Corporate presentation Spandana Sphoorty Financial Limited Hyderabad, INDIA June 2010

1. Corporate presentationSpandana Sphoorty Financial LimitedHyderabad, INDIAJune 2010

2. Agenda • Industry Overview and Spandana’s positioning • Product Suite • Key financial and operating metrics • Investors, Bankers and Rating • Key Strengths of Spandana

3. Agenda • Industry Overview and Spandana’s positioning • Product Suite • Key financial and operating metrics • Investors, Bankers and Rating • Key Strengths of Spandana

4. What is Microfinance and MFI ? Industry Overview Large Unmet Demand Growth path MFIs in the retail financial servicesMicrofinance Institutions is one of the fastest growing space mainly due to huge demand • Retail financial services landscape in India is dotted by following key players – • Govt/ Public Sector: Banks, District Credit Cooperatives, Regional Rural Banks etc • Private Sector: Indian Banks, Foreign Banks, Non-Banking Finance Companies, including Microfinance Institutions (MFIs), Urban Coop Banks etc • Unorganized players: Moneylenders, Pawn brokers etc. • Microfinance is the provision of micro-credit and other financial services to low-income households • Microfinance Institutions (MFIs) are the client servicing interface, working predominantly with women and providing doorstep financial services • Non-Banking Finance Companies/ Societies/ Trusts/ Coops are the dominant legal form of MFIs • * Only 5% of habitations in India have a Commercial Bank branch, only 40% of population has savings Bank account – large gaps in financial inclusion exist • Estimated demand of Microfinance is INR 333,000 crore (USD 74 billion) against which, only 10% has been reached – including private sector MFIs and govt.’s SHG-Bank linkage programme • Microfinance business model has now been well proven with over a decade of successful track record • MFIs have shown an aggregated growth of over 100% year-on-year for the last 5 years • Being a disaggregated industry, large players with sizeable operations and established track record of scaling-up the loan portfolio, will continue to grow at a fast pace * Size of Financial Exclusion: Dr. D Subbarao, Governor, Reserve Bank of India, June 2010

5. Leader in operational efficiencies Large scale Rating/ Grading Proven track record Sustained growth model Spandana, place in the IndustrySpandana Sphoorty Financial Services (SSFL), Hyderabad India • Spandana is the 6th largest MFI in the world, and 2nd largest in India in terms of number of clients • Started operations in 1998 at Guntur, Andhra Pradesh and steadily grew at a compounded annual growth rate of about 100% since then – mainly due to high degree of customer connect • Scale of operations*: 4.5 mn clients, about 12,000 on roll trained staff, over 1,600 branches in 12 States of India with Asset Under Management (AUM) of about Rs.4,000 crore (USD 0.9 Bn) • Operating expense ratio at sub 6% level against the industry average of about 12% • Good portfolio quality with a cumulative repayment rate of 99.9% shows that the business model has shown its robustness over the last 10 years • Staff productivity at over 400 clients per staff against an industry average of 252** • Strong management team lead by a dynamic leader, founder and Promoter Mrs. Padmaja Reddy • Disbursed over Rs.13.7 thousand crore (USD 3 Bn) cumulatively since inception • Most profitable MFI with highest Return on Assets (7%+ against an industry average of 3.5%) • Optimum Capitalization also ensures one of highest Returns on Equity, presently at 50%+ levels • ***CRISIL MFI grading: mfR1 (highest rating grade; first MFI to achieve this distinction) • CRISIL Rating of debt and bank facilities: A-/Stable/P1’ (best in the industry) • New products under pilots and testing are ready for scale-up • States where operations started in last 2 ys are ready for scale-up, many new potential states available • Over 42 Banking relationships across Public / Private/ Foreign Banks * as on June 30, 2010 ** M-CRIL Analytics, 2009 ***CRISIL: India's leading Ratings, Research, Risk and Policy Advisory company (www.crisil.com)

6. Agenda • Industry Overview and Spandana’s positioning • Product Suite • Key financial and operating metrics • Investors, Bankers and Rating • Key Strengths of Spandana

