ("BSE") and National
Stock Exchange of India Limited (“NSE”) from time to time.
These guidelines, circulars, notifications and directions are
also presented to the Board in the form of regulatory updates
to keep the Board informed and report on actions initiated on
the same. The Company also complies with the provisions
of the Companies Act 2013, Secretarial Standards issued by
the Institute of Company Secretaries of India (“ICSI”) and as
notified by Ministry of Corporate Affairs from time to time.

Further, the Company aligns itself with the Income Tax
Act, 1961 and Goods and Services Tax Act ("GST") and
diligently observes all other applicable statutory and
regulatory requirements to maintain robust compliance and
governance standards.

Compliance with Directions/ Guidelines of RBI / NHB and
other statutes

During the Financial Year 2025-26, your Company has operated
within a robust compliance framework and has complied with
all applicable regulations, directions, guidelines and circulars

issued by statutory and regulatory authorities governing
Housing Finance Companies.

Your Company has complied with Reserve Bank of India
(Housing Finance Companies) Directions, 2025 including
any amendments made thereto from time to time.
During the Financial year, your Company has ensured
adherence to circulars issued covering areas such as periodic
updation of KYC, use of the 1600 number series for customer
communications, levy of prepayment charges on business
purpose loans extended to individuals and MSMEs, and other
governance and prudential norms applicable to Housing
Finance Companies.

The RBI, vide Press Release No. 2025-26/1588 dated November 28,
2025, issued 244 Consolidated Master Directions administered
by the Department of Regulation, covering 11 categories of
regulated entities. These directions rationalised the regulatory
framework by issuing 35 directions applicable to Non-Banking
Financial Institutions while repealing and withdrawing 9,445 existing
circulars. The Company has carefully examined the relevant Master
Directions and has made necessary alignments to its internal
policies and practices to ensure continued regulatory compliance.

Insurance Regulatory and Development Authority of India
(“IRDAI”) Compliance

The Company is registered with the IRDAI as a Corporate
Agent for carrying on the Insurance Agency Business and has
complied with the applicable requirements under Insurance
Regulatory and Development Act, 1999 and IRDAI (Registration
of Corporate Agent) Regulations 2015, as amended from
time to time. Being an insurance intermediary, Company is
maintaining all the required information as per IRDAI rules.

The Company’s Certificate of Registration to act as Corporate
Agent ("Composite") was renewed with validity of three years
from December 08, 2023 to December 07, 2026.

DEPOSITS

Your Company being a non-deposit taking HFC has not
solicited, accepted or renewed any amount falling within the
purview of provisions of Section 73 of the Companies Act, 2013
read with the Companies (Acceptance Deposits) Rules, 2014
during the Financial Year under review. Hence, the requirement

for furnishing the details relating to deposits covered under
Chapter V of the Companies Act, 2013 and in terms of RBI
(Housing Finance Companies) Directions 2025 read with
paragraph 58 and 59 of Reserve Bank of India (Non-Banking
Financial Companies - Acceptance of Public Deposits)
Directions, 2025 are not applicable to the Company.

AWARDS AND RECOGNITION

During the year under review, your Company continued to earn widespread recognition across Corporate Social Responsibility,
Information Technology, Environmental, Social and Governance ("ESG"), and Brand & Corporate achievements. These accolades
reflect the Company’s unwavering commitment to excellence, innovation, sustainability, and Stakeholder value creation. The key
recognitions received during the year are outlined below:

RESOURCE MOBILIZATION

Your Company has in place a well-defined borrowing
framework approved by the Board of Directors, which
is periodically reviewed to ensure alignment with the
Company’s strategic and operational objectives. Guided by
this framework, the Company maintains a structured liability
profile aimed at optimizing the cost of funds while ensuring
adequate liquidity and financial flexibility to support the
growth of its lending operations.

Additionally, the Company continues to explore opportunities
for responsible and sustainable sources of funding that align
with its broader commitment towards inclusive housing
finance and long-term economic development.

Further, reinforcing its disciplined capital management
framework and in compliance with pursuant to Section
180(1)(c) of the Companies Act, 2013, the Shareholders
of the Company, through a Special Resolution passed on
September 16, 2025, have authorized the Board of Directors
(including Committees of the Board) to borrow monies, apart
from temporary loans obtained from the Company’s bankers in
the ordinary course of business, in excess of the paid-up share
capital, securities premium and free reserves of the Company,

subject to an overall borrowing limit of T32,000 crore (Rupees
thirty two thousand crore only).

Strategic Performance Metrics showing borrowing
profile and liquidity resilience of the Company :

Diversified Funding Sources

The Company mobilizes resources through a diversified mix
of funding instruments and borrowing avenues, enabling it to
efficiently access capital under varying market conditions.

During the year under review, our sources of funding were
substantially in the form of Long-Term Loans from Banks
and Financial Institutions (52%), followed by Securitization/
Direct assignment (27%), NHB Refinance (11%) and Debt
capital market (10%).

Term Loans from Banks and Financial Institutions

As at March 31, 2026, the Company obtained fresh loan
sanctions of ^4,000 crore, against the availed loans amounting
to ^3,650 crore. Accordingly, the outstanding balance of term
loans from banks and financial institutions stood at ^10,624
crore (excluding PTC and CC), with an average tenure of
approximately 9 years.

Co-Lending/Securitization/Assignment of Loan Portfolio

The Company has continued to leverage opportunities in the
co-lending, securitization and direct assignment markets,
enabling it to strengthen liquidity, broaden its liability base and
mitigate asset-liability mismatches.

During the year under review, your Company received purchase
consideration of ^1,677 crore from assets assigned under
transfer of loan portfolio transactions, received purchase
consideration of ^496 crore from PTC transaction and raised
^200 crore through co-lending of loan portfolio.

These portfolio transfer and co-lending transactions were
undertaken in compliance with the guidelines issued by
the RBI, and the related assets were derecognized from the

Company’s financial statements in accordance with the
applicable regulatory and accounting framework.

Refinance from National Housing Bank (“NHB”)

The Company, during the Financial Year, received NHB
refinance aggregating to ^295 crore. As on March 31, 2026,
total outstanding balance of refinance from NHB stood at
around ^2,186 crore.

Non-Convertible Debentures ("NCDs")

During the Year, the Company has mobilised funds through
issue of Non-Convertible Debentures amounting to ^400 crore.
In pursuance to which, the total outstanding NCDs of the
Company has reached at ^1,530.74 crore as at March 31,2026
as compared to ^1,317 crore in the previous year.

Moreover, the composition of the NCD portfolio of your
Company reflects a diversified lender base, with Financial
Institutions ("FI") constituting 33%, Development Financial
Institution ("DFI") 50%, and Scheduled Commercial Banks
("SCB") 17% of the total outstanding, as against FI - 23 %; DFI -
65 % and SCB- 12 % respectively, in the previous year.

