Annual Report and Financial Statements

for the year ended 31 March 2023

COMPANY REGISTRATION NUMBER 7554558

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AXIS BANK UK LIMITED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2023

Contents

Officers and professional advisers 2

Strategic report 3 - 13

Directors’ report 14 – 15

Statement of Directors' responsibilities 16

Independent Auditor's report to the members of Axis Bank UK Ltd 17 – 23

Income statement and comprehensive income 24

Statement of changes in equity 25

Statement of financial position 26

Cashflow Statement 27

Accounting Policies 28 – 38

Notes to the financial statement 39 – 60

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AXIS BANK UK LIMITED
OFFICERS AND PROFESSIONAL ADVISERS
FOR THE YEAR ENDED 31 MARCH 2023

Company Registration Number 07554558

The Board of Directors

Rajiv Anand
Chairman

Diane Elizabeth Moore

Non-Executive Director

Paul Seward
Non-Executive Director

Rudrapriya Ray
Non-Executive Director

Sanjay Silas
Managing Director & Chief Executive Officer

Company Secretary Harjot Singh

Registered Office Regus Offices Unit No. G.06,

167 City Road, London.
EC1V 1AW

Auditor BDO LLP

55 Baker Street,
W1U 7EU, London,
United Kingdom

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AXIS BANK UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023

Current strategy & Future Plans

The current strategy of the Bank is execution of the ‘Wind Down Plan’ for orderly exit of
operations. The wind down plan entails closure of all its activities to be followed by solvent
liquidation of the Bank.

The primary activities of the Bank, since inception in April 2013 have been lending to
corporate clients with an Indian link and lending to professional landlords in the Buy-to-Let
(BTL) market, whilst also developing a diversified treasury portfolio of high quality liquid assets
as part of its liquidity management activities. The Bank occasionally undertook Repo
transactions from within the investment portfolio and participated in the Foreign Exchange
(FX) market in order to meet currency specific liquidity requirements as well as providing
limited FX services for corporate clients. Besides these activities the Bank commenced
Investment Banking Advisory services during 2016-17. The Bank also has a retail proposition
centred on a range of fixed deposit products, including online deposits. The Bank does not
provide transactional banking services. The Bank has leveraged its relationships with other
institutions in order to raise liabilities for its asset growth.

During 2019, the Committee of Directors and the Board of Axis Bank Limited, India (ABI)
(parent of Axis Bank UK Limited), reviewed its international strategy, in order to assess how its
foreign offices and subsidiaries fit with its Group strategic priorities.

As part of this exercise, ABI reviewed the UK and European business potential with a view to
assess the future business opportunities and also to assess if a presence in the UK fitted into
the overall strategic vision of ABI, given its decision to focus more on its strengths in India and
harness the potential there.

The Board of the Bank during its meeting held on 17 and 18 October 2019 considered the
ABI’s strategic review in great detail and agreed to conduct a review of options through
which an orderly exit of the Bank’s operations could be executed. The Board’s decision was
communicated to the PRA and FCA on 18 October 2019.

After a detailed review of options, the Board approved the strategy of an accelerated wind-
down as the best way forward and a detailed wind down plan was prepared by the Bank
which was approved by the Board during its meeting held on 28 January 2020. The wind
down plan was placed to both the Prudential Regulatory Authority (PRA) and Financial
Conduct Authority (FCA) in a meeting held on 7 February 2020. The Bank engaged with the
regulators throughout the process.

As part of the wind down plan, the BTL Sale process was embarked upon and the sale
process was completed on 30 June 2020, with the portfolio sold to Morgan Stanley.

After the BTL sale the Board reviewed the wind-down strategy. Following sustained interest,
the Board advised management to undertake a market sounding exercise for an entity sale
of Axis Bank UK Ltd to explore the appetite in the market for such a sale. Based on a
favourable response to the process, and after discussions with the PRA and the FCA, the
Board agreed to initiate a process of an ‘Entity Sale’.

At the end of a competitive bidding process, the Board of the Bank and Axis Bank Limited,
(the sole shareholder), approved OpenPayd Holdings Limited as the preferred bidder. On 31
March 2021, a Share Purchase Agreement (SPA) was signed between Axis Bank Limited and
OpenPayd Holdings for the sale of the Bank. The transaction was subject to necessary
approvals from the regulators for change-in-control. Subsequently, OpenPayd Holdings
commenced the process for obtaining regulatory approvals for change-in-control.
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AXIS BANK UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023

While the process for change-in-control was being pursued, OpenPayd Holdings, based on
their internal review, conveyed to Axis Bank Ltd about its intention to terminate the SPA in light
of the unlikeliness of obtaining the regulatory approvals before the agreed long-stop date of
30 September 2022. Axis Bank Limited, in consultation with the Bank, evaluated the proposed
termination within the purview of SPA and concurred with OpenPayd Holdings. Axis Bank
Limited and OpenPayd Holdings concluded the necessary legal process and the SPA got
terminated with effect from 10 August 2022. With the termination of Entity Sale process, the
Bank reverted to winding down of its operations and submitted a wind-down plan to the PRA
and the FCA in September 2022. This was followed by various queries, follow up queries and
discussions with the regulators.

After various discussions, the FCA on 9 February 2023 confirmed that they do not have further
observations on the wind-down plan. Subsequently, on 24 February 2023, the PRA also
confirmed that they do not have further observations or feedback which needs a response
prior to commencing the wind-down process. The Bank has thus commenced execution of
wind down plan, which entails pre-closure of deposit accounts and sell down of corporate
book. The Bank has since closed all term deposit accounts and major portion of current and
saving accounts. The process continues for closure of remaining current and saving accounts
and sell down of corporate loans.

Whilst the Board of the Bank is still aiming to exit the UK market, the intention has now
changed from entity sale to winding down the UK legal entity through solvent liquidation.
Once the regulated activities are closed and revocation of license is approved by the
regulators, the company will pursue Member’s Voluntary Liquidation (MVL).

Overview of strategy

i) Corporate banking
The Bank’s Corporate business was focussed to provide products and services to enhance
investment and trade primarily between the UK, Europe and India. Following the Board’s
strategic decision to wind down operations, the Bank is gradually winding down its book and
it has come down with scheduled repayments. The Bank is in the process of either selling the
residual corporate assets to Axis Bank Limited or in the local UK market. As part of the wind
down plan, the Bank will completely sell down the corporate book before filing its application
with the regulators for revocation of banking licence.

ii) Retail banking

The retail banking business was focused on offering a range of fixed deposit products. The
deposits were predominantly used to fund the Bank’s BTL portfolio. Following the sale of the
BTL portfolio in June 2020, the Bank has been paying out the residual deposits on maturity and
no fresh business was being generated. As part of the wind down plan, the Bank will close all
its deposit accounts before filing its application with the regulators for revocation of banking
licence.

iii) Treasury

The Treasury function is focusing on managing the balance sheet, the market, FX and liquidity
risks of the Bank. The Bank maintained a portfolio of High Quality Liquid Assets (HQLA) and
balances in the reserve account with the Bank of England to meet the Liquidity coverage
ratio (LCR) and to ensure that the Bank has the necessary assets to manage any short-term
liquidity disruptions. The Bank continues to place the surplus funds in reserve account with
Bank of England / short term inter-bank lending in money market.

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AXIS BANK UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023

Business environment

Inflation remains high worldwide and well above central bank targets in almost all inflation
targeting economies. Although inflation is likely to gradually moderate over the course of the
year, there are signs that underlying inflation pressures could be becoming more persistent. In
response, central banks around the world have been tightening policy faster than previously
expected.

The Bank is in the process of winding down its operations, the business environment is not
much of impact. The Bank continues to align its policies, risk limits and governance
mechanisms with the latest regulations and guidelines even during the wind down phase.

Financial Performance

The Bank’s total assets as at 31 March 2023 were $62 million (FY2022: $85 million) and the loss
before taxes was $2.2 million (FY2022: loss of $3.3 million). The loss for the reporting financial
period is largely driven by low level of Bank’s business operations following the strategic
decision to wind down the UK entity, whereas the loss in the prior year was driven by the loss
on sale of corporate assets amounting to $0.5 million. The capital, funding and liquidity
positions of the Bank remained stable throughout the year.

The financial statements and the related notes for the reporting year ended 31 March 2023
are shown on pages 24 to 60.

Key financial indicators and ratios

The financial performance is summarised in the following table:
Income Statement 2023 2022
USD USD
Net interest income 2,170,225 471,462
Net fee and commission income/(expense) 117,878 97,309
Total operating profit 2,440,006 640,092
Operating expenses (4,654,497) (3,944,838)
(Loss) before tax (2,214,491) (3,304,746)
(Loss) for the year (2,214,491) (2,856,958)
Balance Sheet 2023 2022
USD USD
Cash and balances with banks 34,654,492 50,919,247
Loans and advances to corporate customers 24,997,608 32,621,436
Total assets 62,231,776 84,890,450
Equity holders’ funds 58,312,188 60,526,679
Key financial indicators (%) 2023 2022
Net Interest Margin (NIM) 3.05 0.34
Capital adequacy ratio (CAR) 188.35 108.32
Core tier 1 ratio 188.35 108.32
Return on Assets (ROA) -3.56 -3.37
Return on Equity (ROE) -3.73 -3.84
NIM: Net interest income/Average monthly assets
CAR: Total Capital/ Total RWA
Core Tier 1 ratio: Total Tier 1 Capital/ Total RWA
Return on Assets (ROA): The Bank’s Return on Assets as per requirement of Article 90 of CRD is calculated as Net profit
divided by total Balance Sheet size.
ROE: PAT/Average Equity

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AXIS BANK UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023

The financial statements of the Bank have been prepared on the basis of other than a going
concern. The Bank has created provision of $0.24 million towards onerous contracts in
compliance with IAS 37. Thus excluding the impact of the liability of onerous contracts, net
loss for the reporting period and liabilities as of the reporting date would have been less by
$0.24 million.

Culture

The Bank takes pride in the fact that its culture is founded on the customer-centric, service
driven ethic of its parent. This culture is driven from the top down within the organisation and
reinforced by the inclusion of the principles of ‘treating customers fairly' in all aspects of its
business from product design through to customer interaction, supported by a strong
compliance ethic. The Bank believes in ethical ways of doing business and commitment to
social values. It observes high standards of integrity and acts with due skill, care and diligence
in the conduct of its business. The Bank adheres to its own ‘Anti-Bribery and Corruption Policy’.
The Bank's strategy is relationship driven rather than transaction driven, and this strategy is
further supported through its approach to remuneration which rewards its employees on their
holistic contribution to the organisation, rather than on the simple attainment of financial
targets.

The Bank is committed to employment practices and policies which recognize the diversity of
its workforce and ensure equality for employees. The Board of the Bank has approved a
‘Diversity Statement’ and believes that diversity provides positive benefits from both a cultural
and business standpoint. The Board believes that the setting of aspirational objectives,
principles and guidelines to encourage diversity offers the most practical way of achieving its
diversity aims and which the Chair (in respect of the Board) and the Executive Directors (in
respect of the staff) are encouraged to promote. As per its stated policy, the Bank should
seek to maintain a balanced and diverse work-force through an open approach to
remuneration, recruitment and internal promotion. It is the Bank’s policy that at all times it
would comply with any laws, rules or regulations relating to diversity and discrimination,
comply with the provisions of the Senior Managers Regime and ensure that its remuneration
policy does not favour any one group of staff to the disadvantage or detriment of others.

The Bank, in line with the philosophy of Axis Bank Group, is committed to social causes,
environmental issues, human rights etc. and they form part of the core of our culture.
However, whilst the commitment to the causes remain, given the relatively modest size of the
Bank, it does not have separate policies encapsulating each issue.

Even during the wind down process, the Bank will remain committed to its culture and ethos
enumerated above. One of the key objectives of the plan is to ensure all stakeholders,
especially customers, are treated fairly during the sale process. The Board has underscored
their commitment to its customers, employees, vendors and other stakeholders by working
with the Bank’s advisors to ensure appropriate and tailored communication plans are in
place and customers are treated fairly.

Corporate governance
The Bank places a strong emphasis on internal governance and the maintenance of high
ethical standards in its working practices.
The Bank’s corporate governance framework is driven by the Board which comprises one
Executive Director, two Non-Executive Directors nominated by the shareholder and two
independent UK-based Non-Executive Directors. The Chair of the Board is from one of the
nominated NEDs of the Parent and comes with a wealth of experience in the financial sector.

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AXIS BANK UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023

The UK-based Non-Executive Directors have considerable banking and regulatory experience
gained at a senior level within global financial institutions and with UK regulators. Neither hold
any other responsibilities within the wider Axis Bank Group and between them they chair all
Board committees except for Human Resources Remuneration and Nomination Committee
(HRRNC).
The Board has collective responsibility for promoting the aspirations of the promoters of the
Bank, but within regulatory guidelines and risk appetite. While the Executive Directors have
the direct responsibility for business operations, the Non-Executive Directors are responsible for
bringing independent judgement and scrutiny to the decisions taken by the Management.

Responsibility for overseeing the risk framework of the Bank is devolved to the following Board
Committees, each of which is chaired by an Independent Non-Executive Director:

• Committee of Directors
• Risk Management Committee
• Audit & Compliance Committee

The Bank has independent risk & compliance function which is responsible for the day-to-day
evaluation & monitoring of the risks faced by the Bank and for submitting reports to the Bank
and Board Committees. The Bank also has an Internal Audit function (outsourced to Axis Bank
Ltd) which reports functionally to the Chair of the Audit & Compliance Committee (ACC).

The control functions actively monitor developments and changes in the regulatory
environment, and reporting on such developments are standing agenda items at the Board
Committee meetings where the implications are considered and the Bank’s response is
approved.

During the wind down (earlier during entity sale) process also, the Bank continues to adhere
to strong corporate governance practices. A detailed governance mechanism during the
wind down process is detailed in the wind down plan approved by the Board and reviewed
by PRA/FCA. The governance structure continues to be in place under the current wind
down scenario.

