Capital Small Finance Bank Ltd. के निदेशक की रिपोर्ट

Mar 31, 2025

^1    Financial Performance

Profit and Loss Summary

 

' in crores
Â	FY 2025	FY 2024
Income Earned	908.50	794.33
Income Expended	498.31	449.18
Net Interest Income	410.19	345.15
Other Income	86.02	68.08
Net Total Income	496.21	413.23
Operating Expenses	310.78	258.33
Provision for Advances	10.30	6.69
Provisions for Taxes	43.48	36.68
Profit after Tax	131.65	111.53

 

Asset and Liability Composition

' in crores
Â	FY 2025	FY 2024
liabilities	Â	Â
Capital	45.25	45.04
Reserves and Surplus	1,294.89	1,152.38
Deposits	8,322.60	7,477.74
Borrowings	320.58	472.25
Other Liabilities and Provisions	124.20	147.87
Total Liabilities	10,107.51	9,295.28

 

' in crores
Â	FY 2025	FY 2024
assets	Â	Â
Cash and Balances with Reserve Bank of India	649.84	568.98
Balances with Banks and Money at call and short notice	349.88	752.18
Investments	1,819.45	1,705.71
Advances	7,090.39	6,074.69
Fixed Assets	87.75	83.73
Other Assets	110.20	109.99
Total Assets	10,107.51	9,295.28

 

Key Ratios

In %age
Â	FY 2025	FY 2024
Net Interest Margin1	4.20	3.94
Gross NPAs	2.58	2.76
Net NPAs	1.30	1.40
Return on Assets2	1.35	1.27
Return on Equity	10.38	14.64
Return on Average Advances	2.05	1.98
Cost of Deposits	5.87	5.61
Yield on Advance	11.20	11.10
CRAR	25.39	27.39

 

Notes:

¹Â Â Â Â Net Interest Margin has been computed based on the Net Interest income (Interest Income - Interest Expense) and
average of total assets as reported to Reserve Bank of India in Form X under Section 27 of the Banking Regulation Act,
1949, during the year

²Â Â Â Â Return on Assets is calculated with reference to monthly average working funds (Working funds taken as total of
assets excluding accumulated losses, if any)

 

The Board of Directors ("Board") of Capital Small Finance
Bank Limited ("Bank" or "Company") are pleased to share
the financial performance of Bank for the financial year
ended March 31,2025 - year marked by healthy advance
growth, improved asset quality and improving return
matrix. The key performance highlights includes:

•    As of March 31, 2025, the Bank's gross advances
stood at '7,184 crores, reflecting a Year-over-Year
("Y-o-Y") growth of 17%. The loan disbursements
for the year ended March 31, 2025 shown a growth
of 38% Y-o-Y basis and stood at '2,846 crores. The
total deposits of the Bank aggregated to '8,323
crores registering a Y-o-Y growth of 11.3%. The Bank
continued to maintain high CASA 36.9% as of March
31,2025 despite industry-wide pressure on CASA due
to the shift towards higher-yielding term deposits, the
Bank's strong CASA share reflects its robust retail
liability franchise.

•    The asset quality remained robust, with Gross Non¬
Performing Asset ("GNPA") reduced to 2.58% and Net
NPA Non-Performing Asset ("NNPA") reduced to 1.3%

as of March 31,2025 against Gross NPA of 2.76% and
Net NPA of 1.4% as of March 31, 2024 with negligible
write offs.

• The profit after tax for FY'25 stood at '132 crores
registering 18% growth on Y-o-Y basis. Return on
Assets ("ROA") improved to 1.4% in FY'25 against 1.3%
in FY'24 and Net Interest Margin ("NIM") increased to
4.2% in FY'25 against 3.9% in FY'24.

This year marks a special moment in our journey - 9
years as India's first Small Finance Bank and 25 years
as a trusted financial institution. The milestone reflects
our commitment to inclusive banking and long-term
value creation. We focused on deepening customer trust,
expanding responsibly and building a resilient and agile
institution which is Future Ready.

The Board conveys its deep gratitude to all stakeholders
for their enduring trust and support. Guided by a long-term
vision, the Bank remains resolutely focused on creating
sustainable value for all stakeholders.

In Financial Year 2024-25, the Indian economy continued
its strong growth trajectory, albeit at a moderated pace
compared to the previous year. Despite global economic
headwinds, the demand for credit remained robust,
significantly benefiting the banking sector, especially
Small Finance Banks ("SFBs"). Rising disposable incomes,
coupled with increased urbanisation and financial
awareness, further spurred demand for small business
loans from SFBs. Additionally, the government's ongoing
initiatives to promote financial inclusion, including
targeted policies to support SFBs in rural and semi-urban
areas, have contributed to their expansion and operational
strength. As a result, SFBs have played a crucial role in

fostering inclusive economic growth, strengthening their
foothold in previously underserved markets.

For the financial year ending March 31, 2025, the Bank
recorded solid growth across its financial performance
metrics, demonstrating resilience amidst a dynamic
economic environment. Key indicators such as total
assets, deposits, and loans disbursed showed steady
upward movement, signaling the Bank's ability to adapt
and thrive in evolving market conditions. This progress
is a result of our focused strategy to balance expansion
with risk mitigation, which has ensured the maintenance
of a robust loan portfolio with a controlled level of non¬
performing assets ("NPAs").

Cost optimisation remains a central focus for the Bank,
and we take pride in our enhanced operational efficiency,
reflected in the significant improvement in the operating
expense (opex) ratio as a percentage of average assets.
This ratio has reduced to 3.17% in FY25, down from 3.50%
in FY19, highlighting our successful cost management
strategies. Additionally, the cost-to-income ratio continues
to show positive momentum, reaching approximately
62.30% in FY25, building on the improvements from 70.75%
in FY21.

The Board is confident that the continued focus on
maintaining strong liabilities and assets positions will
contribute to the sustained growth and success of Bank.

The below table shows improving profitability ratios as a
result of margin expansion and improved efficiencies:

 

In line with this growth, the Bank achieved a consistent
increase in net profit, driven by ongoing improvements in
operational efficiency and targeted enhancements to our
product and service offerings. These results reflect the
strategic efforts to innovate and respond proactively to
changing customer needs and market trends. Our team's
dedication and agility in executing these strategies have
been key to delivering these results, positioning us for
continued growth and success in the years ahead.

Bank continues to expand its presence across regions,
aiming to provide inclusive banking services to underserved
communities, enabling it to serve a broader customer
base and contribute to financial inclusion. The Bank
acknowledges that its success is intricately linked to the
satisfaction of customers. Therefore, it remains dedicated
to understanding the evolving needs and expectations.

In managing the Bank's liability profile, there is a continued
commitment to strengthening existing relationships and
maintaining robust levels of Current Account and Savings
Account ("CASA") deposits. The Bank has consistently
upheld strong CASA ratios, with a ratio of 36.94% as of
March 31,2025, compared to 38.30% as of March 31,2024.
These figures continue to reflect the Bank's strong position
in this key segment, well above industry averages. Despite
the challenges posed by a rising interest environment, our
dedication to cost management is apparent in the sustained
favourable cost of funds. For the FY ended March 31,2025,
it stood at 6.02%, while for the previous financial year
ending March 31, 2024, it was 5.82%. Additionally, its retail
deposits constitute a significant proportion, accounting
for 92.52% as on March 31, 2025. Going forward, the Bank
remains committed to further increasing its CASA and
retail deposits to optimise its cost of funds.

On the asset front, the Bank continues to uphold a strong
secured lending strategy, with secured loans making up
~99% of the overall portfolio-approximately ~80% of which
is backed by immovable property and fixed deposits. This
prudent approach, supported by rigorous credit evaluation
and robust risk management practices, has contributed
to further improvements in asset quality. As of March 31,
2025, the Bank's Gross Non-Performing Assets ("GNPA")
stood at 2.58%, down from 2.76% the previous year, while
Net Non-Performing Assets ("NNPA") improved to 1.30%
from 1.40%. This year-on-year enhancement reflects the
Bank's deep understanding of its borrower profile and
its continued emphasis on credit discipline and portfolio
quality.

The Bank recognises that interest rates are largely
influenced by market dynamics, and our focus remains on
actively managing our interest margin through disciplined
pricing strategies. Over various interest rate cycles, we
have consistently maintained a stable spread in the range
of 5.3% to 5.6%, reflecting the resilience of our business
model. On the liabilities side, deposits account for
approximately 80%-85% of our funding base, including a
strong CASA contribution of 37%. On the asset side, 45%-
50% of the loan portfolio is linked to floating interest rates,
with nearly 75% of that benchmarked to the Marginal Cost
of Funds based Lending Rate ("MCLR"), ensuring timely
transmission of rate movements.

Furthermore, the Bank's loan portfolio diversification is
noteworthy, with advances in agriculture, MSME, Trading
& Other Business Loans, and mortgages segments
amounting to '2,334.60 crores, '1,511.59 crores, and
'1,923.31 crores, respectively, as of March 31, 2025. In
the previous year, as of March 31, 2024, these segments
accounted for '2,293.12 crores, '1,181.58 crores and
'1,624.03 crores respectively. The average ticket size for
these segments as of March 31, 2025, stood at '1.26 mn,
'2.19 mn and '1.28 mn respectively.

In order to gain a foothold in new markets where the branch
network is not yet established, the Bank is actively seeking
partnerships to expand geographical presence and better
understand these markets. By forging strategic alliances,
it aims to mitigate associated risks while diversifying the
range of products and services. Such collaborations will
not only enhance the offerings but also contribute to the
overall growth of Capital Small Finance Bank Limited.

The Bank has consistently delivered strong growth in both
profitability and operational performance, reflecting its
steadfast commitment to excellence. Over recent years,
operating profit before provisions has experienced an
exceptional compound annual growth rate ("CAGR") of
approximately 33%, increasing from '34.28 crores in FY'19
to '187.07 crores in FY'25. Profit before Tax ("PBT") has
also seen significant growth, rising from '26.92 crores
in FY'19 to '175.13 crores in FY'25. Similarly, Profit after
Tax ("PAT") surged from '19.42 crores in FY'19 to '131.65
crores in FY'25. These impressive results underscore the
Bank's strong financial position and operational efficiency,
backed by its experienced leadership and a dedicated
group of shareholders committed to upholding the highest
standards of corporate governance.

Moving forward, the focus remains on strengthening of
operational and profitability metrics through several key
strategies. Firstly, the aim is to optimise asset-liability mix
in favour of asset creation while increasing the credit to
deposit ratio. Secondly, it continues to emphasise on cost
optimisation and efficiency improvement. Lastly, it intends
to enhance its fee income and leverage cross-selling
opportunities to further diversify our revenue streams.

^2    Dividend

Based on the robust financial performance and profitability
of the Bank, the Board of Directors at its meeting held on
April 29, 2025 has recommended a Final Dividend of '4
per equity share (face value of '10 each) for the financial
year ended March 31, 2025 resulting in a total dividend
payout of 13.75% against earnings of FY 2025, subject
to the approval of the Shareholders at the ensuing 26th
Annual General Meeting ("AGM") of the Bank. This dividend
payout demonstrates the Bank's commitment to delivering
value to its esteemed shareholders. The Board believes in
sharing the success of the institution with those who have
placed their trust and invested in Capital Small Finance
Bank Limited. The Board remains dedicated to maintaining
a healthy dividend payout ratio while carefully considering
the need for reinvestment in the Bank's growth initiatives.
The support and confidence of shareholders are greatly
appreciated, and the Board is pleased to reward their trust
through this dividend declaration.

Further, the dividend is not paid from Reserves. In terms
of the provisions of the Income Tax Act, 1961, the dividend
income is taxable in the hands of the shareholders and the
dividend will be paid to the shareholders by the Bank after
deduction of tax at source (‘TDS') at the applicable rates.

Regulation 43A of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 ("SEBI Listing
Regulations") is not applicable, as your Bank does not fall
in top 1,000 listed entities based on market capitalisation.
Accordingly, your Bank has not yet formulated and adopted
a Dividend Distribution Policy.

I n terms of RBI regulations and other applicable regulations, the Bank has appropriated the following amounts to
various reserves for the financial year ended March 31, 2025:

 

Particulars	Amount (' in crore)
Profit after tax	131.65
Profit brought forward	305.90
Accumulated profit (before appropriations)	437.55
Appropriations
To Statutory Reserve	32.91
To Special Reserve	3.94

 

Particulars	Amount (' in crore)
To Revenue and other reserves (Investment Fluctuations reserve)	1.52
To Revenue and other reserves (Investment Reserve reserve)	0.00
To Revenue and other reserves (Other Revenue reserve)	(0.62)
Dividend paid during the year	5.41
Balance carried forward to balance sheet	394.39

 

^4    Capital Adequacy Ratio (CAR)

The Capital Adequacy Ratio (CAR) plays a vital role
in maintaining the stability and soundness of banks.
It is a regulatory requirement that ensures banks
have sufficient capital to absorb potential losses and
meet their obligations to depositors and creditors. By
maintaining an adequate capital buffer, banks can
mitigate the risk of insolvency and contribute to the
overall resilience of the financial system.

Your Bank formulated a comprehensive capital
adequacy plan that considers both systematic and
idiosyncratic risks. Systematic risks are those that
affect the entire banking industry, such as changes
in interest rates, macroeconomic volatility, sectoral
disruptions, economic conditions etc. are monitored
and factored into capital planning. Idiosyncratic risks
are those that are specific to the bank, including
credit, market, and operational risks such as problems
with its lending or investment activities are monitored
and assessed. To ensure regulatory compliance and
business continuity, the Bank maintains a prudent
capital buffer over and above the minimum regulatory
requirements. This buffer not only acts as a cushion
during periods of financial stress but also enables the
Bank to pursue its growth objectives in a sustainable
manner and manage and mitigate risk in a better way.
Your Bank has consistently maintained a strong and
resilient Capital Adequacy Ratio (CAR), underscoring
its robust capital position and strict adherence to
regulatory norms. As of March 31,2025, the Bank's CAR
stood at 25.39%, significantly exceeding the minimum
regulatory requirement of 15%. This substantial buffer
reflects the Bank's prudent capital management
practices and its unwavering commitment to financial
stability.

A sound capital base not only underpins the Bank's
day-to-day operations but also empowers it to
pursue strategic growth initiatives while withstanding
potential economic or sectoral shocks. Your Bank
remains firmly focused on maintaining adequate
capital buffers to absorb unforeseen losses, support
future expansion, and instill continued confidence
among regulators, investors, and other stakeholders.

Looking ahead, the Bank will continue to proactively
manage its capital position, aligning with evolving
regulatory expectations and emerging market
opportunities in a dynamic and competitive financial
environment.

^5    Capital and Debt Structure

a)    Authorised Share Capital:

During the year under review, there was no
change in the Authorised Share Capital of the
Bank and as on March 31, 2025 the authorised
share capital of the Bank stood at '50.00 crores
comprising of 5,00,00,000 equity shares of '10
each.

b)    Issued and Subscribed Share Capital:

The Bank has issued, subscribed and paid up
Share Capital of '45,24,69,370 as on March 31,
2025. The Bank, during the year under review,
has issued and allotted 6,417 equity shares to
Material Risk Taker (MRT as identified by the
Board in terms of Compensation policy) on July
19, 2024 of ' 10/- each at face value in the form
of Employee Stock Option as per CSFB ESOP
Plan for Material Risk Takers. Further, the Bank
has issued and allotted 20,250 equity shares on
September 11, 2024 and 1,77,750 equity shares
on November 22, 2024, having face value of
' 10/- each at a premium of ' 88/- (i.e. at the
total issue price of ' 98/-) per share in the form
of Employee Stock Option as per CSFB ESOP
Plan 2018 of the Bank. The equity shares issued
during the year under review rank pari-passu
with the existing equity shares of the Bank.

Apart from the above, the Bank did not raise any
additional equity share capital during the year.

c)    Non - Convertible Bonds:

During the financial year under review, the Bank
has redeemed 947 units of 11% Unsecured
Redeemable Non-Convertible Subordinated

Bond (Lower Tier II) in the nature of Debenture
Series - X (ISIN - INE646H08095), on May
24, 2024 and the interest amount along with
principal amount due thereon was credited to the
accounts of debentures holders as on May 24,
2024.

Further, during the financial year under review,
the Bank has not issued and allotted any Non -
Convertible bonds.

r

Listing of Equity Shares of the Bank with
BSE and NSE

^ ‘- ‘-

The equity shares of the Bank are listed on BSE
Limited and National Stock Exchange of India Limited
and open for trade for public at large.

The listing fee for the FY 2025 - 2026 have been duly
paid.

r-    “n

7 Disclosure regarding Employee Stock
Option schemes

l ¹- ^--

Capital Small Finance Bank Limited - Employees
Stock Option Plan 2018 ("CSFB ESOP Plan 2018")
was approved by the shareholders of the Bank in the
Annual General Meeting held on August 18, 2018,
amended further in Extra Ordinary General meeting

held on October 22, 2021, for granting equity options to
its employees. Further, the Capital Small Finance Bank
Limited - Employees Stock Option Plan for Material
Risk Takers ("CSFB ESOP Plan MRT") was approved
by the shareholders of the Bank through Postal Ballot
on July 11, 2020, amended further on October 22,
2021, for granting equity options to Material Risk
Takers (MRTs as identified by the Board in terms of
Compensation policy). Furthermore, Capital Small
Finance Bank Limited - Employees Stock Option Plan
2023 ("CSFB ESOP Plan 2023") was approved by the
shareholders of the Bank in the Extra Ordinary General
Meeting held on May 12, 2023 for granting equity
options to its employees.

As per Regulation 12 of Securities and Exchange
Board of India (Share Based Employee Benefits and
Sweat Equity) Regulations, 2021, no company shall
make any fresh grant which involves allotment to its
employees under any scheme formulated prior to its
IPO and prior to the listing of its equity shares ('pre-
IPO scheme') unless such scheme is ratified by its
shareholders subsequent to the IPO.