Commercial Papers

During the Financial Year under review, your Company issued
Commercial Papers amounting to ^200 crore, which was fully
utilized for the object as stated in the Offer Document. As on
March 31,2026, the Company’s Commercial Paper outstanding
is ^200 crore (Maturity Amount).

Further, no other short-term instruments were issued in the
Financial Year 2025-26.

Rupee Denominated External Commercial Borrowing

The Company continues to diversify its funding profile through
Rupee Denominated External Commercial Borrowings,
including Masala Bonds, thereby strengthening access to
offshore capital while mitigating currency risk.

As at March 31, 2026, the total outstanding balance under
Rupee Denominated External Commercial Bond was ^270
crore. The Company has maintained a disciplined approach
towards servicing its obligations, with all interest payments
on NCDs and Masala Bonds being duly paid on due dates,
without any instances of delay or unclaimed amounts.
Further, during the year, the company has fully redeemed
masala bond of ^200 Crore.

In line with applicable regulatory provisions, being a listed
HFC, the requirement for creation of Debenture Redemption
Reserve ("DRR") is not applicable. Further, the stipulation to
invest or deposit a sum of not less than 15% of the amount
of debentures which are maturing during the Financial Year
ending on March 31 of the next year as provided under Rule 18

of the Companies (Share Capital and Debentures) Rules, 2014
has been dispensed with for listed entities vide notification of
MCA dated June 05, 2020.

TRUSTEE TO SECURITIES HOLDERS

In order to safeguard the interest of Debenture Holders of
the Company and continuous monitoring of compliance with
terms of issue, your Company has appointed IDBI Trusteeship
Services Limited and Beacon Trusteeship Limited pursuant to
the provisions of Securities and Exchange Board of India (Issue
and Listing of Non- Convertible Securities) Regulation 2021.

The details of Debenture Trustee are available on the
Company’s website athttps://www.aavas.in/details-of-
debenture-trustee-rta-and-grievanceand are also available at
corporate information section, of this Annual Report.

BRANCH BUILD-UP: STRATEGIC NETWORK
EXPANSION

Our success is anchored in a deep commitment to
physical accessibility and community. A strong branch
network forms the backbone of the Company’s operations,
enabling it to serve customers effectively at the grassroots
level. Each branch acts as a strategic touchpoint, driving
business growth and fostering closer engagement with
local communities. By expanding the physical presence,
the Company continues to strengthen its reach, improve
customer access and tap into emerging markets across India.

The Company is expanding its presence in the southern region,
which represents a meaningful whitespace opportunity.
Building on the operational experience in Karnataka and a
contiguous expansion strategy, during the year, your Company
has extended its footprint into Tamil Nadu with 20 Branches.

As on March 31,2026, the Company is operating in 13 states and
2 union territories, with a network of 435 branches, consisting
of Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Uttar
Pradesh, Haryana, Chhattisgarh, Uttarakhand, Himachal
Pradesh, Punjab, Odisha, Karnataka, Tamil Nadu, Delhi and
Chandigarh. The Company has added net 38 Branches during
the Financial Year 2025-26.

Your Company has its Registered Office in Jaipur, Rajasthan
and its branch network as on March 31, 2026 vis-a-vis the
previous Financial Year are detailed hereunder:

BOARD OF DIRECTORS AND KEY MANAGERIAL
PERSONNEL

The Board of Directors plays a pivotal role in upholding
the principles of sound Corporate Governance by
providing strategic direction, oversight, and accountability.
An appropriately structured and well-balanced Board,
comprising Executive, Non-Executive, and Independent
Directors, ensures a diversity of perspectives, experience, and
expertise, thereby strengthening decision-making processes.

The composition of your Company’s Board is designed to
foster independence, transparency, and objectivity, enabling
effective supervision of management and safeguarding the
interests of all Stakeholders.

During the period under review, your Company has optimum
mix of Executive, Non-Executive and Independent Directors
including Women Independent Director and its composition
is aligned with the requirements of Companies Act, 2013,
SEBI (LODR) Regulations, 2015, and the Reserve Bank of India
(Non-Banking Financial Companies - Governance) Directions,
2025, as amended from time to time.

The Board of Directors of the Company comprises eminent
professionals with diverse experience, high standards
of integrity, and proven competence. The Non-Executive
Directors, including Independent Directors, play a pivotal
role in strengthening the governance framework by bringing
objective and independent judgment to Board deliberations.
Their contributions span across key areas such as strategic
direction, operational performance, risk oversight, resource
allocation, financial reporting, and upholding the highest
standards of corporate conduct.

In line with best governance practices, the Board has
identified and mapped core competencies including
Accounting and Finance, Legal and Regulatory Compliance,
Strategy Formulation and Execution, Risk Management, and
Corporate Governance, along with other specialized skills.
These competencies are considered essential for the effective
functioning of the Company, particularly in its capacity as
a NBFC and HFC.

As on March 31, 2026, the Board is comprised of 9 Directors,
including three 3 Independent Directors of which 2 are
Women Independent Directors, 5 Non-Executive Nominee
Directors, and 1 Executive Director who also serves as the
Managing Director & Chief Executive Officer. The Board’s
composition reflects an appropriate balance of executive
and non-executive representation, ensuring robust oversight,
diverse perspectives, and strong leadership, thereby fostering
sound business principles and sustainable value creation.

BOARD OF DIRECTORS

The Composition of the Board of the Company as on March 31,2026 is given below:

&Tenure of Mrs. Kalpana Kaushik Mazumdar is set to expire June 22, 2026, the resulting vacancy will suitably be filled by the Board within the
regulatory timelines.

“Ceased to be Managing Director and CEO of the Company w.e.f. Close of business hours of April 20, 2026. Further Mr. Manu Yeshpal Singh appointed
as the Managing Director (subject to receipt of approval from the Reserve Bank of India and approval of the shareholders of the Company) and Chief
Executive Officer of the Company, w.e.f. April 21,2026.

“Appointed as Additional Non-Executive Non-Independent Directors w.e.f. June 30, 2025 and subsequently their appointment was approved by the
Shareholders as Non-Executive Nominee Director at the Annual General Meeting held on September 16, 2025.

““Appointed as Additional Non-Executive Non-Independent Director w.e.f. October 15, 2025 and subsequently his appointment was approved by the
Shareholders as Non-Executive Nominee Director via postal ballot passed on January 06, 2026.

KEY MANAGERIAL PERSONNEL

The Key Managerial Personnel (“KMP”) of your Company constitute the core leadership team responsible for the effective execution
of the Company’s strategy and the day-to-day management of its operations.

In accordance with the provisions of Section 2(51) and Section 203 of the Companies Act, 2013, read with the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time, your Company’s KMP
comprises the following:

“Ceased as KMP w.e.f. close of business hours of April 20, 2026.
“Appointed as KMP w.e.f. April 21,2026.

