DEAR SHAREHOLDERS,
The Board of Directors ('Board') of Capital Small Finance Bank Limited ('Bank') are pleased to present the 27
th
Board's report on the business and operations of the Bank together with the audited financialstatements for the financialyear ended
March 31, 2026.
1.
Business Overview
The Board of Directors are pleased to present the financial performance of the Bank for the financial year ended March 31, 2026, a year characterised by strong business growth, stable asset quality and resilient profitability, despite a relatively tighter operating environment.
The key performance highlights are as follows:
As of March 31, 2026, the Bank's
gross advances increased to
`
8,687 crores,
registering a healthy growth of ~21% year-on-year. This growth reflects sustained momentum across core lending segments and continued focus on secured asset expansion
Total deposits crossed
`
10,000 crores, at
`
10,018 crores,
reflecting a robust growth of ~20% year-on-year, supported by branch expansion and deepening of customer relationships
The Bank continued to maintain a stable liability profile, although CASA remained under industry-wide pressure due to a shift towards higher-yielding term deposits Asset quality improved to
Gross NPA at 2.54%
and
Net NPA at 1.24%
as of March 31, 2026, reflecting disciplined underwriting and effective risk management practices
Profitability
Profit After Tax at
`
141.39 crores
•
Return on Assets (RoA)
stood at
1.23%
•
Net Interest Margin (NIM)
moderated slightly to
4.04%
, reflecting evolving interest rate dynamics and competitive pressures on cost of funds During the year, the Bank continued its strategic focus on
balanced growth, operational efficiency and prudent risk management,
while expanding its footprint in both existing and new markets.
The Bank remains committed to strengthening customer relationships, enhancing operational capabilities and building a future-ready institution with a strong foundation for sustainable growth.
The Board expresses its sincere gratitude to all stakeholders for their continued trust and support.
2.
Financial Performance and State of Bank's Affairs
The Financial highlights (standalone) for the year under review, are presented below:
Profit and Loss Summary
` in crores
|
|
FY26
|
FY25
|
Growth (In %)
|
|
Income Earned
|
1,048.60
|
908.50
|
15.42
|
|
Income Expended
|
587.18
|
498.31
|
17.83
|
|
Net Interest Income
|
461.42
|
410.19
|
12.49
|
|
Other Income
|
98.27
|
86.02
|
14.24
|
|
Net Total Income
|
559.68
|
496.21
|
12.79
|
|
Operating Expenses
|
346.18
|
310.78
|
11.39
|
|
Provision for Advances
|
24.70
|
10.30
|
139.81
|
|
Provisions for Taxes
|
47.41
|
43.48
|
9.04
|
|
Profit after Tax
|
141.39
|
131.65
|
7.40
|
Asset and Liability Composition
|
|
|
|
` in crores
|
|
|
FY26
|
FY25
|
Growth (In %)
|
|
LIABILITIES
|
|
|
|
|
Capital
|
45.42
|
45.25
|
0.38
|
|
Reserves and Surplus
|
1,415.61
|
1,294.89
|
9.32
|
|
Deposits
|
10,017.65
|
8,322.60
|
20.37
|
|
Borrowings
|
499.43
|
320.58
|
55.79
|
|
Other Liabilities and Provisions
|
165.84
|
124.20
|
33.53
|
|
Total Liabilities
|
12,143.94
|
10,107.51
|
20.15
|
` in crores
|
|
FY26
|
FY25
|
Growth (In %)
|
|
ASSETS
|
|
|
|
|
Cash and Balances with Reserve Bank of India
|
412.67
|
649.84
|
(36.50)
|
|
Balances with Banks and Money at Call and Short Notice
|
907.98
|
349.88
|
159.52
|
|
Investments
|
1,973.14
|
1,819.45
|
8.45
|
|
Advances
|
8,572.41
|
7,090.39
|
20.90
|
|
Fixed Assets
|
96.82
|
87.75
|
10.34
|
|
Other Assets
|
180.91
|
110.20
|
64.16
|
|
Total Liabilities
|
12,143.94
|
10,107.51
|
20.15
|
Key Ratios
In %
|
|
FY26
|
FY25
|
|
Net Interest Margin
1
|
4.04
|
4.20
|
|
Gross NPAs
|
2.54
|
2.58
|
|
Net NPAs
|
1.24
|
1.30
|
|
Return on Assets
2
|
1.23
|
1.35
|
|
Return on Equity
|
10.10
|
10.38
|
|
Return on Average Advances
|
1.87
|
2.05
|
|
Cost of Deposits
|
5.85
|
5.87
|
|
Yield on Advance
|
10.95
|
11.20
|
|
CRAR
|
22.31
|
25.39
|
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)
In Financial Year 2025–26, the Indian economy sustained its growth momentum, supported by stable domestic demand, improving consumption patterns and continued infrastructure spending, albeit amid persistent global uncertainties and evolving interest rate dynamics. The demand for credit remained healthy across segments, providing continued support to the banking sector, particularly Small Finance
Banks ('SFBs'). Rising financial awareness, increasing formalisation of the economy and sustained focus on small business and retail loans. Government initiatives aimed at strengthening access to formal banking channels, especially in rural and semi-urban areas, further supported the growth and outreach of SFBs. In contrast to the high interest rate environment of the previous fiscal year, FY26 witnessed a decisive es shift towards an accommodative monetary policy the Bank's strong position stance. The Reserve Bank of India (RBI) undertook a significant easing cycle, reducing the repo rate by a cumulative 125 basis points since February 2025 to 5.25%, a level expected to remain broadly stable through FY27. This shift, supported by moderating food inflation and stable global energy prices, has improved cost-of-funds dynamics for the banking sector. However, credit transmission has remained gradual, with overall bank credit growth moderating to around 10%. This evolving environment presents both challenges and opportunities, with banks having strong liability franchises and efficient transmission mechanisms better positioned to sustain margins.