In lieu of the above regulation, the Shareholders of the
Bank in the Annual General meeting held on August
30, 2024 approved the CSFB Limited - Employee Stock
Option Plan For Material Risk Takers and further both
the Stock Exchanges accorded their In-principal
approval on October 24, 2024 for 74,316 equity shares.

The details of the said existing ESOP schemes as
required under Rule 12(9) of the Companies (Share
Capital and Debentures) Rules, 2014 are as under:

Scheme	CSFB ESOP Plan	CSFB ESOP Plan	CSFB ESOP Plan
Â	2018	for MRTs	2023
Date of Shareholders approval	August 18, 2018	July 11, 2020	May 12, 2023
Total number of Options approved	8,54,720	1,00,000	6,85,049
Exercise price per Option	'98	'10	'171
Total No. of Options outstanding at the beginning of the year	2,55,000	6,417	6,70,000
Total Options granted during the year	-	19,220	-
Total Options vested during the year	2,22,500	6,417	-
Total Options exercised	1,98,000	6,417	-
Total number of shares arising as a result of exercise of Option	1,98,000	6,417	-

 

Scheme	CSFB ESOP Plan	CSFB ESOP Plan	CSFB ESOP Plan
Â	2018	for MRTs	2023
Options forfeited / lapsed	16,250	-	45,000
Total Options in force as on March 31,2025	40,750	19,220	6,25,000
Variations in terms of Options	Nil	Nil	Nil
Money realised by exercise of Options	'1,94,04,000	'64,170	-
Details of Stock Options granted to Directors and KMPs during the year	KMP : Mr. Munish Jain: NIL	KMP : Mr. Munish Jain: 19,220	KMP : Mr. Munish Jain : NIL
Â	Mr. Aseem Mahajan : Nil	Mr. Aseem Mahajan - Nil	Mr. Aseem Mahajan - Nil
Â	Mr. Amit Sharma: Nil	Mr. Amit Sharma - Nil	Mr. Amit Sharma: Nil
Any other employee who receives a grant of Options in any one year of Options amounting to five percent or more of total Options granted during that period	Nil	Nil	Nil
Identified employees who were granted options, during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding, warrants and conversions) of the Bank at the time of grant	Nil	Nil	Nil
any material change to the scheme and whether such scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014	Nil	Nil	Nil
web-link of disclosures made on the website of the Company, as required under SEBI (Share Based Employee Benefits) Regulations, 2014	https://www.capitalbank.co.in/investors/disclosures- under-regulation-46-Of-the-LODR

O    ^v

Registered office

During the year under review, there is no change in the registered office of the Bank.

The Registered office of the Bank is situated at Midas Corporate Park, 3rd Floor, 37, G.T. Jalandhar - 144001, Punjab,
India

^9    Sweat Equity Shares and Equity Shares with Differential Rights

In respect of the disclosure as per Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014, the Bank
has not issued any Sweat Equity Shares during the financial year under review.

Pursuant to Rule 4(4) of Companies (Share Capital and Debentures) Rules, 2014, the Bank has not issued any Equity
shares with differential right during the financial year under review.

-

Listed Securities, Debenture Trustee Detail and Credit Rating
^ '- ^--

The debt securities of the Bank issued in the form of Upper Tier-II Bonds, which are listed on the BSE Limited and detail
of the same is as under:

NCD Series	Coupon Rate	isin	Rating by Brickwork Ratings India Private Limited on April 12, 2024	Rating by Brickwork Ratings India Private Limited on April 09, 2025	Rating by Care Ratings Limited on March 12, 2024	Rating by Care Ratings Limited on March 07, 2025
Unsecured Redeemable Non-Convertible (Upper Tier II), Basel I Compliant Bonds 2014-15 (Series XI)	11.75%	INE646H08012	BWR A+ Outlook: (Stable) (Reaffirmation)	BWR A+ Outlook: (Stable) (Reaffirmation)	CARE A-; Stable (Single A Minus; Outlook: Stable)	CARE A-; Stable (Single A Minus; Outlook: Stable)
Unsecured Redeemable Non-Convertible (Upper Tier II), Basel I Compliant Bonds 2015-16 (SERIES XIII)	11.75%	INE646H08020	BWR A+ Outlook: (Stable) (Reaffirmation)	BWR A+ Outlook: (Stable) (Reaffirmation)	CARE A-; Stable (Single A Minus; Outlook: Stable)	CARE A-; Stable (Single A Minus; Outlook: Stable)

The Bank has got the following credit rating in respect of unlisted debt securities of the Bank issued in the form of
Lower Tier-II Bonds

NCD Series	Coupon	ISIN Rating by	Rating by	Rating by Care	Rating by
Â	Rate	Brickwork	Brickwork	Ratings Limited	Care Ratings
Â	Â	Ratings India	Ratings India	on March 12,	Limited on
Â	Â	Private Limited	Private Limited	2024	March 07,
Â	Â	on April 12,	on April 09,	Â	2025
Â	Â	2024	2025	Â	Â
Unsecured	10%	INE646H08129 BWR A+	BWR A+	CARE A; Stable	CARE A; Stable
Redeemable	Â	Outlook:	Outlook:	Â	Â
Non-Convertible	Â	(Stable)	(Stable)	Â	Â
Lower Tier II Basel-II Compliant Bonds 2018-19 in the nature of debentures (Series-XVII)	Â	(Reaffirmation)	(Reaffirmation)	Â	Â

Note: The above rating details can be accessed on the website of the Bank at https://www.capitalbank.co.in/investors/
credit-ratings

Contact Details of Debenture Trustee:

Name : IDBI Trusteeship Services Limited
Address : Universal Insurance Building,

Ground Floor, Sir PM. Road,

Fort, Mumbai - 400001
E-mail : [email protected]
Tel No. [phone]

The details of Unclaimed Dividends as on March 31, 2025 and the last date for claiming the same, prior to its transfer
to the IEPF, are as under:

 

Dividend for the year ended	Date of declaration of Dividend	Last date for claiming Dividend	Unclaimed Dividend as on March 31, 2025 (Amt. in ')
March 31, 2018	August 18, 2018	September 24, 2025	2,16,652.80
March 31, 2019	September 27, 2019	November 03, 2026	1,04,140.00
March 31, 2020	-	-	Â
March 31, 2021	August 20, 2021	September 26, 2028	1,39,522.00
March 31, 2022	August 05, 2022	September 11, 2029	5,52,360.58
March 31, 2023	August 11, 2023	September 10, 2030	7,04,269.50
March 31, 2024	August 30, 2024	September 30, 2031	72,11,329.08

---r

Dematerialisation of Securities
^ ’- ^--

The Bank has been issued ISIN for the Equity Shares
and debt securities by NSDL and CDSL. The equity
Shares of all the Directors, KMPs and Promoters
have been dematerialised and the Bank is making all
possible efforts to make the security holders aware
and get their securities converted into Dematerialised
form. Out of total paid up capital, 85.74% of shares are
in dematerialisation form as on March 31, 2025.

©Compliances as per the Reserve Bank of
India and the Government of India
^ *- ^--

The Bank has complied with statutory compliances
with respect to all the applicable rules/regulations/
guidelines/notifications issued by the Reserve Bank
of India and the Government of India.

---r

Particulars of employees

l ⁷ - ^--

The information in terms of Section 197(12) of
the Companies Act, 2013 read with Rule 5(2) of
the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014 is given in
Annexure A. Further, the statement containing
particulars of employees as required under Section
197(12) of the Companies Act, 2013 read with Rule 5(1)
of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014 is given in
Annexure B and forms part of this report.

The statement containing particulars of employees as
required under Section 197(12) of the Companies Act,
2013 read with Rule 5(2) and 5(3) of the Companies
(Appointment and Remuneration of Managerial
Personnel) Rules, 2014 forms part of this report. In
terms of Section 136 of the Companies Act, 2013,
the Annual Report excluding the said information is

being sent to the members of the Bank and others
entitled thereto. The said information is available
for inspection by the members during working hours
at the Registered Office of the Bank up to the date
of ensuing AGM. A copy of this statement may be
obtained by the Members by writing to the Company
Secretary of the Bank.

’    v

©Transfer of unclaimed dividend to Investor
Education and Protection Fund
^ ’- ^--

Pursuant to the relevant provisions of Section 125
of the Companies Act, 2013 and the rules made
thereunder, the amount of unpaid dividends that are
lying unclaimed for a period of 7 years from the date
of its transfer to the unpaid dividend account, is liable
to be transferred to Investor Education and Protection
Fund (IEPF).

Shareholders may note that both the unclaimed
dividend and corresponding shares, which have
been transferred to IEPF in previous financial years,
including all benefits arising on such shares, can be
claimed from IEPF as per the procedure provided
under the applicable provisions of the Companies
Act, 2013. The Bank sends periodic intimation to
shareholders, advising them to lodge their claims
with respect to unclaimed dividend. Mr. Amit Sharma,
Company Secretary, has been appointed as nodal
officer to ensure compliance with the IEPF Rules. The
detail of Nodal officer is also provided on the website
of the Bank.

Accordingly, Unclaimed Dividends for and up to the
financial year ended March 31, 2017 have already
been transferred to the IEPF. Further, the Unclaimed
Dividend in respect of the financial year ended
March 31, 2018 must be claimed by the concerned
Shareholders on or before September 24, 2025 failing
which it will be transferred to IEPF in accordance
with the Rules. The data for the same is available on
the website of the Bank at https://www.capitalbank.
co.in/investors/disclosures-under-regulation-62-Of-
the-LODR/unclaimed-dividends-equity.

Transfer of Underlying Equity shares in respect of the
unclaimed Dividend to IEPF

Pursuant to the relevant provisions of Section 124 and
Section 125 of the Companies Act, 2013 read with the
IEPF (Accounting, Audit, Transfer and Refund) Rules,
2016, as amended from time to time, the unclaimed
Dividend and the underlying Equity Shares of the Bank
for the Financial Year 2016 -17 (in case where the
Dividend for subsequent 7 financial years have not
been claimed by the concerned Shareholder), were
liable to be transferred by the Bank to IEPF Authority
and the same has been transferred, pursuant to the
notification issued by the Ministry of Corporate Affairs
(MCA) dated October 16, 2017.

©Annual Return pursuant to sub- section (3)
of Section 92 of the Companies Act, 2013

l ’- ^--

The draft Annual Return of the Bank for FY ended
March 31,2025 is available on the website of the Bank
at https://www.capitalbank.co.in/investors/yearly-
compliances in the format (MGT-7) prescribed under
the Companies Act, 2013.

©Requirement for maintenance of cost
records

l ‘- ^--

The cost records as specified by the Central
Government under Section 148(1) of the Companies
Act, 2013, are not required to be maintained by the
Bank.

©Disclosure under Section 134(3)(m) of the
Companies Act, 2013 read with Rule 8(3) of
the Companies (Accounts) Rules, 2014

^    ‘- o-

Energy Conservation:

Being a Banking company, energy consumed during
this period is only in the form of electricity and diesel
used in generators. The Bank has allocated specific
cost budgets to reduce electric waste for Head
Office and all its branches. The same is monitored
on periodical basis. Other measures like use of LEDs,
power saver air conditioning equipment etc. are being
installed for conserving the energy. There is no capital
investment on energy conservation equipment other
than specified.

The steps taken by the Bank for conservation of
energy:

• Encouraging green plants in / outside the Bank's
premises to lower air conditioning needs and
keeping temperatures at 24°C or higher.

• Switching to LED lights instead of traditional
ones to cut down on electricity usage.

•    Using timers for signage to optimise energy
usage.

•    Installing power factor systems in electrical
panels for efficient electricity use and
implementing power factor corrections.

•    Recognising the importance of renewable energy
for a cleaner future, the Bank has installed a
220 KW solar plant at its Head Office situated at
Jalandhar, Punjab

Technology Absorption:

We believe that the banks with the ability to adopt and
integrate information technology will dominate in the
highly competitive domestic market. Accordingly, the
Bank continues to leverage information technology as
a strategic tool in business operations for customer
delight by offering efficient and improved services
with low cost and using it as a tool to improve staff
productivity, increasing efficiency and more efficient &
effective control over banking operations.

We are convinced that investing in IT is critical and
also understand that its potential and consequences
on the banking is enormous. That is why the Bank
since its inception is equipped with a full-fledged
Information Technology Department with required
manpower to strengthen develop, maintain and
support IT infrastructure.

Digital banking for asset products offers convenient
Banking for Customers, eliminating the need for
excessive paperwork and enhancing banking
experience. This technological advancement allows
the Bank to leverage its capabilities and streamline
operations, ultimately leading to increased efficiency
and faster service.

Benefits derived like product improvement,
cost reduction, product development or import
substitution:

Bank is investing in initiatives and innovations to build
a digital gateway to a sustainable lifestyle. The Bank's
investments in digital technologies have simplified
banking and enabled a smoother customer journey.

In addition, the Bank continues to strengthen its core
systems and applications with planned upgrades and
offers a robust technology platform.

In case of imported technology (imported during the
last three years reckoned from the beginning of the
financial year):

a)    The details of technology imported: Nil

b)    The year of import: Nil

c)    Whether the technology been fully absorbed: Nil

d)    If not fully absorbed, areas where absorption has
not taken place, and the reasons thereof: Nil

Expenditure incurred on Research and Development:

Since financial services is being primarily covered
under Service Sector, the details of this clause are not
applicable to the Bank.

Foreign exchange earnings and outgo:

There was no foreign exchange earnings or outgo
during the year under review.

©Disclosures under Section Sec 134(3)(l) of
the Companies Act, 2013
i    ¹- -->

There are no material changes and commitments,
affecting the financial position of the Bank, which has
occurred between the end of the financial year of the
Bank to which the financial statements relates and
date of this report.

’    v

©Details of significant & material orders
passed by the regulators or courts or
tribunals

^    ’- ^--

There were no significant material orders passed by
the Regulators or Courts or Tribunal which would
impact the going concern status of the Bank and its
future operations.

'

©Disclosure of Penalties imposed on the
Bank during the Financial Year

l ¹- --

I. Please refer note 16 to Schedule 18 forming part
of the financial statements, which forms part of
this annual report.

II. Penalties imposed by stock exchanges or SEBI or
any statutory authority, on any matter relating to
capital markets.

During the review period, no penalty was imposed
by stock exchanges or SEBI or any statutory
authority on any matters relating to capital
markets.

Deposits

^ ’- °-

Being a Banking company, the disclosures required
as per Rule 8(5)(v) & (vi) of the Companies (Accounts)
Rules, 2014 read with Section 73 and 74 of the
Companies Act, 2013 and Companies (Acceptance of
Deposits) Rules, 2014 are not applicable. The details
of the deposits received and accepted by your Bank
as a Banking company have been disclosed in the
financial statements for the financial year ended
March 31, 2025.

¹-

©Asset-Liability and Risk Management
pursuant to Section 134(3)(n) of
Companies Act, 2013

^ ‘- *-

The Bank has established a comprehensive and
robust Risk Management Framework designed to
identify, assess, monitor, and mitigate risks across
its operations. Whilst the Board is responsible for
framing, implementing and monitoring the said
risk management framework, it has delegated its
powers relating to monitoring and reviewing of risk
associated with the business of the Bank to the Risk
Management Committee. Bank follows an integrated
approach to managing risks and the processes are
embedded in the fundamental business model. The
Risk Management Landscape in the Bank covers the
stages of identifying, assessing, measuring, managing,
controlling and reporting risk concerns across all the
risk classes viz. Credit, Market and Operational Risks
and Liquidity Risk. The Risk Management Policies
adopted and reviewed periodically articulate, codify
the strategy, structure, processes and systems to
manage bank wide risks. Expanding business arenas,
deregulation and globalisation of financial activities,
emergence of new financial products and increased
level of competition has necessitated the need for an
effective and structured risk management practice
in financial institutions. The Bank has adopted an
integrated approach for the management of risk.
Effective internal policies are developed in tune
with the business requirements and best practices.
Capital Bank has formulated ‘Risk Management
Policy' which also includes Internal Capital Adequacy
Assessment Policy ("ICAAP") for identifying and

measuring various operational, credit, market and
solvency risks. Operational risks are managed
through comprehensive systems of internal control,
establishing systems and procedures to monitor
transactions, maintaining key back-up procedures
and undertaking regular contingency planning. We
constantly strive to enhance the risk management
capabilities in accordance with the emerging
regulatory guidelines and the broad risk management
principles. The Bank reviews the risk management
system and the progress made in implementing the
RBI guidelines on risk management, on a quarterly
basis. The Asset Liability Management Committee
("ALCO"), consisting of the Bank's senior management
and the Managing Director, is responsible for ensuring
adherence to the limits set by the Board as well as
for deciding the business strategy of the Bank (on
the assets and liabilities sides) in line with the Bank's
budget and decided risk management objectives.
The Committee actively manages and controls
the structure of assets and liabilities and interest
rate sensitivities with a view of optimising profits
besides maintaining capital adequacy and sufficient
liquidity. Statements for Structured Liquidity, Liquidity
Coverage and Interest Rate Sensitivity of the bank
is being prepared in line with the RBI guidelines to
actively manage the liquidity and interest rate risks.

Liquidity Risk Management has been at the core of
sound risk management practices of banking industry
in the modern age. The Liquidity risk is the potential
inability to meet the Bank's liabilities as they become
due. It arises when the Banks are unable to generate
cash to cope with a decline in deposits or increase in
assets.

The Bank gives utmost importance to manage
various risks in most efficient way and has articulated
comprehensive structure for liquidity risk management
through various policies including Contingency
Funding Plan ("CFP") which aims to address the
adverse liquidity scenarios. It is recommended by
ALCO to Risk Management Committee of Board
("RMCB") on annual basis for approval and is reviewed
quarterly by the ALCO. In case, any review by the ALCO
results in the funding gap, ALCO will be responsible
to establish an action plan on the same which shall
be approved by the RMCB. Further the decision to use
the lines of defence as per the CFP lies with the ALCO.
The contingency is defined in various scenarios. The
comprehensive CFP endeavours to monitor liquidity
on real time basis, with a wide and unrelated range
of lines of defence, along with proper channel of
reporting, escalation and decision making.