APPOINTMENT & RESIGNATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the Financial Year under review and upto the date of this Annual report, the Company has witnessed changes in its
Board composition in accordance with corporate governance requirements and business imperatives. The changes, including
appointments and resignations were undertaken to strengthen leadership oversight, ensure regulatory alignment and drive
operational effectiveness details as under:-

DECLARATION BY INDEPENDENT DIRECTOR

In accordance with the provisions of the Section 149(6)
of the Companies Act, 2013 and Regulation 16(1)(b) &
25 of SEBI (LODR) Regulations, 2015, the Company has
received declarations from all the Independent Directors
of the Company confirming that they meet the criteria of
independence for Independent Directors.

The Board affirms that the Independent Directors fulfill
the aforesaid criteria and possess requisite integrity,
qualifications, proficiency, experience, expertise and are
independent of the management.

The names of all the Independent Directors of the Company
have been included in the Independent Director’s databank
maintained by Indian Institute of Corporate Affairs (“IICA”).

None of the Directors have any pecuniary relationship or
transactions with the Company.

CERTIFICATE OF NON-DISQUALIFICATION OF
DIRECTORS

The Board of Directors hereby affirms that none of its
members are disqualified from being appointed as Directors
in accordance with the provisions of Section 164 of the
Companies Act, 2013. Further, no Director has been debarred
from holding the office of Directors by virtue of any SEBI order or
any other such authority. None of the Directors of the Company
are related to each other.

In support of the above, a certificate from a Company Secretary
in practice has been obtained confirming that none of the
Directors on the Board of the Company have been debarred or
disqualified from being appointed or continuing as Directors

of Company by SEBI / MCA or any such statutory authority.
The same forms part of this Annual Report as ‘Annexure-1’.

DISCLOSURE UNDER SECTION 197(14) OF THE
COMPANIES ACT, 2013

During the year under review, the Company did not have any
Subsidiary, therefore, the disclosure under Section 197(14)
of Companies Act, 2013 for receiving any commission by the
Managing Director and Chief Executive Officer of the Company
from Subsidiary Company is not applicable.

BOARD MEETINGS

The Company upholds Corporate Governance best practices
by convening a minimum of four Board meetings each year,
ensuring at least one meeting per quarter. The schedule for
these meetings is established well in advance, following due
consultation and concurrence of all Directors.

For matters requiring urgent attention, decisions approved
through circular resolutions are subsequently presented
at the next scheduled Board meeting, thereby reinforcing
transparency and accountability in governance.

During the Financial Year under review, the Board held 7
(Seven) meetings. Detailed records of individual Directors’
attendance at these meetings are comprehensively captured
in the Corporate Governance Report and are not repeated here
to avoid duplicacy.

PERFORMANCE EVALUATION OF THE BOARD, ITS
COMMITTEES AND INDIVIDUAL DIRECTORS

The effectiveness of the Board of Directors is central to the
Company’s sustained growth and governance excellence.
A structured evaluation process enables the Board to
identify opportunities for improvement, address governance
challenges, and strengthen accountability, thereby enhancing
value creation for all Stakeholders.

In line with the provisions of the Companies Act, 2013 and
SEBI (LODR) Regulations, 2015, the Board has undertaken
its annual assessment of overall performance, including that
of its Committees and Individual Directors. In consultation
with the Nomination and Remuneration Committee, the
Board has established a comprehensive framework that
sets out the criteria for evaluating the performance of the
Board, its Committees, and Individual Directors, including
Independent Directors, in compliance with applicable
regulatory requirements.

The Board also periodically reviews and refines this framework,
in collaboration with the Nomination and Remuneration
Committee, to ensure alignment with evolving compliance
obligations and governance standards.

The evaluation process is facilitated through a web-based
platform, “DigiCompany” which streamlines operations,

enhances efficiency, and automates the generation of
evaluation reports.

Details of the evaluation process covering the Board, its
Committees, and Individual Directors, including Independent
Directors, are provided in the Corporate Governance Report,
forming part of this Annual Report.

SEPERATE INDEPENDENT DIRECTORS’ MEETINGS

During the Financial Year under review, two separate meeting
of Independent Directors was convened on December 02,
2025 and March 12, 2026. This meeting was held without the
participation of Non-Independent Directors or members of the
Company’s Management, thereby ensuring an environment
conducive to independent deliberation and oversight.

The Independent Directors, in the course of this meeting, reviewed
and discussed various matters arising from Committee meetings
and Board deliberations. Their discussions encompassed, inter
alia, the assessment of the quality, adequacy, and timelines of
information flow between the Company’s Management and the
Board, ensuring that the Board is equipped with all necessary data
and insights to effectively discharge its fiduciary and governance
responsibilities.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT
DIRECTORS

In line with the Company’s commitment to strong governance
practices, familiarization programmes are conducted for
Independent Directors in compliance with Regulation 25(7) of
the SEBI (LODR) Regulations, 2015. These programmes ensure
that Independent Directors are well-acquainted with their
roles, rights, responsibilities, and the Company’s business
model at the time of induction.

The Programme provides a structured framework aligned
with contemporary governance expectations, emphasizing
adherence to a code of ethics and integrity. Its objective is
to educate Independent Directors about their obligations,
regulatory environment, and the Company’s operational model,
thereby fostering trust and confidence among Stakeholders
and the investment community.

Through induction and ongoing training initiatives, the Board,
including Independent Directors, is empowered to make
informed and deliberate decisions that serve the best interests
of the Company and its Stakeholders.

Details of the familiarization programme are available on the
Company’s website at:https://www.aavas.in/codes-and-policies.

POLICY ON DIRECTOR’S APPOINTMENT,
REMUNERATION & OTHER DETAILS

To foster capable and visionary leadership, the Company has
adopted a comprehensive Nomination and Remuneration
Policy governing the selection, compensation, and governance

of its Directors, Key Managerial Personnel (“KMP”), and
Senior Managerial Personnel (“SMP”). The Policy emphasizes
ethical conduct, professional merit, and organizational
alignment, ensuring that individuals appointed to critical
positions contribute meaningfully through their competence
and insight. It also reinforces transparency in the nomination
process, underscoring the Company’s commitment to
responsible leadership.

This Policy has been formulated in accordance with Section
178 of the Companies Act, 2013, Regulation 19 of SEBI (LODR)
Regulations, 2015, and the Guidelines on Compensation of Key

Managerial Personnel and Senior Management in NBFCs issued
by the Reserve Bank of India (RBI) vide circular RBI/2022-23/36
DOR.GOV.REC.No.29/18.10.002/2022-23 dated April 29, 2022,
as amended from time to time. The Policy is available on the
website of the Company athttps://www.aavas.in/img/pdf/
Policy_on_Nomination_and_Remuneration-feb-2026.pdf

Details of remuneration paid to Directors are disclosed in
the Annual Return ("Form MGT-7"), which is also available
on the website of the Company athttps://www.aavas.in/
investor-relations/annual-reports.