As per this governance mechanism, the Board of the Bank will have oversight over the entire
execution of wind down process, with involvement of the strategy team of the Parent bank.

Senior Managers & Certification Regime (SM&CR)

The Bank has embedded both the Senior Managers and Certification regimes, which took
effect on 7 March 2016 and 7 March 2017 respectively. The Board of the Bank has overseen
the process to ensure that systems and processes have been put in place so that the Bank
meets the requirements of the regime on an ongoing basis. The responsibility map is reviewed
every year or in a shorter duration if required and approved by the Board.

Risk governance
The Risk department plays a significant role in review and challenge of risks inherent in the
wind-down plans and strategy by verifying that they fall within the risk appetite and that the
Bank assumes a level of risk that is individually and in aggregate acceptable to the Board.
The Bank continues to follow the industry standard approach of “3 Lines of Defence”
comprising:
• Heads of business units are directly accountable for the management of risks in their
areas through the operational controls set out in the functional and departmental
procedures manuals. To assist in making the first line more effective, the Bank actively
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AXIS BANK UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023

promotes sustainable return thinking, up-to-date risk-related information and absolute

respect for limits.
• Monitoring and reporting of risk positions by the Risk, Finance and Compliance teams
forms the second line of defence. These teams are responsible for recommending risk
policy and for providing oversight and challenge of the activities carried out by the first
line. To assist in making the second line of defence more effective, the Bank actively
promotes a strong control structure, close interaction and co-ordination between the
control functions and a supportive organisational structure.
• The Internal Audit function forms the third line of defence, providing independent
assurance to Senior management, the Audit & Compliance Committee, the Risk
Management Committee and the Board over the design and operation of the Bank’s risk
management, governance and internal control processes.
The Board is responsible for ensuring the adequacy of the risk management systems of the
Bank and for setting a clear statement of risk appetite. It is assisted in this by a framework of
committees, functions and control function managers. Risk Appetite refers to the level of risk
deemed acceptable to the Board in each of the principal risk categories i.e. Market Risk,
Credit Risk and Operational Risk. The role and responsibilities of the various risk management
committees are set out in the following paragraphs.

Audit & Compliance The ACC, a Board Committee, is responsible for the quality and
Committee (ACC) effectiveness of the compliance and audit functions of the
Bank. This includes, but is not limited to, oversight of all conduct
of business matters and overseeing the Bank’s relationship with
its external auditor.
Risk Management The RMC, a Board Committee, is responsible for the quality and
Committee (RMC) effectiveness of risk management. This includes, but is not
limited to, oversight of all prudential matters. The RMC also
advises the Board on matters pertaining to the setting of the
Bank’s risk appetite.
Asset & Liability The ALCO is responsible to the RMC for overseeing the asset
Committee (ALCO) and liability management function of the Bank and for
monitoring compliance with all regulatory and internal limits in
the areas of liquidity and market risk. The ALCO is an executive
committee, which monitors and manages the Bank’s balance
sheet, cost of deposits and liquidity. The ALCO also strives to
optimise the return on the Bank’s funds.

The control functions ensure that effective procedures for risk assessment are maintained, to
identify the risks relating to the activities, processes & systems of the Bank and to recommend
such amendments & changes as may be required from time to time to ensure the framework
remains fit for purpose. The role of the risk management function is to:
• recommend appropriate changes to risk governance and organisational structures;
• draft and implement policies & procedures in order to maintain compliance with the
regulatory framework;
• independently review and comment on all credit applications;
• provide periodic reports on risk positions and events to the Bank and Board Committees;
and
• perform on-going monitoring and on a regular basis assess the adequacy and
effectiveness of the measures and procedures put in place, and the actions taken to
address any deficiencies in the Bank's compliance with its prudential obligations.

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AXIS BANK UK LIMITED
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In order to assist the Bank’s management in prioritising and focusing its risk management
efforts, the risk department works with line managers to maintain a “Risk Register” covering
the principal risks faced by the business, which is reviewed annually or in response to material
developments in the business environment.

Risk controls vary from activity to activity and are set out in the policies and manuals covering
each activity. All activities are subject to:

• application of the “four eyes” principle in respect of operational matters;

• individual authorities based on roles and seniority with all material devolved authorities
approved by the Board; and
• oversight of all important risk areas by one of risk management, compliance or
finance via appropriate risk-based management information reports.

The risk monitoring and reporting regimes around the various business lines and activities of
the Bank are also set out in the relevant policies and operational manuals. Common to all
reporting regimes are:
• regular position reporting to monitor compliance within approved limits;
• exception reporting to identify non-compliant positions and events;
• monitoring of trends to facilitate pre-emptive action;
• provision of regular reports to executive management and Board Committees; and
• escalation procedures for exceptions.

The Bank faces a complex legal and regulatory environment. Inadequate or incomplete
adoption of regulatory initiatives could lead to increased costs, loss of competitive edge or
regulatory sanction. All legal and regulatory changes faced by the Bank are managed
through an effective governance and oversight framework. The protection of customer data
and compliance with the data protection regulations are at the forefront of the Bank’s
strategy. As part of implementation of General Data Protection Regulation (GDPR) regulatory
requirement, the Bank took the support of a consultant to put in place a process which will
enable customers to exercise their rights under GDPR. This includes utilising the services of
vendors enabling customers to have control over how their data is used and protected.

Anti-Money Laundering (AML) and compliance

The Bank maintains an independent compliance function, which is empowered to challenge
business decisions.

The Bank supports a strong compliance culture. The Bank's compliance function is responsible
for ensuring that adequate policies and procedures are in place to maintain the Bank's and
its employees' compliance with its legal and regulatory obligations in respect of both AML
and conduct of business issues. Such policies and procedures are designed to detect and
minimise any risk of failure by the Bank to comply with its regulatory obligations, as well as any
associated risks.
Internal audit

The Internal Audit function acts independently of operations and is responsible for reviewing
all business lines and support functions within the Bank. The Internal Audit function has been
outsourced to the Group Internal Audit Division (GIAD) of the parent bank. The Audit plan
proposed by GIAD is approved by the Audit & Compliance Committee. Internal Audit
provides the Management and the Audit Committee with independent assurance that the
Bank’s policies and procedures have been implemented effectively, and that there are
adequate controls in place to mitigate significant risks so that the exposure is within
acceptable tolerance levels.

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AXIS BANK UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023

Principal Risks and Uncertainties

The Bank has implemented a Board-approved risk management framework which covers
both the high-level governance matters referred to in the preceding section and the day-to-
day identification and management of risks.

Given its current activities and present scenario, the Bank views its primary financial risks as
being credit and liquidity related. Credit risk appetite for the residual corporate loan portfolio,
which is held for sale, is set by the Board and evidenced through the Credit Risk
Management Policy. Risk concentrations are mitigated through portfolio level limits as set out
in the same document and related credit risk management procedures. Concentration risk
limits govern individual counterparty, sector and geographic exposures. These are reviewed
by Bank’s Risk Management Committee. Liquidity risk may arise notwithstanding compliance
with mandatory regulatory liquidity limits and, owing to the impact that a single (large)
unexpected event may have, the Bank actively manages its liquidity risks. With closure of all
term deposits, Bank’s liquidity risk is minimized. Full assessment of the Bank’s liquidity risks are
covered by the Bank’s various liquidity risk policies and its ILAAP. The Bank works to internal
limits that are tighter than those imposed by the PRA (e.g. current LCR + 10%) as this reduces
the likelihood of the Bank being forced into a position of liquidity stress under adverse
conditions.

The primary role of the Bank’s treasury function is now funding the on-balance sheet lending
activities of the Bank and managing its market, foreign exchange and liquidity risks. The
treasury function operates within limits set by the Bank’s Risk Management Committee and
set out in the Market Risk Policy. The Bank does not engage in proprietary trading activities
beyond the de minimis levels and does not hold bonds in a trading portfolio. Hence the
Bank’s market risk is modest.

The Bank, like all other similar organisations, is exposed to a variety of operational risks. The
Bank identifies, assesses, monitors and mitigates these risks by a comprehensive system of
internal controls and operational practices as set out in its Risk Management Framework and
Operational Risk Management Policy. The Bank views “operations” risks which relate to losses
arising from the everyday activities of the Bank as a subset of the broader “operational” risk
heading which includes event risks of all types and consequential risks such as reputational
risk, legal risk etc. Specifically, the Bank believes that the management of reputation risk,
which can affect both the customers and any other counterparty, cannot be restricted to
compliance with rules and regulations / controls. It is dependent upon a strong ethical culture
where sound judgement is applied within a risk-conscious and structured environment. The
Bank is also cognisant of the regulatory risks associated with non-compliance with regulations,
especially in light of the fast changing and emerging regulatory landscape and seeks to
maintain a culture of compliance and openness with the regulator. In all its activities, the
focus is on developing the people, systems and processes, which ensure that the threats of
operational risks are proactively managed. The Operational Risk (OR) reporting regime
comprises Key Risk Indicator (KRI) RAG reports, as part of Dashboard and Individual events
(other than simpler processing errors) are recorded in an Operational Risk register. The
calculation of the Operational Risk charge is directly linked with the Risk register outputs
allowing us to allocate notional capital charges against specific risks which in turn facilitates
back-testing.

The control functions are responsible for maintaining a suite of risk management policies
which give effect to the risk management framework and ensure compliance with the risk
appetite set by the Board. On an annual basis, the Bank undertakes a risk self-assessment
programme which seeks to monitor developing risk trends and which supports the risk metrics
produced through the Bank’s management information systems.

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AXIS BANK UK LIMITED
STRATEGIC REPORT
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The Bank’s financial risks are managed through the ALCO and the Credit and Investment
Committee (CIC) within authorities set down by the Risk Management Committee of the
Board. Conduct of business and other operational risks are considered by the Management
Committee (MANCOM) including monitoring of certain outsourced activities under service
level agreements. The Loan and Investment Review Committee (LIRC) reviews the level of
provisioning to be applied to the Bank’s asset portfolios for fair valuation. The control functions
are responsible for providing financial risk metrics to the Committees for monitoring and high-
level risk management. Conduct of business and operational risk metrics are also collated to
assist the Bank in delivering a high quality customer-centric outcome for both retail and
corporate customers whilst maintaining appropriate fraud and AML controls.

Risk metrics are monitored on a daily, weekly or monthly basis as appropriate to the nature of
the underlying risks.

The ICAAP and the ILAAP documents capture all the risks that the Bank faces under present
business scenario. ICAAP and ILAAP documents are prepared and submitted to the Risk
Management Committee of the Bank. These are developed as part of the annual planning
and budgeting process to ensure that the Bank’s activities are carried out within its capital
and liquidity resources. Both the ICAAP and ILAAP are subject to interim review and update in
response to material changes to the business or regulatory environment.

However, the wind-down strategy had changed the nature and profile of the risks the Bank
faces. Certain risks, such as credit and liquidity risks, will reduce as a result of the significant
reduction in the lending and deposit portfolios, whilst other risks, such as reputational risk, may
increase.

With the Bank reverting to wind down plan and reduction in exposures, a composite review
of risk appetitite limits was undertaken by the Bank to commensurate with its risk profile during
the wind down period. The stress testing scenarios of ICAAP and ILAAP were also reviewed in
context with the projected balance sheet and risk profile during the wind down period. The
risk profile, various risk appetite limits and the ICAAP / ILAAP documents for the wind down
period were reviewed and approved by Bank’s Risk Management Committee in October
2022.

Climate Change

The Bank has reviewed the Task Force on Climate Related Financial Disclosures (TCFD) whilst
taking into consideration the strategy to exit the UK markets by way of wind-down (earlier
entity sale). Based on the requirements of the TCFD, the Bank has integrated the
management of financial risks related to climate change into its governance, risk and
management framework. The climate-related risks affecting the Banks can be broadly
divided into physical risks and transition risks and the definitions are reproduced below.

The physical risks from climate change arise from a number of factors, and relate to specific
weather events (such as heatwaves, floods, wildfires and storms) and longer-term shifts in the
climate (such as changes in precipitation, extreme weather variability, sea level rise, and
rising mean temperatures).

Transition risks can arise from the process of adjustment towards a low-carbon economy. A
range of factors influence this adjustment, including: climate-related developments in policy
and regulation, the emergence of disruptive technology or business models, shifting
sentiment and societal preferences, or evolving evidence, frameworks and legal
interpretations.
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Presently, the financial impact due to physical risks is more relevant to the Bank and the
financial impact due to transition risks is immaterial. This is primarily due to the longer time
horizon of several years involved in the transition process of aligning to low-carbon economy
and the Bank is in the process of winding down its operations.

The Bank’s major business area, corporate banking, is the only portfolio which indirectly
impacts the financial position of the Bank through its exposure to corporate borrowers. From
the qualitative assessment performed in April 2022, the Board of the Bank has considered the
material exposure to climate related risk to be low. Since then, the exposure has been
gradually reducing thereby climate related risk continues to be low.

To minimise the Bank’s impact on the environment and greenhouse gases, all employees are
actively encouraged to recycle paper and plastic. The Bank carries out its business activities
from only one location and since the start of the COVID-19 pandemic, the majority of the
Bank’s employees have worked from home. This has further reduced the Bank’s impact on
the environment.

The Bank’s parent, Axis Bank Ltd, has also been actively engaged with matters such as
sustainability and social responsibility by being in the forefront of pursuing the ESG
(Environment, Social and Governance) agenda by way of issuing green bonds, practicing
Sustainable Lending Practices, as well as achieving progress in Sustainable Development
Goals.

Stakeholder engagement and s.172(1) statement

The Board is cognisant of its responsibilities under s172 and have taken measures on an on-
going basis throughout the year, to meet the objectives enshrined therein. This included
hearing the views/issues of different stakeholders and bringing their voices into the
boardroom.

As enshrined in the Strategy document, approved by the Board, ‘the Bank will observe high
standards of integrity and fair dealing when doing business, and will act with due skill, care
and diligence in the conduct of its business’. To effectively maintain this philosophy and
vision, and at the same time achieve the Bank’s business objectives, the Bank has always
recognised the need to foster good relationship with all stakeholders, including customers,
suppliers, regulators, employees and others.

