Axis Bank

Sustainable Financing Framework

July 2021

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Table of Contents

1. Introduction ....................................................................................................................... 3
1.1 Company Overview...................................................................................................... 3
1.2 Sustainability strategy and vision ................................................................................. 3
1.2.1 Axis Bank’s and Sustainable Finance ................................................................... 4
1.2.2 Sustainable Lending Portfolio ............................................................................... 4
1.2.3 Priority Sector Lending.......................................................................................... 5
1.2.4 Direct Environmental Impacts ............................................................................... 5
2. Axis Bank Sustainable Financing Framework Overview ............................................... 7
2.1 Use of Proceeds .......................................................................................................... 8
2.1.1 Eligible Green Project Categories ......................................................................... 9
2.1.2 Eligible Social Project Categories ........................................................................11
2.1.3 Exclusions ...........................................................................................................14
2.2 Process for Project Evaluation and Selection ..............................................................14
2.3 Management of Proceeds ...........................................................................................15
2.3.1 Type of Funding Transaction ...............................................................................15
2.3.2 Allocation of Use of Proceeds ..............................................................................15
2.4 Reporting ....................................................................................................................16
2.4.1 Allocation Reporting .............................................................................................16
2.4.2 Impact Reporting .................................................................................................16
3. External Review ...............................................................................................................17
Appendix: ................................................................................................................................18

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1. Introduction

1.1 Company Overview

Axis Bank is one of the leading private sector banks in India, offering a wide range of products
and services to corporate, government and retail customers through a variety of delivery
channels. The Bank commenced operations with the opening of its first branch in Ahmedabad in
April 1994 and since then has emerged as one of India’s leading financial conglomerates with a
presence across diverse segments of the economy.
For over 27 years, Axis Bank has strived to stand by
its customers and other stakeholders as a
trustworthy and supportive partner, helping them
fulfil their financial aspirations and realising their
personal ambitions.
Axis Bank has presence across 28 states and 8
union territories in India, operating 4,594 branches
and extension counters in 2,596 centres in 667
districts, as on 31st March 2021.
The Bank has overseas branches at Singapore,
DIFC - Dubai and an Offshore Banking Unit at the
International Financial Service Centre (IFSC),
Gujarat International Finance Tec-City (GIFT City).
It also has representative offices in Dubai, Abu
Dhabi, Sharjah, and Dhaka and a subsidiary in London. The Bank has entered into an agreement
with OpenPayd Holdings for sale of Axis Bank UK Limited, its subsidiary in London.

1.2 Sustainability strategy and vision

As the global banking landscape changes to be more aligned with the universal developmental
goals and ambitions, the true purpose of financial institutions is emerging to catalyze actions that
can help create long term, positive impacts across society through their banking and lending
activities. Axis Bank remains cognizant of the criticality of adopting the principles of ESG
(Environmental, Social and Governance) into its business strategy and conduct; and is working
towards strengthening the pillars to build a future-proof and high-impact ESG strategy.
During the year, the Bank formed an ESG Steering Committee chaired by its Executive Director
(Corporate Centre) and comprising of senior officials, with the mandate to guide and support the
Board and business divisions of the Bank, in matters of sustainability. The Charter of the CSR
Committee has been amended to facilitate review of the initiatives taken by the Bank from a
sustainability perspective.

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 1.2.1 Axis Bank and Sustainable Finance

As a leading financial institution, Axis Bank facilitates financial flows into diverse aspects of the
Indian economy, touching myriad sections of society. In alignment with the global sustainable
development agenda led by the Sustainable Development Goals and the Paris Agreement, the
Bank has strived to strengthen its sustainable financing practices and portfolio, lending to ‘green’
sectors including renewable energy generation, mass transport, low carbon infrastructure and
waste management, as well as strengthening its overall environmental and social (E&S) risk
assessment capabilities.
As on 31 March 2020, the Bank’s overall exposure to such ‘sustainable’ sectors including
renewable energy (including large hydro), urban mass transport, and green buildings, stood at
₹64.47 Billion, up from ₹54.98 Billion in the previous reporting year.
In March 2020, the Government of India declared large hydropower projects to be classified as
renewable energy source and the Bank’s reported sustainable sectors portfolio as on 31 March,
2020 includes the Bank’s large hydro exposure.
In 2016, Axis Bank launched India’s first certified, dollar-denominated green bond by an Asian
bank, raising USD 500 million. Towards ensuring transparency in the use of proceeds and
improving impact measurement, the Bank released its Green Bond Framework in alignment with
Climate Bonds Initiative’s Standard version 2.1. The total funded green exposure under the Green
bond issuance was ₹46.05 Billion as on 31 March, 2021.