BOARD COMMITTEES

Aligned with the applicable regulatory framework, the Board has constituted following 9 Committees of Board to effectively
strengthen governance, strategic decision-making, enhance operational efficiency, oversight functions and regulatory compliance:

During the Financial Year under review, the Board accepted all
recommendations made by the above Committees.

The details with respect to the composition, terms of
reference, number of Meetings held, etc. of these Committees
as on March 31, 2026 are given in the Report on Corporate
Governance, which forms part of this Annual Report
as ‘Annexure-2’.

EMPLOYEE STOCK OPTION PLAN

The Company recognizes the importance of attracting, retaining
and motivating talent as a key driver of its long-term growth and
value creation. In line with this, the Company has implemented
an Employee Stock Option Schemes (“ESOP Schemes”),
designed to align the interests of employees with those of
shareholders by providing an opportunity to participate in the
Company’s growth and performance.

All the ESOP & PSOP Schemes of the Company are in
compliance with the provisions of SEBI (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021 (“SEBI SBEB and
Sweat Equity Regulations”) as amended from time to time.

Further, the Nomination & Remuneration Committee is authorized
to administer and oversee the ESOP & PSOP Schemes of the
Company ensuring compliance with the Companies Act,
2013, SEBI SBEB and Sweat Equity Regulations, 2021 and SEBI
(LODR) Regulations, 2015.

EQUITY STOCK OPTION PLAN 2022 (“ESOP-2022”)

During the Financial Year under review, the Company made
grant aggregating to 3,01,230 options on November 11, 2025
under ESOP-2022.

PERFORMANCE STOCK OPTION PLAN 2023 (“PSOP-2023”)

During the Financial Year under review, the Company made grant aggregating to 23,637 options on August 12, 2025 under
the PSOP-2023.

PERFORMANCE STOCK OPTION PLAN 2024 (“PSOP-2024”)

During the Financial Year under review, the Company made grant aggregating to 10,000 options on November 11, 2025 under
the PSOP 2024.

EQUITY STOCK OPTION PLAN 2025 (“ESOP-2025”)

With a view to drive long term performance, retain talent and attract new talent, the Company formulated and implemented ‘Aavas
Financiers Limited - Equity Stock Option Plan- 2025’ (“ESOP-2025”) as a key component in its reward structure to the eligible
employees of the Company. The ESOP-2025 was approved by the Shareholders in Annual General Meeting held on September 16,
2025. Further, during the year under review, the Company made grant aggregating to 14,22,470 options on November 11, 2025
under the ESOP 2025.

Following are the existing ESOP and PSOP plans of the Company:

Additionally, in compliance with the Regulation 13 of SEBI
SBEB and Sweat Equity Regulations, 2021, a certificate
confirming that the above ESOP & PSOP Schemes have been
implemented in accordance with the SEBI SBEB and Sweat
Equity Regulations, 2021 as amended from time to time, has
been obtained from Secretarial Auditors of the Company.

Further, the applicable disclosures as stipulated under Regulation
14 of SEBI SBEB and Sweat Equity Regulations, 2021, with regard
to ESOP & PSOP Plan of the Company are available on the website
of the Company athttps://www.aavas.in/investor-relations/
annual-reports.

Further, in compliance with Regulation 42 of SEBI (LODR)
Regulations, 2015, the ESOP & PSOP schemes are available on
the website of the Company athttps://www.aavas.in/img/pdf/
employee_benefit_scheme_document.pdf.

AUDIT & AUDITORS

Statutory Auditors and Auditors’ Report

In terms of provisions of Section 139 of the Companies Act,
2013 read with the Companies (Audit and Auditors) Rules, 2014
and RBI Guidelines for appointment of Statutory Auditor(s),
M/s. M S K A & Associates LLP, Chartered Accountants (Firm
Registration No. 105047W) and M/s. Borkar & Muzumdar,
Chartered Accountants (Firm Registration No. 101569W) were
appointed as the Joint Statutory Auditors of the Company by the
members of the Company for a period of 3 (Three) consecutive

years in the AGM held on August 07, 2024 effective from the
conclusion of 14^th AGM until the conclusion of 17^th AGM.

The Audit Report given by the Joint Statutory Auditors on the
financial statements of the Company is part of this Annual
Report. There has been no qualification, reservation, adverse
remark or disclaimer given by the Auditors in their Report.

The Audit Committee and the Board of Directors also took note
of the eligibility certificate received from both the audit firms
that they are not disqualified and are eligible to hold the office
as Auditors of the Company. Further, during the year under
review, the Auditors have not reported any fraud under Section
143(12) of the Companies Act, 2013.

Secretarial Auditors and Secretarial Audit Report

With a vision to uphold the highest standards of governance
and regulatory discipline, the Company undertakes Secretarial
Audit as a key assurance mechanism to evaluate compliance
with applicable laws and secretarial practices.

In adherence with the provisions of Section 204 of the Companies
Act, 2013 read with rules made thereunder and Regulation
24A of SEBI (LODR) Regulation, 2015, the Shareholders of
the Company, in the 15^th AGM held on September 16, 2025,
approved the appointment of M/s. Chandrasekaran Associates,
(Firm Registration No. P1988DE002500) Company Secretaries
as Secretarial Auditors of the Company for a period of 5 (Five)
consecutive Years effective from Financial Year 2025-26 upto
Financial Year 2029-30.

Accordingly, M/s. Chandrasekaran Associates, Company
Secretaries (Firm Registration No. P1988DE002500), have
carried out Secretarial Audit of the Company for the Financial
Year 2025-26 in accordance with the provisions of Section 204 of
the Companies Act, 2013 read with the rules made thereunder.

The Report of Secretarial Auditors is self-explanatory and there
were no observations or qualifications or adverse remarks
in their Report.

In accordance with provisions of Sub-section (1) of Section 204
of the Companies Act, 2013, the Secretarial Audit Report in
Form MR-3, forms part of this Annual Report as ‘Annexure-3’.

Furthermore, M/s. Chandrasekaran Associates, Company
Secretaries has issued an Annual Secretarial Compliance
Report for the Financial Year 2025-26 in compliance with
Regulation 24A of SEBI (LODR) Regulation, 2015 which
forms part of this Annual report as ‘Annexure-4’ and is also
submitted to the Stock Exchanges. There are no observations,
or qualifications or adverse remarks in their Report.

The Company has obtained consent and eligibility certificate
from the above audit firm under applicable rules and
laws that they are not disqualified and are eligible to hold
the office as Secretarial Auditors of the Company for the
Financial Year 2026-27.