Every year, the Bank aims to make progress on meeting its social and environmental
responsibilities. It is manifest in our commitments, a more robust organisation, and a shared
knowledge of our goals. This year the Bank has identified one senior executive, who is
responsible for managing climate change risks, and added that as his ‘prescribed
responsibility’ under the Senior Manager & Certified Regime (SM&CR) rules.

The Bank has always recognised the need to be fair to its stakeholders, both within and
outside the company. Important decisions, that can have impact on the stakeholders are
discussed in an open and transparent manner, and to the extent possible, their views are
taken on board.

We set out below details of efforts towards such stakeholders:

Parent Bank (sole owner)

The Board has always encouraged active engagement with the Parent Bank to bring about
synergy. Whilst maintaining its operational independence, the Bank has often drawn upon
Page 12
AXIS BANK UK LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 MARCH 2023

the strength of the parent in technology, risk management, credit appraisal, etc., to add
value to its services. The Board has been responsible in shaping the strategy and the business
plan, but the overarching principle has been to be an important part of the Group and
contribute to attaining the Group vision.

It was in line with the above principle, that the Directors, whilst pursuing the wind down
process (even earlier during entity sale), considered their obligations under Section 172 of the
Companies Act and maintained that the interests of other stakeholders like customers, staff,
and partner companies would be protected as the wind down plan is executed.

Customers

Customers are at the heart of everything that is done by the Bank. The strategy document,
approved by the Board, clearly states that the Bank is ‘committed to treating customers
fairly’. Accordingly, the Bank has drawn out plans to address the issue of proper and
appropriate customer communication on the matter of its strategic decision to wind down its
operations and have taken professional and legal help to ensure that it is within the threshold
of its own stated policies and regulatory requirements.

Employees

Throughout the reporting financial year, the Board has actively engaged with its employees.
The Directors have met various employees and ensured that they felt aligned to the Bank’s
overarching strategic objectives. The Bank is reviewing the staff position and matters regularly
at the Management and HRRNC meetings to align the same with ongoing wind down
process.

Regulators

The Board recognises the importance of open and continuous dialogue with the regulators.
Throughout the course of the financial year the Bank has kept both the Prudential Regulation
Authority (PRA) and the Financial Conduct Authority (FCA) updated of matters on an on-
going basis.

Suppliers

The Board recognises the key role suppliers/service providers play in ensuring that the Bank
delivers a reliable service to customers. Once the strategic decision was taken, the Bank had
individual meetings with the service providers. This focus of transparency has helped the
Bank in framing joint strategies to ensure that customer services are not affected, even as the
strategy to execute the wind down plan takes place.

By order of the Board

Sanjay Silas Harjot Singh

Managing Director & Chief Executive Officer Company Secretary
16 June 2023

Page 13
AXIS BANK UK LIMITED
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 MARCH 2023

The Directors have pleasure in presenting the Annual Report and the audited financial
statements for the year ended 31 March 2023. These financial statements have been
prepared in accordance with UK adopted international accounting standards.
Principal activity
Axis Bank UK Limited (“the Bank”), a company, registered as a private company limited by
shares, in England & Wales (No.7554558), is a wholly-owned subsidiary of Axis Bank Limited
(Axis Bank India), the third largest private sector bank in India having a balance sheet size of
USD 160.32 billion as of 31 March 2023 (March 2022: $155.05 billion). The Bank commenced
operations in April 2013, subsequent to receiving authorisation from the Prudential Regulation
Authority on 19 April 2013. The Bank is regulated by the Prudential Regulation Authority (PRA)
and the Financial Conduct Authority (FCA) and is covered by the Financial Services
Compensation Scheme (FSCS). The Bank historically offered a range of products covering
retail banking, corporate and commercial banking, buy to let mortgages (BTL), investment
banking services, trade finance and treasury services to its customers. Following strategic
decision of winding down the operations, the Bank was pursuing entity sale with execution of
a sale purchase agreement (SPA) for divestment of shareholding by the Parent to OpenPayd
Holdings Limited. The SPA got terminated during the year and the Bank reverted to the
strategy of winding down of its operations.

As per the plan, the Bank is in the process of winding down its activities and will apply for
revocation of banking license on completion of wind down activities. Once the revocation of
banking license is approved by the regulators, the Company will pursue Members’ Voluntary
Liquidation (solvent liquidation) as per UK guidelines. Whilst the Board of the Bank is still aiming
to exit the UK market, the intention has now changed from entity sale to winding down the UK
legal entity through solvent liquidation.

For further details on the developments and the wind down plan, please refer to the Strategic
Report.
Risk Management and Governance
The Risk management strategy and the Risk governance framework of the Bank can be
found in the Strategic Report. See note 25 for further details.
Going concern basis
As stated above, the Bank has reverted to the wind down plan after termination of the share-
purchase agreement between Axis Bank Limited and OpenPayd Holdings Limited. As per the
plan, the Bank will wind down its activities and apply for revocation of banking license. Once
the revocation of banking license is approved by the regulators, the Company will pursue
Members’ Voluntary Liquidation (solvent liquidation) as per UK guidelines. Whilst the Board of
the Bank is still aiming to exit the UK market, the intention has now changed from entity sale to
winding down the UK legal entity through solvent liquidation. Accordingly, the financial
statements of the Bank have been prepared on the basis “Other than that of a Going
Concern”.

Capital structure
Axis Bank UK Limited continues to monitor its current and projected capital adequacy ratios
on a regular basis to ensure that capital held is always adequate to meet both internal and
external regulatory requirements.

As at 31 March 2023 the issued share capital comprises 55,000,000 ordinary shares with a par
value of $1each and 1 ordinary share of £1.

Page 14
AXIS BANK UK LIMITED
DIRECTORS’ REPORT
FOR THE YEAR ENDED 31 MARCH 2023

Charitable donations
The Bank made no charitable donations during the year (2022: nil).

Directors
The current Directors are listed on page 2. During the period, there is no change in the
directors.

Qualifying indemnity provision

The Bank has arranged qualifying third-party indemnity insurance for all its directors.

Disclosure as per Capital Requirement Regulation (CRR)

The Bank has made the disclosures as required for year ended 31 March 2023, under the CRR
in a separate document that is available on its website (www.axisbankuk.co.uk).

Strategic Report
In accordance with section 414(C) of the Companies Act 2006, we have prepared a
Strategic Report, which forms part of the Annual Report and precedes this section.
Payment of dividends
There is no payment of dividend during the year (2022: $7.5 million).
Post Balance sheet event
We confirm that there were no subsequent events post the balance sheet date.
Auditor
BDO LLP indicated their willingness to be reappointed for the year ended 31 March 2023 and
appropriate arrangements were put in place for them to be deemed reappointed in the
absence of an Annual General Meeting.
General meetings
In accordance with the Companies Act 2006, the Bank is not required to hold an annual
general meeting.

By order of the Board

Sanjay Silas Harjot Singh

Managing Director & Chief Executive Officer Company Secretary
16 June 2023

Page 15
AXIS BANK UK LIMITED
STATEMENT OF DIRECTORS' RESPONSIBILITIES
FOR THE YEAR ENDED 31 MARCH 2023

Directors’ responsibilities

The directors are responsible for preparing the strategic report, the directors’ report and the
financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year.
Under that law, the directors have elected to prepare the financial statements in
accordance with UK adopted international accounting standards. Under company law, the
directors must not approve the financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the company and of the profit or loss of the
company for that period.

In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;
• state whether International Financial Reporting Standards (IFRSs) as adopted by the
United Kingdom have been followed, subject to any material departures disclosed and
explained in the financial statements; and
• prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the company will continue in business. As explained in Note 2B of
accounting policies to the financial statements, the Directors do not believe the going
concern basis to be appropriate and, in consequence, these financial statements have
not been prepared on that basis.

The directors are responsible for keeping adequate accounting records that are sufficient to
show and explain the company’s transactions and disclose with reasonable accuracy at any
time the financial position of the company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are also responsible for safeguarding
the assets of the company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.

Statement as to disclosure of information to the auditor

The Directors who held office at the date of approval of this Report confirm that:
• so far as the Directors are aware, there is no relevant audit information of which the Bank’s
auditor is unaware, and
• the Directors have taken all steps that they ought to have taken to make themselves
aware of any relevant audit information and to establish that the auditor is aware of that
information.
This confirmation is given and should be interpreted in accordance with the provisions of
section 418 of the Companies Act 2006.

By order of the Board

Sanjay Silas
Managing Director & Chief Executive Officer
16 June 2023

Page 16
AXIS BANK UK LIMITED
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AXIS BANK UK LIMITED
FOR THE YEAR ENDED 31 MARCH 2023

Independent auditor’s report to the members of Axis Bank UK Limited

Opinion on the financial statements

In our opinion:
• the financial statements give a true and fair view of the state of the Company’s affairs as at 31
March 2023 and of its loss for the year then ended;
• the company financial statements have been properly prepared in accordance with UK
adopted international accounting standards; and
• the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.

We have audited the financial statements of Axis Bank UK Limited (the ‘Company’ or the ‘Bank’) for
the year ended 31 March 2023 which comprise the income statement and comprehensive income, the
statement of changes in equity, the statement of financial position, the cashflow statement and notes
to the financial statements, including a summary of significant accounting policies. The financial
reporting framework that has been applied in their preparation is applicable law and UK adopted
international accounting standards.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Our audit
opinion is consistent with the additional report to the audit committee.

Independence

Following a competitive tender, we were appointed by the Audit and Compliance Committee 27 July
2018 to audit the financial statements for the year ended 31 March 2019 and subsequent financial
periods. The period of total uninterrupted engagement including retenders and reappointments is 5
years, covering the years ended 31 March 2019 to 31 March 2023. We remain independent of the
Company in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to public interest entities, and
we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-
audit services prohibited by that standard were not provided to the Company.

Emphasis of matter – financial statements prepared on a basis other than going

concern

We draw attention to Note 2B to the financial statements, which explains that the financial statements
have been prepared on a basis other than that of a going concern as the directors are in the process
of winding down the activities of the Bank and pursuing Members’ Voluntary Liquidation (solvent
liquidation). Accordingly the financial statements have been prepared on a basis other than that of a
going concern as described in note 2B. Our opinion is not modified in respect of this matter.

Page 17
AXIS BANK UK LIMITED
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AXIS BANK UK LIMITED
FOR THE YEAR ENDED 31 MARCH 2023

Overview

2023 2022
Key audit matters Valuation of Loans and Advances to  
Corporate Customers - Held for Sale 



Going concern ✗ 


The financial statements are prepared on a 
basis other than going concern as at 31
March 23 and there hence going concern is
no longer a KAM.

Materiality $ 729,000 (2022: $303,000) based on 1.25% (2022: 0.5%) of Net Assets.

An overview of the scope of our audit

Our audit was scoped by obtaining an understanding of the Bank and its environment, including the
Bank’s system of internal control, and assessing the risks of material misstatement in the financial
statements. We also addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have represented a risk of
material misstatement.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified, including those which
had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and
directing the efforts of the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.

Page 18
AXIS BANK UK LIMITED
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AXIS BANK UK LIMITED
FOR THE YEAR ENDED 31 MARCH 2023

Key audit matter How the scope of our audit addressed

the key audit matter
Valuation of
Loans and The Bank is being wound We have reviewed and assessed
advances to down following approval management’s accounting treatment for
Corporate obtained from the regulators. corporate loan book against the
Customers – As part of this the loans and requirements of the accounting framework
Held for Sale advances to Corporate and in light of the Bank’s business model.
Customers – Held for Sale
As disclosed (“corporate loan book”) is With the assistance of our internal
in Note 3 F of marketed for sale. There is a valuation experts we have reviewed the
the accounting risk that the corporate loan management expert’s Valuation
policies, in book of the Bank, may not be Methodology document.
Financial valued correctly within the
instruments - Statement of Financial We tested the reasonableness of key
Classification Position. valuation inputs and assumptions such as
and Country Risk Premium, Guarantor Credit
measurement, The Bank measures its Risk Premium and Credit Adjustment
the Bank corporate loan book at fair Factor with reference to market data,
applies certain value using non-observable where available, and industry practice.
criteria in market data valuation
determining techniques. Given there is We have performed an independent
the significant judgement valuation of a sample of the loans and
classification exercised in the assessment compared these to the valuations
of its assets of the Bank’s measurement of generated by management’s expert.
and its corporate loan book assets,
subsequent we have identified this as a We tested other inputs used in the
measurement key audit matter. valuation, such as the expected value and
thereof. timing of cash flows, by agreeing these to
underlying loan agreements

Key observations:

We have not identified any indicators that

the judgements made in the valuation of
Loans and advances to corporate
customers Held for Sale issued by the
Bank are not reasonable.

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the
effect of misstatements. We consider materiality to be the magnitude by which misstatements,
including omissions, could influence the economic decisions of reasonable users that are taken on the
basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed
materiality, we use a lower materiality level, performance materiality, to determine the extent of testing
needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial
as we also take account of the nature of identified misstatements, and the particular circumstances of
their occurrence, when evaluating their effect on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a
whole and performance materiality as follows:

Page 19
AXIS BANK UK LIMITED
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AXIS BANK UK LIMITED
FOR THE YEAR ENDED 31 MARCH 2023

Company financial statements

2023 2023
$ $
Materiality 729,000 303,000
Basis for determining materiality 1.25% of Net 0.5% of Net
Assets Assets
Rationale for the benchmark applied We determined that Net assets was
the most appropriate benchmark
due to the ongoing wind down of the
bank and the expected close down
of its business in the foreseeable
future (i.e. in less than 12 months of
signing of the financials). Therefore
the key indicator for the stakeholders
would be the net breakup value of
the Bank which is represented by
Net assets. We have used a higher
percentage for 2023 based on the
change in the circumstances of the
Bank and our assessment of the
risk.
Performance materiality 547,000 196,000
Basis for determining performance materiality 75% 65%
Rationale for the percentage applied for In light of changes in the Bank’s
performance materiality circumstances and on the basis of
our risk assessment together with
our assessment of the Bank's overall
control environment, our judgment
was that overall performance
materiality for the Bank should
increase to 75% in 2023 compared
to 65% of materiality in 2022.