1.2.2 Sustainable Lending Portfolio

The Bank has in place the Environment, Social and Governance (ESG) Policy1 that integrates
environmental and social risk assessment into its credit appraisal mechanism. Environment,
Social & Governance (ESG) Policy is applicable, subject to certain internal criteria/thresholds, to
project loans/corporate loans/lines of credit (including working capital term loans); Bridge loans
provided by Axis Bank pending final sanction of the project loan by Axis Bank; Overseas funding,
Consortium / multiple banking; Syndicated by other banks; Refinance transactions.
Axis Bank recognises that international risk management frameworks, adopted by financial
institutions, have promoted convergence around common environmental and social standards for
lending and project finance. We have thus developed the ESG Policy in cognizance of the
following Standards for Environment & Social Risk Assessment of Lending Portfolio:
❖ Applicable Indian national, state and local regulatory requirements;
❖ The IFC Performance Standards (PS1 to PS8) Framework 2012 for Environmental and
Social Sustainability;

1
ESG Policy may be subjected to internal review and modification from time to time.

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 ❖ The World Bank Group General Environment, Health & Safety (EHS) Guidelines and
Sector Specific Guidelines;
❖ Relevant multilateral environmental, social, labor and biodiversity conventions ratified by
India;
❖ National Voluntary Guidelines, Ministry of Corporate Affairs, 12th July 2011; and
❖ G4 Sector Disclosure for Financial Services.

The risk categorisation of credit proposals is primarily adapted from IFC’s Sustainability
Framework, and is used to identify the key areas/themes to focus the scope of the Environmental
and Social Due Diligence (ESDD). During FY 2020-21, a total of 37 proposals were assessed
under ESG Policy. A summary of the Policy can be accessed on the Bank's website.

1.2.3 Priority Sector Lending

In line with the Priority Sector Lending (“PSL”) guidelines by the Reserve Bank of India2, Priority
Sector advances include loans to the agriculture sector, micro and small enterprises, financial
inclusion sector, microfinance loans, loans to certain weaker sectors, housing and education
finance up to certain ceilings, and loans to fund the purchase of eligible assets and investments
in eligible securitised assets.
The Bank has focused on increasing its emphasis on its product offerings to MSMEs, Agri Sector
and economically weaker segments, increasingly deploying digital lending channels to facilitate
quicker turnaround time for sanction and disbursement of loans to various segments. The Bank
is also working on developing newer platforms that will help reach out to potential borrowers and
offer our solutions seamlessly. It continues to focus on augmenting the small ticket size loans with
competitive features and products such as crop loans to small and marginal farmers (Definition
provided in Appendix 2). Microfinance business, targeted at women borrowers from low income
households, is being scaled up. Notably, the Bank has been working towards increasing its
presence in specific rural and semi urban geographies across India, especially where it perceives
to have lesser penetration in agricultural advances and MSME lending. In addition, it continues to
undertake activities promoting financial literacy and awareness aimed at the under banked.

1.2.4 Direct Environmental Impacts

As a service sector organisation with a nation-wide presence and an employee strength of close
to 80 thousand employees, the Bank’s direct environmental footprint primarily revolves around
the resources that it consumes to conduct its day to day operations, such as electricity and paper,

2
Priority Sector Lending (PSL) from the Reserve Bank of India (RBI):
https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=11959

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resources required for business related travel of any kind, and the resources consumed by and
for its employees.
Being a service-oriented industry, the primary energy source contributing to the carbon footprint
is purchased electricity from the grid and use of diesel generator sets for on-site power generation
as a secondary source. In order to reduce the consumption of fossil fuel-based energy, the Bank
has strived to increase adoption of renewable energy sources, such as installation of roof top
solar panels across offices and branches, entering into power purchase agreements with
renewable power suppliers, and investing in energy efficiency and resource efficiency initiatives.
The Bank has a Policy on Environmental Management which guides its environment-related
actions across all its operational locations in India. Important areas of intervention incorporated
within the policy include rationalisation of resource consumption, reduction in waste output,
increased adoption of clean energy, strengthening employee awareness and participation, among
other such guiding principles. The overall installed renewable energy capacity at the Bank was
7.05 MW as on 31 March 2020, generating approximately 102,484 GJ of electricity. The Bank has
taken an aspirational target of reducing its specific carbon emissions (Scope 1 and Scope 2
emissions per FTE) by 5% year on year, from FY 2020-21 onwards.