The Bank has constituted a Risk Management
Committee. The details of the said committee and
its terms of reference are set out in the report on
corporate governance, which forms part of this annual
report.

Further, the Bank has formulated Stress Testing
Framework for evaluation of Bank's financial position
under a severe but plausible scenario to assist in
decision making within the Bank. It enables the Bank
in forward looking assessment of risks. It facilitates
internal and external communication and helps senior
management understand the condition of the Bank
in the stressed situations. Stress testing outputs are
extremely useful in decision making process in terms
of potential actions like risk mitigation techniques,
contingency plans, capital and liquidity management
in stressed conditions.

Stress testing forms an integral input of the internal
capital adequacy assessment process, which requires
the Bank to undertake forward-looking stress testing
that identifies severe events or changes in market
conditions that could adversely impact the Bank. The
stress testing reports provide the senior management
with a thorough understanding of the material risks to
which the Bank may be exposed and to help in potential
actions like mitigation techniques, contingency
plans, capital and liquidity management in stressed
conditions etc. Further, stress testing is an important
input in identifying, measuring and controlling funding
liquidity risks, in particular for assessing the Bank's
liquidity profile and the adequacy of liquidity buffers
in case of both bank-specific and market-wide stress
events.

The Bank has a strong impetus on risk management
and it realised that risk management is backbone of
banking industry and being an evolving topic, the bank
attempts to keep evolving various newer avenues to
manage risk effectively and efficiently as per the risk
management policy and framework of the bank so
that the whole structure is well aligned with the risk
appetite, risk assessment and risk mitigation strategy
of the Bank. The risk management committee monitor
and review the risk management plan and to perform
functions as defined under the Companies Act, 2013
and SEBI Listing Regulations.

Independent Directors Declaration in terms

©of Section 134(3)(d); Section 149(6) of
Companies Act 2013 and Regulation 16(1)

(b) of SEBI Listing Regulations

l ¹- --

The composition of Board of Directors of the Bank
is governed by the provisions of the Companies Act,
2013 and the Banking Regulation Act, 1949. The
Board of the Bank as on March 31, 2025 consisted
of twelve Directors, out of which seven directors are
Independent Directors.

Mr. Srinath Srinivasan (DIN : 00107184), Nominee
Director of Oman India Joint Investment Fund II
resigned from the Board of the Bank on February 27,
2025 due to his personal reasons. There was no other
change in the Board of Directors of the Bank during
the year under review.

The Bank has obtained declaration of Independence
from Mr. Navin Kumar Maini (DIN : 00419921), Mr.
Gurpreet Singh Chug (DIN : 01003380), Mr. Sham
Singh Bains (DIN : 01537844), Ms. Rachna Dikshit
(DIN : 08759332), Mr. Kamaldeep Singh Sangha (DIN
: 08242130), Mr. Sukhen Pal Babuta (DIN : 01739016)
and Mr. Nageswara Rao Yalamanchili (DIN : 06651230)
and they meet the criteria of independence as laid
down under Section 149(6) and 149(7), Schedule IV
of the Companies Act, 2013 and Regulation 16(1)(b) &
Regulation 25(8) of SEBI Listing Regulations. Further,
all the Independent Directors have complied with the
Code for Independent Directors prescribed in Schedule
IV to the Companies Act, 2013. During the year under
review, the separate meeting of Independent Directors
was conducted on January 13, 2025.

Pursuant to the Rule 8(5)(iiia) of the Companies
(Accounts) Rules, 2014, the Board opines that all the
Independent Directors of the Bank adhere to corporate
integrity, possess the requisite expertise, experience
and qualifications to discharge the responsibilities
as an Independent Director as mandated by the
Companies Act, 2013 and other applicable laws and
fulfil the conditions of independence specified in the
Companies Act, 2013 and the SEBI Listing Regulations
and that they are independent of the management.

All the Independent Directors of the Bank have been
registered and are members of the Independent
Directors Databank maintained by the Indian Institute
of Corporate Affairs (IICA). Three Independent
Directors were granted exemption and the four
Independent Directors had already passed the online
Proficiency self-assessment test.

During the year under review, Mr. Navin Kumar Maini
(DIN : 00419921) was re-appointed as Part - Time
Chairman of the Bank w.e.f April 24, 2025 till January
29, 2027.

’

Company's Policy on Directors'
Appointment & Remuneration including

©criteria for determining Qualifications,
Attributes, Independence etc. in terms of
Section 134(3)(e); Section 178(1) & (3) of
the Companies Act 2013

l ’- --

Basis the ‘Fit and Proper' criteria laid down by
the Reserve Bank of India, the Nomination and
Remuneration Committee (NRC) of the Bank conducts
the due diligence of the Board members on yearly
basis except for the Directors who are member of the
NRC.

Further, Board also conducts due diligence of all
the Directors on yearly basis. The due diligence
process involves considering the appointment
and remuneration of Directors and Key Managerial
Personnel as per the guidelines issued by Reserve
Bank of India and the Companies Act, 2013. The
process contains detailed procedures for determining
qualifications, positive attributes, due diligence
mechanism and reference checks for appointment of
Directors and Key Managerial Personnel.

The Bank has put in place the Compensation Policy
for Employees including MD & CEO, WTD and other
Material Risk Takers (MRTs) and Comprehensive
Compensation policy for Non-Executive Directors
with a key objective to support organisational strategy
by helping to build a competitive, high performance
and accompany with an entrepreneurial culture
that attracts, retains, motivates and rewards high
performing employees as well as properly compensate
the employees vis-a-vis their risk and performance
involvement. The policies are available on the website
of the Bank at https://www.capitalbank.co.in/
investors/secreterial-policies.

¦-

©Performance Evaluation of Board in terms
of Section 134(3)(p) of the Companies Act,
2013

l ¹- ^--

The Nomination and Remuneration Committee
(NRC) and the Board has approved the evaluation
process for evaluating the performance of the Board

and Committees as whole and individual director.
During the year under review, a separate meeting
of Independent Directors was held on January 13,
2025, which carried out the annual evaluation of the
performance of Non- Executive Non-Independent
Directors, Executive Directors, Chairperson, Board as
a Whole and Board Committees. Further, the Board of
Directors in its meeting held on January 29, 2025 had
also conducted the Annual evaluation of performance
of Board as a whole, Board Committees, Chairperson,
Managing Director, Executive Director, Independent
Directors and Non-Executive Directors.

In accordance with the provisions of Section 149(8) read
with Schedule IV, Section 178(2) of the Companies Act,
2013, Regulation 17 and other applicable Regulations
of SEBI Listing Regulations, and in consonance with
Guidance Note on Board Evaluation issued by the
SEBI, the Board assesses the performance of the
Individual Director, Board Committees and Board as
a whole on the basis of various criteria with the aim
to improve the effectiveness of the individual Director,
Committees and the Board. The description and
process of annual performance evaluation has been
provided in Report on Corporate Governance annexed
with Board's Report as Annexure C.

'    v

©State of the Company's Affairs in terms
of Section 134(3)(i) of the Companies Act
2013

^ *- --

The state of affairs of the Bank in details has been
given separately in different sections of the Board
Report and also under Management Discussion and
Analysis. There was no change in status of the Bank
during the year ended March 31,2025.

'    v

Name of the companies which have
become or ceased to be Subsidiaries/

©Associates or Joint Ventures during the
year in terms of Section 134(3) (q) read
with Rule 8(5)(iv) of Companies (Accounts)
Rules, 2014

l ’- *-

The Bank has no subsidiary and joint venture. Further,
no company have become or ceased to be the
Subsidiary, Joint venture or Associate company of the
Bank during the financial year under review.

'-

©Disclosure Under the Sexual Harassment
of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013

l ¹- ^--

The Bank is dedicated to fostering a safe and healthy
work environment for all employees, free from
prejudice, gender bias, and sexual harassment. The
Bank uphold a zero-tolerance policy towards any form
of sexual harassment and strive to promote a positive
and productive workplace for everyone. In alignment
with the guidelines set forth in the Sexual Harassment
of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013, the Bank ensures a safe
and conducive work environment for all employees
and associates by implementation of a Policy on
Prevention and Redressal against Sexual Harassment
at the workplace.

The Bank has formulated and adopted a policy
on prevention of sexual harassment of women at
workplace and has complied with the provision by
constituting Internal Complaint Committees at Head
office level and at Regional level (for Branches). The
composition of the committees is in consonance with
the provisions of the Sexual Harassment of women at
the workplace (Prevention, Prohibition & Redressal)
Act, 2013. These committees are formulated for
redressal of complaints for Sexual Harassment of
women at the workplace and take all necessary
measures to ensure a harassment-free workplace.
The Bank believes that all employees, including other
individuals who are dealing with the Bank have the
right to be treated with dignity.

The following is the summary of the complaints
received and disposed off during the Financial Year
2024-25:-

In Head Office (including Regional Offices)

a) No. of SH complaints received: Nil
b) No. of SH complaints disposed off: Nil
In Branches:

a) No. of SH complaints received: 1

b) No. of SH complaints disposed off: 1

The Committee believes in ethics and takes
appropriate action against the employees who have
violated the norms, which includes disciplinary action

such as warning letter and in some cases termination
of employment depending upon the gravity of
violation.

’- “N

©Adequacy of Internal Financial Controls
Related to Financial Statements
^ ’- ^--

The Companies Act, 2013 has introduced a reasonably
advanced reporting concept for auditors i.e. Internal
Financial Control (IFC) over financial reporting.
Auditors of the company are required to report on
adequacy and operating effectiveness of internal
financial controls of the company with report on
financial statements prepared under Section 143 of
the Companies Act, 2013.

The Bank as per the requirement of Section 134(5)(e)
has adopted the policies and procedures to ensure
orderly and efficient conduct of its business, including
adherence to the Bank's policies, safeguarding of its
assets prevention and detection of frauds and errors,
accuracy and completeness of accounting records,
timely preparation of reliable financial information.

The internal financial controls of the Bank with
respect to the financial statements are adequate and
are operating effectively.

During the year under review, the Auditors have
not reported any instances of frauds committed in
the Bank by its Officers or Employees to the Audit
Committee under Section 143(12) of the Companies
Act, 2013, details of which needs to be mentioned in
the Report.

^30    Directors

The Board of the Bank is duly constituted in
accordance with the provisions of Banking Regulation
Act, 1949, the Companies Act, 2013, SEBI Listing
Regulations and other applicable law/guidelines.

Mr. Sarvjit Singh Samra (DIN : 00477444) has held
the office as Managing Director & CEO of the Bank
w.e.f. April 24, 2022 for a period of three years. He
has been further re-appointed as Managing Director
and CEO of the Bank w.e.f. April 24, 2025 for a period
of three years. Mr. Sarvjit Singh Samra has been
instrumental in taking key decisions from day one that
have contributed to the Bank emerging as the most
preferred Bank in its area of operation. His vision to

serve common man and the local touch has given the
Bank a competitive edge over other banks operating
in the area and the Bank is able to provide safe,
efficient and service oriented repository of savings to
the local community while reducing their dependence
on moneylenders by making need-based credit easily
available.

Part-time Chairman

Pursuant to the approval of the Reserve Bank of India,
Mr. Navin Kumar Maini (DIN: 00419921) is acting as
Part-time Chairman of Capital Small Finance Bank
Limited for a period of three years w.e.f. April 24, 2022.
He is re-appointed as Part-time Chairman of the Bank
w.e.f. April 24, 2025 till January 29, 2027.

Retirement/Appointment of Directors in compliance
to Section 10(2A)(i) of the Banking Regulation Act,
1949

The Board is duly constituted as per the provisions
of the Banking Regulation Act, 1949, Companies Act,
2013, RBI guidelines for Small Finance Banks and
SEBI Listing Regulations, as may be applicable. As of
March 31, 2025, the Board consisted of 12 Directors,
including 7 Independent Directors, 1 Non - Executive
Director, 2 Non - Executive Nominee Directors and 2
Executive Directors.

Except the resignation of Mr. Srinath Srinivasan (DIN
:00107184) as Nominee Director, there is no other
change in the composition of the Board of Directors
during the period under review.

The composition of the Board of Directors of the Bank as on March 31, 2025 are as follows

s. No.	Name of Director	din	Designation
1.	Mr. Navin Kumar Maini	00419921	Part Time Chairman - Non Executive Independent Director
2.	Mr. Sarvjit Singh Samra	00477444	Managing Director and CEO
3.	Mr. Munish Jain	10132430	Executive Director
4.	Mr. Dinesh Gupta	00475319	Non - Executive Director
5.	Mr. Mahesh Parasuraman	00233782	Non - Executive Director (Nominee Director of Amicus Capital Private Equity I LLP and Amicus Capital Partners India Fund I)
6.	Mr. Balbir Singh	02284941	Non - Executive Director (Nominee Director of SIDBI)
7.	Mr. Gurpreet Singh Chug	01003380	Non Executive Independent Director
8.	Mr. Sham Singh Bains	01537844	Non Executive Independent Director
9.	Ms. Rachna Dikshit	08759332	Non Executive Independent Director
10.	Mr. Nageswara Rao Yalamanchili	06651230	Non Executive Independent Director
11.	Mr. Kamaldeep Singh Sangha	08242130	Non Executive Independent Director
12.	Mr. Sukhen Pal Babuta	01739016	Non Executive Independent Director

 

{ \ Name	Â	r a Designation
Â		Â
Mr. Sarvjit Singh Samra	Â	Managing Director and Chief Executive Officer
Â	Â	Â
Mr. Munish Jain	Â	Executive Director
Â	Â	Â
Mr. Aseem Mahajan	Â	Chief Financial Officer
Â	Â	Â
Mr. Amit Sharma	Â	Company Secretary and Compliance Officer

 

Certificate of Non - Disqualification of Directors

I n terms of Regulation 34(3) read with Schedule V of
the SEBI Listing Regulations, the Bank has obtained a
certificate from Deepak Arora & Associates, Company
Secretaries, confirming that none of the directors
on the Board of the Bank have been debarred or
disqualified from being appointed or continuing as
directors of the companies either by SEBI or MCA or
any other statutory / regulatory authority. The said
certificate is available on the website of the Bank
at https://www.capitalbank.co.in/investors/yearly-
compliances

Directors Retiring by Rotation

I n terms of Section 152 of the Companies Act, 2013,
Mr. Balbir Singh (DIN : 02284941), Nominee Director
being longest in the office shall retire by rotation at
the forthcoming Annual General Meeting and being
eligible for re- appointment, offers himself for re¬
appointment.

Appointments/Resignations of the Key Managerial
Personnel

The Bank had following Key Managerial Personnel as
on March 31,2024:

( N Name	Â	(-\ Designation
Â		Â
Mr. Sarvjit Singh Samra	Â	Managing Director and Chief Executive Officer
Â	Â	Â
Mr. Munish Jain	Â	Executive Director and Chief Financial Officer
Â	Â	Â
Mr. Amit Sharma	Â	Company Secretary and Compliance Officer

The Board of Directors appointed Mr. Aseem Mahajan
as the Chief Financial Officer w.e.f. April 24, 2024 of the
Bank and pursuant to said appointment, Mr. Munish
Jain ceased to hold the position of Chief Financial
Officer of the Bank as on even date.

As on March 31, 2025 and on the date of this report,
following are the Key Managerial Personnel (‘KMP')
as per Section 203(1) read with Section 2(51) of the
Companies Act, 2013 and Rule 8 of the Companies
(Appointment and Remuneration of Managerial
Personnel) Rules, 2014:

^31    Corporate Governance

Corporate governance is the combination of
rules, processes or laws by which businesses are
operated, regulated or controlled and that aims at
effective, transparent, and responsible management
of a company within the applicable statutory and
regulatory structures.

Over the last several years, the external environment
in which public companies operate has become
increasingly complex for companies and shareholders
alike. The increased regulatory burdens imposed on
public companies in recent years have added to the
costs and complexity of overseeing and managing a
corporation's business and bring new challenges from
operational, regulatory and compliance perspectives.
Many cases of Management failures and financial
crisis have been reported in the finance industry
during the financial year and all these are the cause of
poor corporate governance.

Your Bank has formulated a Corporate Governance
framework which ensures timely disclosures and filing
of correct information regarding our financials and
performance, as well as the leadership and governance
of the Bank. The Board is constituted professionally
with a strong commitment to shareholder value,
transparency, accountability, ethical standards and
regulatory compliances.

The Board's supervisory role is independent and
separate from the executive management and the
Board Committees. The Composition of the Board of
Directors as on March 31,2025 comprised of majority
of Independent directors and this is a great step of the
Bank towards better Corporate Governance.

The Board presently comprises of twelve Directors
including one-woman director and it provides
diverse combination of professionalism, knowledge,
expertise and experience as required in the banking
business for long-term success. The Board has seven
Independent Directors constituting more than one-
half of its total membership strength including one
women Director and two Nominee Directors. The
Directors have distinguished themselves in different
walks of life through experience and expertise. The
Bank recognises and embraces the benefits of having
a diverse Board of Directors to enhance the quality
of its performance. The Bank considers increasing
diversity at Board level as an essential element in
maintaining a competitive advantage in the complex
business that it operates. The identified key skills/
expertise/competencies of the Board and mapping
with individual director are provided in the ‘Corporate
Governance Report', forms a part of this Report.

The Bank has duly framed policies and codes
which are required under the Companies Act, 2013,
SEBI Listing Regulations and other Laws/Rules/

Regulations as applicable on the Bank. The policies/
codes as required to disclose on the website of the
Bank are available at https://www.capitalbank.co.in.