Reporting threshold

We agreed with the Audit Committee that we would report to them all individual audit differences in
excess of $15,000 (2021: $6,000). We also agreed to report differences below this threshold that, in
our view, warranted reporting on qualitative grounds.

Other information

The directors are responsible for the other information. The other information comprises the
information included in the annual report and financial statements other than the financial statements
and our auditor’s report thereon. Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. If,
based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.

We have nothing to report in this regard.

Page 20
AXIS BANK UK LIMITED
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AXIS BANK UK LIMITED
FOR THE YEAR ENDED 31 MARCH 2023

Other Companies Act 2006 reporting

Based on the responsibilities described below and our work performed during the course of the audit,
we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters
as described below.

Strategic In our opinion, based on the work undertaken in the course of the audit:
report and • the information given in the Strategic report and the Directors’ report for
Directors’ the financial year for which the financial statements are prepared is
report consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the Directors’ report.

Matters on We have nothing to report in respect of the following matters in relation to

which we are which the Companies Act 2006 requires us to report to you if, in our opinion:
required to
report by • adequate accounting records have not been kept by the Company,
exception or returns adequate for our audit have not been received from
branches not visited by us; or
• the Company financial statements are not in agreement with the
accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are
not made; or
• we have not received all the information and explanations we require
for our audit.

Responsibilities of Directors

As explained more fully in the Statement of Directors responsibilities, the Directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view,
and for such internal control as the Directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the
Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.

Page 21
AXIS BANK UK LIMITED
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AXIS BANK UK LIMITED
FOR THE YEAR ENDED 31 MARCH 2023

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect
of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud is detailed below:

Non-compliance with laws and regulations

Based on:
• Our understanding of the Bank and the industry in which it operates;
• Discussion with management and those charged with governance; and
• Obtaining and understanding of the Bank’s policies and procedures regarding compliance with
laws and regulations;

we considered the significant laws and regulations to be licence conditions and supervisory
requirements of the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA),
Companies Act 2006, UK adopted international accounting standards and relevant tax legislation.

Our procedures in respect of the above included:

• We made inquiries of Directors, the Audit Committee and those responsible for legal and
compliance matters about their own identification and assessment of the risks of irregularities
and known fraud cases.
• We corroborated our inquiries through our review of compliance monitoring findings during the
year, key correspondence with the Financial Conduct Authority and Prudential Regulation
Authority, minutes of the Board and Board Risk Management Committee;
• Involvement of tax specialists in the audit;

Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud.
Our risk assessment procedures included:
• Enquiry with management and those charged with regarding any known or suspected
instances of fraud;
• Obtaining an understanding of the Bank’s policies and procedures relating to:
o Detecting and responding to the risks of fraud; and
o Internal controls established to mitigate risks related to fraud.
• Review of minutes of meeting of those charged with governance for any known or suspected
instances of fraud;
• Discussion amongst the engagement team as to how and where fraud might occur in the
financial statements;
• Performing analytical procedures to identify any unusual or unexpected relationships that may
indicate risks of material misstatement due to fraud;
• Considering remuneration incentive schemes and performance targets and the related
financial statement areas impacted by these.

Based on our risk assessment, we considered the areas most susceptible to fraud to be posting
inappropriate journal entries to manipulate the financial results and management bias in accounting
estimates.

Page 22
AXIS BANK UK LIMITED
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AXIS BANK UK LIMITED
FOR THE YEAR ENDED 31 MARCH 2023

Our procedures in respect of the above included:

• We have tested as a sample of journal entries by agreeing them supporting documentation,
with particular focus on risk characteristics. Such risk characteristics included journals posted
and approved by same person (under dual-roles arrangement), journals by senior
management, manual journals to interest income, journals with blank description based on our
understanding of usual business operations.
• We reviewed the nature of the industry and sector, assessed the Bank’s internal controls and
tested the operating effectiveness of these controls designed to prevent and detect
irregularities and fraud;
• Involvement of forensic specialists in the audit to attend engagement team discussion and
provide expertise insights into areas which may be susceptible to fraud;
• We challenged assumptions and judgements made by management in their significant
accounting estimates, in particular in relation to the fair value determined on corporate loans
and advances – held for sale;

We also communicated relevant identified laws and regulations and potential fraud risks to all
engagement team members who were all deemed to have appropriate competence and capabilities
and remained alert to any indications of fraud or non-compliance with laws and regulations throughout
the audit.

Our audit procedures were designed to respond to risks of material misstatement in the financial
statements, recognising that the risk of not detecting a material misstatement due to fraud is higher
than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by,
for example, forgery, misrepresentations or through collusion. There are inherent limitations in the
audit procedures performed and the further removed non-compliance with laws and regulations is from
the events and transactions reflected in the financial statements, the less likely we are to become
aware of it.

A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state
to the Parent Company’s members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company and the Parent Company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.

Stefan Beyers (Senior Statutory Auditor)

For and on behalf of BDO LLP, Statutory Auditor
London, UK

Dated: 16 June 2023

BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).

Page 23
AXIS BANK UK LIMITED
INCOME STATEMENT AND COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2023

Notes 2023 2022

USD USD
Interest and similar income 2 1,044,483 111,087
Interest income from loans and advances to 2 1,472,367 1,733,168
customers held for sale
Interest and similar expense 3 (346,625) (1,372,793)

Net Interest Income 2,170,225 471,462

Fee and commission income/(expense) 4 117,878 97,309

Net gain on other financial instruments at FVTPL 273,579 175,585
Other operating income 16,414 157,261
Net impairment credit on financial assets (2,436) -
Loss on sale of loans and advances to corporate 14 - (492,341)
customers
Fair value gains on loans and advances to (135,654) 230,816
corporate customers held for sale

Total Income 2,440,006 640,092

Personnel costs 5 (2,219,008) (2,456,315)

Depreciation 15&17 (244,021) (488,042)
Writeback of fixed assets 15&17 - 488,040
Other general operating expenses 7 (2,191,468) (1,488,521)

(Loss) Before Tax (2,214,491) (3,304,746)

Corporation tax credit 9 - 447,788

(Loss) for the year and total comprehensive loss (2,214,491) (2,856,958)

The notes on pages 28 to 60 form part of these financial statements

Page 24
AXIS BANK UK LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2023

Issued Retained Total equity

capital earnings

USD USD USD

Balance at 1 April 2021 80,000,002 8,383,635 88,383,637
Repatriation of share capital (17,500,000) - (17,500,000)
Share capital reduction (7,500,000) 7,500,000 -
Dividend paid - (7,500,000) (7,500,000)

55,000,002 8,383,635 63,383,637

Total comprehensive loss for the year
Loss for the year - (2,856,958) (2,856,958)

Balance at 31 March 2022 55,000,002 5,526,677 60,526,679

Balance at 1 April 2022 55,000,002 5,526,677 60,526,679

55,000,002 5,526,677 60,526,679

Total comprehensive loss for the year
Loss for the year - (2,214,491) (2,214,491)

Balance at 31 March 2023 55,000,002 3,312,186 58,312,188

The notes on pages 28 to 60 form part of these financial statements

Page 25
AXIS BANK UK LIMITED
STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 MARCH 2023

BALANCE SHEET
Notes 2023 2022
USD USD
Assets
Cash and balances with banks 10 34,654,492 50,919,247
Derivative financial Instruments 11 2,154 149,217
Loans and advances to corporate customers – held 13&23 24,997,608 32,621,436
for sale
Property and equipment 15 - 98,727
Right of use assets 17 - 145,290
Prepayments, accrued income and other assets 16 2,577,522 956,533

Total assets 62,231,776 84,890,450

Liabilities
Derivative financial Instruments 11 325,552 175,526
Deposits from customers 18 2,220,543 22,566,273
Lease liabilities 21 - 199,451
Provisions 22 434,551 410,232
Accruals and other liabilities 19 938,942 1,012,289

Total liabilities 3,919,588 24,363,771

Equity attributable to equity holders

Equity share capital 20 55,000,002 55,000,002
Retained earnings 3,312,186 5,526,677

Total equity 58,312,188 60,526,679

Total liabilities and equity 62,231,776 84,890,450

The financial statements were approved by the Board of Directors and authorised for issue on
12 June 2023.

Sanjay Silas
Managing Director & Chief Executive Officer
Company Registration No 07554558

The notes on pages 28 to 60 form part of these financial statements

Page 26
AXIS BANK UK LIMITED
CASHFLOW STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023
2023 2022
USD USD
Cash flows for the year
(Loss) before tax (2,214,491) (3,304,746)

Adjustments to reconcile profit from operations

Depreciation, amortisation & impairment of fixed assets 244,021 (2)
Loss on sale of loans and advances to corporate customers - 492,341
Fair value gain/(loss) on loans and advances to customers held for 135,654 (230,816)
sale
Net impairment (credit) 2,436 -
Effect of foreign exchange rate changes on opening tax debtor - (36,104)

Cash flows before changes in operating activities (1,832,380) (3,079,327)

Changes in operating activities:
Net (increase)/decrease in other receivables (1,620,994) 2,044,553
Net increase/(decrease) in other payables (49,028) (222,795)
Net decrease in loans and advances to corporate customers 7,485,738 48,863,975
Net (decrease) in deposits by banks - (41,758,023)
Net increase/(decrease) in deposit by customers (20,345,730) (113,275,547)
Net Increase in derivative financial Instruments (liability) 297,090 1,972,968

Cash utilized by continued operations (14,232,924) (102,374,869)

Corporate tax received - 2,484,399

Net cash outflows from operating activities (A) (16,065,304) (102,969,797)

Cash flows from investing activities:

Proceeds from sale of loans and advances to corporate customers - 20,791,563

Net cash flows from investing activities (B) - 20,791,563

Cash flows from financing activities:

Repayment of lease liabilities (199451) (408,869)
Repatriation of share capital - (17,500,000)
Dividend paid - (7,500,000)

Net cash outflows from financing activities (C) (199,451) (25,408,869)

Net decrease cash and cash equivalents (A+B+C) (16,264,755) (107,587,103)

Cash and cash equivalent as at the beginning of the year 50,919,247 158,506,350

Cash and cash equivalents as at the end of the year 34,654,492 50,919,247

Interest received was $2,457,162 (2022: $2,181,959) and interest paid was $544,804 (2022:
$2,674,488).

The notes on pages 28 to 60 form part of these financial statements

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AXIS BANK UK LIMITED
ACCOUNTING POLICIES
FOR THE YEAR ENDED 31 MARCH 2023

1. Reporting entity

Axis Bank UK Limited (Registration no. 07554558) (The Bank) is a private limited company (limited by
shares) domiciled and incorporated in the United Kingdom under the Companies Act 2006. The
Bank is a wholly-owned subsidiary of Axis Bank Limited, one of the leading private sector banks of
India. The address of the Bank’s registered office is Regus Offices Unit No. G.06, 167 City Road,
London EC1V 1AW.

2. Basis of preparation

A. Statement of compliance

The financial statements of the Bank are prepared in accordance with UK adopted international
accounting standards.

The Bank's financial statements for the year ended 31 March 2023 were authorised for issue on 12
June 2023.

B. Going concern

The Board of Axis Bank UK Limited (“the Bank”), in its meeting held on 18 October 2019 agreed to
conduct a review of options through which an orderly exit of operations could be executed.
Subsequently, the Board of the Bank in its meeting held on 12 November 2020 approved the
decision to pursue the sale of the Bank to a third party. Accordingly, Axis Bank Limited entered into
a sale and purchase agreement to divest its entire shareholding of the Bank to a third party –
OpenPayd Holdings Limited (OpenPayd). The change in control was subject to regulatory
approval by the Prudential Regulation Authority (“PRA”).

While the process for change-in-control was being pursued, OpenPayd, based on their internal
review, conveyed to Axis Bank Limited about their intention to terminate the SPA in light of low
probability of obtaining the regulatory approvals before the long-stop date of 30 September 2022.
Axis Bank Limited, in consultation with Axis Bank UK Limited, evaluated the proposed termination
within the purview of SPA and concurred with OpenPayd. Axis Bank Limited and OpenPayd
concluded necessary legal process on 3 August 2022. With the termination of SPA, the Bank
reverted to the strategy of winding down of its operations.

As per the plan, the Bank will wind down its activities and apply for revocation of its banking
license. Once the revocation of its banking license is approved by the regulators, the Company will
pursue Members’ Voluntary Liquidation (solvent liquidation) as per UK guidelines. Whilst the Board
of Axis UK is still aiming to exit the UK market, the intention has now changed from entity sale to
winding down the UK legal entity through solvent liquidation. Accordingly, the financial statements
of the Bank have been prepared on the basis “Other than that of a Going Concern”.

There are no material adjustments made to the financial statements as a result of preparing them
on the basis of other than that of a going concern, except for making a provision of $0.24 million
towards onerous contracts in compliance with IAS 37.

C. Basis of preparation

The financial statements of the Bank are prepared on the historical cost basis or the fair value basis
where the fair value of relevant assets and liabilities has been applied in accordance with UK
adopted international accounting standards. The Bank is in the process of winding down its
operations to be followed by solvent liquidation, which will include realisation of residual assets and
settlement of all residual liabilities. The wind down plan entails sale of corporate loans and the
same are expected to be realised at fair value. Other financial assets, which include margins paid,
derivatives, receivables, etc., are expected to be realised at the book value on respective due

Page
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AXIS BANK UK LIMITED
ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

dates. The liabilities are considered as current liabilities and the Bank has adequate liquidity to
settle the same as per respective terms. As stated above, the assets and liabilities are expected to
be realised / settled at the book value, thus no further adjustments/reclassification are required in
the disclosed values.

D. Functional and presentation currency

The financial statements of the Bank are presented in US Dollars (USD), which is the presentation
and functional currency of the Bank as it represents the primary currency of the underlying
transactions, assets, funding and revenues. Amounts are rounded to the nearest whole number,
unless otherwise stated.