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2. Axis Bank Sustainable Financing Framework Overview
Axis Bank’s Sustainable Financing Framework (“The Framework”) was developed with the
objective of reinforcing Axis Bank’s capabilities in financing green and social projects3, which
contribute to the UN SDGs as well as the Paris Agreement. Axis Bank has already issued a Green
Bond in 2016 under its Green Bond Framework, and now aims to create a Sustainable Financing
Framework in order to raise investments for financing/ refinancing environmental and Social
Projects, as well as projects with both social and environmental impact. Through this new
Framework, Axis Bank aims to mobilise investors to contribute capital towards the realisation of
the UN SDGs.

Sustainable Financing Transactions (“SFT”) will include bonds, loans and other forms of debt
financing with structures tailored to contribute to sustainable development by application of the
proceeds to Eligible Projects as defined in this Framework.

- With respect to bonds, bonds issued under this Framework will be aligned with the ICMA
principles4: 2021 Green Bond Principles (“GBP”), 2021 Social Bond Principles (“SBP”) and
2021 Sustainability Bond Guidelines (“SBG”) or as they may subsequently be updated, as
well as the ASEAN Green Bond Standards, Social Bond Standards and Sustainability Bond
Standards.
- With respect to loans, loans issued under this Framework will be aligned with the 2021 Green
Loan Principles (“GLP”), 2021 Guidance on Green Loan Principles 5 , or as they may
subsequently be amended. Should the loan be used for projects that deliver green and/or
social benefits, the loan will be labelled as “sustainable”.
- Other SFT may conform to other sustainable finance principles as may have been established
at the time of such a financing transaction being undertaken.

SFTs do not place restriction on the tenor and currency; and can include other terms and
conditions including covenants, to reflect the financing strategy and plans of Axis Bank as well as
the outcome of the commercial discussions between the Issuer/Borrower and
Manager/Arranger/Lender.

SFTs may be executed in any jurisdiction and market reflecting Axis Bank’s current and future
business needs.

For each SFT, Axis Bank management asserts that it will adopt the following core components of
the GBP, SBP, SBG and GLP:
1. Use of proceeds;
2. Process for project evaluation and selection;
3. Management of proceeds; and
4. Reporting

3
Wherever mentioned, the term “project(s)” refers to project-based lending and general purpose loans for pure-play businesses that
derive at least 90% of revenues from activities identified in the eligible categories
4
https://www.icmagroup.org/green-social-and-sustainability-bonds/
5
https://www.lsta.org/content/green-loan-principles/

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The Framework also covers External Review.

The Framework will be in force as long as there is SFTs outstanding. Axis Bank may update this
Framework and commits that any new version will keep or improve the current level of
transparency and reporting. Axis Bank commits to communicate any changes made to the
framework with investors on its official website (https://www.axisbank.com/)

2.1 Use of Proceeds

The net proceeds of the SFTs will be used to finance or refinance, in whole or in part, new or
existing Eligible Green Project Categories and Eligible Social Project Categories (“Eligible Project
Categories”).

• The proceeds of a Green Bond/Loan issued under this Framework will be applied to
projects that fall under the Eligible Green Project Categories set out in Section 2.1.1 below.
• The proceeds of a Social Bond/Loan issued under this Framework will be applied to
projects that fall under the Eligible Social Project Categories set out in Section 2.1.2 below.
• The proceeds of a Sustainability Bond/Loan issued under this Framework will be applied
to projects that fall under the Eligible Green Project Categories set out in Section 2.1.1
and Eligible Social Project Categories set out in Section 2.1.2

Eligible Assets may include:

• Loans to businesses and projects for which the use of proceeds meet the Eligibility
Criteria;
• Loans to businesses which derive 90 per cent or more of their revenues from activities
which meet the Eligibility Criteria; and
• Axis Bank’s own operating or capital expenditures for which the use of proceeds meets
the Eligibility Criteria

Eligible Project Categories may include the projects Axis Bank funded during the 36 months prior
to the issuance or signing date of the respective SFTs and during the life of the SFTs.