INFORMATION SYSTEM AUDIT (“IS AUDIT”)

The Company has in place a Board approved Information Systems
Audit Policy that is commensurate with the technological
landscape. The audits focus on information technology general
controls and information security aspects.

The Information System audit are carried out as part of an
Internal Audit function. The Internal Audit function is an
independent assurance function. The Head of Internal Audit
(“HIA”) is accountable to the Audit Committee and Management
in providing assurance on the adequacy and effectiveness of
the Company’s risk management, control, and governance of
information system processes used for controlling its activities.

INTERNAL AUDIT & INTERNAL FINANCIAL
CONTROL AND ITS ADEQUACY

The Company has in place a Board approved Risk Based
Internal Audit Framework ("RBIA") in compliance with directive
issued by Reserve Bank of India. The Company has an effective
independent Internal Audit function headed by the HIA to
oversee the audit of functional areas and operations.

The HIA reports directly to the Audit Committee of the Board.
The primary responsibility of the HIA is to effectively manage the
Internal Audit function and to ensure that it provides required
assurance on the entity’s business and support functions.

The RBIA framework effectively ensures that internal audit
coverage is commensurate with the nature of complexity of

business operations on an ongoing basis. It encompasses
coverage of business and support functions, including
governance, regulatory, operational and technology aspects,
as well as branch audits. HIA ensures compliance with the
internal audit principles and standards and the independence
of the Internal Audit department, its audit staff and evaluating
its performance against key performance indicators.

The Audit Committee performs periodic reviews and evaluates
adequacy and effectiveness of the Company’s internal
control environment, ensuring the timely implementation of
audit recommendations to enhance operational integrity and
regulatory compliance.

The Company’s internal financial control is a process designed
to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements
in accordance with generally accepted accounting principles.
The Company’s internal financial control framework includes
those policies and procedures aimed at:

•    Ensuring the maintenance of accurate financial records;

•    Providing reasonable assurance that financial transactions
are recorded appropriately for the preparation of financial
statements;

•    Establishing mechanisms for the timely prevention and
detection of unauthorized acquisition, use, or disposal
of Company assets that may have a material impact on
financial statements.

SIGNIFICANT AND MATERIAL ORDERS PASSED
BY REGULATORS

There were no significant or material orders passed by the
regulators or courts or tribunals against the Company during
the Financial Year 2025-2026.

MATERIAL    CHANGES/EVENTS    ANDCOMMITMENTS, IF ANY

During the year following material changes/events have
occurred:

Material Event: Share Purchase Agreement and Open
Offer

During the previous Financial Year 2024-25, the Company had
entered into share sale agreements (“SPAs”) with Aquilo House
Pte. Ltd. (belonging to the CVC Network) (“Purchaser”) and
Lake District Holdings Limited, Partners Group ESCL Limited
and Partners Group Private Equity (Master Fund), LLC, being
the erstwhile promoters and members of the Promoter Group
of the Company (“Sellers”).

Pursuant to the SPAs, the Purchaser agreed to acquire, in
aggregate, 2,09,49,112 equity shares of the Company from the
Sellers, constituting 26.47% of the paid-up share capital of the

Company and control of the Company, subject to the terms
and conditions set out in the SPAs.

The execution of the SPAs triggered an obligation on the
Purchaser to make an open offer to the public shareholders
of the Company in accordance with the Securities and
Exchange Board of India (Substantial Acquisition of Shares
and Takeovers) Regulations, 2011. Pursuant to the said open
offer, the Purchaser acquired 1,78,08,116 equity shares of
the Company, aggregating to 22.50% of the paid-up share
capital of the Company pursuant to the open offer from the
public shareholders.

In accordance with the terms of the SPAs, on June 30, 2025
(“Closing Date”), the Purchaser acquired 2,09,49,112 equity
shares constituting 26.47% of the paid-up share capital of
the Company. Consequently, with effect from the Closing
Date (i) the Purchaser acquired control of the Company and
was classified as a ‘promoter’ of the Company; and (ii) the
erstwhile promoters and members of the promoter group of the
Company hold NIL shares of the Company and have ceased to
be in control of the Company, and stand reclassified as public
shareholders of the Company with effect from June 30, 2025.

As a result of the aforesaid acquisition and the open offer, the
Purchaser as on March 31, 2026, holds 3,87,57,228 equity
shares of the Company, representing 48.88% of the paid-up
share capital of the Company.

Further, there have been no other material changes or
commitments that have affected the financial position
of the Company.

MAINTENANCE OF COST RECORDS

The Company being an NBFC-HFC is not required to maintain
cost records as per sub-section (1) of Section 148 of the
Companies Act, 2013.

INFORMATION TECHNOLOGY

Your company has strengthened its position as a
technology-driven leader by leveraging digital, AI, and
automation to improve efficiency, reduce costs, and enhance
customer experience. Key initiatives included upgrading the
Nirman sales app, implementation of a digital agreement
process, a loan disbursal processes, and expansion of
customer self-service via chatbots and mobile apps.
AI adoption across critical functions improved turnaround
times, FTR rates, voice bot improved collections efficiency, and
application development speed, while RPA and other AI tools
enhanced audits and employee productivity.

The Company also modernized its data platform with a
scalable cloud-native stack which ensures scalability and
advanced analytics. It strengthened cybersecurity through
drills, assessments and awareness programs and maintained

a strong BitSight rating. Operational improvements included
adopting cloud-based systems like Salesforce, MuleSoft for
loan origination and customer service and Oracle platforms
for core banking and financial systems. Digital integrations
enabled over 75% of customer requests to be resolved digitally
with 99% self-service.

Going forward, the focus will be on scaling AI across functions,
enhancing cybersecurity, expanding cloud adoption, and
building strategic partnerships to drive long-term growth and
innovation in affordable housing finance.

HUMAN RESOURCE - A CULTURE OF COMMITMENT,
CONSISTENCY AND COMPASSION

Your Company has always been committed to nurturing a
supportive, inclusive and dynamic workplace where each
team member feels valued and motivated. Our comprehensive
HR initiatives are designed to enhance employee well-being,
cultivate professional growth, and build a strong sense of
community. By investing in our people, we not only drive
individual success and well-being, but also propel our
organization towards greater achievements. Its vision of being
a leader and a role model in a broad based and integrated
financial services business and a culture that is purpose driven
gives meaning to our people. As we reflect on the past Financial
Year, 2026, it is evident that our success is intrinsically linked to
the quality and competence of our human capital.

Your Company has continued to built upon the strong
foundation established in previous years by implementing
strategic initiatives designed to enhance the well-being,
foster career growth and advance professional development
of our employees. Among these initiatives, we have placed a
particular emphasis on promoting the holistic well-being of our
female staff and strengthening the leadership capabilities of
our Senior Management team.