Transactions in foreign currencies are recorded in US Dollars at the rate of exchange prevailing at
the rates ruling at the end of the day in which the transaction arose. Any resulting exchange
differences are included in the income statement. Monetary assets and liabilities denominated in
foreign currencies are translated into the functional currency at the rate of exchange at the
balance sheet date. The rates of exchange used for translation are the rates in force at close of
business in Mumbai, India at the balance sheet date.

E. Changes in accounting policy

The financial statements are prepared consistent with UK adopted international accounting
standards, but amended to reflect that the going concern assumption is not appropriate. The
accounting policies have, unless otherwise stated, been applied consistently to all periods.

3. Significant accounting polices

The Bank’s significant accounting policies are set out below. The accounting policies have, unless
otherwise stated, been applied consistently to all periods presented in the financial statements

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the
Bank and the revenue can be reliably measured. The following specific recognition criteria must
also be met before revenue is recognised.

A. Fee and commission income

Fee and commission income which are not integral part of the effective interest rate are
recognised as income as the consideration expected or received in exchange of the services
provided to the customers. Fee and commission income is earned from a diverse range of services
provided by the Bank to its customers and accounted for as follows:

• Income earned on the execution of a significant act is recognised as revenue when the act is
completed (for example, fees arising from negotiating, facilitating, coordinating, or
participating in the negotiation of, a transaction for a third-party, irrespective of whether the
Bank is participating in the financing arrangement and as agreed by the beneficiary of such
services); and

• Income earned from the provision of services is recognised as revenue as the services are
provided.

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AXIS BANK UK LIMITED
ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

B. Interest and similar income and expense

Interest income/expenses for all interest-bearing financial instruments measured at amortised cost
are recognised in the income statement using the effective interest method. The effective interest
rate is a method of calculating the amortised cost of a financial asset or financial liability and of
allocating the interest income or expense over the relevant period using the estimated future cash
flows.

The effective interest rate is the rate that exactly discounts estimated future cash receipts and
payments through the expected life of the financial instrument or, where appropriate, a shorter
period, to the net carrying amount of the financial asset or financial liability. When calculating the
effective interest rate, the calculation includes all amounts paid or received by the Bank that are
an integral part of the effective interest rate of a financial instrument, including transaction costs
and all other premiums or discounts.

The Bank has issued notices for pre-closure of deposits with interest payment up to the contractual
maturity of respective deposit and the customers can close the deposit at any point of time. The
Bank has thus recognised the interest payable on outstanding deposits up their respective
maturities as interest expense for the year and the same is recorded as a liability.

C. Retirement and other employee benefits

The Bank operates a defined contribution pension plan. The contribution payable by the Bank is in
proportion to the services rendered to the Bank by the employees and is recorded as an expense
under ‘Employee compensation and benefits’. Unpaid contributions, if any, are recorded as a
liability.

D. Corporation tax expense

Corporation tax expense comprises current and deferred tax. Corporation tax expense is
recognised in the income statement except to the extent that it relates to items recognised in
equity or other comprehensive income, in which case it is recognised either in equity or other
comprehensive income as the case may be.

Current tax is the expected tax payable on the taxable income for the year, using tax rates
enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable
in respect of previous years.

Deferred tax is provided for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax
is measured at the tax rates that are expected to be applied to the temporary differences when
they reverse, based on the laws that have been enacted or substantively enacted by the reporting
date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will
be available against which the asset can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realised. Unrecognised deferred tax assets are reassessed at each balance sheet
date and are recognised to the extent that it has become probable that future taxable profit will
allow the deferred tax asset to be recovered.

Deferred tax assets and deferred tax liabilities are offset if a legally-enforceable right exists to set off
current tax assets against current tax liabilities and the deferred taxes relate to the same taxable
entity & the same taxation authority.

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AXIS BANK UK LIMITED
ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

Deferred tax is recognised for all taxable temporary differences, except where the deferred tax
arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor taxable
profit or loss.

E. Provisions

Provisions are recognised when the Bank has a present obligation (legal or constructive) as a result
of a past event, and it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation, and a reliable estimate can be made of the amount of the
obligation.

Contractual commitments may become onerous because of a decision to go for liquidation of the
Bank. Provision is made for wind down cost (classified as restructuring cost), including the costs of
redundancy, when the Bank has a constructive obligation to restructure. An obligation exists when
the Bank has a detailed formal plan for the restructuring and has raised a valid expectation in
those affected by starting to implement the plan or by announcing its main features. If the Bank
has a contract that is onerous, it recognises the present obligation under the contract as a
provision. An onerous contract is one where the unavoidable costs of meeting the Bank’s
contractual obligations exceed the expected economic benefits.

No provision is made for the future costs of terminating the business unless such costs were
committed at the reporting date.

Provisions are reviewed at the end of each reporting date to reflect the current best estimate. If it is
no longer probable that an outflow will be required to settle the obligation, the provisions are
reversed.

F. Financial instruments - Classification and measurement

IFRS 9 requires financial assets to be classified on the basis of two criteria:

i) The business model within which financial assets are managed; and
ii) Their contractual cash flow characteristics (whether the cash flows represent solely
payments of principal and interest’ (SPPI).

Financial assets will be measured at amortised cost if they are held within a business model whose
objective is to hold financial assets in order to collect contractual cash flows, and their contractual
cash flows represent solely payments of principal and interest.

Financial assets will be measured at fair value through other comprehensive income if they are
held within a business model whose objective is achieved by both collecting contractual cash
flows and selling financial assets, and their contractual cash flows represent solely payments of
principal and interest.

Financial assets will be measured at fair value through profit and loss if they are held for trading or
held within a business model whose objective is to realise the asset through sales as opposed to
holding the asset to collect the contractual cash flows.

Business models were determined on initial application of IFRS 9. Factors considered by the Bank in
determining the applicable business model for a group of assets include (i) past experience of how
the cash flows for these assets were collected and (ii) how the assets’ performance and risks are
evaluated, managed and reported to key management personnel.

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AXIS BANK UK LIMITED
ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

The contractual cash flow characteristics of financial assets are assessed with reference to whether
the cash flows represent SPPI. In assessing whether contractual cash flows are SPPI compliant,
interest is defined as consideration primarily for the time value of money and the credit risk of the
principal outstanding. The time value of money is defined as the element of interest that provides
consideration only for the passage of time and not consideration for other risks or costs associated
with holding the financial asset. Terms that could change the contractual cash flows so that it
would not meet the condition for SPPI are considered, including: (i) contingent and leverage
features, (ii) non-recourse arrangements and (iii) features that could modify the time value of
money.

The Bank classifies its financial assets and liabilities into the following categories:
• Financial assets/liabilities classified at amortised cost;
• Financial assets measured at fair value through other comprehensive income; and
Financial assets/liabilities measured at fair value through profit and loss.

i) Financial assets measured at amortised cost

Financial assets that are held to collect contractual cash flows where those cash flows represent
solely payments of principal and interest are measured at amortised cost. This includes lending
arrangements which results in contractual cash flows that are solely payments of principal and
interest on the principal amount outstanding. Financial assets measured at amortised cost relate to
loans and advances to customers and banks which includes the buy to let portfolio.

Financial assets measured at amortised cost are initially recognised at fair value, representing the
cash consideration to originate the financial instrument, plus the net of incremental transaction
costs and fees. They are subsequently measured at amortised cost using the effective interest
method less impairment. The amortisation is included in interest income in the income statement.
The losses arising from impairment are recognised as part of ‘Net impairment charges’ in the
income statement.

Following the Bank’s decision to sell the corporate banking book, the portfolio has subsequently
been reclassified as fair value through profit and loss, as a result of the change in business model.

ii) Financial assets measured at fair value through other comprehensive income

Financial assets that are held to collect contractual cash flows and for subsequent sale, where the
assets’ cash flows represent solely payments of principal and interest, are recognised in the
balance sheet at their fair value, inclusive of transaction costs.

iii) Financial liabilities measured at amortised cost

Financial liabilities are recognised where the substance of the contractual arrangement results in
the Bank having an obligation either to deliver cash or another financial asset to the holder.
Financial liabilities include customer deposits, trade payables, other amounts payable, payable to
related parties and interest bearing loans and borrowings. Financial liabilities are initially recognised
at a fair value of consideration received less directly attributable transaction costs and
subsequently measured at amortised cost using the effective interest rate method. Amortised cost
is calculated by taking into account any discount or premium on the issue and costs that are an
integral part of the effective interest rate method.

iv) Financial assets/liabilities measured at fair value through profit and loss

Financial assets are classified at fair value through profit or loss where they do not meet the criteria
to be measured at amortised cost or fair value through other comprehensive income or where
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AXIS BANK UK LIMITED
ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

they are designated at fair value through profit or loss to reduce an accounting mismatch. The
Bank’s derivative financial instruments and the corporate banking portfolio are carried at fair value.

v) Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date in the principal or, in its
absence, the most advantageous market to which the Bank has access at that date.

When one is available, the Bank measures the fair value of an instrument using the quoted price in
an active market for that instrument. A market is regarded as ‘active’ if transactions for the asset or
liability take place with sufficient frequency and volume to provide pricing information on an
ongoing basis.

If there is no quoted price in an active market, then the Bank uses valuation techniques that
maximise the use of relevant observable inputs and minimise the use of unobservable inputs. The
chosen valuation technique incorporates all of the factors that market participants would take into
account in pricing a transaction.

The best evidence of the fair value of a financial instrument on initial recognition is normally the
transaction price – i.e. the fair value of the consideration given or received. If the Bank determines
that the fair value on initial recognition differs from the transaction price and the fair value is
evidenced neither by a quoted price in an active market for an identical asset or liability nor based
on a valuation technique for which any unobservable inputs are judged to be insignificant in
relation to the difference, then the financial instrument is initially measured at fair value, adjusted to
defer the difference between the fair value on initial recognition and the transaction price.
Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of
the instrument but no later than when the valuation is wholly supported by observable market data
or the transaction is closed out.

G. De-recognition of financial assets and financial liabilities

i) Financial assets

A financial asset (or, where applicable a part of a financial asset or part of similar financial assets) is
derecognised when:

• the rights to receive cash flows from the asset have expired; or
• the Bank has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement; and either:
• the Bank has transferred substantially all the risks and rewards of the asset; or
• the Bank has neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.

When the Bank has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, and has neither transferred nor retained substantially all the risks and
rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the
Bank’s continuing involvement in the asset.

On de-recognition of a financial asset in its entirety, the difference between the carrying amount
and the sum of: (a) the consideration received (including any new asset obtained less any new
liability assumed); and (b) any cumulative gains or losses that have been recognised directly in
Page 33
AXIS BANK UK LIMITED
ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

other comprehensive income is recognised in profit or loss.

ii) Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or
cancelled or expires. Where an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially modified,
such an exchange or modification is treated as a de-recognition of the original liability and the
recognition of a new liability, and the difference in the respective carrying amounts is recognised in
the income statement and the associated liability is also recognised.

iii) Reclassification of financial assets and liabilities

The Bank reclassifies financial assets when and only when its business model for managing those
assets changes. The reclassification takes place from the start of the first reporting period following
the change. In the financial year FY20-21, the Bank reclassified its corporate loan and BTL portfolio
from amortised cost to fair value through profit and loss. Reclassifications were made at fair value
as of the reclassification date.

Following the decision to sell down the Corporate loans and BTL portfolios, on the 1 April 2020,
Corporate loans worth $170,455,857 and Buy to Let mortgage loans worth $376,308,792 have been
reclassified as held for sale since the carrying amount will be recovered principally through a sale
transaction rather than to collect the contractual cash flows. In accordance with the applicable
provisions of IFRS9, the portfolios which were previously measured at amortised cost have been
measured at fair value through profit and loss and a gain or loss arising from the difference
between the previous amortised cost value and fair value is recognised in income statement as fair
value gain on loans to corporate customers.

H. Assets held for sale

Assets and non-current assets are classified as held for sale (‘HFS’) when their carrying amounts will
be recovered principally through sale rather than through continuing use. HFS assets are generally
measured at the lower of their carrying amount and fair value less cost to sell. Immediately before
the initial classification as held for sale, the carrying amounts of the relevant assets are measured in
accordance with applicable IFRSs.

I. Offsetting

Financial assets and financial liabilities are offset and the net amount reported in the balance
sheet if, and only if, the bank currently has a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a net basis, or to realise the asset and settle the
liability simultaneously. This is not generally the case with master netting agreements. Therefore, the
related assets and liabilities are presented at gross value in the balance sheet.

J. Financial guarantees

In the ordinary course of business, the Bank may give financial guarantees, consisting of letters of
credit, guarantees and acceptances. Financial guarantees are initially recognised in the financial
statements (within other liabilities) at fair value, which is generally the fee received or receivable.
Subsequently, financial guarantee liabilities are measured at the higher of the initial fair value, less
cumulative amortisation, and the best estimate of the expenditure required to settle the
obligations.

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AXIS BANK UK LIMITED
ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

K. Property, plant and equipment

Property, plant and equipment is stated at cost, which includes direct and incremental acquisition
costs less accumulated depreciation and impairment provisions. Subsequent costs shall be
capitalised if these result in an enhancement to the asset. Depreciation is calculated using the
straight-line method to write down the cost of property, plant and equipment to their residual
values over their estimated useful lives. The Bank reviews the economic lives at the end of each
annual reporting period. The estimated useful lives are as follows:

Asset Estimated useful life

Equipment 5 to 7 years
Computer hardware 5 to 7 years
Furniture, fixtures and equipment 5 to 7 years
Leasehold improvements Over the lease period

Property and equipment is derecognised on disposal or when no future economic benefits are
expected from its use. Any gain or loss arising on de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount of the asset) is recognised
in ‘Other operating income/expenditure’ in the income statement in the year in which the asset is
derecognised.

Property and equipment under construction and advances paid towards acquisition of property
and equipment are disclosed as capital work-in-progress.

L. Leases

As a lessee

A contract, or a portion of a contract, is accounted as a lease when it conveys the right to use an
asset for a period of time in exchange for consideration. Leases are those contracts that satisfy the
following criteria:

• There is an identified asset;

• The Bank obtains substantially all the economic benefits from use of the asset; and
• The Bank has the right to direct use of the asset.

