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").

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.

^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:

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:

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

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 : itsl@idbitrustee.co.in
Tel No. +91-22-40807000

---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.

Ý-

©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.

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:

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.

Committees of the Board
as on March 31, 2025

*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:

^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

Ý- "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.

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.

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