7. Product Suite Product Suite General Loan (Abhilasha) Emergency loan (Samruddhi) Group Loan (Pragathi) Agri Family Loan (Dharani) Individual Loan (Sphoorty) Farm Equipment (Tractor) Loan Nature of Loan Group Group Group Group Individual Individual Purpose of Loan For income generation activities For emergency cash flow needs For income generating activities For agriculture and allied activities For small business activities For purchase of farm equipments such as tractors Typical Customer Wage labourers (both skilled and unskilled) formed in a group of 10 women Existing customers Low-income clients with slightly better well being than Abhilasha customers Small and marginal farmers and tenant farmers Small and micro entrepreneurs with co-obligant guarantee Farmers and young entrepreneurs with hypothecation of vehicle Loan Size Rs 2,000 to Rs 20,000 Rs 2,000 to Rs 10,000 Rs 15,000 to Rs 25,000 Rs 5,000 to Rs 30,000 Rs 21,000 to Rs 200,000 Rs 50,000 to Rs 350,000 Loan Tenor 50 weeks 50 weeks 12 to 24 months 11 months 12 to 24 months 3 years Repayment Terms weekly equated installments weekly equated installments monthly equated installments Interest monthly; principal semi-annually Monthly Monthly Loans are serviced at the customer locations (slums/ villages) with complete transparency – disclosure of all terms of loan, no hidden charges in the name of value added services

8. Agenda • Industry Overview and Spandana’s positioning • Product Suite • Key financial and operating metrics • Investors, Bankers and Rating • Key Strengths of Spandana

9. Spandana, Key MetricsOperational and Financial snapshot Branches 88% p.a. Gross loan Portfolio (Rs. mn) 120% p.a. Profit after Tax (Rs. mn) 175% p.a. • Sustained growth in all operating and financial metrices • Spandana is the first MFI to cross PAT of Rs.2 Bn (USD 45 mn)

10. Spandana, Key Milestones 1998 2004 2005 2006 2007 2008 2009 2010 Guntur, Andhra Pradesh Growth across Andhra Pradesh Karnataka Tamil Nadu Orissa, Maharashtra, Chhattisgarh Rajasthan, Madhya Pradesh Jharkhand, Goa, Gujarat, Uttar Pradesh Consolidation • Registered as a society under Societies Registration Act, 1860 • Transformation to a non-deposit taking NBFC • Reached 0.1 MM borrowers • Received CRISIL rating of mf3 • Annual disbursement crossed Rs 1Bn • Pioneered portfolio sale in the industry • CRISIL rating upgraded to mf2 • Pilot launch of Agri Family Loan • First round of PE infusion by JM Financial and Lok Capital • Exclusive tie-up with Western Union Money Transfer • Pilot launch of Farm Equipment Loan • Second round of PE infusion by Valiant Capital Partners • Reached 1mn borrowers • Annual disbursement crossed INR 10Bn • Reached 3mn borrowers in August • Reached 3.7 mnborrowers in March New Product Pilot and Testing Planned new state entries Registered as a Society Post Conversion to NBFC 2 Yr CAGR in Loan Book: 28% Post External Equity Funding 3 Yr CAGR in Loan Book: 109%

11. Contiguous growth strategy Helps in significant growth in every new market Karnataka – Entry in FY05 Gross Loan Portfolio (Rs MM) Tamil Nadu – Entry in FY06 Gross Loan Portfolio (Rs MM) • In every new state that Spandana enters, within a few years, contiguous growth strategy helps in rapid scale-up • Despite the growth, the Company has been able to maintain its asset quality • The Company has successfully increased its geographical presence from only 3 states in March 2007 to 12 states in 2010 4 Yr CAGR (07-10) : 74% 4 Yr CAGR (07-10) : 166% Orissa – Entry in FY07 Gross Loan Portfolio (Rs MM) Maharashtra – Entry in FY07 Gross Loan Portfolio (Rs MM) 4 Yr CAGR (07-10) : 231% 4 Yr CAGR (07-10) : 144%

12. MadhyaPradesh • 100 branches • 2,976 villages • 269,226 clients Maharashtra Gujarat Rajasthan • 125 branches • 6,024 villages • 382,537 clients Jharkhand • 7 branches • 37 villages • 2,375 clients Andhra Pradesh • 9 branches • 233 villages • 20,559 clients • 6 branches • 107 villages • 7,240 clients • 787 branches • 37,772 villages • 2,159,469 clients Orissa Goa • 114 branches • 8,209 villages • 353,777 clients • 3 branches • 65 villages • 3,802 clients Chhattisgarh Karnataka TamilNadu • 36 branches • 1,652 villages • 84,350 clients • 222 branches • 9,630 villages • 571,479 clients • 121 branches • 3,599 villages • 337,291 clients Spandana Outreachas on 31 March 2010 New states (post 2008) Old states (pre-2007) State of origin (pre-2006)