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 2.1.1 Eligible Green Project Categories

Eligible
Project Eligible Criteria and Description UN SDGs
Category

Renewable • Solar: SDG 7.2:

Energy - Solar energy generation in operation or under construction By 2030, increase
substantially the share
for:
of renewable energy in
o Solar electricity generation facilities where a the global energy mix
minimum of 85% of electricity generated from the the share of renewable
facility is derived from solar energy resources energy in the global
o Wholly dedicated transmission infrastructure for energy mix
solar electricity generation facilities6.
• Wind:
- Wind energy generation in operation or under construction
for:
o The development, construction and operation of
wind farms
o Operational production or manufacturing facilities 7
wholly dedicated to wind energy development
o Wholly dedicated transmission infrastructure for
wind farms
• Small Hydro and Run of the River Hydro Power8:
- Production, transmission and distribution of renewable
energy from hydropower below 25 MW capacity.

Waste • Projects that contribute to waste prevention and collection, SDG 11.4:
Management waste reduction and waste recycling such as: Strengthen efforts to
o The development, operation and upgrade of recycling protect and safeguard
cultural and national
facilities for metals, plastic or paper heritage
o Collection9, treatment or remediation10 of hazardous
waste or contaminated soil

SDG 12.7:
Promotion of
sustainable
procurement practices
in accordance with

6
Covers manufacturers of solar panels and other related accessories
7
In lending to entities involved in manufacturing of wind turbine blades, Bank shall ensure a confirmation from the manufacturer that
Balsa wood, if used in its manufacturing process, is responsibly sourced
8
For all new hydropower projects, all the conditions as required under the Indian Environment laws for various kind of assessment
with respect to the Hydro project will be followed for the Environment & Social risk assessment and their compliances.
9
Waste segregation is to be done as per the type of waste generated from different sources and as per the requirement of prevalent
waste management laws.
10
The recipient of the loan towards carrying out soil remediation shall not be any entity that itself has caused the need for soil
remediation.

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 o Recycling or composting to divert waste from landfill or
national policies and
improve the efficiency of waste processing (waste to
priorities
energy11 including using biomass12 as feedstock)

Clean • All infrastructure, infrastructure upgrades, rolling stock and SDG 9.1:
Transportation vehicles for electrified public transport, including electrified Quality, reliable,
rail, trams, trolleybuses and cable cars. Buses with no direct sustainable and
resilient
emissions (electric and hydrogen). infrastructure to
• Bus Rapid Transit (BRT) Systems- Components13 of any support economic
BRT project meeting Bronze, Silver or Gold score under the development and
BRT Standard14 as developed by the Institute of human well-being
Transportation and Development Policy
• Development, manufacture and acquisition of low-carbon SDG 11.6:
land transport such as passenger cars and commercial Reduced adverse per
vehicles - zero tailpipe emission vehicles (e.g., hydrogen, capita environmental
impact of cities,
fuel cell and electric vehicles) and hybrid vehicles with including by paying
tailpipe CO2 emissions below 75 gCO2 per passenger- special attention to air
kilometre (pkm) quality and municipal
• Development of infrastructure for low-carbon land transport and other waste
(private and public) - projects related to capacity or energy management
efficiency improvement (e.g., station upgrade, improved
signaling equipment), electric charging stations, and
electricity grid connection upgrade
• Infrastructure for zero direct emission water transport -
batteries, hydrogen fueling facilities

Green • For Buildings located in cities15 SDG 11.6:

Buildings • Have achieved LEED gold or above certification, or Reduced adverse per
equivalent certifications under other internationally capita environmental
recognized building standards such as BREEAM (excellent impact of cities,
including by paying
to outstanding)* and Green Star (5 star and 6 star)**, within
special attention to air
the last 5 years quality and municipal
And and other waste
- Achieve a minimum 30% emissions improvement against management
ASHRAE 90.1 criteria (a part of the LEED standard) or
equivalent stringency of additional emissions improvements
under other building standards
Or
- Meet the carbon hurdles set in the IFC's Edge tool16
- Meet the GRIHA 4 to 5 Star Rating & IGBC Gold standards