A report on Corporate Governance and Certificate
from the Company Secretary in Practice confirming
compliance of conditions, as stipulated under SEBI
Listing Regulations, is annexed as Annexure C and
forms an integral part of this Annual Report.

Business Responsibility and Sustainability Report

Your Bank does not fall in top 1000 listed entities
based on the market capitalisation. Hence, Business
Responsibility and Sustainability Report is not
applicable.

Code of Conduct for Directors and SMPs

In accordance with Regulation 17(5) of SEBI Listing
Regulations, the Bank has adopted the Code of
Conduct for Directors and Senior Management
Personnel ("SMPs"). The code of conduct sets forth
the guiding principles for orderly & fair conduct by
Directors and SMPs. All Directors and SMPs have
affirmed the compliance of the code for the FY'25
and a declaration to this effect signed by the MD &
CEO forms part of Report on Corporate Governance
annexed with Board's Report as Annexure - C. The
Bank's Code of Conduct for Directors and SMPs is
disclosed on the website of the Bank at https://www.
capitalbank.co.in/investors/secreterial-policies.

MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD^

Board of Directors

Details of the Board of Directors and Board meetings held during the year, are provided in the 'Corporate Governance
Report’, forms a part of this Report.

During the year under review, eleven Board Meetings were convened and held, the details of which are given in the
'Corporate Governance Report’, forms a part of this Report. The maximum interval between any two consecutive
meetings did not exceed 120 days as prescribed under the Companies Act, 2013.

Committees of Directors

The Bank has several committees which have been established as a part of best Corporate Governance practices
and are in compliance with the requirements of the relevant provisions of applicable laws and statutes. The Bank
has following Committees of the Board as on March 31, 2025

 

Committees of the Board
as on March 31, 2025

Â	Â	AftA	Â	ooo	Â	Â
Â	Â	m	Â	Â		& \
Â	Nomination and Remuneration Committee	Securities Committee	Â	Audit Committee		Corporate Social Responsibility Committee
Â	Â	Â	Â	Â	Â	J
r~	Â	WSfcJ	Â	1=	Â	Â
Â	Management Committee	Risk Management Committee	Â	IT Strategy Committee		Stakeholders' Relationship Committee
V	Â	Â	Â	Â	IpI	Â
Â	S'	$5?	Â	Â	Â	Â
Â	Special Committee of the Board for Monitoring and Follow up cases of Frauds (formerly Special Committee on Frauds)	Customer Service Committee of Board	Committee for Review of Wilful Defaulters		Compromise and Settlement Committee	*Committee for Review of Non - Cooperative Borrowers

*Committee for review of Non - Cooperative Borrower was merged with Committee for review of Wilful Defaulter during the year under
review

Details of the Committees, along with their composition, charters and meetings held during the year, are provided
in the ‘Corporate Governance Report', forms a part of this Report. During the financial year 2024-25, the Board has
accepted all the recommendations of its Committees.

“h

Meeting of independent directors
^ ^V- --

As per the requirement of the Section 149(8) read with Schedule IV of Companies Act, 2013 (Code for Independent
Directors) and Regulation 25 of SEBI Listing Regulations, the independent directors of the company shall hold at least
one meeting in a financial year, without the attendance of non-independent directors and members of management.

During the year under review, the Independent Directors of the Bank met on January 13, 2025.

Details of General Body Meetings
^ ‘- •-

A.    Location and time of last three Annual General Meetings (AGMs) and details of special resolutions passed thereat:

Financial Year	Particulars of Meeting	Date and Time	Location	Special Resolution passed
? 2022 - 2023	T 23rd Annual General Meeting	? August 05, 2022 at 11 a.m. (IST)	? Through Video Conferencing ("VC") / Other Audio - Visual Means ("OAVM")	? • To Re-Appoint Mr. Sham Singh Bains (DIN: 01537844) as a Non- Executive Independent director for a second term of Three years.
2023 - 2024	24th Annual General Meeting	August 11, 2023 at 11:00 am (IST)	Through Video Conferencing ("VC") / Other Audio - Visual Means ("OAVM")	•    To approve the revised remuneration of Mr. Sarvjit Singh Samra (DIN: 00477444), Managing Director & CEO for the period commencing from April 24, 2022 till April 23, 2023 •    To approve the updated remuneration of Mr. Sarvjit Singh Samra (DIN: 00477444), Managing Director & CEO for financial year 2023-24 onwards
2024 - 2025	25th Annual General Meeting	August 30, 2024 at 11:00 am (IST)	Through Video Conferencing ("VC") / Other Audio - Visual Means ("OAVM")	•    To approve the remuneration of Mr. Sarvjit Singh Samra (DIN: 00477444), Managing Director & Chief Executive Officer from April 01, 2024 to April 23, 2025 •    To approve the remuneration of Mr. Munish Jain (DIN: 10132430), Executive Director from April 01, 2024 to August 27, 2026 •    Ratification of CSFB Limited - Employee Stock Option Plan for Material Risk Takers

B. Postal Ballot during the FY 2024-25

Pursuant to provisions of Section 110 and other applicable provisions, if any, of the Companies Act, 2013, read
with Rule 20 and 22 of the Companies (Management and Administration) Rules, 2014, Regulation 44 of SEBI
Listing Regulations, Secretarial Standard on General Meetings issued by Institute of Company Secretaries of India,
General Circulars Nos. 14/2020 dated April 8, 2020, 17/2020 dated April 13, 2020, 20/2020 dated May 05, 2020,
22/2020 dated June 15, 2020, 33/2020 dated September 28, 2020, 39/2020 dated December 31, 2020, 10/2021
dated June 23, 2021, 20/2021 dated December 08, 2021,03/2022 dated May 05, 2022, 11 /2022 dated December
28, 2022, 09/2023 dated September 25, 2023 and 9/2024 dated September 19, 2024 issued by the Ministry of
Corporate Affairs and other applicable rules/regulations/guidelines/circulars/notifications, the Bank has received
shareholders' approval by passing following special resolutions on January 22, 2025:

 

Date of Postal	Agenda Heading	Number of Votes		Percentage of Votes
Ballot Notice	Â	|In favour	Against	|In favour	Against
December 05, 2024	TO APPROVE THE RE-APPOINTMENT OF MR. SARVJIT SINGH SAMRA (DIN: 00477444) AS MANAGING DIRECTOR AND CEO OF THE BANK FOR A PERIOD OF THREE YEARS W.E.F. APRIL 24, 2025	1,72,96,990	3,473	99.9799%	0.0201%
Â	RE-APPOINTMENT OF MR. NAVIN KUMAR MAINI, INDEPENDENT DIRECTOR (DIN: 00419921) AS PART¬ TIME CHAIRMAN OF THE BANK W.E.F. APRIL 24, 2025 TILL JANUARY 29, 9097	2,54,09,272	3,473	99.9863%	0.0137%

 

Mr. Brij Kishore Sharma of M/s B K Sharma and Associates, Company Secretaries, Jaipur (Membership No. F6206 &
CP No. 12636) was appointed as the "Scrutiniser", to scrutinise the e-voting process in a fair and transparent manner
pursuant to Rule 22(5) of the Companies (Management and Administration) Rules, 2014.

Procedure of the Postal Ballot

The Postal Ballot procedure followed by the Bank is as per the provisions of Section 108 and Section 110 of the
Companies Act, 2013 read with applicable Rules and the SEBI Listing Regulations and the Secretarial Standards - 2
("SS-2") issued by the Institute of Company Secretaries of India. Members were provided with the facility to cast their
votes through e-Voting. The Board of Directors of the Bank had appointed Scrutiniser for conducting the postal ballot
voting process fairly and transparently. The Scrutiniser submits his report to the Company Secretary & Compliance
Officer as authorised by the Chairman of the Board after the completion of the scrutiny of the e-Voting results.
Considering the results and report of the Scrutiniser of the Postal Ballot, the resolutions were considered approved.
The necessary intimations as required under the applicable provisions of SEBI Listing Regulations were submitted
to the Stock Exchanges and post declarations of the results, the same are displayed on the website of the Bank and
e-voting service provider.

C. Extraordinary General Meeting during the FY 2024-25

No Extraordinary General Meeting ("EGM") of the Shareholders was conducted during the FY 2024 - 2025.

 

^34    Corporate Social Responsibility

As a responsible corporate entity, Capital Small
Finance Bank Limited strongly believes in the
idea of paying back to the society in order to run a
sustainable business. Accordingly, in Capital Small
Finance Bank Limited, Corporate Social Responsibility
("CSR") is considered as an important function.
Our CSR activities include encouraging education,
commitment to Environment Stewardship, Inclusion
& Empowerment, promoting sports, eradicating

hunger and improving health care. We are managing
education centres for underprivileged children.

The Bank's CSR policy and programmes are in
accordance with Section 135 of Companies Act,
2013, the Bank takes multiple initiatives in the areas
of education, green belt, environment, Rural Sports
Development, Inclusion & Empowerment and health.
Corporate Social Responsibility Policy of the Bank
can also be accessed from the website of the Bank
https://www.capitalbank.co.in/investors/secreterial-
policies.

The Annual Report on CSR activities as required to
be given under Section 135 of the Companies Act,
2013 and Rule 8 of the Companies (Corporate Social
Responsibility Policy) Rules, 2014 has been provided
as Annexure - D which forms part of the Board's
Report.

The Bank undertakes its Corporate Social
Responsibility activities through Capital Foundation
(a Society Registered under the Societies Registration
Act, 1860). During the year under review, the Bank has
disbursed the entire amount of its CSR obligation to
the Capital Foundation. As per the report received from
the Capital Foundation ' 2,00,48,593.73 has remained
unspent as some of the Ongoing Projects has not been
fully matured. Accordingly, as approved by the CSR
Committee, the Capital Foundation has transferred
the said unspent amount to Unspent Corporate
Social Responsibility Account in accordance with the
provisions of Section 135(6) of the Companies Act,
2013.

Impact Assessment of CSR Projects

The Bank's average CSR obligation in the three
immediately preceding financial years does not
exceed INR 10 crores. Hence the Bank is not required
to undertake impact assessment, through an
independent agency in terms of Rule 8(3)(a) of the
Companies (Corporate Social Responsibility Policy)
Rules, 2014.

35 Green Initiatives

The Ministry of Corporate Affairs ("MCA") has taken
a "Go Green Initiative in the Corporate Governance"
by allowing paperless compliances by companies.
The applicable provisions of Companies Act, 2013
read with rules made thereunder permits circulation
of financial statements, notices etc. to Shareholders
through electronic mode as per the records of the
Bank's Registrar and Share Transfer Agent or as
provided by the Depositories.

I n view of the same, the Bank hereby request all the
stakeholders to get their E-mail registered with the
Bank so as to get the Annual Reports at the E-mail ids
eliminating the usage of paper mode.

Also, registering your e-mail address with the Bank
will ensure that the Bank can directly connect with
you and no important communication from side of the
Bank will be missed by you as a shareholder of the
Bank.

Vigil Mechanism

^ >- --

The Bank values reliability, fairness and equality
which form foundation for all the decisions taken

and believes in conducting its affairs in a fair manner
to build customer trust and confidence and ensure
customer delight. The Bank encourages its employees,
all stakeholders and members of general public, who
have concerns about suspected misconduct, to come
forward and express these concerns without fear
of retaliation or unfair treatment. A Whistle-Blower
Policy in Banking Institutions is crucial for fostering
transparency, accountability, and ethical behaviour
within the organisation.

The Bank has implemented a Whistleblower Policy,
which is periodically reviewed, providing which
safeguards against victimisation of employees
and Directors. The Policy allows to raise concerns
on Reportable Matters (as defined in the policy)
such as breach of Bank's Code of Conduct, fraud,
bribery, corruption, employee misconduct, illegality,
health & safety, environmental issues and wastage/
misappropriation of bank funds/assets, etc. and also
provides for direct access to the Ombudsperson, in
exceptional cases. The policy is available on the Bank's
intranet and website of the Bank. The Whistleblower
Policy complies with all the requirements of Vigil
mechanism as stipulated under Section 177 of the
Companies Act, 2013 and Regulation 4(2)(d) and
Regulation 22 of the SEBI Listing Regulations, and
other applicable laws, rules and regulations, as may
be applicable. The updated Whistleblower Policy is
also available on the website of the Bank at link www.
capitalbank.co.in.

The Bank has also appointed Chief of Internal
Vigilance to ensure compliance with all the internal
guidelines issued by the Bank from time to time.

The functioning of the Policy is reviewed by the Audit
Committee from time to time. During the review period,
no concern has been reported in accordance with the
said policy and none of any complainant has been
denied access to the Audit Committee of the Board.

Loans, Guarantees or Investments in
³⁷ securities

^ *- --

Pursuant to Section 186(11) of the Companies Act,
2013, the provisions of Section 186 of Companies
Act, 2013, except sub-section (1), do not apply to
any loan made, guarantee given or security provided
or investment made by a banking company in the
ordinary course of business. Therefore, the said
provision is not applicable to the Bank.

'-_

The details of application made or any

©proceeding pending under the Insolvency

and Bankruptcy Code, 2016 (31 of 2016)

during the year along with their status as

at the end of the financial year

l    ¹- °-

During the year under review, no application was
made or any proceeding is pending against the Bank.

The details of difference between amount

©of valuation done at the time of one-time
settlement and the valuation done while
taking loan from the banks or financial
institutions along with the reason thereof
^    ’- °-

There was no instance of one-time settlement with
any other bank/financial institution during the year
ended March 31, 2025.

Contracts or Arrangements with Related
⁴⁰ Parties

^    ‘- --

All related party transactions that were entered during
the Financial Year 2024-25 were in the ordinary course
of the business of the Bank and were on arm's length
basis and the same is enclosed pursuant to Section
188(1) of the Companies Act, 2013, as prescribed
in Form AOC-2 under Rule 8 (2) of the Companies
(Accounts) Rules, 2014 as Annexure- E to this Report.

There were no materially significant related party
transactions entered by the Bank with Promoters,
Directors, Key Managerial Personnel or other persons
which may have a potential conflict with the interest
of the Bank. All such Related Party Transactions are
being placed before the Board/Audit Committee for
approval, wherever applicable. The Audit Committee
of the Bank has accorded an omnibus approval for
related party transactions which are of repetitive
nature and entered in the ordinary course of business.

Members can refer the disclosure of transactions with
related parties during the financial year under review
as set out in the note no. 12 of the Schedule 18 of the
notes forming part of audited Financial Statements of
the Bank for the year ended March 31, 2025

©'

Disclosure pursuant to Section 197(14) of
the Companies Act, 2013

l ’- .-

The Bank does not have any holding or subsidiary
company; therefore, no disclosure is required to be
made pursuant to the provisions of Section 197(14) of

the Companies Act, 2013 and as per the relevant rules
thereunder.

^{1    —I}K

©Disclosure pursuant to Section 177(8) of
the Companies Act, 2013
^ >- --

During the Financial Year 2024- 2025, there were no
recommendation of the Audit Committee which was
not accepted by the Board.

---r

Change in Nature of Business

Pursuant to the relevant provision of Rule 8(5) of
the Company (Accounts) Rules, 2014, there were no
change in the nature of Business of the Bank during
the FY 2024- 25.

©Auditors & Auditors' Report

> --

Statutory Auditors and Audit

The Board of Directors, on the recommendation of
the Audit Committee, in its meeting held on June 20,
2024 approved the re-appointment of M/s. S C V & Co.
LLP (FRN 000235N/N500089) as Statutory Auditor of
the Bank for the period of two years effective from
FY 2024 - 25, which was approved by Shareholders
of the Bank in 25th Annual General meeting held on
August 30, 2024.

The Bank has received the approval of Reserve Bank
of India (‘RBI') vide its letter dated July 22, 2024 for the
appointment of M/s. S C V & Co. LLP (FRN 000235N/
N500089), Chartered Accountants as Statutory
Auditors of the Bank for the Financial Year 2024-2025
and M/s S C V & Co. LLP (FRN 000235N/N500089),
Chartered Accountants, acted as Statutory Auditors
of the Bank for the Financial Year 2024-2025 till the
conclusion of Annual General Meeting to be held in
the Financial 2025-2026.

No qualifications, reservations or adverse remarks
are reported by Statutory Auditors of the Bank, in their
Audit report. Information referred to in the Auditors'
Report are self-explanatory and do not call for any
further comments.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the
Companies Act, 2013 and the Companies (Appointment
and Remuneration of Managerial Personnel) Rules,
2014, the Bank had appointed M/s Deepak Arora &
Associates, Practicing Company Secretaries through

its partner, Mr. Deepak Arora (FCS No. 5104 and COP
No. 3641), to conduct Secretarial Audit of the Bank for
the FY 2024 - 2025.

The Secretarial Audit Report is annexed herewith as
Annexure- F to this report.

No qualifications, reservations or adverse remarks
are reported by M/s Deepak Arora & Associates,
Practicing Company Secretaries, Secretarial Auditors
of the Bank, in their Secretarial Audit report.

Information referred to in the Secretarial Auditors'
Report are self-explanatory and do not call for any
further comments.

The Bank has proposed to the Shareholders the re¬
appointment of M/s Deepak Arora & Associates,
Practicing Company Secretaries, for further period of
five years w.e.f. FY 2025 - 2026 in terms of revised
Regulation 24A of SEBI Listing Regulations.

Cost Audit

The Bank is not required to appoint a Cost Auditor.
Therefore, maintenance of cost records as specified
under subsection (1) of section 148 of the Companies
Act, 2013, is not applicable to the Bank.