For the financial year ended March 31, 2026, the Bank delivered steady growth across key financial parameters, demonstrating resilience in a relatively dynamic operating environment. Key indicators such as total assets, deposits and advances registered healthy growth, reflecting the Bank's ability to scale its operations while maintaining prudent risk management. This performance is underpinned by a disciplined approach to balancing growth with asset quality, resulting in a stable loan portfolio with controlled levels of non-performing assets.
While the changing interest rate cycle led to some moderation in margin and return ratios, the Bank continued to maintain stable profitability, supported by strong business momentum and a continued focus on cost discipline and operational efficiency. Ongoing investments in technology, product innovation and customer engagement have further strengthened the Bank's ability to respond effectively to evolving customer needs and competitive dynamics.
CapitalSmallFinanceBankLimitedcontinuedtoexpand its presence across existing and new geographies, with a focus on deepening its reach in underserved and underbanked segments. The Bank remains committed to strengthening customer relationships and enhancing service delivery, recognising that long-term success is closely linked to customer trust and satisfaction. Through a consistent focus on inclusive banking and sustainable growth, the Bank is well-positioned to build on its strong foundation in the years ahead.
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 34.74% as of March 31, 2026, compared figur to33.93%asofSeptember30,2025.These thiscontinue to reflect 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, 2026, it stood at 5.99%, while for the previous financial year ending March 31, 2025, it was 6.02%. Additionally, its retail deposits constitute a significant proportion, accounting for 91.45% as on March 31, 2026. Going forward, the Bank remains committed to further increasing its CASA and retail deposits to optimise its cost of funds. and operational
On the asset front, the Bank continues to uphold a strong secured lending strategy, with secured loans making up ~98% of the overall portfolio—approximately ~77% 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, 2026, the Bank's Gross Non-Performing Assets ('GNPA') stood at 2.54%, down from 2.58% the previous year, while Net Non-Performing Assets ('NNPA') improved to 1.24% from 1.30%. 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 influencedby market dynamics, and our focus remains metrics 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 5.1% to 5.3%, 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 35%. 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 `2,451.76 crores,
`2,208.86 crores, and `2,192.05 crores, respectively, as of March 31, 2026. In the previous year, as of March 31, 2025, these segments accounted for
`2,334.60 crores, `1,511.59 crores and `1,923.31 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 and as of
March 31, 2026 it is `1.31 mn, `2.70 mn and `1.42 mn. 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 performance, in both profitability reflecting its steadfast commitment to excellence. Over recent years, operating profit before provisions has experienced an exceptional compound annual growth rate (CAGR) of approximately 25%, increasing from `71.51 crores in FY21 to `218.04 crores in FY26.
Profitbefore tax (PBT) has also seen significant growth, rising from `53.74 crores in FY21 to `188.80 crores in FY26. Similarly, profit after tax (PAT) surged from `40.79 crores in FY21 to `141.39 crores in FY26 representing CAGR of 28%. 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 through several of operational and profitability 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 onefficiency cost optimisation and improvement. Lastly, it intends to enhance its fee income and leverage cross-selling opportunities to further diversify our revenue streams.
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 3.00% in FY26, down from 3.17% in FY25, highlighting our successful cost management strategies. Additionally, the cost-to-income ratio continues to show positive momentum, reaching approximately 61.22% in FY26, building on the improvements from 70.75% in FY21.
The Board is confident that the continued focus on maintaining strong liabilities and asset positions will contribute to the sustained growth and success of Capital Small Finance Bank Limited.