11
Waste to energy (W2E) projects in India are primarily municipal projects, run directly by an urban local body or government entity,
or it may also be run by private parties under PPP or outsourcing agreements. Modern W2E projects segregate waste prior to
incineration and have systems in place for proper disposal of post incineration waste.
12
Only include projects with feedstock not competing with food source and non-virgin.
13
The bank shall strive to ensure that any BRT system it funds under this framework shall follow the direct emission threshold of
<50gCO2e/p-km as identified by WLTP (Worldwide Harmonised Light duty vehicle Test Procedure).
14
https://www.itdp.org/library/standards-and-guides/the-bus-rapid-transit-standard/the-scorecard/
15
Under the framework, the Bank shall not lend to any green building designed for the purpose of extraction, storage, transportation
or manufacture of fossil fuels
16
https://edgebuildings.com/certify/
* https://www.breeam.com/discover/how-breeam-certification-works/
** https://gbca-web.s3.amazonaws.com/media/documents/introducing-green-star.pdf

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Sustainable • Sustainable management of agriculture via implementation SDG 15.5:
Agriculture of sustainable agriculture techniques and sustainable Take urgent and
significant action to
agricultural production17.
reduce the
• Sustainable agriculture techniques may include: degradation of natural
o Remediation and restoration of degraded soil habitats, halt the loss
o Minimum or no use of synthetic fertilizer and pesticide of biodiversity and, by
2020, protect and
o Crop rotation prevent the extinction
o No-till farming of threatened species
o Precision farming
o Drip irrigation
o Zero Budget Natural Farming

2.1.2 Eligible Social Project Categories

Eligible Project
Eligible Criteria and Description UN SDGs
Category

Socioeconomic • Loans to companies in deprived areas18 SDG 5.5:

advancement • Support projects aiming a productive employment Ensure women’s full and
and and decent work for all, including for persons with effective participation and
disabilities and young people, and equal pay for work equal opportunities for
empowerment leadership at all levels of
of equal value.
decision-making in political,
• Gender equality – microfinance for women
economic and public life
SHGs/onward MF companies. Bank has significant
0
JLG portfolio already SDG8.5:
• Women founded start-ups/MSMEs19 which are By 2030, achieve full and
majority-owned or majority-managed (at the most productive employment and
senior level) by women (where majority means more decent work for all women
than 50%) and men, including for young
people and persons with
disabilities, and equal pay for
work of equal value

17
Including Farm Credit, lending for Agriculture Infrastructure and Ancillary Activities as specified in PSL
18
List of India’s least developed Districts, a list of about 100 districts identified by NITI aayog called aspirational districts.
https://www.business-standard.com/article/current-affairs/niti-aayog-fine-tuning-indicators-for-ranking-most-backward-districts-kant-
120092801444_1.html
19
The definition of MSMEs will be as per Government of India (GoI), Gazette Notification S.O. 2119 (E) dated June 26, 2020 read
with circular RBI/2020-2021/10 FIDD.MSME & NFS.BC.No.3/06.02.31/2020-21 read with FIDD.MSME & NFS. BC. No.4
/06.02.31/2020-21 dated July 2, 2020, August 21, 2020 respectively on ‘Credit flow to Micro, Small and Medium Enterprises Sector’
and updated from time to time. IndianGazzate02072020.pdf (rbi.org.in)

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Health, • Financing related to the construction, equipment or SDG 3.8:
Healthcare and operation of activities that expand access to Health coverage and access
Wellbeing healthcare such as20: to quality essential
o Public hospitals, clinics and healthcare centres healthcare services and
o Private hospitals21 which are not for profit access to safe, effective,
quality and affordable
essential medicines and
• Financing to support vaccine manufacturing22 and vaccines for all
distribution
SDG 3.C:
• Medical, healthcare, education, financial services Increase in health financing
support for natural disaster (including pandemic) and the recruitment,
development, training and
• Supports for medical colleges and nursing colleges retention of the health
with purpose of enhancing basic medical care workforce in developing
countries

Employment • MSME23 financing and microfinance: support SDG 8.3:

generation, MSMEs who suffer from natural disaster (including Promote development-
including pandemic24): oriented policies that support
o Providing loans at discounted rate and enlarged productive activities, decent
through the job creation,
potential effect lending volume
entrepreneurship, creativity
of MSME o Waiving collateral requirement with accelerated and innovation, and
financing and process encourage the formalization
and growth of micro-, small-
microfinance
• Loans to entities involved in assisting the and medium-sized
decentralized sector in the supply of inputs and enterprises, including through
access to financial services
marketing of output of artisans, village and cottage
industries25.