The Bank considers whether the supplier has substantive substitution rights. If the supplier does have
those rights, the contract is not identified as giving rise to a lease. In determining whether the Bank
obtains substantially all the economic benefits from use of the asset, the Bank considers only the
economic benefits that arise from use of the asset. In determining whether the Bank has the right to
direct the use of the asset, the Bank considers whether it directs how and for what purpose the
asset is used throughout the period of use. If the contract or portion of a contract does not satisfy
these criteria, the Bank applies other applicable IFRS rather than IFRS 16.

Lease liabilities are measured at the present value of the contractual payments due to the lessor
over the lease term, with the discount rate determined by reference to the rate inherent in the
lease unless this is not readily determinable, in which case the Bank’s incremental borrowing rate
on commencement of the lease is used.

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AXIS BANK UK LIMITED
ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

On initial recognition, the carrying value of the lease liability also includes:

• Amounts expected to be payable under any residual value guarantee;

• The exercise price of any purchase option granted in favour of the Bank if it is reasonably
certain to assess that option; and
• Any penalties payable for terminating the lease, if the term of the lease has been estimated
based on termination option being exercised.

Right of use assets are initially measured at the amount of the lease liability, reduced for any lease
incentives received, and increased for:

• Lease payments made at or before commencement of the lease;

• Initial direct costs incurred; and
• The amount of any provision recognised where the Bank is contractually required to dismantle,
remove or restore the leased asset.

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a

constant rate on the balance outstanding and are reduced for lease payments made. Right-of-
use assets are amortised on a straight-line basis over the remaining term of the lease.

The Bank has elected not to recognise right of use assets and lease liabilities for leases of low-value
assets and short-term leases. Low value assets are classified as assets with annual rental of less than
£2,000 and a short-term lease is a lease with a term of 12 months or less. The Bank recognises the
lease payments associated with these leases as an expense on a straight-line basis over the lease
term.

M. Impairment of non-financial assets

Non-financial assets are reviewed for impairment at each reporting date to determine whether
there is any indication of impairment. If any such indication exists then the asset’s recoverable
amount is estimated. The recoverable amount of an asset is the greater of its value in use and its
fair value less costs to sell. The impairment loss to be recognised is the amount by which the
carrying amount of the assets exceeds the recoverable amount.

The Bank assess at the end of each reporting period whether there is any indication that an
impairment loss recognised in prior periods for a non-financial asset other than goodwill still exist or
not. If there is any indication that such impairment loss is no longer exist or may have reduced, the
Bank shall re-estimate the new recoverable amount of such asset and the carrying amount of the
asset shall be increased to this new recoverable amount. The increase in the recoverable amount
is a reversal of impairment loss.

N. Cash and cash equivalents

Cash and cash equivalents include balances with Banks and highly liquid financial assets with
original maturities of three months or less from the acquisition date that are subject to an
insignificant risk of change in their fair value and are used by the Bank in the management of its
short-term commitments.

4. Critical accounting judgements and key sources of estimation uncertainty

In the application of the accounting policies, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily
apparent from other sources and may make necessary provisions in accordance with their
assumptions.

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AXIS BANK UK LIMITED
ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period or in the period of the revision and future periods if the revision affects both
the current and future periods.

The following are the critical judgements that the Directors have made in the process of applying
the Bank’s accounting policies and that have the most significant effect on the amount
recognised in the financial statements.

A) Valuation of the Corporate Loans portfolio

The basis to value the Corporate Banking portfolio is at its fair value amount. The valuation of the
Corporate Banking portfolio involves a significant degree of judgement and complexity. The
valuation of the book is derived based upon a discounted cash flow model, where the expected
cash flows for each exposure under the terms of the contract are discounted back to a present
value. The valuation methodology consists of two key components;

• Forecast contractual interest and principal cash flows for the term of the facility, with haircuts
to principal receipts if a loss is deemed highly probable; and

• A risk-adjusted yield, incorporating the theoretical discount margin and requisite IBOR curve, to
calculate the present value of the facility cashflows. The key factors impacting the theoretical
discount margin include the following:
o External credit rating of the borrower; and
o The country risk associated with the exposure.

The valuation methodology applied differs depending on the staging of the assets which is
detailed below:

Performance Category Valuation methodology applied

Stage 1 assets Present value of contractual cash flows at
risk-adjusted yield (IBOR/SONIA + theoretical
discount margin)
Stage 1 (watchlist) and Stage 2 assets Present value of expected future cash flows
discounted at the risk-adjusted yield
(IBOR/SONIA + theoretical discount margin)
Stage 3 assets Valuation is dependent on either:

i)management's assessment of the recovery

process and final recoveries or

ii)Present vaue of expected future cash flows

discounted at the risk-adjusted yield

B) Provisions

The reporting of provision in terms of identifying whether a present obligation exists and estimating
the probability, timing, and quantum of outflows arising from past events requires a significant
degree of judgement and can be complex. The amount that is recognised as a provision can be
sensitive to the assumptions made in calculating it. This gives rise to a large range of potential
outcomes which requires judgement in determining an appropriate provision level.

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AXIS BANK UK LIMITED
ACCOUNTING POLICIES (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

For the Board’s decision to sell the entity during previous year and revert to winding down the
operations to be followed by solvent liquidation, the Bank has recognised a provision for the
anticipated cost of restructuring including consultancy and liquidation costs. The amount that is
recognised is based upon management’s estimate of the expected completion of underlying
activities.

Page 38
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT
FOR THE YEAR ENDED 31 MARCH 2023

1. Principal Activity
The principal activities of the Bank are described in the Directors’ Report on page 14.

2023 2022
2. Interest and similar income USD USD
Cash and balances with central bank 379,992 116,268
Short-term funds- margin & placements 664,491 (5,181)
Interest income from loans and advances to
customers held for sale:
Interest income from loans and advances to 1,472,367 1,733,168
corporate customers held for sale

2,516,850 1,844,255

2023 2022
3. Interest and similar expense USD USD
Deposit from customers 345,791 1,334,694
Deposit from banks - 31,904
Interest expense of lease liability 834 6,195

346,625 1,372,793

2023 2022
4. Net fees and commission income USD USD
Fees and commission income
Bank guarantee fees 117,878 69,735
Other fees received - 27,574

117,878 97,309
Fees and commission expenses - -

- -

Net fees and commission income/(expenses) 117,878 97,309

Page39
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AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

2023 2022
5. Personnel costs USD USD
Wages and salaries 1,942,264 2,140,239
Social security costs 241,185 265,438
Pension costs – Defined contribution plan 35,559 50,638

2,219,008 2,456,315

The average number of persons employed by the Bank 12 13

There are no share-based payments made by Axis Bank UK Limited
Average employees classification by functions
Core Banking 6 6
Operations and admin 6 7

2023 2022
6. Directors’ emoluments USD USD
(Included in wages and salaries. Emoluments
includes all payment made to Directors)
Emoluments 581,282 780,293

Contribution to external pension scheme - 4,970

included in above

The gross emoluments* of the highest paid Director were

USD 442,581 (2022: USD 523,631). Accrued pension as of the
year end was USD Nil (2021: USD Nil). Loan balance
outstanding as at year end from Directors were USD Nil
(2021: USD Nil) and the highest total loan outstanding during
the year were USD nil (2021: USD 825).
*Gross emoluments include salary, benefits and awarded
bonus
2023 2022
7. Other general operating expenses USD USD
Consultancy, legal & professional fees 94,836 284,019
Administrative, restructuring, and other 2,000,575 1,121,896
charges
Bank charges, rates and taxes 96,057 82,606

2,191,468 1,488,521

8. Auditor’s remuneration 2023 2022

Fees payable to the Company’s Auditor for the USD USD
audit of the company’s Annual Accounts:
Statutory audit fees – current year 165,272 149,666
Statutory audit fee- prior year - -
Non audit fees – other services - -
Quarterly reviews - -

165,272 149,666

Page 40
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

9. Corporation tax
The components of corporation tax expense for the years ended 31 March are:
2023 2022
USD USD
Current tax expense
Adjustment in respect of prior periods - (447,788)

- (447,788)

Reconciliation of corporation tax credit to accounting

Loss
(Loss) before tax (2,214,491) (3,304,746)

Tax at the domestic corporation tax rate of 19% (2022: (420,753) (627,902)
19%)
Adjustments in respect of current period 41,209 -
Adjustment in respect of prior periods 18,393 (447,788)
Exchange differences - 99,476
Deferred tax not recognised 396,045 528,426
Tax charge not recognised (34,894) -

Tax (credit) using effective rate - (447,788)

Deferred tax is composed of the tax impact of the following:

Short term timing difference- Fixed assets (161,549) (121,069)
Losses and other deductions (14,329) (95,845)

Deferred tax assets (175,878) (216,914)

Deferred tax liability
Other short term differences 175,878 216,914

Deferred tax liability relating to short term differences 175,878 216,914

Tax effective rate - (13.55%)

For the period 1st April 2022 to 31st March 2023 the corporation tax rate remains at 19%. From 1st
April 2023 the corporation tax rate has been increased from 19% to 25%. Deferred tax for $396,045
relating to trading losses (March 2022:$ 528,426) has not been recognised. Gross tax losses were
$18,277,781 as at 31 March 2023 (March 2022: $16,501,008).

Page41
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AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

2023 2022
10. Cash and balance with Bank USD USD
Cash at bank 2,098,913 2,298,332
Central bank 32,555,579 48,620,915

34,654,492 50,919,247

11. Derivative financial instruments

The Bank deals in various currencies and it is not always possible to match the asset and
liability in each currency. As a result, the Bank uses currency swaps to eliminate currency
risk on long or short-term currency positions. These derivatives are revalued daily and any
change in their fair value is recognised in the income statement.

The table below shows the fair values of derivative financial instruments recorded as assets
or liabilities together with their notional amounts. The notional amount, recorded gross, is
the amount of a derivative’s underlying asset, reference rate or index and is the basis upon
which changes in the value of derivatives are measured. The notional amounts indicate
the volume of transactions outstanding at the year-end and are indicative of neither the
market risk nor the credit risk.
31 March 2023
Asset Notional Liabilities Notional
amount amount
Derivatives used as: USD USD USD USD

FX swaps 2,154 44,816,192 325,552 45,096,723

2,154 44,816,192 325,552 45,096,723

31 March 2022
Asset Notional Liabilities Notional
amount amount
Derivatives used as: USD USD USD USD
FX swaps 149,217 48,623,222 175,526 48,530,395

149,217 48,623,222 175,526 48,530,395

12. Fair value of assets and liabilities

IFRS 13 Fair Value Measurement requires an entity to classify its assets and liabilities
according to a hierarchy that reflects the observability of significant market inputs. The
three levels of the fair value hierarchy are defined below.

Level 1 Securities: The fair value for financial instruments traded in active markets is based
on their quoted market price or dealer price quotations without any deduction for
transaction costs.

Level 2 Securities: For all other financial instruments not traded in an active market, the fair
value is determined by using appropriate valuation techniques. Valuation techniques
include comparison to similar instruments for which market-observable prices exist, options
pricing models, credit models and other relevant valuation models.

PagePage
42
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

Level 3 Securities: Certain financial instruments are recorded at fair value using valuation
techniques in which current market transactions or observable market data are not
available. Their fair value is determined using a valuation model that has been tested
against prices or inputs to actual market transactions and using the Bank’s best estimate
of the most appropriate model assumptions, including discounted cash flows. Models are
adjusted to reflect the spread for bid and ask prices to reflect costs to close out positions,
counterparty credit and liquidity spread and limitations in the models.
The following tables set out the valuation methodologies adopted by asset and liability
categories measured at fair value in the financial statements.

i. Fair value hierarchy

As at March 2023, the fair values of assets and liabilities measured on a recurring and non-
recurring basis by level of input were as follows:

31 March 2023

Quoted market Valuation Valuation

prices techniques using techniques using
(Level1) observable non-observable
market data market data
(Level 2) (Level 3)
USD USD USD
Financial assets

Derivative financial instruments - 2154 -

Loans and advances to customers - 24,997,608

Total - 2,154 24,997,608

Financial Liabilities
Derivative financial instruments - 325,552 -

Total - 325,552 -

Page 43
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

31 March 2022

Quoted market Valuation Valuation

prices techniques using techniques using
(Level1) observable non-observable
market data market data
(Level 2) (Level 3)
USD USD USD
Financial assets

Derivative financial instruments - 149,217 -

Loans and advances to customers - 32,621,436

Total - 149,217 32,621,436

Financial Liabilities
Derivative financial instruments - 175,526 -

Total - 175,526 -

ii. Fair value measurements using significant unobservable inputs (level 3)

The following table presents the changes in level 3 items for the periods ended 31 March 2023.

Loan and advances to Total assets

corporate customers
Assets and liabilities USD USD
Balance as of 1 Apr 2022 32,621,436 32,621,436
Realised/unrealised gains/losses (135,654) (135,654)
Disbursement 550,483 550,483
Settlements/repayments (7,772,203) (7,772,203)
Impact of foreign exchange (266,454) (266,454)
movements

As at 31 March 2023 24,997,608 24,997,608

Page 44
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

The following table presents the changes in level 3 items for the periods ended 31 March 2022.

Loan and advances to Total assets

corporate customers

Assets and liabilities USD USD

Balance as of 1 Apr 2021 102,538,499 102,538,499
Realised/unrealised gains/losses:
Included in net income 230,816 230,816
Disbursement 1,597,997 1,597,997
Sales/Transfer (21,283,904) (21,283,904)
Settlements (50,299,986) (50,299,986)
Impact of foreign exchange (161,986) (161,986)
movements

As at 31 March 2022 32,621,436 32,621,436

iii. Valuation techniques used to determine fair values

The table below summarises the specific valuation techniques and unobservable inputs for level
3 assets and liabilities.