3.
Dividend
In view of the overall performance of the Bank, while retaining capital to support future growth, the Board of Directors at its meeting held on April 29, 2026, has recommended a Final Dividend of `5 per equity share of `10 each fully paid up (50% of the face value) for the financial year ended March 31, 2026, resulting in a total dividend payout of 16.06% against earnings of FY26, subject to the approval of the members at the ensuing 27
th
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 out of Reserves. In terms of the provisions of the Income Tax Act, 2025, 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.
Transfer to Reserves
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, 2026:
|
Particulars
|
Amount (
`
in crores)
|
|
Profit afterTax
|
141.39
|
|
Profit Brought Forward
|
394.39
|
|
Accumulated Profit (before Appropriations)
|
535.78
|
|
Appropriations (Amount Transferred to)
|
|
|
To Statutory Reserve
|
35.35
|
|
To Special Reserve
|
5.08
|
|
To Revenue and Other Reserves (Investment Fluctuations Reserve)
|
2.96
|
|
To Revenue and Other Reserves (Investment Reserve)
|
-
|
|
To Revenue and Other Reserves (Other Revenue reserve)
|
-
|
|
Dividend Paid during the Year
|
18.10
|
|
Balance Carried Forward to Balance Sheet
|
474.29
|
The
5.
Capital Adequacy Ratio (CAR)
The Bank continues to maintain a strong capital position, providing a solid foundation to support growth while ensuring resilience against, supporting assety potential risks. As of March 31, 2026, the Capital Adequacy Ratio (CAR) stood at 22.31%, well above the regulatory requirement of 15%, reflecting a comfortable capital buffer.
During the year, capital levels were calibrated to support business expansion, particularly in the advances portfolio, while maintaining prudent risk thresholds. The moderation in CAR compared to the previous year is primarily attributable to growth in risk-weighted assets, in line with the Bank's expansion strategy. The Bank follows a disciplined capital management framework, with continuous monitoring of both external and internal risk factors. Macroeconomic developments, interest rate movements and sectoral trends are factored into capital planning, alongside bank-specific risks such as credit, market and operational exposures. This integrated approach enables the Bank to align capital allocation with its risk appetite and business objectives.
A strong capital base remains central to the Bank's strategy, supporting not only regulatory compliance but also providing flexibility absorb potential stress and maintain stakeholder confidence. Bank continues to maintain a prudent buffer over regulatory requirements, ensuring adequate headroom for future expansion.
Goingforward,theBankwillcontinuetoactivelymanage its capital position, with a focus on optimising capital and maintaining resilience in a dynamic operating environment.
6.
Capital and Debt Structure
6.1 Share Capital
a. Authorised Share Capital:
During the year under review, there was no change in the Authorised Share Capital of the Bank and as of March 31, 2026, 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, Subscribed and Paid-up Share Capital:
The Bank has issued, subscribed and paid-up equity Share Capital of `45,41,87,710 comprising of 4,54,18,771 equity shares of `10/- each as of March 31, 2026. The Bank, during the year under review, has issued and allotted 39,250 equity shares on August 29, 2025, having face value of
`10 each at a premium of `88 (i.e., at the total issue price of `98) per share and 1,32,584 equity shares on December 05, 2025 having face value of `10 each at a premium of `161 (i.e., at the total issue price of `171) per share in the form of Employee Stock Option as per CSFB ESOP Plan 2018 and Employee Stock Option as per CSFB ESOP Plan 2023 of the Bank respectively. The equity shares issued during the year under review rank pari passu with the existing equity shares of the Bank.
Apart from above, the Bank did not raise any additional equity share capital during the year.
c. 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 FY27 has been duly paid.
d. Disclosure regarding Employee Stock Option Schemes
The Bank has implemented the following Employee Stock Option Schemes ("ESOP Schemes"), duly approved by the shareholders:
1. CSFB ESOP Plan 2018:
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.
2. CSFB ESOP Plan for Material Risk Takers:
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).