Annual Secretarial Compliance Report

The Bank has undertaken an audit for the financial
year 2024-25 for all applicable compliances as per
SEBI Listing Regulations and circulars / guidelines
issued thereunder. The Annual Secretarial Compliance
Report pursuant to Regulation 24A of SEBI Listing
Regulations will be submitted to the Stock Exchanges
within 60 days of the end of the financial year.

f

Familiarisation Programme for
⁴⁵ Independent Directors

l ‘- •-

The Bank's independent directors are eminent
professionals with several decades of experience in

Banking and financial services industry, technology,
finance, governance and management areas and
are fully conversant with the business of the Bank.
In accordance with Regulation 25(7) of SEBI Listing
Regulations and RBI guidelines, the Bank, at the Board
/ Committee meetings, presentations and deep dive
sessions, covered important areas of the Bank such as
annual plans and strategies, compensation strategy,
impact of inflation, non-financial risks, customer
services framework, risk management, priority sector
lending, liquidity, new regulatory guidelines, etc.
during the year under review for the Independent
Directors to enable them to familiarise with the Bank,
its Management, Bank's Business, and its operations
for better understanding of their responsibilities,
roles, and rights for effective contribution in
sustainable growth of the Bank. Further, updates on
key regulatory developments including RBI and other
regulatory circulars/notifications/ guidelines etc. are
provided to directors on regular basis at the Board and
Committee meetings to keep the Directors informed
about the dynamic regulatory environment and its
impact. The details thereof are disclosed in the Report
on Corporate Governance annexed with Board's
Report as Annexure - C and on the website of the
Bank under https://www.capitalbank.co.in/investors/
details-of-familiarization-programmes-imparted-to-
independent-directors

¦- "IS

©Management Discussion and Analysis
Report

^ ’- *-

The Management Discussion and Analysis Report of
the financial conditions and results of operations of
the Bank for the year under review, as required under
Regulation 34(2)(e) of SEBI Listing Regulations, is
being given separately and forms a part of the Annual
Report.

^47    Directors' Responsibility Statement

The Board of Directors acknowledge the responsibility for ensuring compliance with the provisions of Section 134(3)
(c) read with Section 134(5) of the Companies Act, 2013, in preparation of annual accounts for the financial year ended
March 31,2025 and state that:

->

In the preparation of the annual accounts for the financial year ended March 31,2025, the applicable accounting
standards had been followed along with proper explanation relating to material departures;

>    o-

-\

The Directors had selected such accounting policies and applied them consistently and made judgments and
estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Bank as at
March 31, 2025 and of the profit of the Bank for the year ended on that date;

«•    >    o    '

---------—\

The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in
accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Bank and for
preventing and detecting fraud and other irregularities;

>    o-

^r '
Directors had prepared the annual accounts on a going concern basis;

-    >    o    ¦*

The Directors had laid down internal financial controls to be followed by the Bank and that such internal
financial controls are adequate and were operating effectively.

^    >    o

The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and
that such systems were adequate and operating effectively.

>    o    ^

 

Compliance with Secretarial Standards
^ > - --

The Bank has complied with all applicable Secretarial
Standards issued by the Institute of Company
Secretaries of India on regular basis.

49 Investor Relations

Your Bank interacted with investors and analysts
through one-on-one meetings, conference call and
regular quarterly meetings during the year. Earnings
call transcripts/recording of the meeting on quarterly/
event-based meetings are posted on the website of
the Bank.

"I^s

Prevention of Insider Trading
^ ’- --

In compliance with the provisions of Securities
Exchange Board of India (Prohibition of Insider
Trading) Regulations, 2015 (‘SEBI (PIT) Regulations'),
the Board has adopted a code of conduct to regulate,
monitor and report trading by Designated Persons
to preserve the confidentiality of price sensitive
information, to prevent misuse thereof and regulate
trading by designated persons. It prohibits the dealing
in the Bank's shares by the promoters, promoter group,
directors, designated persons and their immediate
relatives, and connected persons, while in possession
of unpublished price sensitive information in relation
to the Bank and during the period(s) when the Trading
Window, to deal in the Bank's shares, is closed.
Pursuant to the above, the Company has put in place
adequate and effective system of internal controls to
ensure compliance with the requirements of the SEBI
(PIT) Regulations. The code is available on the Bank's
website at https://www.capitalbank.co.in/investors/
secreterial-policies.

The Board of Directors have also formulated a code
of practices and procedures for fair disclosure of
unpublished price sensitive information containing
policy for determination of ‘legitimate purposes' as
a part of this Code, which is available on the Bank's

website at https://www.capitalbank.co.in/investors/
secreterial-policies.

^51    Internal Audit

The Bank's Internal Audit function provides an
independent view to its Board of Directors and Senior
Management on the quality and efficacy of the internal
controls, risk management systems, governance
systems and processes in place on an on-going
basis. This is provided to primarily ensure that the
business and non-business functions are following
both internal and regulatory guidelines. In line with
the RBI's guidelines on Risk Based Internal Audit
(RBIA), the Bank has adopted a risk based internal
audit policy.

The Risk Based Internal Audit policy has been designed
factoring regulatory guidelines and international best
practices. The policy has a well-defined architecture
for conducting Risk Based Internal Audit which
articulates the audit strategy in terms of a concerted
focus on strategic and emerging business risks.
These inputs form a key step in the identification of
the audit universe for the audit planning exercise.
The audit frequencies are in congruence with the risk
profile of each unit to be audited. The scope of RBIA
includes examining the adequacy and effectiveness
of internal control systems, external compliances,
and evaluating the risk residing at the audit entities.
Further to augment the internal audit function,
concurrent audit, off-site audit, and thematic & snap
audit reviews have been integrated into the internal
audit process to make the function more robust.
The Audit function recommends improvements in
operational processes, design elements, policies, as
part of audit report recommendations.

The Internal Audit function of the Bank operates
independently under the supervision of the Audit
Committee of the Board, that reviews the efficacy
and performance of the internal audit function,
effectiveness of the internal controls laid down by
the Bank and compliance with internal and regulatory
guidelines and provide guidance and directions.

52	Awards and Recognitions N->	o ¦'	s
Â		Â	Honoured with Best Organisation for Customer Experience by ET Now
Received the Great Place to Work certification in 2024		Bestowed During the year under review, with BFSI Best your Bank has received ^ Brands 2024
W		the following awards and certifications: _A
Received the Elets India Brands Awards - Customer Excellence Awards			Â

53 Acknowledgment

The Board of Directors is grateful to the Government
of India, Reserve Bank of India, various State
Governments, SEBI, IRDA and all the regulatory
authorities in India and overseas for their valuable
guidance, support and cooperation.

The Directors record their sincere gratitude to the
Bank's shareholders, esteemed customers and all
other well-wishers for their continued patronage.
The Directors express their appreciation for the
contribution made by every member of the staff
in ensuring high level of growth that the Bank has
achieved during the year.

The Board also places on record its gratitude to the
Shareholders, Bankers, Customers, Suppliers and
other stakeholders who have extended their valuable
sustained support, co-operation and encouragement.

The Board would also like to thank BSE Limited,
National Stock Exchange of India Ltd., National
Securities Depository Limited, Central Depository

Services (India) Limited, Debenture Trustee, Registrar
& Share Transfer Agent, Vendors and Service Providers
for their continued support & co-operation.

The Directors wish to express their gratitude to
Investment Banks & rating agencies for their
wholehearted support. The Directors look forward
to their continued contribution in realisation of the
corporate goals in the years ahead. We wish to apprise
our worthy members who have entrusted their trust
and confidence in the Bank that Capital Small Finance
Bank will venture to strive hard to take long strides
ahead with freshly instilled energies.

For and on behalf of the Board of Directors

Sarvjit Singh Samra

Managing Director & CEO
DIN: 00477444

Gurpreet Singh Chug

Place : Jalandhar    Independent Director

Date : April 29, 2025    DIN: 01003380

---

Mar 31, 2024

The Directors of Capital Small Finance Bank Limited ("Bank" or "Company") are pleased to report that the Bank has continued to deliver strong financial results, with steady growth in key performance indicators such as total assets, deposits, and loans disbursed. The Bank has remained focussed on prudent risk management practices, resulting in a healthy loan portfolio and lower non-performing assets. The net profit witnessed a significant increase, reflecting the Bank''s relentless focus on operational efficiency and the optimisation of its product and service offerings.

Furthermore, the Bank remains committed to providing inclusive banking services to underserved communities.

Embracing the digital revolution, it has taken significant strides in its digital transformation journey by introducing innovative digital products and services, including mobile banking applications and online account opening. Customer satisfaction scores have steadily improved due to the Bank''s unwavering dedication to customer service excellence. Continual enhancements to processes and offerings are underway to exceed customer expectations.

The Board extends sincere gratitude to all shareholders for their unwavering trust and support. The Bank remains steadfast in its commitment to creating sustainable value and delivering superior returns to its stakeholders.

Financial Performance Profit and Loss Summary

''in crores

	FY24	FY23	Change Y-o-Y %
Income Earned	794.33	676.01	17.50%
Income Expended	449.18	354.02	26.88%
Net Interest Income	345.15	321.99	7.19%
Other Income	68.08	49.47	37.62%
Net Total Income	413.23	371.46	11.24%
Operating Expenses	258.33	222.75	15.97%
Provision for Advances	6.69	24.55	(72.75%)
Provisions for Taxes	36.68	30.56	20.02%
Profit after Tax		; V *.*93.60	1916%

Asset and Liability Composition

'' in crores

	FY24	FY23	Change Y-o-Y %
LIABILITIES
Capital	45.04	34.25	31.50%
Reserves and Surplus	1,152.38	576.36	99.94%
Deposits	7,477.74	6,560.62	13.98%
Borrowings	472.25	721.38	(34.54%)
Other Liabilities and Provisions	147.87	98.16	50.64%
Total Liabilities	9,295.28	7,990.77	16.33%

	FY24	FY23	Change Y-o-Y %
ASSETS
Cash and Balances with Reserve Bank of India	568.98	462.65	22.98%
Balances with Banks and Money at call and short notice	752.18	418.21	79.86%
Investments	1,705.71	1,488.58	14.59%
Advances	6,074.69	5,428.69	11.90%
Fixed Assets	83.73	82.59	1.38%
Other Assets	109.99	110.05	(0.05%)
Total Assets	^^9,295.28	^•*?7,990.77	‘ -16.33%

Key Ratios

In %age

	FY24	FY23
Net Interest Margin1	3.94	4.19
Gross NPAs	2.76	2.77
Net NPAs	1.40	1.36
Return on Assets2	1.27	1.22
Return on Equity	14.64	16.62
Return on Average Advances	1.98	1.89
Cost of Deposits	5.61	4.90
Yield on Advance	11.10	10.76
CRAR	27.39	18.87

Notes:

¹ Net Interest Margin has been computed based on the Net Interest income (Interest Income - Interest Expense) and average of total assets as reported to Reserve Bank of India in Form X under Section 27 of the Banking Regulation Act, 1949, during the year

² Return on Assets is calculated with reference to monthly average working funds (Working funds taken as total of assets excluding accumulated losses, if any)

The Indian economy grew at one of the fastest pace in the world. This growth led to an increase in demand for credit, which benefited banking sector and Small Finance Banks (SFBs) the most. The incomes of Indian households have been rising in recent years, which has also led to an increase in demand for loans from SFBs. Additionally, the government has been supportive of SFBs, this has helped SFBs to grow and expand their reach, particularly in underserved areas.

During the financial year ending March 31, 2024, the Bank experienced a period of steady and measured growth in its financial performance. Across key performance indicators such as total assets, deposits, and loans disbursed, there was notable advancement. This achievement underscores the Bank''s commitment to balanced expansion and prudent risk management, resulting in a healthy loan portfolio and minimal occurrence of non-performing asset.

The Bank has showcased a commendable trajectory of gradual and sustainable growth in net profit, a testament to its unwavering commitment to operational efficiency and the strategic optimization of its product and service offerings. These accomplishments underscore the dedication and talent of our team, whose relentless pursuit of excellence in their roles has been instrumental in driving our success.

Capital Small Finance Bank Limited continues to expand its presence across regions, aiming to provide inclusive banking services to underserved communities, enabling it to serve a broader customer base and contribute to financial inclusion. Capital Small Finance Bank Limited acknowledges that its success is intricately linked to the satisfaction of customers. Therefore, it remains dedicated to understanding the evolving needs and expectations.

Addressing the Company''s liability profile, there is a firm commitment to nurturing current relationships to uphold elevated levels of Current Account and Savings Account (CASA) deposits. We have consistently maintained strong CASA levels over the past three financial years, with ratios remaining steady at 38.30% for the year ending March 31,2024, 41.88% as on March 31, 2023, and 42.16% as on March 31, 2022. Despite the challenges posed by a rising interest environment, our dedication to cost management is apparent in the sustained favourable cost of funds. For the financial year ended March 31,2024, it stood at 5.82%, while for the previous financial year ending March 31, 2023, it was 5.11%. Additionally, its retail deposits constitute a significant proportion, accounting for 92.94% as on March 31, 2024. Going forward, the Bank remains committed to further increasing its CASA and retail deposits to optimise its cost of funds.

Turning to Assets, the Bank takes pride in its commitment to maintaining a high proportion of secured lending, accounting for a substantial 99.9% of the loan book, out of which ~84% is collateralised with immovable property and fixed deposits. This steadfast focus on secured lending, complemented by rigorous credit assessment processes and meticulous risk management practices, has been pivotal in ensuring robust asset quality. As of March 31, 2024, the Bank''s Gross Non-Performing Assets (GNPA) stood impressively low at 2.76%, while Net

Non-Performing Assets (NNPA) remained even lower at 1.40%. Such remarkable figures stand as a testament to the Bank''s profound understanding of its target customer base and its extensive experience navigating various business cycles throughout its two decades of banking operations.

We believe interest rates are market driven and our endeavor is to protect our interest margin. Historically, across interest rate cycles we have been maintaining a spread in the range of 5.5% -5.9%. Our liability side consists of 80% deposit with 38% CASA and on asset side 60%-62% of our loan book is floating rate out of which ~80% is MCLR based. The effect of increase in the MCLR in last year will be visible on their annual reset period in the coming year.

Furthermore, the Bank''s loan portfolio diversification is noteworthy, with advances in agriculture, MSME & trading, and mortgages segments amounting to ?2,293.12 crores, ?1,181.59 crores, and ?1,624.03 crores, respectively, as of March 31, 2024. In the previous year, as of March 31, 2023, these segments accounted for ?2,137.45 crores, ?1,120.46 crores and ?1,434.48 crores respectively. The average ticket size for these segments as of March 31, 2024, stood at ?1.24 mn, ?1.86 mn and ?1.17 mn respectively.

In order to gain a foothold in new markets where the branch network is not yet established, the Bank is actively seeking partnerships to expand geographical presence and better understand these markets. By forging strategic alliances, it aims to mitigate associated risks while diversifying the range of products and services. Such collaborations will not only enhance the offerings but also contribute to the overall growth of Capital Small Finance Bank Limited.

The Bank has consistently demonstrated impressive growth in both profitability and operational metrics, underscoring its unwavering dedication to excellence. Over the past few years, the operating profit before provisions has surged with an outstanding compound annual growth rate (CAGR) of approximately 35.21%, marking a significant increase from ?34.28 crores in FY19 to ?154.90 crores in FY24. Moreover, the profit before taxes has experienced a substantial rise from ?26.92 crore in FY19 to ?148.21 crores in FY24. Similarly, the profit after taxes has seen a notable escalation from ?19.42 crores in FY19 to ?111.53 crores in FY24. This remarkable performance stands

as a testament to the Bank''s enduring trustworthiness, reinforced by its seasoned leadership and reputable shareholders who are deeply committed to upholding stringent standards of corporate governance.

The Bank''s profitability and operational metrics have showcased a consistent upward trend, reflecting its commitment to excellence. This exceptional performance is a testament to the trust the Bank has built over the years, supported by its professional and experienced leadership team and reputed shareholders with a strong commitment to corporate governance.

Moving forward, the focus remains on strengthening of operational and profitability metrics through several key strategies. Firstly, the aim is to optimise asset-liability mix in favour of asset creation while increasing the credit to deposit ratio. Secondly, it continue to emphasise on cost optimisation and efficiency improvement. Lastly, it intends to enhance its fee income and leverage cross-selling opportunities to further diversify our revenue streams.

Cost optimization remains a pivotal priority, and the Bank takes pride in its enhanced operational efficiency, evident in the improved operating expense (opex) ratio as a percentage of average assets. This ratio has significantly decreased to 2.95% in FY24 from 3.50% in FY19. The cost-to-income ratio is expected to continue its improving trajectory and reached approximately 62.51% in FY24, building on the achievements of 63.42% in FY22 and 70.75% in FY21.

The Board is confident that the continued focus on maintaining strong liabilities and assets positions will contribute to the sustained growth and success of Capital Small Finance Bank Limited.

The below table shows improving profitability ratios as a result of margin expansion and improved efficiencies:

Return <	on Assets (RoA)
FY 24 ¦	1.27%
FY 23	1.22%
FY 22	0.92%
Return <	on Average Advances
FY 24 ¦	1.98%
FY 23	1.89%
FY 22	1.56%
Return <	on Equity (RoE)
FY 24 ¦	14.64%
FY 23	16.62%
FY 22	12.95%

Dividend

Based on the robust financial performance and profitability of Capital Small Finance Bank Limited, the Board of Directors has recommended a Final Dividend of ?1.20 per equity share (face value of ?10 each) for the financial year ending March 31,2024. This dividend payout demonstrates the Bank''s commitment to delivering value to its esteemed shareholders. The Board believes in sharing the success of the institution with those who have placed their trust and invested in Capital Small Finance Bank Limited. The Board remains dedicated to maintaining a healthy dividend payout ratio while carefully considering the need for reinvestment in the Bank''s growth initiatives. The support and confidence of shareholders are greatly appreciated, and the Board is pleased to reward their trust through this dividend declaration.

Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") is not presently applicable, being your Bank does not fall in top 1000 listed entities, your Bank has not yet formulated and adopted a Dividend Distribution Policy.