Education and • Financing related to the construction, equipment or SDG 4.4:

Vocational operation of activities that expand access to Increase the number of youth
Training education26 such as: and adults who have relevant
o Tertiary or vocational education that is public or skills, including technical and
vocational skills, for
not for profit
employment, decent jobs and
entrepreneurship

20
Including loans up to a limit of ₹10 crore per borrower for building health care facilities including under ‘Ayushman Bharat’ in Tier II
to Tier VI centres. up to a limit of ₹10 crore per borrower for building health as specified in PSL
21
In financing the eligible projects/ entities, the Bank shall require a confirmation of accessibility to all, including those from
economically weaker sections (as defined by Government of India)
22
In financing towards supporting vaccine manufacturing, the Bank shall require a confirmation from the manufacturer that its
manufactured vaccines are accessible to all
23
The definition of MSMEs will be as per Government of India (GoI), Gazette Notification S.O. 2119 (E) dated June 26, 2020 read
with circular RBI/2020-2021/10 FIDD.MSME & NFS.BC.No.3/06.02.31/2020-21 read with FIDD.MSME & NFS. BC. No.4
/06.02.31/2020-21 dated July 2, 2020, August 21, 2020 respectively on ‘Credit flow to Micro, Small and Medium Enterprises Sector’
and updated from time to time. IndianGazzate02072020.pdf (rbi.org.in)
24
This includes lending under ECLGS (Emergency Credit Line Guarantee Scheme) launched by Government of India. This
additionally includes sectors which are identified by RBI as eligible for ON TAP TLTRO facility in order to ease stress for the
economy under COVID-19.
25
The Bank shall strive to ensure that funding in this category is provided only to eligible entities as defined by the GoI and RBI.
26
Including activities that improve educational infrastructure. In financing the eligible entities or projects, the Bank shall require a
confirmation of accessibility to all, including those from economically weaker sections (as defined by Government of India).

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 o Activities that improve educational infrastructure, SDG 4.7:
such as construction of campuses or training Learners to acquire
facilities knowledge and skills needed
to promote sustainable
development, including,
among others, through
education for sustainable
development

SDG 10.2:
Social, economic and political
inclusion of all,
irrespective of age, sex,
disability, race, ethnicity,
origin, religion or economic or
other status

Affordable • Bank loans for affordable housing projects in India SDG 1.4:
Housing and with carpet area up to 60 sq. m27 By 2030, ensure that all men
Social • Bank loans up to a limit of ₹5 crore per borrower for and women, in particular the
setting up schools, drinking water facilities and poor and the vulnerable,
Infrastructure have equal rights to
sanitation facilities including construction/
economic resources, as well
refurbishment of household toilets and water as access to basic services,
improvements at household level, etc. ownership and control over
land and other forms of
property, inheritance, natural
resources, appropriate new
technology and financial
services, including
microfinance

The aforementioned project categories/criteria may provide direct or indirect benefit(s) to one or
more of the following target population:

• Low income households/Population below poverty line28

• Rural communities
• Women
• Children
• Youth
• Elderly
27
As per RBI Circular, Lending to affordable housing for individual units is defined as Housing loans eligible to be classified under
priority sector lending (as updated from time to time) and housing loans to individuals for acquiring dwelling units within the
prescribed threshold under the affordable housing definition in the HML. As per Ministry of Finance, Government of India,
“Affordable Housing” is defined as a housing project using at least 50% of the Floor Area Ratio (FAR)/Floor Space Index (FSI) for
dwelling units with carpet area@ of not more than 60 square meters.