3. CSFB ESOP Plan 2023:
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 existing 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
|
40,750
|
19,220
|
6,25,000
|
|
Total Options granted during the year
|
-
|
20,346
|
-
|
|
Total Options vested during the year
|
-
|
6,407
|
2,47,600
|
|
Total Options exercised
|
39,250
|
-
|
1,32,584
|
|
Total number of shares arising as a result of exercise of Option
|
39,250
|
-
|
1,32,584
|
|
Options forfeited/lapsed
|
-
|
-
|
6,000
|
|
Total Options in force as of March 31, 2026
|
1500
|
39,566
|
4,86,416
|
|
Variations in terms of Options
|
Nil
|
Nil
|
Nil
|
|
Money realised by exercise of Options
|
38,46,500
|
-
|
2,26,71,864
|
|
Scheme
|
CSFB ESOP
|
CSFB ESOP
|
CSFB ESOP
|
|
|
Plan 2018
|
Plan for MRTs
|
Plan 2023
|
|
Details of Stock Options granted to Directors and KMPs during the year
|
KMP:
|
KMP:
|
KMP:
|
|
|
Mr. Munish Jain:
|
Mr. Munish Jain:
|
Mr. Munish Jain:
|
|
|
NIL
|
17690
|
NIL
|
|
|
Mr. Aseem
|
Mr. Aseem
|
Mr. Aseem
|
|
|
Mahajan: Nil
|
Mahajan: Nil
|
Mahajan: Nil
|
|
|
Mr. Amit Sharma:
|
Mr. Amit Sharma:
|
Mr. Amit Sharma:
|
|
|
Nil
|
Nil
|
Nil
|
|
Any other employee who receives a grant of
|
Nil
|
Nil
|
Nil
|
|
Options in any one year of Options amounting to five percent or more of total Options granted during that period
|
|
|
|
|
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
|
|
Weblink of disclosures made on the website of the Company, as required under SEBI (Share Based Employee Benefits) Regulations, 2014
|
https://www.capital.bank.in/investors/disclosures-under- regulation-46-Of-the-LODR
|
of its Non-Convertible Debentures ('NCDs') and subordinated debt instruments:
a. Redemption of Lower Tier II Bonds
The Bank has redeemed 1,200 units of 10.50% Unsecured Redeemable Non-Convertible Subordinated Bond (Lower Tier II) in the nature of Debenture Series – XII (ISIN - INE646H08178) on February 17, 2026 and the interest amount along with principal amount due thereon was credited to the accounts of debenture holders.
b. Exercise of Call Option Upper Tier II Bonds
Pursuant to prior approval from the Reserve Bank of India and in accordance with the terms of issue, the Bank exercised the call option in respect of the following Rated, Listed, Unsecured, Redeemable Non-Convertible Debentures:
•
140 underreview. units
under ISIN INE646H08012
(Series XI) redeemed on March 31, 2026
•
2,500 units under ISIN INE646H08020 (Series XIII) redeemed on March 30, 2026
The ESOPs of the Bank continue to comply with the SEBI (Share Based Employee Benefits and
Sweat Equity) Regulations, 2021. As required, a certificate from the Secretarial Auditors confirming compliance with the regulations will be presented at the ensuing Annual General Meeting.
e. 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 Debentures) Rules, 2014, the Bank has not issued any Sweat
Equity Shares during the 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
6.2 Non-Convertible Bonds
During the financial year ended March 31, 2026, the
Bank undertook the following actions in respect
The redemption amount, including payment of principal and accrued interest, was credited to the accounts of debentures holders as per following details, in accordance with the applicable terms and regulatory approvals:
|
NCD Series
|
Coupon Rate
|
ISIN
|
Redemption Amount per NCD (with accrued interest up to the Call Option Exercise Date)
|
Payment Date
|
|
Unsecured Redeemable Non- Convertible (Upper Tier II), Basel I Compliant Bonds 2014-15 (Series XI)
|
11.75%
|
INE646H08012
|
`11,17,500
|
March 31, 2026
|
|
Unsecured Redeemable Non- Convertible (Upper Tier II), Basel I Compliant Bonds 2015-16 (Series XIII)
|
11.75%
|
INE646H08020
|
`1,11,750
|
March 30, 2026
|
c. Issuance during the Year
During the financial year underr eview, the Bank has not issued and allotted any Non-Convertible bonds.
7.
