1. PREAMBLE:

Aastha Micro Credit (“Company”) believes that sound corporate governance practices are critical for the functioning of the Company and to create a trustworthy, transparent, moral and ethical, both internally and externally environment.

The Company ensures good governance through the implementation of effective policies and procedures, which is mandated and regularly reviewed by the Board of Directors of the Company (“Board”) or by the Committees duly constituted by the Board, as the case may be.

2. PURPOSE:

The purpose of establishing this policy is to enable the adoption of best practices and greater transparency in the operations of the Company.

In view of the Master Directions, the Company has set out the following set of guidelines / corporate governance practices to create value for stakeholders such as the shareholders, employees, customers etc.

The affairs of the Company shall be conducted with integrity, fairness, accountability, and transparency. All commitments in its dealings with stakeholders and regulatory authorities shall be met as set forth below.

3. DEFINITIONS:

“Applicable Laws” means the rules, regulations, directions, and guidelines applicable on the Company, including the Master Directions applicable to the Company, the Companies Act, rules/regulations issued thereunder, as amended from time to time.

“Board” means Board of Directors of the Company.

“Committee” means the committee duly constituted by the Board, either as per Applicable Laws or otherwise, to:

• Perform the functions and responsibilities as per Applicable Laws
• Perform the functions and responsibilities delegated by the Board for effective management and control of business operations of the Company from time to time
• Advise and/or make recommendations to the Board or key stakeholders

“Senior Management” means personnel of the Company who are members of its core management team excluding Board of Directors comprising all members of management one level below the executive directors, including the functional heads.

4. INTERNAL GUIDELINES ON CORPORATE GOVERNANCE:

A. BOARD OF DIRECTORS:

Constitution:

The Board of Director (‘Board’) shall consist of minimum two (02) directors. The Board shall have an optimum combination of executive and non-executive directors in line with the applicable laws and Articles of Association of the Company, as amended from time to time.

All the directors shall make the necessary annual disclosures regarding their concern or interest in any company or bodies corporate, firms, or other association of individuals including shareholding, directorships and Committee positions and shall intimate changes therein as and when they take place.

Roles & Responsibilities:

• Attend Board and/or Committee meetings regularly
• Review agenda papers, notes and minutes and enquire about status of matters raised earlier
• Review minutes of Committees to evaluate their functioning and policy adherence
• Review and approve key policies
• Ensure confidentiality of Company information
• Ensure adequate autonomy to employees within a controlled framework
• Review Compliance Certificate at every quarterly Board Meeting

Meetings of the Board:

At least four meetings of the Board shall be held in a year. The maximum time gap between two meetings shall not exceed one hundred and twenty (120) days or as extended by regulator under Applicable Laws.

Chairperson of the Meeting:

The Chairperson shall conduct the meetings. In their absence, the members present shall elect one among themselves to chair the meeting.

Quorum:

The quorum shall be one-third of the total strength of the Board or two directors, whichever is higher. Participation through video conferencing shall be counted. Interested directors may participate after disclosure under Section 184 of the Companies Act, 2013.

B. CONSTITUTION OF VARIOUS COMMITTEES:

The Board has implemented various Committees to ensure accountability, transparency, compliance, and effective decision-making.

• Audit Committee (ACM)
• Nomination and Remuneration Committee (NRC)
• Asset Liability Management Committee (ALMC)
• Risk Management Committee (RMC)
• Corporate Social Responsibility Committee (CSRC)
• IT Strategy Committee (ITSC)
• Stakeholders Relationship Committee (SRC)
• Loan, Investment and Borrowing Committee (LIBC)
• Securities Allotment Committee (SAC)

C. APPOINTMENT OF CCO, CRO AND HIA:

Chief Risk Officer (CRO): Appointment shall be as per Master Directions dated October 19, 2023 and approved by the Board upon recommendation of NRC and RMC.

Chief Compliance Officer (CCO): Appointment shall be as per RBI Circular dated April 11, 2022 and approved by the Board upon recommendation of NRC.

Head of Internal Audit (HIA): Appointment shall be as per RBI Circular dated February 03, 2021 and approved by the Board upon recommendation of NRC and ACM.

D. FIT AND PROPER CRITERIA:

The Company has a Board-approved policy on Fit and Proper Criteria for Directors. Necessary disclosures and certifications shall be obtained on appointment and on a continuing basis.

E. DISCLOSURE & TRANSPARENCY:

The Company shall comply with all disclosure requirements in the financial statements as mandated under Applicable Laws.

F. COMPENSATION OF KMP AND SENIOR MANAGEMENT:

Compensation shall be governed by the Compensation Policy of the Company.

REVIEW OF THE POLICY:

The Policy shall be amended or modified with approval of the Board. The Policy shall be reviewed by the Board on an annual basis. Consequent upon any amendments in Applicable Laws or any change in the position of the Company, necessary changes in this Policy shall be incorporated and approved by the Board. Notwithstanding anything contained in this Policy, in case of any contradiction of the provision of this Policy with any existing legislation, rules, regulations, laws or modification thereof or enactment of a new applicable law, the provisions under such law, legislation, rules, regulation or enactment shall prevail over this Policy.