PSL criteria: Loans to Individuals upto Rs. 35 lakh in metropolitan centres (with population of ten lakh and above), and upto Rs 25
lakh in other centres for purchase/construction of a dwelling unit per family, provided the overall cost of the dwelling unit in the
metropolitan centre and at other centres does not exceed Rs. 45 lakh and Rs. 30 lakh, respectively.

In addition to above, the Bank will focus on one of the following criteria under this framework:
1. The target groups as per the Pradhan Mantri Awas Yojna (PMAY) (and various similar schemes, which may vary from
time to time and from state to state) for the Economically Weaker Sections. The details of eligibility under the same can be
found at: https://www.axisbank.com/retail/loans/home-loan/pradhan-mantri-awas-yojna/eligibility
2. Housing in Less developed areas/ states
28
$1.90 per day as defined by the World Bank: https://www.worldbank.org/en/topic/poverty

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• Person with disabilities
• Scheduled Tribes and Scheduled Castes
• Unemployed
• Students under the age of 21
• Poor households living in urban peripheries
• Micro, Small and Medium Enterprises (MSMEs)
• Weaker Sections29

2.1.3 Exclusions

The following industries are excluded from consideration for eligibility (“Exclusions”):

• Large-scale hydropower projects (>25 MW capacity)

• Electricity transmission infrastructure / systems where 25 per cent or more of electricity
transmitted to the grid is generated using fossil fuels
• Extraction, refining or transportation of fossil fuels
• Nuclear energy
• Agricultural or afforestation operations on land designated as primary forest, high
conservation value areas, or legally preserved areas
• Production and refining of palm oil
• Payday loans and predatory lending activities
• Adult entertainment
• Alcohol / alcoholic beverages
• Tobacco products
• Gambling
• Weapons and small arms.

2.2 Process for Project Evaluation and Selection

Axis Bank will perform the credit assessment and due diligence of projects/ assets in accordance
with its routine processes already laid down. For any project identified in the above Use of
Proceeds categories (and therefore potentially eligible for an Axis Bank Sustainable Bond), the
ESG Working Group (as defined below) will undertake a preliminary assessment for inclusion of
projects on the basis of above framework criteria. If the criteria are met, the respective project/
asset will be nominated for sustainable bond allocation.

Under Axis Bank’s Sustainable Financing Framework, Eligible Projects are identified and selected
via a process that involves participants from various functional areas. An ESG Working Group
(“ESGWG”) will be set up, composed of representatives from the below departments with the
required level of expertise and seniority:
- Risk Management
- Credit
- Wholesale Banking
- Retail Banking

29
Section 16 of PSL, extracted in Appendix I

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 - Corporate Affairs
- Finance & Accounts (F&A)
- Treasury

The ESGWG will meet once in 3 months to review and select eligible projects/ loan categories
according to the criteria outlined in Sections 2.1.1 and 2.1.2 mentioned above. The same will be
presented to Head, Treasury & Wholesale Banking Product; Executive Director (Wholesale
Banking), Chief Risk Officer (CRO) and Chief Credit Officer (CCO) for approval.

Axis Bank reserves the right to modify the ESGWG in future and/ or add any other relevant
departments, as needed.

The ESGWG will ensure that the selected Eligible Project to comply not only with the section of
Use of Proceeds but also the environmental and social guidelines under Green Bond Principles
and Social Bond Principles which are applicable within Axis Bank.

In addition, the ESGWG will be responsible for managing any future updates of the Framework,
including any expansion of requirements of use of proceeds.

Eligible Projects may include new projects, projects under construction or in Axis Bank’s portfolio,
with a disbursement date no older than 36 months.

2.3 Management of Proceeds

The net proceeds from each SFT issued will be managed by Axis Bank’s finance team and the
proceeds of each bond will be deposited in the general funding accounts. An amount equal the
net proceeds will be earmarked for allocation to Eligible Projects, in accordance with Axis Bank’s
Sustainable Financing Framework.

Axis Bank’s ESGWG will maintain a register to keep track of the use of proceeds for each SFT.
The register will contain the following information including:

2.3.1 Type of Funding Transaction

Key information includes issuer/borrower entity, transaction date, number of transactions,

principal amount of proceeds, repayment or amortization profile, maturity date, interest or coupon,
and the ISIN number in case of bond transaction.