Debenture Trustee Detail and Rating of Debt Instruments
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 Rate
|
ISIN
|
Previous Rating on April 09, 2025
|
Current Rating on April 06, 2026
|
Previous Rating on March 07, 2025
|
Current Rating on February 27, 2026
|
|
|
|
|
By Brickwork Ratings India Private Limited
|
By Care Ratings Limited
|
|
Unsecured
|
10%
|
INE646H08129
|
BWR A+
|
BWR A+
|
CARE A;
|
CARE A;
|
|
Redeemable
|
|
|
Outlook:
|
Outlook:
|
Outlook: (Stable)
|
Outlook: (Stable)
|
|
Non-Convertible
|
|
|
(Reaffirmed)
|
(Stable)
|
(Reaffirmed)
|
(Stable)
|
|
Lower Tier II Basel-II Compliant Bonds 2018-19 in the nature of debentures (Series-XVII)
|
|
|
|
(Reaffirmed)
|
|
|
Pursuant to exercise of call option by the Bank, the following debt securities of the Bank in the form of Upper Tier – II Bonds, which were listed on BSE Limited, were redeemed and the credit rating details are stated hereunder:
|
NCD Series
|
Coupon Rate
|
ISIN
|
Previous Rating on April 09, 2025
|
Current Rating on April 06, 2026
|
Previous Rating on March 07, 2025
|
Current Rating on February 27, 2026
|
|
|
|
|
By Brickwork Ratings India Private Limited
|
By Care Ratings Limited
|
|
Unsecured
|
11.75%
|
INE646H08012
|
BWR A+
|
Withdrawn
|
CARE A-;
|
CARE A-;
|
|
Redeemable Non \u2013 Convertible
|
|
|
Outlook:
|
due to early
|
Outlook: (Stable)
|
Outlook: (Stable) redemption
|
|
(Upper (Reaffirmed) Tier II),Basel I Compliant Bonds 2014-15 (Series XI)
|
|
|
(Reaffirmed)
|
(Stable)
|
(Reaffirmed)
|
|
|
NCD Series
|
Coupon Rate
|
ISIN
|
Previous Rating on April 09, 2025
|
Current Rating on April 06, 2026
|
Previous Rating on March 07, 2025
|
Current Rating on February 27, 2026
|
|
|
|
|
By Brickwork Ratings India Private Limited
|
By Care Ratings Limited
|
|
Unsecured Redeemable
|
11.75%
|
INE646H08020
|
BWR A+ Outlook:
|
Withdrawn due to early
|
CARE A-; Outlook: (Stable)
|
CARE A-; Outlook: (Stable) redemption
|
|
Non-convertible(Upper (Reaffirmed) Tier II), Basel I Compliant Bonds 2015-16 (Series XIII)
|
|
|
(Reaffirmed)
|
(Stable)
|
(Reaffirmed)
|
|
Note: The above rating details can be accessed on the website of the Bank at https://www.capital.bank.in/investors/ credit-ratings
Contact Details of Debenture Trustee:
Name: IDBI Trusteeship Services Limited Address: Universal Insurance Building, Ground Floor, Sir P.M. Road, Fort, Mumbai – 400001 Email: itsl@idbitrustee.co.in Tel No. +91-22-40807000
8.
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, 3
rd
Floor, 37, G.T. Road, Jalandhar - 144001, Punjab, India.
9.
Dematerialisation of Securities
The Bank has been issued an ISIN for the Equity Shares and debt securities by National Securities Depository Limited ('NSDL') and Central Depository Services (India) Limited ('CDSL'). The Bank has established connectivity with both depositories to facilitate dematerialisation and trading of its securities in electronic form. The equity shares of the Bank are compulsorily traded in dematerialised form in terms of the SEBI Listing Regulations and applicable circulars/notification issued by SEBI and
MCA.
The Bank has ensured that the equity shares held by all Directors, Key Managerial Personnel and Promoter/ Promoter Group (as applicable) are maintained in dematerialised form in compliance with the applicable provisions of the Companies Act, 2013 ('Act') and SEBI Listing Regulations.
Out of total paid up capital, 87.74% of shares are in dematerialised form as of March 31, 2026.
The Bank continues to encourage shareholders holding shares in physical form to dematerialise their holdings to ensure safe, efficient and seamless transferability of securities.
Compliances as per the Reserve Bank of
10.
India and the Government of India
The Bank has complied with statutory compliance with respect to all the applicable rules/regulations/ guidelines/notifications issued by the Reserve Bank of
India and the Government of India.
11.
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 Act 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(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(1) of the Act, 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 business 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 at email id cs@capitalbank.co.in
Transfer of Unclaimed Dividend to
12.
Investor Education and Protection Fund
Pursuant to the relevant provisions of Section 124 and 125 of the Act and the rules made thereunder, the amount of unpaid dividend that is 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 Act. 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 provided on the website of the Bank.
Accordingly, Unclaimed Dividends for and up to the financial year ended March 31, 2018, have already been transferred to the IEPF. Further, the Unclaimed
Dividend in respect of the financial year ended
March 31, 2019, must be claimed by the concerned Shareholders on or before November 03, 2026, 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.capital.bank.in/ investors/disclosures-under-regulation-62-Of-the-LODR/unclaimed-dividends-equity
The details of Unclaimed Dividend as of March 31, 2026, 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 of March 31, 2026 (Amt. in
`
)
|
|
March 31, 2019
|
September 27, 2019
|
November 03, 2026
|
90,270.20
|
|
March 31, 2020
|
-
|
-
|
-
|
|
March 31, 2021
|
August 20, 2021
|
September 26, 2028
|
1,36,882.00
|
|
March 31, 2022
|
August 5, 2022
|
September 11, 2029
|
4,96,788.50
|
|
March 31, 2023
|
August 11, 2023
|
September 10, 2030
|
6,37,583.94
|
|
March 31, 2024
|
August 30, 2024
|
September 30, 2031
|
38,97,427.31
|
|
March 31, 2025
|
August 01, 2025
|
August 31, 2032
|
1,26,61,451.00
|
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 Act 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 FY18 (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 in terms thereof, 11,280 equity shares have been transferred to IEPF on October 31, 2025, pursuant to the notification issued by the Ministry of
Corporate Affairs (MCA) Dated October 16, 2017.
|
13.