Transfer to Reserve

In terms of RBI regulations and other applicable regulations, the Bank has appropriated the following amounts to various reserves for the financial year ended March 31,2024:

Particulars Amount

(? in crore)

Profit after tax	111.53
Profit brought forward	233.18
Accumulated profit (before appropriations)	344.71
Appropriations
To Statutory Reserve	27.88
To Special Reserve	4.21
To Revenue and other reserves (Investment Fluctuations reserve)	1.44
To Revenue and other reserves (Investment Reserve Account)	0.41
To Revenue and other reserves (Other Revenue reserve)	0.62
Dividend paid during the year	4.24
Balance carried forward to balance sheet	'' ;w~\T*T305.90

^4 Capital Adequacy Ratio (CAR)

The Capital Adequacy Ratio (CAR) plays a vital role in maintaining the stability and soundness of banks. It is a regulatory requirement that ensures banks have sufficient capital to absorb potential losses and meet their obligations to depositors and creditors. By maintaining an adequate capital buffer, banks can mitigate the risk of insolvency and contribute to the overall resilience of the financial system.

The Bank has developed a well-thought-out capital adequacy plan that considers both systematic and idiosyncratic risks. Systematic risks are those that affect the entire banking industry, such as changes in interest rates or economic conditions. Idiosyncratic risks are those that are specific to a particular bank, such as problems with its lending or investment activities. Capital Small Finance Bank Limited has made arrangements to maintain sufficient buffer capital to address any potential stress and to provide ample growth capital to keep its growth trajectory on track.

The Bank has consistently maintained a strong and healthy Capital Adequacy Ratio, which reflects its robust capital position and adherence to regulatory requirements. As of the financial year ending March 31, 2024, Capital Adequacy Ratio stood at 27.39%,

demonstrating its commitment to prudential capital management. This solid capital base provides a solid foundation for the Bank''s operations, supports its growth aspirations, and instills confidence in our stakeholders. The Bank will continue to prioritise capital adequacy, ensuring that it has the necessary buffers to navigate any future challenges and capitalise on emerging opportunities in the dynamic banking landscape.

(^5 Capital and Debt Structure

a) Authorised Share Capital:

The Bank had authorised capital of ? 50.00 crores and during the year under review, there has been no change in the authorised share capital.

b) Issued and Subscribed Share Capital:

The Bank has issued, subscribed and paid up Share Capital of ? 45.04 crores as on March 31, 2024. The Bank, during the current year, has issued and allotted 27,632 equity shares on May 26, 2023, 76,500 equity shares on November 06, 2023 of ?10/- each at a premium of ? 88/-(i.e. at the total issue price of ? 98/-) per share to employees of the Bank and 12,850 Equity

Shares have been issued and allotted to Material Risk Takers (MRTs as identified by the Board in terms of Compensation policy) on May 26, 2023 of ? 10/- each at face value in the form of Employee Stock Option as per ESOP Plans of the Bank. Further, the Bank has allotted 10,57,700 equity shares, on preferential basis, to Max Life Insurance Company Limited on June 17, 2023 of ? 10/- each at a premium of ? 458/- (i.e. at the total issue price of ? 468/-) per share. The Bank has allotted 96,15,384 equity shares of ? 10/- each at a premium of ?458/- (i.e. at the total issue price of ? 468/-) per share on February 13, 2024 to successful allottees pursuant to Initial Public Offer ("IPO") of the Bank. The equity shares issued during the year under review rank pari-passu with the existing equity shares of the Bank.

With respect to disclosure under Regulation 32(1) of SEBI Listing Regulations, the Audit Committee of the Board at its meeting held on April 24, 2024, had reviewed and confirmed that the funds raised through IPO during the year have been fully utilised for the intended object as mentioned in the offer document and there was no deviation or variation in utilisation of the said funds.

6 Listing of Equity Shares of the Bank with BSE

and NSE

The listing of the Initial Public Offering (IPO) of Capital

Small Finance Bank Limited was made on February

14, 2024 on BSE Limited and National Stock Exchange of India Limited and thereafter the equity shares of Capital Small Finance Bank Limited becomes open for trade for public at large.

The listing fee for the FY 2024 - 2025 have been duly paid.

^7 Disclosure regarding Employee Stock Option schemes

Capital Small Finance Bank Limited - Employees Stock Option Plan 2018 ("CSFB ESOP Plan 2018") was approved by the shareholders of the Bank in the Annual General Meeting held on August 18, 2018, amended further in Extra Ordinary General meeting held on October 22, 2021, for granting equity options to its employees. Further the Capital Small Finance Bank Limited - Employees Stock Option Plan for Material Risk Takers ("CSFB ESOP Plan MRT") was approved by the shareholders of the Bank through Postal Ballot on July 11, 2020, amended further on October 22, 2021, for granting equity options to Material Risk Takers (MRTs as identified by the Board in terms of Compensation policy). Further, Capital Small Finance Bank Limited - Employees Stock Option Plan 2023 ("CSFB ESOP Plan 2023") was approved by the shareholders of the Bank in the Extra Ordinary General Meeting held on May 12, 2023 for granting equity options to its employees. The details of the said ESOP schemes as required under Rule 12 (9) of the Companies (Share Capital and Debentures) Rules, 2014 are as under:

Scheme	CSFB ESOP	CSFB ESOP	CSFB ESOP
	Plan 2018	Plan for MRTs	Plan 2023
Date of Shareholders approval	August 18, 2018	July 11, 2020	May 12, 2023
Total number of Options approved	8,54,720	1,00,000	6,85,049
Exercise price per Option	?98	?10	?171
Total No. of Options outstanding at the beginning of the year	3,97,893	32,133	-
Total Options granted during the year	-	13,875	6,82,000
Total Options vested during the year	-	12,850	-
Total Options exercised	1,04,132	12,850	-
Total number of shares arising as a result of exercise of Option	1,04,132	12,850	-
Options forfeited / lapsed	38,761	26,741	1,500

Scheme	CSFB ESOP Plan 2018	CSFB ESOP Plan for MRTs	CSFB ESOP Plan 2023
Total Options in force as on March 31,2024	2,55,000	6,417	6,80,500
Variations in terms of Options	Nil	Nil	Nil
Money realised by exercise of Options	?1,02,04,936	?1,28,500	-
Details of number of Stock Options granted to	KMP :	KMP :	KMP :
Directors and KMPs during the year	Mr. Munish Jain:	Mr. Munish Jain:	Mr. Munish Jain:
	NIL	13,875	NIL
	Mr. Amit Sharma:	Mr. Amit Sharma:	Mr. Amit Sharma:
	NIL	NIL	3,000
Any other employee who receives a grant of Options in any one year of Options amounting to five percent or more of total Options granted during that period	Nil	Nil	Nil
Identified employees who were granted options, during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding, warrants and conversions) of the Bank at the time of grant	Nil	Nil	Nil

fll Non-Convertible Bonds

During the financial year under review:

• The Bank has issued and allotted 3,099 Unsecured Redeemable Subordinated Non- Convertible (Lower Tier-II) BASEL II Compliant Bonds 2023 - 24 (SERIES XXI) in the nature of debentures on May 26, 2023 of ?1,00,000 each at par aggregating to ?30,99,00,000/- on private placement basis with coupon rate of 10% p.a. (Simple Interest) and redemption date of May 26, 2033.

• The Bank has redeemed 503 units of 11% Unsecured Redeemable Non-Convertible Subordinated Bond (Lower Tier II) in the nature of Debenture Series - VIII (ISIN: INE646H08137), on May 04, 2023 and the interest amount along with principal amount due thereon was credited to the accounts of debentures holders as on May 04, 2023.

• The Bank has redeemed 310 units of 11% Unsecured Redeemable Non-Convertible Subordinated Bond

(Lower Tier II) in the nature of Debenture Series - IX (ISIN: INE646H08145), on May 20, 2023 and the interest amount along with principal amount due thereon was credited to the accounts of debentures holders as on May 20, 2023.

^9 Sweat Equity Shares and Equity Shares with Differential Rights

In respect of the disclosure as per Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014, the Bank has not issued any Sweat Equity Shares during the financial year under review.

Pursuant to Rule 4(4) of Companies (Share Capital and Debentures) Rules, 2014, the Bank has not issued any Equity shares with differential right during the financial year under review.

Listed Securities, Debenture Trustee Detail and Credit Rating

The debt securities of the Bank issued in the form of Upper Tier-II Bonds & Lower Tier II Bonds, which are listed on the BSE Limited and detail of the same is as under:

NCD Series	Coupon	ISIN	Rating by	Rating by	Rating by Care	Rating by Care
	Rate		Brickwork	Brickwork	Ratings Limited	Ratings Limited
			Ratings India	Ratings India	on March 13,	on March 12,
			Private Limited	Private Limited	2023	2024
			on April 12,	on April 12,
			2023	2024
Unsecured	11.75%	INE646H08012	BWR A	BWR A	CARE A-; Stable	CARE A-; Stable
Redeemable Non-Convertible (Upper Tier II), Basel I Compliant Bonds 2014-15 (Series XI)			Outlook: (Stable) (Reaffirmation)	Outlook: (Stable) (Reaffirmation)	(Single A Minus; Outlook: Stable)	(Single A Minus; Outlook: Stable)
Unsecured	11.75%	INE646H08020	BWR A	BWR A	CARE A-; Stable	CARE A-; Stable
Redeemable Non-Convertible (Upper Tier II), Basel I Compliant Bonds 2015-16 (SERIES XIII)			Outlook: (Stable) (Reaffirmation)	Outlook: (Stable) (Reaffirmation)	(Single A Minus; Outlook: Stable)	(Single A Minus; Outlook: Stable)

The Bank has got the following credit rating in respect of unlisted debt securities of the Bank issued in the form of Lower Tier-II Bonds

NCD Series	Coupon	ISIN Rating by	Rating by	Rating by Care	Rating by
	Rate	Brickwork	Brickwork	Ratings Limited	Care Ratings
		Ratings India	Ratings India	on March 13,	Limited on
		Private Limited	Private Limited	2023	March 12,
		on April 12,	on April 12,		2024
		2023	2024
Unsecured	10%	INE646H08129 BWR A	BWR A	CARE A; Stable	CARE A; Stable
Redeemable		Outlook:	Outlook:
Non-Convertible		(Stable)	(Stable)
Lower Tier II Basel-II Compliant Bonds 2018-19 in the nature of debentures (Series-XVII)		(Reaffirmation)	(Reaffirmation)

Contact Details of Debenture Trustee:

Name : IDBI Trusteeship Services Limited Address : Universal Insurance Building, Ground Floor, Sir PM. Road,

Fort, Mumbai - 400001 E-mail : [email protected] Tel No. 91-22-40807000

Dematerialisation of Securities

The Bank has issued ISIN for the Equity Shares and all the debt securities by NSDL and CDSL. The equity Shares of all the Directors, KMPs and Promoters have been dematerialised and the Bank is making all possible efforts to make the security holders aware and get their securities converted into Dematerialised form. Out of total paid up capital 85.50% of equity shares are in dematerialization form.

|12 Compliances as per the Reserve Bank of India and the Government of India

The Bank has made statutory compliances with respect to all the applicable rules/regulations/ guidelines/notifications issued by the Reserve Bank of India and the Government of India.

(13 Particulars of employees

The information in terms of Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure A. Further, the statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure B and forms part of this report. The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. In terms of Section 136 of the Act, the same would be available for inspection during working hours at the Registered Office of the Bank. A copy of this

statement may be obtained by the Members by writing to the Company Secretary of the Bank.

14 Transfer of unclaimed dividend to Investor Education and Protection Fund

Pursuant to the relevant provisions of Section 125 of the Companies Act, 2013 and the relevant rules made thereunder, the amount of unpaid dividends that are lying unclaimed for a period of 7 years from the date of its transfer to the unpaid dividend account, is liable to be transferred to Investor Education and Protection Fund ("IEPF").

Shareholders may note that both the unclaimed dividend and corresponding shares, which have been transferred to IEPF in previous financial years, including all benefits arising on such shares, can be claimed from IEPF as per the procedure provided under the applicable provisions of the Companies Act, 2013. The Company sends periodic intimation to shareholders, advising them to lodge their claims with respect to unclaimed dividend. Mr. Amit Sharma, Company Secretary, has been appointed as nodal officer to ensure compliance with the IEPF Rules. The detail of Nodal officer is available on the website of the Bank.

Accordingly, Unclaimed Dividends for and up to the financial year ended March 31, 2016 have already been transferred to the IEPF. Further, please note that the Unclaimed Dividend in respect of the financial year ended March 31, 2017 must be claimed by the concerned Shareholders on or before August 28, 2024 failing which it will be transferred to IEPF in accordance with the Rules. The data for the same is available on the website of the Bank at https://www.capitalbank. co.in/investors/disclosures-under-regulation-62-Of-the-LODR/unclaimed-dividends-equity

The details of Unclaimed Dividends as on March 31, 2024 and the last date for claiming the same, prior to its transfer to the IEPF. are as under:

Dividend for the year ended	Date of declaration of Dividend	Last date for claiming Dividend	Unclaimed Dividend as on March 31, 2024 (Amt. in ?)
March 31, 2017	July 22, 2017	August 28, 2024	2,21,556.40
March 31, 2018	August 18, 2018	September 24, 2025	2,16,652.80
March 31, 2019	September 27, 2019	November 03, 2026	1,04,140.00
March 31, 2020	-	-	-
March 31, 2021	August 20, 2021	September 26, 2028	1,39,522.00
March 31, 2022	August 05, 2022	September 11, 2029	5,52,360.58
March 31, 2023	August 11, 2023	September 10, 2030	25^7,08,493.50

Transfer of Underlying Equity shares in respect of the unclaimed Dividend to IEPF

Pursuant to the relevant provisions of Section 124 and Section 125 of the Companies Act, 2013 read with the IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended from time to time, the unclaimed Dividend and the underlying Equity Shares of the Bank for the Financial Year 2015 -16 (in case where the Dividend for subsequent 7 financial years have not been claimed by the concerned Shareholder), were liable to be transferred by the Bank to IEPF Authority and the same has been transferred, pursuant to the notification issued by the Ministry of Corporate Affairs (MCA) Dated October 16, 2017.

15 Annual Return pursuant to sub- section (3) of Section 92 of the Companies Act, 2013

The Annual Return of the Bank is available on the website of the Bank at www.capitalbank.co.in in the format (MGT-7) prescribed under the Act.

16 Requirement for maintenance of cost records

The cost records as specified by the Central Government under section 148(1) of the Companies Act, 2013, are not required to be maintained by the Bank.

17 Disclosure under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014

Energy Conservation:

Being a Banking Company, energy consumed during this period is only in the form of electricity and diesel used in generators. The Bank has allocated specific cost budgets for this purpose and to reduce electric waste for Head Office and all its branches. The same is also monitored on periodical basis. Other measures like use of LEDs, power saver air conditioning equipment etc. are being installed for conserving the energy. There is no capital investment on energy conservation equipment other than specified.

Technology Absorption:

We at Capital Small Finance Bank Limited (CSFB) believe that the banks with the ability to adopt and integrate information technology will dominate in the highly competitive domestic market. Accordingly, the Bank continues to leverage information technology as a strategic tool in business operations for customer delight by offering efficient and improved services with low cost and using it as a tool to improve staff productivity, increasing efficiency and more efficient & effective control over banking operations.

We are convinced that investing in IT is critical and also understand that its potential and consequences on the banking is enormous. That is why the Bank since its inception is equipped with a full-fledged Information Technology Department with required manpower to strengthen develop, maintain and support IT infrastructure.

Foreign exchange earnings and outgo:

There was no foreign exchange earnings or outgo during the year under review.

18 Disclosures under Section Sec 134(3)(l) of the Companies Act, 2013

There are no material changes and commitments, affecting the financial position of the Bank, which has occurred between the end of the financial year of the Bank to which the financial statements relates and date of this report.

(19 Details of significant & material orders passed by the regulators or courts or tribunals

There are no significant material orders passed by the Regulators or Courts or Tribunal which would impact the going concern status of the Bank and its future operations.

^0|j Disclosure of Penalties imposed on the Bank during the Financial Year

I. Please refer note 16 to Schedule 18 forming part of the financial statements, which forms part of this annual report.

II. Penalties imposed by stock exchanges or SEBI or any statutory authority, on any matter relating to capital markets

During the review period, the Company was listed on Stock Exchanges on February 14, 2024. Consequently, the Quarterly Results for the Quarter and Nine Months Ended December 31, 2023 were approved by the Board of Directors on February 27, 2024, and subsequently submitted to BSE Limited on the same date, thus resulting a delay of 13 days, for which penalty was imposed by BSE Limited and the same has been deposited by the Company in compliance with SEBI Listing Regulations.

^21 Deposits

Being a Banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014 read with Section 73 and 74 of the Companies Act, 2013 and Companies (Acceptance of Deposits) Rules, 2014 are not applicable. The details of the deposits received and accepted by your Bank as a Banking company have been disclosed in the financial statements for the financial year ended March 31,2024.

|22 Asset-Liability and Risk Management pursuant to section 134(3)(n) of Companies Act, 2013

The Bank has formulated and adopted a robust risk management framework. Whilst the Board is responsible for framing, implementing and monitoring the said risk management framework, it has delegated its powers relating to monitoring and reviewing of risk associated with the business of the Bank to the Risk Management Committee. Bank follows an integrated approach to managing risks and the processes are embedded in the fundamental business model. The Risk Management Landscape in the Bank covers the stages of identifying, assessing, measuring, managing, controlling and reporting risk concerns across all the risk classes viz. Credit, Market and Operational Risks and Liquidity Risk. The Risk Management Policies adopted and reviewed periodically articulate, codify the strategy, structure, processes and systems to

manage bank wide risks. Expanding business arenas, deregulation and globalisation of financial activities, emergence of new financial products and increased level of competition has necessitated the need for an effective and structured risk management practice in financial institutions.

