IDFC FIRST Bank Limited has released its Business Responsibility and Sustainability Report (BRSR) for FY 2025-26, providing comprehensive disclosures on environmental, social, and governance (ESG) performance in accordance with Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The report is prepared on a standalone basis and has been independently assured by SGS India Private Limited.

Entity Overview and Financial Parameters

The bank, incorporated in 2014 with CIN L65110TN2014PLC097792, operates as a financial services entity engaged in monetary intermediation of commercial banks. Its paid-up capital stood at ₹86,01,69,92,480 as on March 31, 2026. Key CSR-related financial parameters for FY 2025-26 are presented below:

The bank serves a diverse customer base including retail customers (urban and rural), professionals, large corporates, private companies, MSMEs, and NBFCs across 25 states and 5 Union Territories.

Operations and Workforce

As at the end of FY 2025-26, the bank operated 1,199 national locations (1,146 plants/branches and 53 offices) and one international office. The total permanent workforce stood at 43,059 employees, comprising 35,128 males (81.58%) and 7,931 females (18.42%). The bank also reported 11 differently abled permanent employees — 10 male and 1 female.

Approximately 60% of the bank's workforce is engaged in frontline roles including sales, customer service, call centres, and collections, while nearly 27% of employees are based in rural locations. The overall permanent employee turnover rate for FY 2025-26 was 31.5%, compared to 32.0% in FY 2024-25 and 32.2% in FY 2023-24.

Governance, Ethics, and Compliance

The bank's Board-approved policies cover all nine principles of the National Guidelines on Responsible Business Conduct (NGRBC). The CSR & ESG Committee of the Board holds oversight responsibility for ESG-related implementation and disclosures. Policy reviews are conducted annually or whenever regulatory changes necessitate amendments.

During FY 2025-26, the Reserve Bank of India imposed two monetary penalties on the bank. A penalty of ₹10,000/- was levied on December 11, 2025, relating to a branch visit at Noida Sector 16 on November 13, 2025, where the branch did not provide the facility for exchanging mutilated notes. A separate penalty of ₹5,000/- was imposed on October 15, 2025, for non-compliance with the requirement to prominently display security features at the Panipat (Haryana) Branch. No appeals were preferred in either case, and corrective actions including staff sensitisation and disciplinary measures were initiated.

The bank's anti-corruption and anti-bribery framework is embedded in its Code of Conduct for Board of Directors & Senior Management Personnel, Code of Conduct for Employees, and Whistle Blower Policy. No complaints related to conflict of interest involving Directors or KMPs were received in FY 2025-26 or FY 2024-25.

Stakeholder Grievances and Consumer Complaints

The bank received and processed grievances from multiple stakeholder groups during FY 2025-26. Customer complaints related to delivery of essential services totalled 17,170, with 760 pending resolution at year-end, compared to 21,573 filed and 321 pending in FY 2024-25.

On human rights, 4 sexual harassment complaints were filed in FY 2025-26, with 2 pending resolution at year-end, compared to 1 filed and 1 pending in FY 2024-25. No complaints related to discrimination, child labour, forced labour, wages, or other human rights issues were recorded in either year.

Environmental Performance

The bank reported a reduction in total Scope 1 and Scope 2 greenhouse gas emissions from 61,701.28 tCO2e in FY 2024-25 to 49,393.40 tCO2e in FY 2025-26. Scope 1 emissions declined from 19,417.16 tCO2e to 9,107.77 tCO2e, while Scope 2 emissions decreased from 42,284.12 tCO2e to 40,285.63 tCO2e.

Total Scope 3 emissions for FY 2025-26 were 41,004.59 tCO2e (down from 42,680.95 tCO2e in FY 2024-25), covering purchased goods and services (Cat. 1: 368.47 tCO2e), business travel (Cat. 6: 39,300.49 tCO2e), and employee commuting (Cat. 7: 1,335.63 tCO2e). Non-hazardous waste generated included metal waste (0.98 metric tonnes), dry waste (333.11 metric tonnes), and wet waste (191.99 metric tonnes) in FY 2025-26.

In FY 2025-26, the bank added 3 offices and 50 branches under green certification, taking its overall green footprint to 1.4 million sq. ft., representing 36% of the bank's carpet area. The bank has also voluntarily initiated connecting its large offices to the green power grid to reduce Scope 2 emissions, and implements Zero Liquid Discharge principles at select large offices through Sewage Treatment Plants.