Annual Return pursuant to sub- section (3) of Section 92 of the Act
|
|
(a) The draft Annual Return of the Bank in Form
MGT \u2013 7 as of March 31, 2026 as mandated under the provisions of Section 92(3) read with Section 134(3)
of the Act has been uploaded on the website of trhe Bank at https://www.capital.bank.in/investors/yearly- compliances
|
|
14.
Requirement for maintenance of Cost Records
|
|
Being a banking company, provisions of Section 148(1) of the Act relating to maintenance of the cost records are not applicable.
|
Disclosure under Section 134(3)(m) of the
15.
Act 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 to reduce electric waste for Head Office and all its branches.
The same is monitored on a periodical basis. Other measures like use of LEDs, and power saver air conditioning equipment, among others, are being installed for conserving the energy. There is no capital investment on energy conservation equipment other than specified.
The steps taken or impact on conservation of energy and for utilising alternate sources 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 at 220 KW solarplantatitsHeadOffice
Jalandhar, Punjab
Technology Absorption:
We believe that 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
We are convinced that investing in IT is critical and also understand that its potential and consequences on banking are 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 the banking experience. This technological advancement allows the Bank to leverage its capabilities and streamline operations, ultimatelyleadingtoincreasedefficiency and faster service. material
Benefits derived like product improvement, cost reduction, product development or import substitution:
The 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. A proper structure and process is available which facilitates the incorporation of risk criteria in the product development and approval process. The Bank is continuously taking various steps on product improvement. Your Bank has implemented a system, which will manage all Bank's IT asset life cycle, i.e., from procurement to scrap and disposal of assets, for all banking operations.
operations for customer delight by offering efficient and improved services with low cost and using it as a tool to improve staffproductivity,increasingefficiency and more efficient & effective control over banking operations.
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 has 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)
16.
of the Act
There were no material changes and commitments, affecting the financial position of the Bank, which occurred between the end of the financial year of the Bank to which the financial statements relate and date of this report.
Details of significant and material orders
17.
passed by the regulators or courts or tribunals
passed by There were no significant the Regulators or Courts or Tribunals which would impact the going concern status of the Bank and its future operations.
Disclosure of Penalties imposed on the
18.
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, no penalty was imposed by stock exchanges or SEBI or any statutory authority on any matter relating to capital markets.
19.
Deposits
Being a banking company, the disclosure relating to deposits as required under Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, 2014 read with Section 73 and 74 of the Act 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 are in the ordinary course of business and have been disclosed in the financial statements for the financial year ended March
2026, forming part of the Annual Report for FY26.
Asset-Liability and Risk Management
20.
pursuant to Section 134(3)(n) of the Act
The Bank has instituted a comprehensive and robust Risk Management Framework to proactively 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 risks associated with the business of the Bank to the Risk Management Committee. The Bank follows an integrated approach to managing risks, and these processes are embedded within the fundamental business model. The Risk Management Landscape in the Bank encompasses the stages of identifying, assessing, measuring, managing, controlling, and reporting risk concerns across all major risk classes, viz. Credit, Market, Operational, and Liquidity Risks. The Risk Management Policies, adopted and reviewed periodically, articulate and codify the strategy, structure, processes, and systems to manage bank-wide risks. Expanding business horizons, deregulation, globalisation of financial activities, the emergence of new have necessitated a more effective and structured risk management framework in financial institutions.
The Bank has adopted an integrated approach for risk management, supported by effective internal policies aligned with business requirements and best practices. The Bank has formulated a 'Risk Management Policy', which also includes the Internal Capital Adequacy Assessment Process ('ICAAP') for identifying and measuring various operational, credit, market, and solvency risks. Operational risks are managed through comprehensive internal control systems, including well-defined procedures to monitor transactions, maintain key back-up processes, and undertake regular contingency planning. The Bank continuously strives to enhance its risk management capabilities in line with evolving regulatory guidelines and overarching 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'), comprising senior management and the Managing Director, is responsible for ensuring adherence to the limits set by the Board, as well as for determining the Bank's business strategy (on both asset and liability sides) in line with the Bank's budget and defined risk management objectives.