The Bank has adopted an integrated approach for the management of risk. Effective internal policies are developed in tune with the business requirements and best practices. The Bank has formulated ‘Risk Management Policy'' which also includes Internal Capital Adequacy Assessment Policy (ICAAP) for identifying and measuring various operational, credit, market and solvency risks. Operational risks are managed through comprehensive systems of internal control, establishing systems and procedures to monitor transactions, maintaining key back-up procedures and undertaking regular contingency planning. We constantly strive to enhance the risk management capabilities in accordance with the emerging regulatory guidelines and the broad risk management principles. The Bank reviews the risk management system and the progress made in implementing the RBI guidelines on risk management, on a quarterly basis. The Asset Liability Management Committee (ALCO), consisting of the Bank''s senior management and the Managing Director, is responsible for ensuring adherence to the limits set by the Board as well as for deciding the business strategy of the Bank (on the assets and liabilities sides) in line with the Bank''s budget and decided risk management objectives. The Committee actively manages and controls the structure of assets and liabilities and interest rate sensitivities with a view of optimising profits besides maintaining capital adequacy and sufficient liquidity. Statements for Structured Liquidity, Liquidity Coverage and Interest Rate Sensitivity of the bank is being prepared in line with the RBI guidelines to actively manage the liquidity and interest rate risks.

Liquidity Risk Management has been at the core of sound risk management practices of banking industry in the modern age. The Liquidity risk is the potential inability to meet the Bank''s liabilities as they become due. It arises when the Banks are unable to generate cash to cope with a decline in deposits or increase in assets.

The Bank gives utmost importance to manage various risks in most efficient way and has articulated comprehensive structure for liquidity risk management through various policy including Contingency Funding Plan (CFP) which aims to address the adverse liquidity

scenarios. It is recommended by ALCO to Risk Management Committee of Board (RMCB) on annual basis for approval and is reviewed quarterly by the ALCO. In case, any review by the ALCO results in the funding gap, ALCO will be responsible to establish an action plan on the same which shall be approved by the RMCB. Further the decision to use the lines of defence as per the CFP lies with the ALCO. The contingency is defined in various scenarios. The comprehensive CFP endeavours to monitor liquidity on real time basis, with a wide and unrelated range of lines of defence, along with proper channel of reporting, escalation and decision making.

The Bank has constituted a Risk Management Committee. The details of the said committee and its terms of reference are set out in the report on corporate governance, which forms part of this annual report.

Further, the Bank has formulated Stress Testing Framework for evaluation of Bank''s financial position under a severe but plausible scenario to assist in decision making within the Bank. It enables the Bank in forward looking assessment of risks. It facilitates internal and external communication and helps senior management understand the condition of the Bank in the stressed situations. Stress testing outputs are extremely useful in decision making process in terms of potential actions like risk mitigation techniques, contingency plans, capital and liquidity management in stressed conditions.

Stress testing forms an integral input of the internal capital adequacy assessment process (ICAAP), which requires the Bank to undertake forward-looking stress testing that identifies severe events or changes in market conditions that could adversely impact the Bank. The stress testing reports provide the senior management with a thorough understanding of the material risks to which the Bank may be exposed and to help in potential actions like mitigation techniques, contingency plans, capital and liquidity management in stressed conditions etc. Further, stress testing is an important input in identifying, measuring and controlling funding liquidity risks, in particular for assessing the Bank''s liquidity profile and the adequacy of liquidity buffers in case of both bank-specific and market-wide stress events.

The Bank has a strong impetus on risk management and it realised that risk management is backbone of banking industry and being an evolving topic, the bank attempts to keep evolving various newer avenues to

manage risk effectively and efficiently as per the risk management policy and framework of the bank so that the whole structure is well aligned with the risk appetite, risk assessment and risk mitigation strategy of the Bank. The risk management committee monitor and review the risk management plan and to perform functions as defined under the Act and SEBI Listing Regulations.

Independent Directors Declaration in terms of Section 134(3)(d); Section 149(6) of Companies Act, 2013 and Regulation 16(1)(b) of SEBI Listing Regulations

The composition of Board of Directors of the Bank is governed by the provisions of the Companies Act, 2013 and the Banking Regulation Act, 1949. The Board of the Bank as on March 31, 2024 consisted of thirteen Directors, out of which seven directors are independent Directors.

Ms. Rachna Dikshit, Mr. Kamaldeep Singh Sangha and Mr. Sukhen Pal Babuta were appointed as Independent Director, during the year under review, on the Board of the Bank.

The Bank has obtained declaration of Independence from Mr. Navin Kumar Maini, Mr. Gurpreet Singh Chug, Mr. Sham Singh Bains, Ms. Rachna Dikshit, Mr. Kamaldeep Singh Sangha, Mr. Sukhen Pal Babuta and Mr. Nageswara Rao Yalamanchili and they meet the criteria of independence as laid down under Section 149(6) and 149(7), Schedule IV of the Companies Act, 2013 and Regulation 16(1)(b) & Regulation 25(8) of SEBI Listing Regulations. Further, all the Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Act. The separate meeting of Independent Directors were conducted on February 01,2024 & February 26, 2024.

Pursuant to the Rule 8(5)(iiia) of the Companies (Accounts) Rules, 2014, the Board opines that all the Independent Directors of the Bank adhere to corporate integrity, possess the requisite expertise, experience and qualifications to discharge the responsibilities as an Independent Director as mandated by the Companies Act, 2013 and other applicable laws and fulfil the conditions of independence specified in the Act and the SEBI Listing Regulations and that they are independent of the management.

All the Independent Directors of the Bank have been registered and are members of the Independent Directors Databank maintained by the Indian Institute of Corporate Affairs (IICA). Three Independent

Directors were already granted exemption. Three Independent Directors had already passed the online Proficiency Self-Assessment test. Mr. Kamaldeep Singh Sangha shall appear for Online Proficiency SelfAssessment Test in due compliance of law.

0 Company''s Policy on Directors'' Appointment & Remuneration including criteria for determining Qualifications, Attributes, Independence etc. in terms of Section 134(3)(e); Section 178(1) & (3) of the Companies Act, 2013 Basis the ‘Fit and Proper'' criteria laid down by the Reserve Bank of India, the Nomination and Remuneration Committee (NRC) conducts the due diligence of the Board members on yearly basis except for the Directors who are member of the NRC.

Further Board also conducts due diligence of all the Directors on yearly basis. The due diligence process involves considering the appointment and remuneration of Directors and Key Managerial Personnel as per the guidelines issued by Reserve Bank of India and the Companies Act, 2013. The process contains detailed procedures for determining qualifications, positive attributes, due diligence mechanism and reference checks for appointment of Directors and Key Managerial Personnel.

The Bank has put in place the Compensation Policy for Employees including MD & CEO, WTD and other Material Risk Takers (MRTs) and Comprehensive Compensation policy for Non-Executive Directors with a key objective to support organisational strategy by helping to build a competitive, high performance and accompany with an entrepreneurial culture that attracts, retains, motivates and rewards high performing employees as well as properly compensate the employees vis-a-vis their risk and performance involvement. The policies are available on the website of the Bank at https://www.capitalbank.co.in/ investors/secreterial-policies.

25 ince Evaluation of Board in terms of

Section 134(3)(p) of the Companies Act, 2013

The Nomination and Remuneration Committee (NRC) and the Board has approved the evaluation process for evaluating the performance of the Board and Committees as whole and individual director. The separate meeting of Independent Directors held on February 26, 2024 which carried out the annual evaluation of the performance of Non- Executive Non-Independent Directors, Executive Directors, Chairperson, Board as a Whole and Board Committees.

Further the Board of Directors in its meeting held on February 27, 2024 had also conducted the Annual evaluation of performance of Board as a whole, Board Committees, Chairperson, Managing Director, NonExecutive Directors

In accordance with the provisions of Section 149(8) read with Schedule IV, Section 178(2) of the Companies Act, 2013 Regulation 17 and other applicable Regulations of SEBI Listing Regulations, and in consonance with Guidance Note on Board Evaluation issued by the SEBI, the Board assesses the performance of the Individual Director, Board Committees and Board as a whole on the basis of various criteria with the aim to improve the effectiveness of the individual Director, Committees and the Board. The description and process of annual performance evaluation has been provided in Report on Corporate Governance annexed with Board''s Report as Annexure C.

(26 State of the Company''s Affairs in terms of Section 134(3)(i) of the Companies Act, 2013

The state of affairs of the Company in details has been given separately in different sections of the Board Report and also under Management Discussion and Analysis. There was no change in status of the Bank during the year ended March 31, 2024.

27 Name of the companies which have become or ceased to be Subsidiaries/ Associates or Joint Ventures during the year in terms of Section 134(3) (q) read with Rule 8(5)(iv) of Companies (Account) Rules, 2014

No company have become or ceased to be the Subsidiary, Joint venture or Associate Company of the Bank during the financial year.

¦_ 28 Disclosure Under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 in terms of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 The Bank has formulated Internal Complaint Committees at Head office level and at Cluster level (for Branches). The composition of the committees is in consonance with the provisions of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. These committees are formulated for redressal of complaints for Sexual Harassment of women at the workplace ("SH") and take all necessary measures to ensure a harassment-free workplace. The Bank believes that all employees,

including other individuals who are dealing with the Bank have the right to be treated with dignity.

The following is the summary of the complaints received and disposed off during the Financial Yea 2023-24:

In Head Office (including Regional Offices)

a) No. of SH complaints received: Nil

b) No. of SH complaints disposed off: Nil In Branches:

a) No. of SH complaints received: Nil

b) No. of SH complaints disposed off: Nil

The Committee believes in ethics and takes appropriate action against the employees who have violatec the norms, which includes disciplinary action such as warning letter and in some cases termination o employment depending upon the gravity of violation.

^29 Adequacy of Internal Financial Controls Relatec to Financial Statements

The Companies Act, 2013 has introduced a reasonably advanced reporting concept for auditors i.e. Interna Financial Control (IFC) over financial reporting Auditors of the Company are required to report or adequacy and operating effectiveness of interna financial controls of the Company with report or financial statements prepared under section 143 o the Companies Act, 2013.

The Bank as per the requirement of section 134(5)(e'' of the Companies Act, 2013 has adopted the policies and procedures to ensure orderly and efficien conduct of its business, including adherence to the Company''s policies, safeguarding of its assets prevention and detection of frauds and errors accuracy and completeness of accounting records timely preparation of reliable financial information.

During the year under review, the Statutory Auditors and the Secretarial Auditors have not reported any instances of frauds committed in the Bank by its Officers or Employees to the Audit Committee unde section 143(12) of the Companies Act, 2013, details o which needs to be mentioned in the Report.

^30 Directors

The Board of the Bank is duly constituted in accordance with the provisions of Banking Regulation Act, 1949 the Companies Act, 2013 and other applicable law/ guidelines.

Mr. Sarvjit Singh Samra has held the office as Managing Director & CEO of the Bank w.e.f. April 24, 2019 for a period of three years. He has been further re-appointed as Managing Director and CEO of the Bank w.e.f. April 24, 2022 for a period of three years. Mr. Sarvjit Singh Samra has been instrumental in taking key decisions from day one that have contributed to the Bank emerging as the most preferred Bank in its area of operation. His vision to serve common man and the local touch has given the Bank a competitive edge over other banks operating in the area and the Bank is able to provide safe, efficient and service oriented repository of savings to the local community while reducing their dependence on moneylenders by making need-based credit easily available.

Part-time Chairman

Pursuant to the approval of the Reserve Bank of India, Mr. Navin Kumar Maini (DIN: 00419921) is acting as Part-time Chairman of Capital Small Finance Bank Limited for a period of three years w.e.f. April 24, 2022.

Retirement/Appointment of Directors in compliance to Section 10(2A)(i) of the Banking Regulation Act, 1949

The Board is duly constituted as per the provisions of Banking Regulation Act, 1949, Companies Act, 2013, RBI guidelines for Small Finance Banks and SEBI Listing Regulations, as may be applicable.

During the year under review, Mr. Gurdeep Singh (DIN: 01572748) ceased to be the Director of the Bank w.e.f June 13, 2023 pursuant to his resignation due to personal circumstances and commitments.

During the year under review, Ms. Harmesh Khanna (DIN: 03078018) ceased to be the Director of the Bank w.e.f August 21,2023 on completion of her tenure.

During the year under review, Mr. Rakesh Soni (DIN: 07262045) ceased to be the Director of the Bank w.e.f August 21, 2023 on completion of his tenure.

Further, during the year under review, with the recommendation of Nomination and Remuneration Committee, Mr. Munish Jain (DIN: 10132430) was appointed as Additional Director w.e.f. August 28, 2023 and thereafter appointed as Whole Time Director (designated as Executive Director) of the Bank for a period of three years w.e.f. August 28, 2023 till August 27, 2026. The shareholders of the Bank approved the said appointment in Extra - Ordinary General meeting held on September 25, 2023. He also remained as the Chief Financial Officer of the Bank during the year (ceased as Chief Financial Officer of the Bank w.e.f. April 24, 2024).

Mr. Sarvjit Singh Samra Mr. Munish Jain

Mr. Amit Sharma

f- Mr. Sarvjit Singh Samra Mr. Munish Jain

Mr. Amit Sharma \__ _

Further, during the year under review, the Board of Directors in its meeting held on June 26, 2023 on the recommendation of Nomination and Remuneration Committee, had appointed Mr. Kamaldeep Singh Sangha (DIN : 08242130) and Ms. Rachna Dikshit (DIN : 08759332) as Additional Directors (Independent) w.e.f. June 26, 2023.

Further, during the year under review, the Board of Directors in its meeting held on August 11,2023 on the recommendation of Nomination and Remuneration Committee, had appointed Mr. Sukhen Pal Babuta (DIN : 01739016) as Additional Director (Independent) w.e.f. August 11, 2023.

Further, during the year under review, Mr. Navin Kumar Maini (DIN : 00419921) was re-appointed as Independent Director for second term of three years w.e.f. January 30, 2024 to January 29, 2027 and the Shareholders of the Bank, vide special resolution, approved the same in its Extra - Ordinary General meeting held on September 25, 2023.

Further, during the year under review, Mr. Gurpreet Singh Chug (DIN : 01003380) was re-appointed as Independent Director for second term of three years w.e.f. February 23, 2024 to February 22, 2027 and the Shareholders of the Bank, vide special resolution, approved the same in its Extra - Ordinary General meeting held on September 25, 2023.

Further the Shareholders of the Bank in the Annual General Meeting held on August 11,2023 had approved the appointment of Mr. Kamaldeep Singh Sangha (DIN : 08242130) & Ms. Rachna Dikshit (DIN : 08759332) as Independent Director w.e.f. June 26, 2023. Further, the shareholders of the Bank in Extra - Ordinary General meeting held on September 25, 2023 approved the appointment of Mr. Sukhen Pal Babuta (DIN : 01739016) as Independent Director w.e.f. August 11, 2023.

Directors Retiring by Rotation

In terms of Section 152 of the Companies Act, 2013, Mr. Mahesh Parasuraman (DIN: 00233782) Nominee Director being longest in the office shall retire at the forthcoming Annual General Meeting and being eligible for re- appointment, offers himself for reappointment.

Appointments/Resignations of the Key Managerial Personnel

The Bank had following Key Managerial Personnel ("KMPs") as on April 1, 2023:

Name Designation

f \ Managing Director and Chief Executive Officer

Chief Financial Officer and Chief Operating Officer

Company Secretary and Compliance Officer L J

The Board in its meeting held on August 29, 2023 has elevated Mr. Munish Jain as Executive Director and Chief Financial Officer. Accordingly, as on March 31, 2024, following are the KMPs of the Bank:

Name - Designation

r Managing Director and

Chief Executive Officer

Executive Director and Chief Financial Officer

Company Secretary and

Compliance Officer

Further, there was no appointment / resignation of any Key Managerial Personnel during the financial year. Post the completion of FY24, the Board of Directors appointed Mr. Aseem Mahajan as the Chief Financial Officer w.e.f. April 24, 2024 of the Bank and pursuant to said appointment, Mr. Munish Jain ceased to hold the position of Chief Financial Officer of the Bank as on even date.

31 Corporate Governance

Corporate governance is the combination of rules, processes or laws by which businesses are operated, regulated or controlled and that aims at effective, transparent, and responsible management of a company within the applicable statutory and regulatory structures.

Over the last several years, the external environment in which public companies operate has become increasingly complex for companies and shareholders alike. The increased regulatory burdens imposed on public companies in recent years have added to the costs and complexity of overseeing and managing a corporation''s business and bring new challenges from operational, regulatory and compliance perspectives. Many cases of Management failures and financial crisis have been reported in the finance industry during the financial year and all these are the cause of poor corporate governance.

Your Bank has formulated a Corporate Governance framework which ensures timely disclosures and filing of correct information regarding our financials and performance, as well as the leadership and governance of the Bank. The Board is constituted professionally with a strong commitment to shareholder value, transparency, accountability, ethical standards and regulatory compliances.

The Board''s supervisory role is independent and separate from the executive management and the Board Committees. The Composition of the Board of Directors as on March 31,2024 comprised of majority of Independent directors and this is a great step of the Bank towards better Corporate Governance.

The Board presently comprises of thirteen Directors including one-woman director and it provides diverse combination of professionalism, knowledge, expertise and experience as required in the banking business for long-term success. The Board has seven Independent Directors constituting more than one-half of its total membership strength including one women Director and three Nominee Directors. The Directors have distinguished themselves in different walks of life

through experience and expertise. The Company recognises and embraces the benefits of having a diverse Board of Directors to enhance the quality of its performance. The Company considers increasing diversity at Board level as an essential element in maintaining a competitive advantage in the complex business that it operates. The identified key skills/ expertise/competencies of the Board and mapping with individual director are provided in the ‘Corporate Governance Report'', forms a part of this Report.

The Company has duly framed policies and codes which are required under the Act, SEBI Listing Regulations and other Laws/Rules/Regulations as applicable on the Company. The policies/codes as required to disclose on the website of the Company are available at https://www.capitalbank.co.in.