Recognizing the importance of a performance driven culture,
the Company introduced a performance-based equity scheme
to instill a sense of ownership and accountability while
incentivizing excellence. This initiative reflects our dedication
to align individual contributions with organizational success,
ensuring that employees are rewarded for their commitment
and achievements.

Furthermore, we continue to invest in leadership development
programs, mentorship opportunities, and skill enhancement
initiatives to empower our workforce and equip them with the
tools necessary to excel in an evolving business landscape.

As of March 31,2026, our permanent employees count stood
at 7,649, reflecting our growth and unwavering commitment to
fostering a conducive and performance-driven organizational
environment. In the future, your Company is committed to
foster an improved workplace that nurtures professional

development and operational excellence. Together, we will
persist in our pursuit of excellence, promote sustainable
growth and create lasting value for all our Stakeholders.

DISCLOSURES UNDER SEXUAL HARASSMENT
OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION & REDRESSAL) ACT, 2013

Your Company remains firmly committed to providing a
safe, respectful and inclusive workplace environment for all
employees. Sexual harassment is treated as a serious violation
of human dignity and organisational values, and the Company
maintains a zero-tolerance approach towards such conduct.

In compliance with the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act,
2013, the Company has adopted a comprehensive policy
and constituted Internal Complaints Committees ("ICCs") to
address and resolve complaints relating to sexual harassment.
The policy applies to all employees across locations.

Details of complaints received, disposed and pending during
the Financial Year are provided in the Corporate Governance
Report forming part of this Annual Report.

MATERNITY BENEFITS PROVIDED BY THE
COMPANY UNDER MATERNITY BENEFIT ACT, 1961

The Company places strong emphasis on fostering a
supportive, inclusive, and equitable workplace for its women
employees. In line with this commitment, the Company has
remained fully compliant with the provisions of the Maternity
Benefit Act, 1961, during the Financial Year under review.

A comprehensive Leave Policy is in place, clearly outlining
entitlements related to maternity leave and associated
benefits. All eligible women employees have been extended
statutory benefits under the Act, including paid maternity
leave, continuity of salary and service during the leave period,
and post-maternity support.

Further, recognizing the importance of employee welfare,
the Company has also introduced a reimbursement facility
for creche services, thereby supporting working mothers in
balancing professional and personal responsibilities.

By ensuring compliance with applicable laws and proactively
implementing employee-friendly initiatives, the Company
remains dedicated to providing a safe, empowering, and
inclusive work environment for its women employees.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

In any organization, a secure and confidential channel for
reporting concerns related to ethical conduct is essential for
maintaining accountability and integrity. Such a mechanism
empowers individuals to raise issues without fear, fostering
a culture of transparency and trust within the organization.
Accordingly, your Company has in place a "Whistle Blower

Policy" encompassing vigil mechanism pursuant to the
requirements of sub-section 9 and 10 of Section 177 of the
Companies Act, 2013 and Regulation 22 of the SEBI (LODR)
Regulations, 2015, to report to the management genuine
concerns or grievances about unethical behavior, actual or
suspected fraud or violation of the Company’s Code of Conduct.

With the core aim to achieve the highest standards of ethical,
moral and legal conduct of business operations and to nurture
these standards, the Company encourages its employees who
have concerns about suspected misconduct to come forward
and express their concerns without fear of punishment or
unfair treatment.

The mechanism provides a secure channel to the employees
and Directors for adequate safeguards against victimization
of employees and Directors who use such mechanism and
makes provision for direct access to the Chairperson of the
Audit Committee in exceptional cases, ensuring transparency
and accountability in addressing whistleblower concerns.
There are no restrictions for accessing the Audit Committee for
any of the Company’s employees.

In order to safeguard the fairness of the process, the identity
of the Whistle Blower is kept confidential to prevent any
discriminatory actions against him/her.

The Whistle Blower Policy is available on the website of the
Company athttps://www.aavas.in/codes-and-policies.

CODE OF CONDUCT FOR PREVENTION OF
INSIDER TRADING IN COMPANY’S SECURITIES

To uphold the highest standards of transparency and regulatory
compliance, the Company has established and adopted a
comprehensive Code of Conduct for the Prevention of Insider
Trading, in line with the Securities and Exchange Board of India
(Prohibition of Insider Trading) Regulations, 2015 (“SEBI (PIT)
Regulations, 2015”).

This Code regulates, monitors, and ensures proper reporting of
trading activities by Designated Persons and their immediate
relatives, identified based on their functional roles. It is
designed to maintain ethical integrity in trading the Company’s
securities. The Code prohibits trading while in possession
of Unpublished Price Sensitive Information (“UPSI”) and
prescribes clear procedures, disclosure requirements, and
consequences for violations.

To safeguard Stakeholder interests, Mr. Saurabh Sharma,
Company Secretary, has been appointed as the Compliance
Officer under the Code, responsible for overseeing adherence
to insider trading regulations and governance principles.

Furthermore, in accordance with Regulations 3(5) and (6) of
SEBI (PIT) Regulation 2015, the Company has maintained
a Structural Digital Database (“SDD”), wherein details of
persons with whom UPSI is shared on need-to-know basis
and for legitimate business purposes is maintained with time

stamping and audit trails to ensure non-tampering of the
database. It ensures proper record-keeping and monitoring of
access to UPSI. This database serves as an essential tool for
regulatory compliance, preventing unauthorized dissemination
and ensuring transparency in the management of sensitive
financial information.

The SDD is maintained internally by the Company and is not
outsourced in accordance with the provisions of the SEBI PIT
Regulations, 2015.

RISK MANAGEMENT FRAMEWORK

Managing risk effectively remains central to the Company’s
long-term sustainability. Recognizing the dynamic nature
of its operating environment, the Company has built a
comprehensive risk management framework supported by
clearly defined policies, systems, and governance practices.

Risk oversight is anchored through a collaborative structure
involving senior management and the Board’s Risk Management
Committee, ensuring compliance with regulatory requirements
under SEBI (LODR) Regulations, 2015, and RBI guidelines.
This framework enables continuous monitoring of the evolving
risk landscape while fostering a culture of awareness and
accountability.

The Committee undertakes periodic reviews of key risks and
mitigation strategies, supported by well-established policies such
as the Risk Management Policy, IT Risk Management Policy, and
ICAAP, along with an Early Warning Signal mechanism for timely
identification of potential stress.

A wide range of risks—including credit, liquidity, interest rate,
cybersecurity, fraud, regulatory, and operational risks—are
actively tracked and reviewed. The Company’s disciplined
underwriting processes, backed by skilled professionals and
supported by specialized teams and external experts, further
strengthen its ability to manage risks effectively and sustain
business performance.

INVESTOR RELATIONS

Fostering trust through open, timely and transparent
communication remains central to building strong and
enduring relationships with the investment community.
The Company is committed to keeping Stakeholders well
informed about its financial performance, strategic priorities
and long term objectives through consistent engagement.
Leveraging technology, the Company not only sustains current
performance but also supports future ready growth, guided by
a holistic view of the operating environment.