The Committee actively manages and controls the structure of assets and liabilities and interest rate sensitivities with a view to optimising profitability, while maintainingsufficient capital adequacy and liquidity. Statements for Structured Liquidity, Liquidity Coverage, and Interest Rate Sensitivity of the Bank are prepared in line with RBI guidelines to actively manage liquidity and interest rate risks. Liquidity Risk Management has been at the core of sound risk management practices in the modern banking industry. Liquidity risk refers to the potential inability to meet the Bank's liabilities as they become due. It arises when banks are unable to generate decline in deposits or an increase in assets.
The Bank accords utmost importance to managing risks in the most efficient manner and has articulated a comprehensive structure for liquidity risk management through various policies, including the Contingency Funding Plan ('CFP'), which aims to address adverse liquidity scenarios. The CFP is recommended by ALCO to the Risk Management Committee of the Board ('RMCB') annually for approval and is reviewed quarterly by ALCO. In case any review by ALCO indicates a funding gap, ALCO is responsible for formulating an action plan, which is subject to approval by the RMCB. Further, the decision to activate the lines of defence as per the CFP rests with ALCO. The contingency scenarios are clearly defined. The comprehensive
CFP seeks to monitor liquidity on a real-time basis, supported by a diversified and uncorrelated range of funding sources, along with well-defined reporting, escalation, and decision-making channels.
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 a Stress Testing
Framework for evaluating the Bank's financial position under severe but plausible scenarios to support informed decision-making. It enables forward-looking assessment of risks, facilitates internal and external communication, and assists senior management in understanding the Bank's condition under stressed situations. Stress testing outputs are highly useful in decision-making, particularly in relation to potential actions such as risk mitigation strategies, contingency planning, and capital and liquidity management under stressed conditions.
Stress testing forms an integral input to the ICAAP, which requires the Bank to undertake forward-looking stress scenarios that identify severe events or changes in market conditions that could adversely impact the Bank. The stress testing reports provide senior management with a comprehensive understanding of material risks to which the Bank may be exposed and support potential actions such as mitigation strategies, contingency planning, and capital and liquidity management under stressed conditions. Further, stress testing serves as an important tool in identifying, measuring, and controlling funding liquidity risks, particularly in assessing the Bank's liquidity profile and the adequacy of liquidity buffers under both bank-specific and market-wide stress scenarios.
The Bank places strong emphasis on risk management and recognises it as the backbone of the banking industry. Given its dynamic and evolving nature, the Bank continuously explores new avenues to strengthen its risk management practices in line with its Risk Management Policy and Framework. This ensures that the overall structure remains well aligned with the Bank's risk appetite, risk assessment, and risk mitigation strategies. The Risk Management Committee continues to provide effective oversight by monitoring and reviewing the risk management plan and discharging its responsibilities in line with the provisions of the Act and SEBI Listing Regulations.
Independent Directors Declaration in terms of Section 134(3)(d); Section
21.
149(6) of Act 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 Act and the Banking Regulation Act, 1949. The Board of the Bank as of March 31, 2026, consisted of ten Directors, out of which six directors are Independent Directors.
Further, Mr. Sham Singh Bains (DIN: 01537844) retired as Independent Director of the Bank on November 08, 2025 pursuant to expiry of his second term as Independent Director in terms of the provisions of the Act. The Bank has obtained declaration of independence from all Independent Directors confirming that they meet and comply with the criteria of independence as laid down under Section 149(6) and 149(7), Schedule IV of the Act 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. During the year under review, the separate meetings of Independent Directors were conducted on December 30, 2025 and March 18, 2026.
The Board has assessed the confirmations submitted by the Independent Directors and thereafter has taken the same on record, as required under Regulation 25(9) of the SEBI Listing Regulations. During the year, there has been no change in the circumstances affecting their status as Independent Directors of the Bank and that they are not debarred from holding the office of director under any SEBI order or any other such authority.
Pursuant to the Rule 8(5) (iiia) of the Companies (Accounts) Rules, 2014, the Board opines that all the Independent Directors of the Bank are competent, proficient and adhere to corporate integrity, possess the requisite expertise, experience and qualifications to discharge the responsibilities and duties as an Independent Director as mandated by the Act 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). Two Independent Directors were granted exemption and the four Independent
Directors had passed the online proficiency self-assessment test.
Company's Policy on Directors' Appointment & Remuneration including criteria for determining Qualifications,
22.