Subsidiary and Associate Companies

The bank holds the following subsidiaries and associate companies participating in its business responsibility framework:

None of the entities listed above participate in the bank's Business Responsibility initiatives. The bank is affiliated with four national trade and industry chambers, including the Indian Banks' Association, Confederation of Indian Industry, Fixed Income Money Market and Derivatives Association of India, and Foreign Exchange Dealers Association of India.

IDFC First Bank upgraded its full-year Net Interest Margin (NIM) guidance for FY27 to 5.8% from 5.75% and reduced credit cost expectations to 150–160 basis points from 170–180 basis points, following a record quarterly Profit After Tax (PAT) of ₹1,075 crore in Q1FY27. The revised outlook reflects robust loan growth of 20.6% year-on-year (YoY), improved asset quality metrics, and significant operating leverage achieved during the quarter ended June 30, 2026. Management reaffirmed its trajectory toward achieving a 1% Return on Assets (RoA) for the fiscal year, citing better-than-expected credit performance and stable deposit franchise recovery post-fraud incident.

The Board of Directors approved the unaudited results on July 25, 2026, with disclosures compliant with SEBI Listing Regulations 2015. The financials were subjected to limited review by Joint Statutory Auditors Walker Chandiok & Co LLP and M. P. Chitale & Co. Managing Director and CEO V. Vaidyanathan and CFO Sudhanshu Jain led the discussion, highlighting that the bank’s customer business—comprising deposits and funded assets—has crossed ₹6 lakh crore. The transcript of the earnings call was filed with the National Stock Exchange of India Limited and BSE Limited on July 31, 2026.

Revised Guidance and Financial Outlook

Management provided updated targets reflecting stronger-than-expected performance in the first quarter. The key revisions are detailed below:

CFO Sudhanshu Jain noted that the Q1FY27 NIM stood at 5.96%, aided by a 6 basis point benefit from an income tax refund and a lower investment book. Excluding these one-off items, the adjusted NIM improved by 5 basis points sequentially to 5.90%. For the full year, Jain expects margins to stabilize around the 5.8% handle as the investment book normalizes and asset mix shifts continue. He clarified that while asset mix changes may be slightly dilutive, the bank is targeting this margin level due to stabilized cost of funds around 6%.

Operational Leverage and Asset Quality

The bank demonstrated significant operating leverage in Q1FY27. Operating expenses grew by only 2.3% quarter-on-quarter (QoQ), excluding the ₹646 crore fraud impact from the prior quarter, while core income grew by 4.6% QoQ. This divergence widened the operating jaw between total income and opex to approximately 500 basis points, driving the cost-to-income ratio down by 166 basis points sequentially to 70.7%.

Asset quality showed consistent improvement across segments. Gross Non-Performing Assets (GNPA) declined to 1.51% from 1.61% in Q4FY26, while Net NPA improved to 0.44%. Gross slippages fell 30% year-on-year to 2.49%. The Retail, Agri, and MSME (RAM) portfolio’s GNPA improved to 1.40%. Management highlighted that collection efficiency remained stable at 99.5%, signaling restored normalcy in the microfinance segment, which now constitutes ₹6,700 crore of the loan book. Substandard, Doubtful and Loss (SMA) assets also improved to 0.77% from 0.78% in the previous quarter.

Deposit Franchise and Strategic Initiatives

Customer deposits grew 16.6% year-on-year to ₹2,99,405 crore, with Current Account Savings Account (CASA) deposits rising 24.6% YoY to ₹1,58,492 crore. This pushed the CASA ratio to 50.8%, up from 48.0% a year ago. Management confirmed that institutional deposits remain stable and granular savings account balances have rebounded strongly post-fraud incident. Jain noted that average CASA ratio stood above the 50% mark at 50.1%.

On the strategic front, the bank announced plans to capture a 2.5% market share in Foreign Currency Non-Resident (FCNR) deposits, offering competitive rates of 6.75%. Additionally, V. Vaidyanathan emphasized the bank’s long-term vision of achieving an RoA of 1.7%–1.8% as it scales, supported by robust technology investments in AI and cloud-native architecture. The bank also created a voluntary contingency provision of ₹515 crore against macroeconomic uncertainties, largely offset by ₹514.82 crore in claim proceeds from the Credit Guarantee Fund for Micro Units (CGFMU).

What the Numbers Show

The revision of credit cost guidance downward to 150–160 basis points, combined with the NIM upgrade, signals a material improvement in the bank’s profitability trajectory. The near-perfect offset between the voluntary contingency provision and CGFMU claims indicates prudent risk management without impacting bottom-line earnings. Furthermore, the widening operating jaw suggests that the bank is successfully transitioning from a high-cost build phase to a scalable model where revenue growth outpaces expense growth, validating the management’s confidence in sustaining an RoA above 1%.