31 March 2023 Valuation Unobservable Range

Fair value technique input (weighted average)

Assets USD
Loans and advances to 24,997,608 Discounted Credit 0.46% - 5.48%
customers Cash flow spread

31 March 2022 Valuation Unobservable Range

Fair value technique input (weighted average)

Assets USD
Loans and advances to 32,621,436 Discounted Credit 1.78% - 5.1%
customers Cash flow spread

The valuation techniques used, observability for the loans and advances to customers for level 3
assets, are described below.

Valuation: The valuation of the book is derived based upon a discounted cash flow model,
where the expected cash flows for each exposure under the terms of the contract are
discounted back to a present value. The discount factor was determined by incorporating a
number factors such as funding costs (including a premium for illiquid conditions) as well as a
country risk premium representing the domicile risk for each exposure.
Observability: Within the loans and advances to customers population, the credit spread is
generally unobservable. Unobservable credit spreads are determined by incorporating funding
costs, the level of comparable assets such corporate bonds, government bond yields and credit
default swap spreads.

Page 45
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

iv. Assets and liabilities measured at fair value on a recurring basis – Level 3 – Gains and losses

31 March 2023 31 March 2022

USD USD
Gains/(losses) included in net loss for the period (138,090) 230,816
Where of change in unrealised gains/losses relating to (76,962) 113,254
assets and liabilities still held at the reporting date

v. Sensitivity analysis of level 3 measurements to changes in unobservable inputs

The credit spread is the key unobservable input used in the valuing the Corporate loans
portfolio. This has been sensitised by 25 basis points in either direction to arrive at the following
valuation changes:

31 March 2023
Favourable changes Unfavourable
changes
Income Statement Income Statement

Assets USD USD

Loans and advances to customers 306,651 220,807
Total 306,651 220,807

31 March 2022
Favourable changes Unfavourable
changes
Income Statement Income Statement

Assets USD USD

Loans and advances to customers 139,000 2,000
Total 139,000 2,000

Page 46
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

vi. Fair value of financial assets and financial liabilities that are not measured at fair value (but
fair value disclosures are required)

Carrying amount1 Fair value2

31 March 2023 31 March 2022 31 March 2023 31 March 2022
USD USD USD USD
Financial assets
Cash and balances 34,654,492 50,919,247 34,654,492 50,919,247
with banks
Other Assets (Only 2,579,676 747,583 2,579,676 747,583
Financial
Instruments)

Total 37,234,168 51,666,830 37,234,168 51,666,830

Financial liabilities
Deposit from 2,220,543 22,566,273 2,220,543 22,566,273
Customers
Other Liabilities 938,942 1,012,289 938,942 1,012,289

Total 3,159,485 23,578,562 3,159,485 23,578,562

2023 2022

13. Loans and advances to Corporate Customers USD USD

held for sale
Loans to Corporate Customers 24,920,646 32,734,690
Fair value adjustment 76,962 (113,254)

24,997,608 32,621,436

2023 2022
14. Loss on sale of loans and advances to USD USD
customers
Sale consideration - 20,791,562
Carrying amount of the loans sold - (21,283,903)

- (492,341)

1 Balances are net of any amortised fees

2 The financial assets and liabilities with the exception of cash balances are classified as level 3 financial instruments.
Page 47
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

15. Property, Plant

and equipment
Leasehold Computer Other fixed Total
improvements (incl. software) assets
Cost: USD USD USD USD
At 1 April 2022 1,103,124 3,200,999 147,097 4,451,220
Additions - - - -
Write off - - - -

At 31 March 1,103,124 3,200,999 147,097 4,451,220

2023
Additions - - - -
Write off - - - -

At 31 March 1,103,124 3,200,999 147,097 4,451,220

2022

Depreciation:
At 1 April 2022 (1,018,495) (3,200,999) (132,997) (4,352,491)
Disposals
Reversal of - - - -
Impairment
Depreciation (84,629) - (14,100) (98,729)
charge for the
year
(1,103,124) (3,200,999) (147,097) (4,451,220)
At 31 March
2023

Net book value:

At 31 March 84,629 - 14,100 98,729
2022
At 31 March - - - -
2023

2023 2022
16. Prepayments, accrued income and other assets USD USD
Deposits 1,374,479 673,828
Other receivables 1,167,657 67,761
Other prepayments 35,386 214,944

2,577,522 956,533

Page 48
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

17. Right of Use Assets

Leasehold property Office Equipment Total

Cost:
USD USD USD
At 31 March 2022 144,113 1,117 145,290
Additions - - -
Disposal - - -

At 1 April 2022 144,113 1,117 145,290

Depreciation and amortisation:

Depreciation charged for the (144,113) (1,117) (145,290)

year

At 31 March 2023 - - -

- - -
NBV at 31 March 2023

The Bank’s right of use assets predominantly relates to the leasehold premises at 4 Chiswell
Street. The Bank opted for the lease break in October 2022. Thus, right of use assets were fully
depreciated by September 2022. There was no write back of assets during the year (March
2022: $288,226 for leased premises and $2,354 for office equipment).

At 31 March 2023, the non-cancellable commitments relating to short-term leases is $47,046

(2022: nil).

2023 2022
18. Deposit from customers USD USD
Current accounts 994,640 698,246
Savings accounts 1,967 3,570
Fixed Term deposits 1,037,893 21,677,810
Other deposits 186,043 186,647

2,220,543 22,566,273

2023 2022
19. Accruals and other liabilities USD USD
Other payables and accrued liabilities 938,942 1,012,289

938,942 1,012,289

Page 49
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

2023 2022
20. Equity share capital USD USD
Authorised, issued and fully-paid share capital
1 ordinary share of GBP 1 2 2
55 Million ordinary shares of USD 1 each 55,000,000 55,000,000

Total equity capital 55,000,002 55,000,002

As at 31 March 2023 the issued share capital comprises 55,000,000 ordinary shares with a par
value of $1each and 1 ordinary share of £1 as in previous accounting year.

The Bank has not paid any dividend during the previous year (March 2022: $7,500,000). The
Bank has not cancelled and extinguished any share capital during previous year (March
2022: the Board by means of a solvency statement route approved a reduction in share
capital by cancelling and extinguishing 25,000,000 of the issued ordinary shares of 1 USD
each. The transaction completed on 4 June 2021, whereby $17,500,000 was returned
directly back to the Bank’s shareholder with the remainder of the proceeds forming part of
the Bank’s distributable reserves.)

The holders of ordinary shares are entitled to receive dividends as declared by the Bank
and are entitled to one vote per share at the meetings of the Bank. All shares rank equally
with regards to residual assets of the Bank.

The directors regard share capital and reserves as its capital for the capital management
purposes where the objective is to ensure it is sufficient to participate in lines of business and
to meet the PRA’s capital requirements. In order to maintain or adjust the capital structure,
the Bank may issue new shares or sell assets. Please refer to the strategic report for further
information on capital management.

21. Lease Liabilities

Leasehold property Office Equipment Total

USD USD USD

At 1 April 2022 195,263 4,188 199,451
Interest charged during 849 33 882
the year
Payment (166,946) (3,596) (170,542)
Impact of exchange (29,166) (625) (29,791)
movement

At 31 March 2023 - - -

Page 50
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

Leasehold property Office Equipment Total

USD USD USD

At 1 April 2021 613,793 4,558 618,352
Interest charged during 6,227 82 6,309
the year
Payment (408,626) (243) (408,869)
Impact of exchange (16,131) (209) (16,340)
movement

At 31 March 2022 195,263 4,188 199,451

The lease liability matured during the previous year as the Bank opted for lease break in
October 2022.

22. Provisions Onerous Contracts Restructuring Total

USD USD USD
At 1 Apr 2022 - 410,232 410,232
Additions 235,284 162,789 398,073
Amount utilised - (371,549) (371,549)
Impact of exchange movement - (2,205) (2,205)

As at 31 March 2023 235,284 199,267 434,551

The restructuring provisions predominantly relates to various consultancy costs arising from
the ongoing wind down plan and accrual of costs of onerous contracts in compliance with
guidance on onerous contracts in IAS 37 ‘Provisions, Contingent Liabilities and Contingent
Assets’. All provisions are expected to settle within 12 months. The amendments to IAS 37
did not have any impact on the Bank.

23. Related party transactions

Ultimate controlling party

The ultimate controlling party of the company is Axis Bank Limited incorporated in India which is
both the parent company (ownership - 100%) and ultimate controlling party.

The Company's immediate and ultimate parent, controlling party, and parent of the largest and
smallest group in which the Company’s results are consolidated, is Axis Bank Limited, a
Company incorporated in India. Copies of the consolidated financial statements of Axis Bank
Limited are available from its registered address Trishul, 3rd floor, Opp Samartheshwar Temple,
Law garden, Ellisbridge, Ahmedabad, Gujarat – 380 006, India.
As on 31 March 2023, the assets and liabilities outstanding to the related parties are as below:

Page 51
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

2023 2022
USD USD
1. Cash and balances with Axis Bank Ltd 7,567 3,604
2. Receivable for providing of services 6,387 6,775

The related party transactions for the financial year 2022-2023 is set out below.

Items 2023 2022

USD USD
1. Outsourcing charges paid (147,612) (190,742)
2. Repatriation of share capital - (17,500,000)
3. Dividend paid - (7,500,000)
4. Proceeds from sale of corporate loans - 20,791,563
5. Re-imbursement of expenses paid 25,549 27,101
6. (Loss) on sale of corporate loans - (492,341)

The company enters into commercial transactions with its parent company in the ordinary
course of business. The amounts outstanding are unsecured and interest free and will be settled
in cash. No provisions have been made for doubtful debts in respect of the amounts owed by
related parties.

Other transactions with related parties (including remuneration paid to the Directors) are
disclosed in Note 6.

24. Overview of the Bank’s risk management

As mentioned in the Strategic Report, risk management plays a pivotal role in the Bank’s
strategy by verifying that the Bank falls within its risk appetite threshold and assumes a level of
risk that is individually and in aggregate acceptable to the Board. The Board also acknowledges
the fact that during the wind-down (earlier during entity sale) process, the portfolio imbalances
would necessitates re-alignment of internal risk appetite in a manner that it does not lead to
excess risk taking. Though there is no incremental business accruing to the Balance Sheet, since
the portfolio exits are planned over the course of the financial year 2022-2023, the existing risk
measurement, monitoring and mitigation remains in place.

Credit Risk Management

The credit risk management processes are guided by policies, independent risk oversight and
periodical monitoring through the committees of the Board. The Risk Management
Committee(RMC) is a committee of the Board and is responsible for the risk management
framework and monitoring the risks arising from the businesses undertaken by the Bank and to
advise the Board on the following matters:

i. the maintenance and development of a supportive culture, in relation to the

management of risk, appropriately embedded through procedures, training and
leadership actions so that all employees are alert to the wider impact on the whole
organisation of their actions and decisions.
ii. ensuring the risk management framework aligns strategy with the Board’s risk appetite;
and

Page 52
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

Note 24 (continued)

iii. systems of risk management, internal control and compliance to identify, measure,
aggregate, control and report risks.

To maintain the maximum transparency in the credit processes, various functional areas have
been duly segregated.

The goal of the Bank’s credit risk management is to manage the credit risk inherent in individual
exposures as well as at the portfolio level and to maximise the Bank’s risk-adjusted rate of return
on capital by maintaining a healthy credit portfolio. To achieve this, the Bank has structured
credit approval processes and a comprehensive Credit Risk Management Policy which also
provides for the early identification of weak or vulnerable assets and actively managing them
thereafter to minimise impairment provisions.

The objectives of the Bank’s credit risk management framework are to:
• set credit limits in line with the Bank’s stated risk appetite;
• provide a credit approval process appropriate to the lending activities envisaged by the
business plan;
• avoid lending into markets or businesses unless the Bank understands the dynamics and
risks within that market or business;
• optimize the Bank’s risk-adjusted rate of return on capital rather than concentrating
predominantly on asset or income growth;
• maintain a healthy credit portfolio by reducing risk concentrations within the portfolio;
and
• monitor compliance with the above through appropriate credit metrics prepared and
managed by an arms-length risk management function.
The limits comprise ratings-based, graduated scales setting the maximum transaction size for
secured and unsecured lending, the limits being commensurately lower or maturity shorter, the
lower the rating grade. Separate credit limits for exposures to institutions are also based around
a combination of ratings and maturity profile.

From a structural perspective, the Credit Policy of the Bank is split between standardised and
bespoke lending activities. The relative attributes which generally determine the approach the
Bank adopts may be summarised as follows:

Page 53
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

Note 24 (continued)

Standardised Activities Bespoke Activities

- Narrow range of product types - Broad range of products
- Standard terms and conditions - Deal specific terms and conditions
- Limited tolerance for exceptions or - Wide range of potential variations between
variances to standard terms and facilities of otherwise similar type
conditions - Larger transaction size
- Smaller individual transaction sizes - Low volume
- Higher volume - Wide range of security types
- Common security types - Approval by Committee
- Approval by individual jointly
(based upon certain threshold
limits)

Where a transaction under a commoditised product varies sufficiently from the standard
conditions, it is either rejected or must be treated in all regards as a bespoke transaction and
approved accordingly.

The Credit Policy of the Bank therefore comprises four separate ‘legs’ reflected in the following
documents:

a) the Credit Risk Policy (Risk Appetite) which governs the control elements of credit
policy including all credit limits;
b) a Credit Policy which sets out the Bank’s lending strategy, pricing criteria, approach
and methodologies for bespoke transactions; and
c) a Non-Performing Assets (NPA) policy which governs the determination and
management of credit delinquency.
For a bespoke loans, the Bank uses established external credit rating model and all non-bank
counterparties except those backed by 100% cash margin or backed by a financial guarantee
from a counter party Bank (wherein ultimate risk is on the counter party bank) are required to be
rated using the internal credit rating model. The risk department reviews and confirms the rating
assigned to a borrower or counterparty. The Bank also maintains appropriate income
recognition and provisioning policies. Any exposure to a single party or group in excess of 10% of
its capital base is considered as large exposure as per regulatory guidelines and is monitored
regularly.