13. Profit and Loss statementfor last 4 years All figures in INR million • Annualized portfolio Return (APR) at 26.5%. [against industry avg. of 28%] • Operating expense ratio at 5.1% [against industry average of 12%] • Provisions and write-offs include a 1% standard asset charge – higher than the RBI prescribed norms • Return on Assets at 7%+ [against industry average of 3.5%] • Return on Equity at 52% [highest in the industry] • Audited by one of the top-4 Audit firms • 1USD = 46 INR (approx)

14. Balance sheetof last 4 years All figures in INR million

15. Agenda • Industry Overview and Spandana’s positioning • Product Suite • Key financial and operating metrics • Investors, Bankers and Rating • Key Strengths of Spandana

16. Investors, Bankers and Rating Investors Bankers: Spandana focuses on diversified fund sources so that the cost of borrowing is reduced. Spandana is supported by 48 Bankers and financial institutions. Some of the relationships are over five year old –FWWB, SIDBI, ICICI Bank, HDFC Bank and ING Vyasya Bank Public sector Banks have been showing increasing interest is taking exposure with us. The major funding instruments are Term Loans, Portfolio Sales (bilateral assignments and Securitisation), Capital Markets (NCDs) and Money Market (CPs) products. EPS: Rs.152 (Face Value Rs.10) At different stages, institutional investors have joined Spandana and contributed to its growth. As on March 31, 2010, Spandana has a paid-up Share Capital of Rs.13.5 crore (USD 3 mn) • Highest rating & grading in the industry (by CRISIL) – • Rating of debt & bank facilities ‘A-/Stable/P1’ • Grading of institutional ability: mfR1

17. Board of Directors • Ms. G Padmaja Reddy Founder, promoter and Managing Director of Spandana - She has been instrumental in building Spandana into one of the leading MFIs famed for its scale, efficiency, productivity and profitability • Dr. Rajiv Behari Lall CEO & MD of IDFC. He earlier worked as Partner at Warburg Pincus, as ED with Morgan Stanley, as a Policy Advisor and Economist at the World Bank, ADB, and in academia. • Mr. V.P. Shetty Executive Chairman of JM Financial Limited- Asset Reconstruction Company – earlier worked as GM- Vijaya Bank, Chairman and MD-UCO Bank, Chairman & MD-Canara Bank, Chairman & MD with IDBI. • Mr. Vikram S Rathore ED-SIDBI – over 30 years of experience in Commercial & Development Banking • Ms. Supritha Shetty JGM-ICICI Bank - heads the Rural Risk, Policy and Compliance of ICICI Bank • Dr. Venkateswara Reddy Cardiologist with a long standing experience in teaching Medicine • Mr. Harinder Sawhney Executive Director of JM Financial's Private Equity Fund • Dr. Bala Deepthi Practicing Doctor of Medicine – represents youth on the board of Spandana • Ms. M. Asha Latha, Head of HR & Admin at Spandana - has earlier worked in Health Administration • Mr. Vishal Mehta From Lok Capital – rich experience in fund raising, investments and portfolio strategy

18. Agenda • Industry Overview and Spandana’s positioning • Product Suite • Key financial and operating metrics • Investors, Bankers and Rating • Key Strengths of Spandana

19. Spandana, Key Strengths Strong Management Team Years of diversified experience Significant Business Growth Potential Geographical and product expansion coupled with new initiatives Highly Efficient Employee Workforce Highest productivity per employee; lowest operating cost in the industry Exceptional Financial Performance 4-year PAT CAGR of 56% Established Capability to Scale From 3 to 12 states and portfolio growth of 369%, in two years Streamlined and EfficientProcesses High quality asset portfolio (almost Zero Net NPAs) Diversified Product Offerings Continuous development of innovative products

20. THANK YOUfor details, contact – Spandana Sphoorty Financial Limited, Plot No. 79, Vinayak Nagar, Care Crystal, Gachibowli, Hyderabad-500032Phone: 91 40 4438 6666Fax: 91 40 4438 6640mail: contact@spandanaindia.com