To strengthen investor engagement, the Company has
established a dedicated Investor Relations team that facilitates
regular communication through earnings conference calls,
investor and analyst meetings and structured interactions
between fund managers and management. The Investor

Relations team also participates in investor conferences each
quarter to deepen engagement. Presentations shared with
investors, analysts and fund managers are made available on
the Company’s website and are simultaneously disseminated
to the stock exchanges to ensure transparent and equitable
access to information. Each quarter, the audio recordings
of these meetings, along with their transcripts, are posted
on the website of the Company athttps://www.aavas.in/
investor-relations/investor-intimation.

CORPORATE SOCIAL RESPONSIBILITY

Your Company recognizes Corporate Social Responsibility
(“CSR”) as an integral part of responsible Corporate
Governance and remains committed to contributing towards
the social and economic development of the communities in
which it operates.

Through its CSR initiatives, the Company undertakes
programmes aimed at promoting community welfare and
improving the quality of life, particularly for underprivileged and
marginalized sections of society. The Company continues to
support initiatives in areas such as Environment Sustainability,
Education, Health & Well Being, Livelihood & women
empowerment and other activities aligned with the objectives
set out under the applicable CSR framework.

In compliance with the provisions of Section 135 of the
Companies Act, 2013 read with the Companies (Corporate
Social Responsibility Policy) Rules, 2014, as amended from
time to time, the Company has constituted a CSR & ESG
Committee of the Board to oversee the implementation and
monitoring of CSR activities. Further, the Company has adopted
a Corporate Social Responsibility Policy in accordance with the
provisions of and the activities specified under Schedule VII
of the Companies Act, 2013. The Policy lays down the guiding
principles and framework for undertaking CSR initiatives
of the Company.

The CSR Policy is available on the website of the Company at
https://www.aavas.in/codes-and-policies.

The Annual Report on CSR activities, as required under the
Companies Act, 2013 and the rules made thereunder, is
provided as ‘Annexure - 8’ forming part of this Annual Report.

PARTICULARS OF HOLDING/JOINT VENTURE/
SUBSIDIARY/ASSOCIATE COMPANIES

Pursuant to the share sale agreements entered into with
Aquilo House Pte. Ltd. (“Purchaser”) and each of Lake District
Holdings Limited, Partners Group ESCL Limited, and Partners
Group Private Equity ("Master Fund"), LLC who were members
of the Promoter/Promoter Group of the Company ("Sellers")
until June 30, 2025 and in accordance with the powers
conferred upon the Purchaser under Article 16 of the Articles
of Association, Aquilo House Pte. Ltd. has become the Holding

Company of the Company effective June 30, 2025. This status
is in terms of Section 2(87)(i) of the Companies Act, 2013, by
virtue of controlling the composition of the Board of Directors.

Further, pursuant to Section 129(3) of the Companies Act,
2013 read with the Companies (Accounts) Rules, 2014, the
requirement of furnishing a statement in Form AOC-1 is not

applicable, as the Company does not have any Subsidiary,
Associate or Joint Venture during the Financial Year under review.

In accordance with Section 136(1) of the Companies Act,
2013, the Annual Report of your Company containing inter
alia, Financial Statements has been available on the website
of the Company athttps://www.aavas.in/investor-relations/
annual-reports.

PARTICULARS OF EMPLOYEE REMUNERATION AND RELATED DISCLOSURES

In compliance with Section 197(12) of the Companies Act, 2013 and Rule 5(1) of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014, disclosures regarding the remuneration of Directors and employees have been made.
The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as
required under Section 197(12) of the Act read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration
of Key Managerial Personnel) Rules, 2014, is available on the website of the Company athttps://www.aavas.in/investor-relations/
annual-reports.

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

In terms of Section 134(3) (m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014, the particulars
of energy conservation, technology absorption and foreign exchange earnings and outgo is provided as under:

ENVIRONMENT HEALTH AND SAFETY (“EHS”)
PROTECTION

As a Housing Finance Company, the Company is committed
to upholding robust environmental and social standards
across its lending and operational practices. We continuously
strengthen and refine our credit appraisal and investment
decision frameworks to ensure alignment with applicable
Indian statutory and regulatory requirements, as well as
internationally recognized benchmarks, including the IFC
Performance Standards. These principles are embedded
across our housing finance and MSME portfolios, enabling

us to promote responsible financing and sustainable
development outcomes.

Your Company places strong emphasis on safeguarding
the health and safety of its workforce by embedding robust
EHS principles into its operations. Its approach is centered
on systematic risk identification, preventive controls,
and adherence to applicable regulatory requirements.
Through structured policies, the Company strives to build a
vigilant and accountable safety culture. Ongoing monitoring,
internal reviews, and continuous enhancement of safety
practices remain integral to its commitment to operational
excellence and long-term sustainability.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORTING

In accordance with Regulation 34(2)(f) of the SEBI (LODR)
Regulations, 2015, the top 1,000 listed companies based
on market capitalization are required to include a Business
Responsibility and Sustainability Report (“BRSR”) in
their Annual Reports. This report outlines the Company’s
initiatives from an Environmental, Social and Governance
(“ESG”) perspective.

Following SEBI Master Circular HO/49/14/14(7)2025-CFD-
POD2/I/3762/2026 dated January 30, 2026, SEBI has further
introduced BRSR Core, a focused sub-set of the BRSR,
comprising Key Performance Indicators (“KPIs”) across nine
ESG attributes.

Demonstrating its commitment to robust Corporate
Governance and transparent sustainability disclosures,
the Company has voluntarily implemented the BRSR Core
framework over the last two Financial Years.

The Company is dedicated to year-on-year improvements
in ESG performance, refining our systems and disclosure
practices to deliver tangible impact and stay in step with
shifting Stakeholder expectations.

The BRSR describing the initiatives taken by the Company
from an ESG perspective along with Reasonable Assurance
Statement from an Independent Auditor forms part of this
Annual Report as ‘Annexure-10’.

ANNUAL RETURN

The Annual Return has been prepared in form MGT-7 as on
March 31, 2026 in compliance with the provisions of Section
134(3) and Section 92(3) of the Companies Act, 2013,
read with Rule 12(1) of the Companies (Management and
Administration) Rules, 2014. The same is available on the website
of the Company athttps://www.aavas.in/investor-relations/
annual-reports.

ADDITIONAL DISCLOSURES UNDER COMPANIES
(ACCOUNTS) RULES, 2014

a) The details of application made or any proceeding pending
under the Insolvency and Bankruptcy Code, 2016 (31 of
2016) during the Financial Year along with their status as
at the end of the Financial Year:

There were no proceedings, either filed by the Company
or against the Company, pending under the Insolvency
and Bankruptcy Code, 2016, as amended, before the
National Company Law Tribunal or other Courts as on
March 31,2026.

b) The details of difference between amount of the valuation
done at the time of one-time settlement and the valuation
done while taking loan from the Banks or Financial
Institutions along with the reasons thereto:

During the Financial Year under review, the Company has
not made any settlement with its Bankers or Financial
Institutions from which it has availed any loan.