2.3.2 Allocation of Use of Proceeds

• Name and description of Eligible Projects to which the proceeds of the SFTs have been
allocated in accordance with the Framework
• Allocation of the proceeds of SFTs to Eligible Projects
• The balance of unallocated proceeds
• Information of temporary investment for unallocated proceeds

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Axis Bank is committed to allocating all proceeds from the SFT to Eligible Project on a best effort
basis within one year of the Bond issuance in accordance with the evaluation and selection
process set out above.
Axis Bank will monitor the allocation to Eligible Project and track the net proceeds through its
internal accounting system. Pending allocation, the net proceeds from the SFT(s) issued may be
invested in cash or cash equivalents, or other liquid marketable instruments with Axis Bank’s
treasury and in accordance with its liquidity policies.
During the life of the SFT issued, if the designated Projects cease to fulfil the Eligibility Criteria,
or if the Eligible Asset matures before the life of the bond, as may be the case with a Perp AT1,
the net proceeds will be re-allocated to replacement Projects that comply with the Eligibility
Criteria, as soon as reasonably practicable or can be replaced by investment in liquid marketable
instruments.

2.4 Reporting

Axis Bank will report on the allocation of net proceeds and associated impact metrics of its SFT(s)
annually until maturity, which will be available in the public domain, and as necessary in the event
of material development. Axis Bank may consolidate information of all SFT(s) into one single
report.

The information will contain at least the following details:

2.4.1 Allocation Reporting

Axis Bank will provide the following information for the net proceeds of all the SFTs during the
reporting period:
• Confirmation that Eligible Assets included in the Portfolio comply with the Framework
• Total amount of Eligible Assets
• List of Green, Social or Sustainability Bonds issued with their outstanding amount
• Breakdown of Eligible Assets by Eligible Category
• Share of new financing and refinancing
• Balance of unallocated proceeds at the reporting end-period
• Where feasible, case studies of projects financed30.

2.4.2 Impact Reporting

Where possible, Axis Bank will make best efforts to report on the environmental and social
impacts associated with the Eligible Projects funded with the net proceeds of the SFT(s).

30
Subject to confidentiality constraints

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Subject to the nature of Eligible Projects and availability of information, Axis Bank aims to include,
but not limited to, the following Impact Indicators:

Eligible Project Category Impact Indicators – Examples

Green Eligible Assets

Renewable Energy • Total renewable Capacity (in MW)
• Energy generated per year (MWh)
• GHG emissions avoided per year, reported in tonnes CO2-
quivalent (tCO2e)
Waste Management • Waste diverted from landfill per year (tonnes)

Clean Transportation • GHG emissions avoided per year (tCO2e)

• New clean transportation infrastructure built (km)
• Number of electric or low emission land and water transport
vehicles produced
Green Buildings • Building assets by type and green building certification level
• Energy savings per year (MWh)
• GHG emissions avoided per year (tCO2e)
Sustainable Agriculture • Area covered by sustainable agricultural land management
practices (hectares)

Social Eligible Assets

Socioeconomic advancement • Number of beneficiaries, by gender
and empowerment • Number of locations reached (number of villages, blocks or
towns)
Health, Healthcare and • Number of beneficiaries/ potential beneficiaries
Wellbeing • Number of locations reached

Employment generation,
including through the potential • Number of jobs created, by gender
effect of SME financing and • Number of SMEs and start-up supported or funded
microfinance

Education and Vocational • Number of beneficiaries/potential beneficiaries

Trainings • Number of locations reached

Affordable Housing and Social • Number of housing units built or refurbished

Infrastructure • Amount of housing/social infrastructure loans disbursed to
qualifying borrowers

3. External Review

Axis Bank has engaged Sustainalytics to provide an external review on its Sustainable Financing
Framework.
Opinion from the external reviewer will be available at www.axisbank.com

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Appendix:

Appendix 1 - Weaker Sections from PSL

Appendix 2 – Definition of small and marginal farmers (SMF), as defined by RBI:

“Farmers with landholding of up to 1 hectare (Marginal Farmers).
Farmers with a landholding of more than 1 hectare and up to 2 hectares (Small Farmers).
Landless agricultural laborers, tenant farmers, oral lessees and share-croppers whose share of
landholding is within the limits prescribed for SMFs.”

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