A report on Corporate Governance and Certificate from the Company Secretary in Practice confirming compliance of conditions, as stipulated under SEBI Listing Regulations, is annexed as Annexure C and forms an integral part of this Annual Report.

Code of Conduct for Directors and SMPs

In accordance with Regulation 17(5) of SEBI Listing Regulations, the Bank has adopted the Code of Conduct for Directors and Senior Management Personnel ("SMPs"). The code of conduct sets forth the guiding principles for orderly & fair conduct by Directors and SMPs. All Directors and SMPs have affirmed the compliance of the code for the FY24 and a declaration to this effect signed by the MD & CEO forms part of Report on Corporate Governance annexed with Board''s Report as Annexure C. The Bank''s Code of Conduct for Directors and SMPs is disclosed on the website of the Bank at https://www. capitalbank.co.in/investors/secreterial-policies

MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD ^	\
i • Board of Directors	>
Details of the Board of Directors and Board meetings held during the year, are provided in the ‘Corporate Governance Report'', forms a part of this Report.
During the year under review, twelve Board Meetings were convened and held, the details of which are given in the ‘Corporate Governance Report'', forms a part of this Report. The maximum interval between any two consecutive —

The Bank has several committees which have been established as a part of best Corporate Governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes. The Bank has following Committees of the Board as on March 31, 2024

Customer Service	Committee for Review
Committee of	of Wilful	/ ^
Board	Defaulters ,	Committee for
IPO	/	Review of Non
Committee	¦ /	- Cooperative
\ ¦		Borrowers
W \ Wfryjf
JfiPQ		h
Special		Nomination and
Committee on		Remuneration
¦ Frauds ¦		Committee
1 Stakeholders''		Securities
Relationship \ Committee		Committee
		_ 1
bid		r ooo m Audit Committee
IT Strategy Committee	''IS® CS5>
		\ A
k. / 1	Corporate
Risk	Social
Management	Responsibility
Committee	Committee
Management Committee
	\
^^4

Details of the Committees, along with their composition, charters and meetings held during the year, are provided in the ‘Corporate Governance Report'', forms a part of this Report. During the financial year 2023-24, the Board has accepted all the recommendations of its Committees.

As per the requirement of the Section 149(8) read with Schedule IV of Companies Act, 2013 (Code for Independent Directors) and Regulation 25 of SEBI Listing Regulations, the independent directors of the Company shall hold at least one meeting in a financial year, without the attendance of non-independent directors and members of management.

During the year under review, the Independent Directors of the Bank met 2 (Two) times on February 01,2024 & February 26, 2024.

^33 Details of General Body Meetings

r	S.	Year	Particulars	Date and	Location	Special Resolution passed, if any
L	No.		of Meeting	Time
r	1	2023 -	Extra -	May 12,	Through Video	Issuance of equity shares by way of preferential
		2024	Ordinary	2023 at	Conferencing	issue on private placement basis and execution of
			General	11:30 am	("VC") / Other	transaction documents in respect thereof
			Meeting		Audio -Visual Means	To consider and approve CSFB Limited - Employees
					("OAVM")	Stock Option Plan 2023 "CSFB ESOP Plan 2023"
						To re-appoint Mr. Gurdeep Singh (DIN : 01572748) as a non- executive independent director for a second term of three years
	2	2023 -	24th Annual	August 11,	Through Video	To approve the revised remuneration of Mr. Sarvjit
		2024	General	2023 at	Conferencing	Singh Samra (DIN: 00477444), Managing Director &
			Meeting	11:00 am	("VC") / Other	CEO for the period commencing from April 24, 2022
					Audio -	till April 23, 2023
					Visual Means ("OAVM")	To approve the updated remuneration of Mr. Sarvjit Singh Samra (DIN: 00477444), Managing Director &
L						CEO for financial year 2023-24 onwards
r	3	2023 -	Extra -	September	Through Video	To consider and approve the Initial Public Offer
		2024	Ordinary	25, 2023 at	Conferencing	To consider and approve adoption of new Articles of
			General	11:00 am	("VC") / Other	Association
			Meeting		Audio -
					Visual Means	to re-appoint Mr. Navin Kumar Maini
					("OAVM")	(DIN : 00419921) as a non- executive Independent Director for a second term of three years
						To re-appoint Mr. Gurpreet Singh Chug (DIN : 01003380) as a non- executive Independent Director for a second term of three years
						To approve the appointment of Mr. Munish Jain (DIN : 10132430) as Whole time Director (designated as Executive Director) of the Bank

As a responsible citizen, Capital Small Finance Bank Limited strongly believes in the idea of paying back to the society in order to run a sustainable business. Accordingly, in Capital Small Finance Bank Limited Corporate Social Responsibility is considered as an important function. Our Corporate Social Responsibility (CSR) activities include encouraging education, promoting sports, eradicating hunger and improving health care. We are managing education centres for underprivileged children.

The Company''s CSR policy and programmes are in accordance with Section 135 of Companies Act, 2013, the Bank takes multiple initiatives in the areas of education, Rural Sports Development and health. Corporate Social Responsibility Policy of the Bank can also be accessed from the website of the Bank https:// www.capitalbank.co.in/investors/secreterial-policies

The Annual Report on CSR activities as required to be given under Section 135 of the Companies Act, 2013 and Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been provided as Annexure D which forms part of the Board''s Report.

The Bank undertakes its Corporate Social Responsibility activities through Capital Foundation (a Society Registered under the Societies Registration Act, 1860). During the Year under Societies review, the Bank has disbursed the entire amount of its CSR obligation to the Capital Foundation. As per the report received from the Capital Foundation ^1,71,95,835/-including the interest thereon has remained unspent for the FY''24 as some of the Ongoing Projects has not been fully matured. Accordingly, as approved by the CSR Committee, the Capital Foundation has transferred the said unspent amount to Unspent Corporate Social Responsibility Account in accordance with the provisions of Section 135(6) of the Companies Act, 2013.

^35 Green Initiatives

"Unite to make this planet green and clean"

Deforestation is one of the most pressing environmental issues and a harsh reality of the present times. Large-scale deforestation and various other human activities have drastically added to the Global warming and have caused a major shift in weather patterns across the world. Usage of paper

is one of the major reasons for cutting down of trees which in long term is unsustainable.

Keeping in view the harsh reality, the MCA took a great action towards it by coming out with the "Green Initiative in the Corporate Governance" through its circular No. 17/2011 dated April 21, 2011 and No. 18/2011 dated April 29, 2011 dated April 29, 2011.

Under this MCA has provided a welcoming facility of serving notices / documents by companies'' to its shareholders through electronic mode. After this great initiative taken by the MCA, companies'' are no longer required to give Notice including the Annual Return in physical form to its stakeholders who are having email Id. They can provide in electronic mode at the Registered E-mail Id of the stakeholders.

In view of the said concern, we request all the stakeholders to get their E-mail registered with the Bank so to get the Annual Reports at the E-mail ids instead through paper mode.

Also, registering your e-mail address with us will ensure that we can directly connect with you and no important communication from our side will be missed by you as a shareholder of the Bank.

^36 Vigil Mechanism

The Bank has implemented a Whistleblower Policy, which is periodically reviewed, pursuant to which safeguards are being provided against victimisation of employees and Directors. The Policy allows to raise concerns on Reportable Matters (as defined in the policy) such as breach of Bank''s Code of Conduct, fraud, bribery, corruption, employee misconduct, illegality, health & safety, environmental issues and wastage/ misappropriation of bank funds/assets, etc. and also provides for direct access to the Ombudsperson, in exceptional cases. The policy is available on the Bank''s intranet and website of the Bank. The Whistleblower Policy complies with all the requirements of Vigil mechanism as stipulated under Section 177 of the Companies Act, 2013, and other applicable laws, rules and regulations, as may be applicable. The updated Whistleblower Policy is also available on the website of the Bank at link www. capitalbank.co.in.

The Bank has also appointed Chief of Internal Vigilance to ensure compliance with all the internal guidelines issued by the Bank from time to time.

The functioning of the Policy is reviewed by the Audit Committee from time to time. During the review period,

no concern has been reported in accordance with the said policy and none of any complainant has been denied access to the Audit Committee of the Board.

& Loans, Guarantees or Investments in securities

Pursuant to Section 186(11) of the Companies Act, 2013, the provisions of Section 186 of Companies Act, 2013, except sub-section (1), do not apply to any loan made, guarantee given or security provided or investment made by a banking company in the ordinary course of business. Therefore, the said provision is not applicable to the Bank.

^38 The details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end of the financial year:

During the year, no application was made/ proceeding is pending against the Bank.

^39 The details of difference between amount of valuation done at the time of one-time settlement and the valuation done while taking loan from the banks or financial institutions along with the reason thereof:

There was no instance of one-time settlement with any other bank/financial institution during the year ended March 31, 2024.

40 Contracts or Arrangements with Related Parties

All related party transactions that were entered during the Financial Year 2023-24 were in the ordinary course of the business of the Bank and were on arm''s length basis and the same is enclosed as Annexure E in the prescribed format AOC-2 to this Report. There were no materially significant related party transactions entered by the Bank with Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of the Bank. All such Related Party Transactions are being placed before the Board/Audit Committee for approval, wherever applicable.

Members can also refer the disclosure of transactions with related parties during the financial year under review as set out in the note no. 12 of the Schedule 18 of the Financial Statements of the Bank.

4! Disclosure pursuant to Section 197(14) of the Companies Act, 2013

The Bank does not have any holding or subsidiary company, therefore no disclosure is required to be made pursuant to the provisions of Section 197(14) of the Companies Act, 2013 and as per the relevant rules thereunder.

42 Disclosure pursuant to Section 177(8) of the Companies Act, 2013

During the Financial Year 2023- 2024, there was no recommendation of the Audit Committee which was not accepted by the Board.

43 Change in Nature of Business

Pursuant to the relevant provision of Rule 8(5) of the Company (Accounts) Rules, 2014, there is no change in the nature of Business of the Bank.

^44 Auditors & Auditors'' Report

Statutory Auditors and Audit

M/s T R Chadha & Co. LLP, Chartered Accountants (Regd. No. 006711N/N500028) were appointed as Statutory Auditors of the Company for three Financial Years starting from 2021-22 by the Shareholders of the Bank in its Annual General Meeting held on August 20, 2021. The continuation of the term of Statutory Auditors was subject to the approval from Reserve Bank of India every year as per the resolution passed in the AGM. The Reserve Bank of India gave approval of appointment for Financial Years 2021-22 and 2022-23.

The Board of Directors, on the recommendation of the Audit Committee, approved the continuation of the term of M/s TR Chadha & Co. LLP as Statutory Auditor for the FY24 in its meeting held on May 19, 2023 and applied with RBI for approval of the same.

However, as per communication received from the RBI vide email dated September 13, 2023, M/s T R Chadha & Co. LLP has been found ineligible for appointment as Statutory Auditor for FY24.

The Board of Directors of the Bank in its meeting held on February 27, 2024 took note of the casual vacancy and cessation of the term of M/s T R Chadha & Co. LLP and approved the profiles of two firms in order of preference for the appointment as Statutory Auditors of the Bank for the Financial Year 2023-24, subject to the approval of the Reserve Bank of India (RBI).

The Bank has received the approval of Reserve Bank of India (‘RBI'') vide its letter dated March 01, 2024 for the appointment M/s S C V & Co. LLP (FRN 000235N/ N500089), Chartered Accountants as Statutory Auditors of the Bank for the Financial Year 2023-2024 and the Bank has appointed M/s S C V & Co. LLP (FRN 000235N/N500089), Chartered Accountants as Statutory Auditors of the Bank for the Financial Year 2023-2024 till the conclusion of Annual General Meeting to be held in the Financial 2024-25 to fill the casual vacancy.

No qualifications, reservations or adverse remarks are reported by Statutory Auditors of the Bank, in their Audit report. Information referred to in the Auditors'' Report are self-explanatory and do not call for any further comments.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank had appointed M/s Deepak Arora & Associates, Practicing Company Secretaries through its partner Mr. Deepak Arora (FCS No. 5104 and COP No. 3641) to conduct Secretarial Audit of the Bank.

The Secretarial Audit Report is annexed herewith as Annexure F to this report.

No qualifications, reservations or adverse remarks are reported by M/s Deepak Arora & Associates, Practicing Company Secretaries, Secretarial Auditors of the Bank, in their Secretarial Audit report.

Information referred to in the Secretarial Auditors'' Report are self-explanatory and do not call for any further comments.

Cost Audit

The Bank is not required to appoint a Cost Auditor. Therefore, maintenance of cost records as specified under subsection (1) of section 148 of the Companies Act, 2013, is not applicable to the Bank.

Annual Secretarial Compliance Report

A Secretarial Compliance Report, pursuant to Regulation 24A of the SEBI Listing Regulations, for the financial year 2023-24 on compliance of all applicable SEBI Regulations and circulars/ guidelines issued thereunder, has been obtained from M/s Deepak Arora & Associate, Practicing Company Secretaries and the same is available on the website of the Company and Stock Exchanges.

^45 Familiarisation Programme for Independent Directors

In accordance with Regulation 25(7) of SEBI Listing Regulations and RBI guidelines, the Bank, at the Board / Committee meetings, presentations and deep dive sessions, covered important areas of the Bank such as annual plans and strategies, compensation strategy, impact of inflation, non-financial risks, customer services framework, risk management, priority sector lending, liquidity, new regulatory guidelines, etc. during the year under review for the Independent Directors to enable them to familiarise with the Bank, its Management, Bank''s Business, and its operations for better understanding of their responsibilities, roles, and rights for effective contribution in sustainable growth of the Bank. The details thereof is disclosed in the Report on Corporate Governance annexed with Board''s Report as Annexure C and on the website of the Bank under https://www.capitalbank.co.in/ investors/secreterial-policies

^46 Management Discussion and Analysis Report

The Management Discussion and Analysis Report of the financial conditions and results of operations of the Company for the year under review, as required under Regulation 34(2)(e) of SEBI Listing Regulations, is being given separately and forms a part of the Annual Report.

The Board of Directors acknowledge the responsibility for ensuring compliance with the provisions of Section 134(3) (c) read with Section 134(5) of the Companies Act, 2013, in preparation of annual accounts for the financial year ended March 31,2024 and state that:

	¦ ¦ ¦ ¦ ¦	In the preparation of the annual accounts for the financial year ended March 31, 2024, the applicable accounting standards had been followed along with proper explanation relating to material departures;	>
		The Directors had selected accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent to give a true and fair view of the state of affairs of the Company as at March 31, 2024 and of the profit of the Company for that period;	>
		The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
		Directors had prepared the annual accounts on a going concern basis; ^4	r
		The Directors had laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively.	>
		The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and 6 operating effectively.	r

|48 Compliance with Secretarial Standards

The Bank has complied with the all applicable Secretarial Standards issued by the Institute of Company Secretaries of India on regular basis.

^49 Investor Relations

Your Company interacted with investors and analysts through one-on-one meetings, conference call and regular quarterly meetings during the year. Earnings call transcripts/recording of the meeting on quarterly/ event-based meetings are posted on the website of the Company.

^50 Prevention of Insider Trading

In compliance with the provisions of Securities Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (‘SEBI (PIT) Regulations''), the Board has adopted a code of conduct to regulate, monitor and report trading by Designated Persons

to preserve the confidentiality of price sensitive information, to prevent misuse thereof and regulate trading by designated persons. It prohibits the dealing in the Company''s shares by the promoters, promoter group, directors, designated persons and their immediate relatives, and connected persons, while in possession of unpublished price sensitive information in relation to the Company and during the period(s) when the Trading Window, to deal in the Company''s shares, is closed. Pursuant to the above, the Company has put in place adequate and effective system of internal controls to ensure compliance with the requirements of the SEBI (PIT) Regulations. The code is available on the Company''s website at https:// www.capitalbank.co.in/investors/secreterial-policies

The Board of Directors have also formulated a code of practices and procedures for fair disclosure of unpublished price sensitive information containing policy for determination of ‘legitimate purposes'' as a part of this Code, which is available on the Company''s website at https://www.capitalbank.co.in/investors/ secreterial-policies

51 Awards and Recognitions

Honoured with BFSI Best Brands 2024
	Received the LACP Vision Awards Platinum Winner Worldwide in 2023
your Company
has received	Bestowed with the LACP Vision Awards Platinum- Technical Achievement Award in 2023
the following i
II IC lUIIWVIIIU n
awards and
certifications: ''
	Honoured with the LACP Vision Awards Top 100 Reports Worldwide in 2023
	deceived the Great Place to Work certification in 2023

© Acknowledgment

The Board of Directors is grateful to the Government of India, Reserve Bank of India, various State Governments, SEBI, IRDA and regulatory authorities in India and overseas for their valuable guidance, support and cooperation.

The Directors record their sincere gratitude to the Bank''s shareholders, esteemed customers and all other well-wishers for their continued patronage. The Directors express their appreciation for the contribution made by every member of the staff in ensuring high level of growth that the Bank has achieved during the year.

The Board also places on record its gratitude to the Shareholders, Bankers, Customers, Suppliers and other stakeholders who have extended their valuable sustained support, co-operation and encouragement.

The Board would also like to thank BSE Limited, National Stock Exchange of India Ltd., National Securities Depository Limited, Central Depository

Services (India) Limited, Registrar & Share Transfer Agent, Vendors and Service Providers for their continued support & co-operation.

The Directors wish to express their gratitude to Investment Banks & rating agencies for their wholehearted support. The Directors look forward to their continued contribution in realisation of the corporate goals in the years ahead. We wish to apprise our worthy members who have entrusted their trust and confidence in the Bank that Capital Small Finance Bank Limited will venture to strive hard to take long strides ahead with freshly instilled energies.

For and on behalf of the Board of Directors

Sarvjit Singh Samra

Managing Director & CEO DIN: 0047744

Gurpreet Singh Chug

Place : Jalandhar Independent Director

Date : May 09, 2024 DIN: 01003380