PARTICULARS OF LOANS, GUARANTEES OR
INVESTMENTS

Since the Company is an HFC, it is exempted from disclosing
information regarding particulars of loans extended,
guarantees given, and security provided in the ordinary course
of business under the provisions of Section 186(11) of the
Companies Act, 2013.

Nevertheless, the notes to the Financial Statements of
the Company state the details of loans, guarantees, and
investments made as required under the provisions of Section
186 of the Companies Act, 2013 and the rules made thereunder.

CONTRACTS OR ARRANGEMENTS WITH RELATED
PARTIES

Your Company has an explicit “Policy on Materiality of
Related Party Transactions and dealing with Related Party
Transactions” to ensure that all related party transactions are
on an arm’s length basis and in the ordinary course of business
in adherence of the provisions of Section 188 of the Companies
Act, 2013 and rules made thereunder and the SEBI (LODR)
Regulations, 2015. Accordingly, all related party transactions
entered during Financial Year 2025-26 were on an arm’s length
basis and in the ordinary course of business under the Act and
were not material under the SEBI (LODR) Regulations, 2015.

All related party transactions entered into during the Financial
Year, were presented to both the Audit Committee and the
Board. The Audit Committee has granted omnibus approval for
related party transactions as per the provisions of the Companies
Act, 2013 and the SEBI (LODR) Regulations, 2015. Further, in
compliance with the Section 134(3)(h) of the Companies Act,
2013, a thorough disclosure has been made in Form AOC-2 as
‘Annexure-6’ which forms part of this Annual Report.

Additionally, in compliance with the SEBI and RBI Master
Directions, the 'Policy on Materiality of Related Party
Transactions and dealing with Related Party Transactions' is
given in ‘Annexure-9’ which forms part of this Annual Report
and is available on the website of the Company athttps://
www.aavas.in/codes-and-policies.

INTERNAL GUIDELINES ON CORPORATE
GOVERNANCE

The Company regards corporate governance not merely as a
regulatory obligation, but as a fundamental pillar of sustainable
growth, ethical business conduct, and long-term value creation
for all Stakeholders.

To embed these principles across its operations, the Board has
instituted comprehensive Internal Guidelines on Corporate
Governance, setting clear standards of integrity, transparency,
and accountability. These guidelines are fully aligned with
the Companies Act, 2013, the SEBI (LODR) Regulations,
2015, and the regulatory framework prescribed by the
Reserve Bank of India.

The governance framework is supported by a comprehensive
set of Board-approved policies, including Code of
Conduct, "Risk Management Policy", "Related Party
Transactions Policy", "Vigil Mechanism/Whistle Blower
Policy", Anti-Bribery and Anti-Corruption measures which
help in promoting a culture of integrity and responsible
decision-making across the organisation.

The Company has also established robust internal control
systems, periodic internal audits and a dedicated compliance
function to monitor adherence to these guidelines.

The Board and its committees regularly review governance
practices and policy effectiveness, ensuring continuous
strengthening of the Company’s governance standards in line
with evolving regulatory and business requirements.

The Internal Guidelines on Corporate Governance of the
Company is available on the website of the Company athttps://
www.aavas.in/codes-and-policies.

DIRECTORS’ RESPONSIBILITY STATEMENT

In compliance with the provisions of Section 134(3)(c) and
134(5), of the Companies Act, 2013, and based on the
information provided by the Management, the Board of
Directors hereby gives the following statement:

a)    in the preparation of the annual accounts, the applicable
accounting standards have been followed along with
proper explanation relating to material departures;

b)    the Directors had selected such accounting policies and
applied them consistently and made judgments and
estimates that are reasonable and prudent to give a true
and fair view of the state of affairs of the Company at the

end of the Financial Year and of the profit and loss of the
Company for that period;

c)    the Directors had taken proper and sufficient care for
the maintenance of adequate accounting records in
accordance with the provisions of the Companies Act,
2013, for safeguarding the assets of the Company and for
preventing and detecting frauds and other irregularities;

d)    the Directors had prepared the annual accounts on a
going concern basis;

e)    the Directors had laid down Internal Financial Controls
to be followed by the Company and that such Internal
Financial Controls are adequate and were operating
effectively; and

f)    the Directors had devised proper systems to ensure
compliance with the provisions of all applicable laws and
that such systems were adequate and operating effectively.

BUSINESS OVERVIEW & FUTURE OUTLOOK

During the year under review, the Company reinforced its
commitment to building a resilient and future-ready financial
services franchise. This was achieved through disciplined
credit practices, diversification of funding sources, and a
strategic focus on sustainable growth, ensuring stability while
driving long-term value creation.

An in-depth review of the Company’s operations, performance
and forward-looking perspective is set out in the Management
Discussion and Analysis section of this Annual Report.

ACKNOWLEDGEMENTS AND APPRECIATION

The Board of Directors expresses its deep gratitude to all
Stakeholders whose trust, commitment, and continued
association have been instrumental in driving the Company’s
progress during the Year.

The Board also acknowledges the valuable guidance and
oversight provided by the regulatory ecosystem, including
the RBI, NHB, SEBI, Stock Exchanges i.e.. NSE and BSE.
Their constructive engagement has played a vital role in shaping
a resilient and well-governed financial framework.

The confidence reposed by Shareholders, Customers,
Debenture Investors, Lending Institutions, and Banking
Partners has remained the foundation of the Company’s ability
to operate responsibly and expand sustainably.

The Directors place on record their appreciation for the
dedication and collective efforts of the Company’s employees.
Their discipline, agility, and sense of ownership have enabled
the Company to navigate a dynamic credit environment
while upholding strong underwriting standards, prudent risk
practices, and regulatory compliance. The contribution of the
Company’s distribution network, sourcing partners, and service

associates is also recognized for strengthening outreach and
operational effectiveness.

Looking ahead, the Board remains confident that the continued
collaboration of all Stakeholders will empower the Company to
advance its vision of responsible lending, maintain portfolio
quality, and deliver sustainable value creation for the long term.

For and on behalf of the Board of Directors
AAVAS FINANCIERS LIMITED

SandeepTandon

Chairperson and Independent Director
(DIN:00054553)

Date: June 04, 2026
Place: Mumbai

Registered and Corporate Office:

201-202, 2^nd Floor, Southend Square,

Mansarovar Industrial Area, Jaipur 302020, Rajasthan, India
CIN: L65922RJ2011PLC034297

E-mail:investorrelations@aavas.in| Website: www.aavas.in