Collateral
Collateral is held to mitigate credit risk exposure and may include one or more of:
1. Bank Deposits under Lien including those with third party institutions.
2. Marketable Securities.
3. Current Assets.
4. Bank Guarantees and Letters of Credit.
5. Fixed Assets (Movable and Immovable).
6. Corporate Guarantees.

No collateral was held in respect of exposures to Banks and financial institutions at the year-end.
Non-bank exposures are secured as set out in the table below:

Page 54
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

Note 24 (continued)
2023
Collateral Type Loans and Collateral Value % of Exposure
Advances to (USD’000)
Customers
(USD’000)
Retail Non- Retail Non-Retail Retail Non Retail
Retail
Current Assets - 1,999 - 6,476 - 324%
Bank Guarantees and Letter of Credit - 232 - 232 - 100%
Fixed Assets (Moveable & Immovable) - 23,787 - 24,418 - 103%
Total - 26,018 - 31,126 - 120%

2022
Collateral Type Loans and Collateral Value % of Exposure
Advances to (USD’000)
Customers
(USD’000)
Retail Non- Retail Non-Retail Retail Non Retail
Retail
Current Assets - 2,000 - 6,478 - 324%
Bank Guarantees and Letter of Credit - 443 - 443 - 100%
Fixed Assets (Moveable & Immovable) - 30,103 - 30,730 - 102%
Total - 32,546 - 37,651 - 116%

Country Risk Exposure

Country risk is the risk that an occurrence within a country could have an adverse effect on the
Bank. The Bank’s risk management framework incorporates measures and tools to monitor this
risk. These measures include various limits by country and a risk rating by country which is
updated quarterly. Country risk exposure is based on the domicile of the legal entity. The
following table provides a summary of exposures by counterparty as of 31 March 2023:

2023 2022
Countries Exposure (USD’000) % of Total Exposure Exposure (USD’000) % of Total Exposure

Australia 896 1.42% 186 0.20%

Belgium - - 5 0.01%
Germany 9,323 14.73% 10,186 11.80%
India 918 1.45% 2,877 3.30%
Singapore 1,250 1.97% 4,772 5.50%
UK 43,310 68.42% 59,121 68.20%
US 7,604 12.01% 9,550 11.00%
Total 63,301 100% 86,697 100%

Market Risk Management

Market risks for the Bank include FX risk and interest rate risk. The Bank’s business activities do not
include taking either equity or commodity risk or holding trading positions in either FX or interest
rate instruments above de minimis levels commensurate with meeting customer needs and
efficient ALM management.

The Bank has determined that due to the modest size of its balance sheet, FX risks will be
managed through a combination of limits on:

Page 55
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

Note 24 (continued)

• daylight positions;
• net Overnight positions; and
• forward Gaps.

All FX exposures are subject to individual counterparty limits (including settlement limits) and to
the portfolio limits applicable to countries and economic sectors in addition to any cap on
exposures imposed by the regulator.

Interest Rate Risk (IRR) is defined as the risk of loss due to fluctuations in Interest Rates. Interest
Rate Risk may arise in any one or more of the following ways:
(i) Mismatch (re-pricing) risk.
(ii) Basis risk.
(iii) Yield curve risk.
(iv) Optionality.
The Bank expects IRR to predominantly arise from mismatches in the asset/liability mix of the
book. Corporate and wholesale assets and liabilities will either be:
- priced off LIBOR maximising the effectiveness of mismatch limits in managing and
controlling IRR in the Banking Book; or
- fixed rate over a defined period.

As at 31 December 2021, the GBP LIBOR ceased as a benchmark rate. During the financial year,
the Bank has successfully migrated the affected corporate loan portfolio linked to GBP LIBOR to
an alternative reference rate (SONIA). With respect to the USD currency, the key LIBOR rates for
tenors such as overnight, 1M, 3M and 6M are expected to be published untill June 2023 and
thereafter it will continue to be published under synthetic methodology until September 2024. As
the Bank is in the process of selling off its corporate loan portfolio, the portfolio affected by the
LIBOR changes are scheduled to be off-loaded prior to the September 2024.

Basis risk is expected to manifest itself principally in the retail portfolio. Basis risk in the retail book
is expected to be de minimis in the near term.

Yield curve risk is regarded as a subset of re-pricing risk and is addressed through the stress
testing process where the gaps are subject to non-parallel shifts in the yield curve.

Optionality risk is not expected to be a material concern given the vanilla nature of the Bank’s
business.

The Bank recognises that IRR will manifest itself both through its impact on earnings and through
economic value as the market value of interest rate sensitive instruments such as gilts/treasuries,
bonds and other government or corporate issued paper will rise and fall as a result of interest
rate moves.

The Market Risk Policy sets absolute limits for different positions carrying market risk. Due to its size,
the Bank does not currently manage its market risks through quantitative approaches such as
VaR. Risk limits are applied to control both interest rate and FX risks as set out below. Interest
rate risk is controlled through Duration of Equity (DoE) and Earnings at risk (EAR) limits. Gap limits
are based on the net aggregate exposures falling due within each time bucket, the asset or
liability being assigned to the bucket corresponding to its next interest rate re-fixing date. As at
the reporting date, the profile of the Bank’s interest rate sensitive book is as follows:

Page 56
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

Note 24 (continued)

All in USD’000
2023
Particulars Up to 1M 1 – 3M 3 – 6M 6 – 12M 1-3Yr > 3 Yr Non Sensitive Total
Category

Cash and bank 32,555 - - - - - 2,099 34,654

Derivative financial instruments 2 - - - - - - 2
Other assets - - - - - - 1,480 1,480
Loans – customers 10,350 14,849 904 - - - - 26,103
Total assets 42,907 14,849 904 - - - 3,579 62,239
Derivative financial instrument 47 279 - - - - - 326
Deposits – customers 1,040 - - - - - 1,181 2,221
Other liabilities - - - - - - 1,357 1,357
Total equity and Liabilities 1,087 279 - - - - 2,538 3,904
Interest Rate Gap 41,820 14,570 904 - - - 1,041 58,335
Impact of Interest increase of (44) (88) (6) - - - - (138)
2%

All in USD’000
2022
Particulars Up to 1M 1 – 3M 3 – 6M 6 – 12M 1-3Yr > 3 Yr Non
Sensitive Total
Category
Cash and bank 48,621 - - - - - 2,298 50,919
Derivative financial instruments 12 - 137 - - - - 149
Loans – customers 17,084 15,538 - - - - 76 32,698
Total assets 65,717 15,538 137 - - - 2,374 83,766
Derivative financial instrument 5 - 170 - - - - 175
Deposits – customers 1,453 3,458 6,871 4,786 4,884 - 1,114 22,566

Other liabilities - - - - - - 1,622 1,622

Total equity and Liabilities 1,458 3,458 7,041 4,786 4,884 - 2,736 24,363
Interest Rate Gap 64,259 12,080 (6,904) (4,786) (4,884) - (362) 59,403
Impact of Interest increase of 64 127 (52) (71) (197) - - (129)
2%

Exposures of less than 1 year are further controlled via Earnings at Risk limit (EAR), such limit being
based on a standard 25bp parallel shift in interest rates. The EAR as on reporting date is USD
0.13m. The EaR is subject to stress testing on a quarterly basis through modelling the impact of
various alternative yield curve shifts including a shock parallel shift of 200bp. The Duration of
Equity (DOE) is assessed on a 200 basis points shift in Interest rates is 0.25% of CET1 capital.

The Bank is exposed to foreign exchange risk to the extent of its open position in each currency.
The Bank has set limits for the maximum net open position over various periods and measures
and monitors these open positions on a daily basis.

As the Bank deals in various currencies, it is not always possible to match the asset and liability in
each currency. As a result, the Bank uses currency swaps to eliminate currency risk on long or
short currency positions. These derivatives are revalued daily and any change in their fair value
is recognised immediately in profit and loss.

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AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

Note 24 (continued)

The open position of the Bank as on 31 March 2023 is as follows:

2023
Currency Open Position USD Equivalent
FCY ’000 USD’000
Indian Rupee 622 8
Pound Sterling (194) (239)
Euro 103 112
Total Long Position in US Dollars 120
Total Short Position in US Dollars (239)

Upward or downward movement of exchange rate by 10% may impact profitability of the
Bank by USD 13,412.

2022
Currency Open Position USD Equivalent
FCY ’000 USD’000
Indian Rupee 255 3
Pound Sterling (30) (39)
Euro 68 76
Total Long Position in US Dollars 79
Total Short Position in US Dollars (39)

Upward or downward movement of exchange rate by 10% may impact profitability of the
Bank by USD 5,052.

Liquidity Risk Management:

It is the stated policy of the Bank to manage the liquidity risks of the Bank so as to comply at
all times with:
• the regulatory rules and requirements set out in the PRA Handbook and other statutory
instruments applicable to the Bank; and
• the risk appetite set by the Board to achieve the strategy agreed with the shareholder.

The Bank’s retail deposits portfolio is fixed-term in nature and only a small component
pertains to Current and Savings accounts which are on-demand in nature. The Bank’s ALCO
regularly monitors the liquidity implications of the wind-down and a special task force is
created to monitor the developments closely.

Responsibility for the day-to-day management of the liquidity position of the Bank lies with
the Treasury function. Limit monitoring is conducted by the Risk Management function.
Treasury acts at all times in line within the limits and parameters set by the RMC and ALCO.
The Risk Management Department reviews the liquidity position on a daily basis to ensure
that the negative liquidity gap does not exceed the tolerance limit in the respective time
buckets.

The Bank maintains a Liquid Asset Buffer (LAB) in eligible securities as part of its routine liquidity
management activities and in order to meet its regulatory obligations.

The Bank has a contingency funding plan in place which sets out how the Bank would manage
its liquidity risks in response to abnormal and potentially business threatening market conditions
affecting the Bank’s ability to fund its business.
Page 58
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

Note 24 (continued)

Bank has been maintaining the funds in Bank of England reserve account to the extent of
outstanding retail deposits, which ensures that there are sufficient liquid assets to meet
prepayment of all deposit accounts during the wind down process. Further, the liquidity position
has considerably strengthened by the committed line provided by the parent Bank, where ABUK
can draw the funds to the extent of $70m at any point and in required currency (EUR/GBP/USD)
during the wind down period.

Liquidity Monitoring - The Treasury function is responsible for ensuring it has reports delivered in a
timely manner, sufficient to enable it to manage the liquidity risks of the Bank. The Risk
Management function is responsible for monitoring compliance with the risk and business limits
set out in this policy and will work in close association with the Finance function who have
responsibility for regulatory reporting and ensuring compliance with all regulatory limits. The
liquidity profile as at reporting date is as shown below:

All in USD’000

As at 31 March 2023 Up to 1M 1-3 M 3-12 M 1-5Yr Over 5Yr Undated Total

Cash and bank 34,654 - - - - - 34,654
Derivative financial 2 2,578 - - - - 2,580
instruments/other assets
Loans and Adv. – 20 3,330 3,622 18,026 - - 24,998
customers
34,676 5,908 3,622 18,026 - - 62,232
Total assets
Derivative financial 47 279 - - - - 326
instruments
Deposits from customers 2,221 - - - - - 2,221
Other liabilities - 1,373 - - - - 1,373
Total equity and Liabilities 2,268 1,651 - - - - 3,920

Net liquidity gap 32,408 4,257 3,622 18,026 - - 58,312

Cumulative Liquidity Gap 32,408 36,664 40,286 58,312 58,312 58,312

All in USD’000
As at 31 March 2022 Up to 1M 1-3 M 3-12 M 1-5Yr Over 5Yr Undated Total
Cash and bank 50,919 - - - - - 50,919
Derivative financial
instruments 13 - 143 - - - 156
Loans and Adv. –
customers 21 3,919 6,477 25,187 76 - 35,680

Total assets 50,953 3,919 6,620 25,187 76 - 86,755

Derivative financial
instruments 5 - 172 - - - 177
Deposits from customers 1,822 3,847 12,656 5,603 - 702 24,630
Other liabilities - 1,622 - - - - 1,622

Total equity and Liabilities 1,827 5,469 12,828 5,603 - 702 26,429
Net liquidity gap 49,126 (1,550) (6,208) 19,584 76 (702) 60,326
Cumulative Liquidity Gap 49,126 47,576 41,367 60,950 61,026 60,326

Page 59
AXIS BANK UK LIMITED
NOTES TO THE FINANCIAL STATEMENT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2023

Note 24 (continued)

Operational Risk Management

The Bank has put in place an Operational Risk Management (ORM) policy to manage
operational risk in an effective, efficient and proactive manner. The primary objective of the
ORM policy is to identify the operational risks that the Bank is exposed to from failed, inadequate
and /or missing controls, processes, people, systems or from external events or a combination of
all the five, assess or measure their magnitude, monitor them and control or mitigate them by
using a variety of checks and balances. Within the ORM framework, processes and services
offered by the Bank are subject to rigorous risk evaluation and approval. In addition to the ORM
policy, the Bank has specific operational policies in place covering (inter alia) IT Security,
Outsourcing and business continuity.

The Bank has adopted a measured approach to the creation of its Risk Register which it believes
is appropriate to the scale and complexity of the operations. The Risk Register comprises an
analysis of the risks under the risk headings contained in the Risk Management Framework. These
risks have been identified by the management team and in each case subjective judgements
have been made as to the frequency with which these risks would arise and their financial
impact in the absence of controls. Appropriate controls are identified and the impact and
frequency reassessed on the basis of those controls being operative.

The risk register therefore determines the Bank’s risk management priorities and where the Bank
seeks to apply the risk resources. It influences how the Bank determines its risk appetite and sets
a useful benchmark against which to measure the incidence and impact of actual events. The
risk register has been updated to reflect the risks posed by wind-down plan. The Operational Risk
Capital Charge for the Bank’s own internal calculation under its ICAAP process is also derived
from this process.

25. Other commitments and contingencies

The Bank had no other commitments and contingencies at the year-end other than bank
guarantee $1.8 million (2022: $2.79 million) and undrawn loan amount of NIL (2022: $0.7 million).

26. Events after balance sheet date

There have been no reportable events after the balance sheet date.

Page 60