Attributes, and Independence, among others, in terms of Section 134(3)(e); Section 178(1) & (3) of the Act
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 members of the NRC. The Board of Directors conducts the due diligence of all the Directors on annual basis. Further, at the time of appointment or re-appointment of Director(s), the NRC of the Bank conducts due diligence of the appointee in accordance with the applicable provisions of the Act, rules made thereunder, Banking Regulation Act, 1949, guidelines issued RBI and relevant provisions of SEBI Listing Regulations and the decision is taken based on the outcome.
Further, the 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 Act. 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 of 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-à-vis their risk and performance involvement. The policies are available on the website of the Bank at https:// www.capital.bank.in/investors/secreterial-policies
Performance Evaluation of Board in terms
23.
of Section 134(3)(p) of the Act
The Act and SEBI Listing Regulations provide for evaluation of the performance of the Board, its Committees, Individual Director and the Chairperson of the Bank.
The Nomination and Remuneration Committee (NRC) and the Board has approved the criteria and
mechanism for carrying out the evaluation for assessing the performance of the Board and Committees as a whole and individual director. During the year under review, a separate meeting of Independent Directors was held on December 30, 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, 2026, 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 Act, 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 Chairperson, Managing Director, Executive Director, Independent Directors and Non-Executive Non-Independent Directors, Board Committees and Board as a whole on the basis of various criteria with the aim to improve the effectiveness of the Individual Director, Chairperson, Committees and the Board. The description and process of annual performance evaluation has been provided in the Report on Corporate Governance annexed with Board's Report as
Annexure-C
.
State of the Company's Affairs in terms of
24.
Section 134(3)(i) of the Act
The state of affairs of the Bank in detail 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, 2026.
Name of the companies which have become or ceased to be Subsidiaries/ Associates or Joint Ventures during
25.
the year in terms of Section 134(3)(q) read with Rule 8(5)(iv) of Companies (Account) Rules, 2014
The Bank does not have subsidiary, joint venture and associate company. Further, no company has 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
26.
of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Bank is dedicated to fostering a safe and healthy work environment for all employees, free from prejudice, gender bias, and sexual harassment ('SH'). The Bank upholds 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 implementing a Policy on Prevention of Sexual Harassment of Women 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 provisions 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 of during FY26:
Offices In Head (including Regional
a) No. of SH complaints received: Nil b) No. of SH complaints disposed off: Nil c) No. of complaints pending for more than 90 days: Nil
In Branches:
a) No. of SH complaints received: Nil b) No. of SH complaints disposed off: Nil c) No. of complaints pending for more than 90 days: Nil 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.
Adequacy of Internal Financial Controls
27.
Related to Financial Statements
Auditors of the Bank are required to report on adequacy and operating effectiveness of internal financial controls of the Bank with report on financial statements prepared under Section 143 of the Act. 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. The Statutory Auditors expressed their opinion on the adequacy and operational effectiveness of your Bank's internal controls over financial reporting, as required under the applicable provisions of the Act. This opinion can be referred to in the Auditor's Report attached to the audited financial statements for FY26 forming part of this Annual Report.
During the year under review, the Auditors have not reported any instances of frauds committed in the BankOfficersor by Employees to the Audit its
Committee under Section 143(12) of the Act, details of which need to be mentioned in the Report.
28.
Directors
The Board of the Bank is duly constituted in accordance with the provisions of Banking Regulation Act, 1949, the Act, SEBI Listing Regulations and other applicable laws/guidelines. Mr. Sarvjit Singh Samra (DIN: 00477444) was
re-appointed and held office as Managing Director
& 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 has 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.
Mr. Munish Jain (DIN: 10132430) was appointed as Whole-Time Director (designated as Executive director) w.e.f August 28, 2023, for a term of three years. Further, the shareholders vide Postal Ballot approval dated March 25, 2026, has approved the
re-appointment of Mr. Munish Jain as Whole-Time Director (designated as Executive Director) of the Bank for further period of three years w.e.f. August 28, 2026, considering his past association with the Bank, his vast and diverse knowledge, experience and professional acumen. The approval of Reserve Bank of India is awaited in this regard.
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 w.e.f. April 24, 2022, and was re-appointed as Part-time Chairman of the Bank till January 29, 2027.
Retirement/Appointment of Directors in compliance to Section 10(2A)(i) of the Banking Regulation Act,
1949
Mr. Mahesh Parasuraman (DIN: 00233782), Nominee Director of Amicus Capital Private Equity I LLP and Amicus Capital Partners India Fund I, resigned from the Board of the Bank on August 14, 2025, due to his increased professional commitments and responsibilities.
Mr. Dinesh Gupta (DIN: 00475319), Non-Executive Non-Independent Director, resigned from the Board of the Bank on August 14, 2025, due to his increased professional commitments in the legal field and his growing involvement in family business. During the year under review, Mr. Dinesh Gupta and persons related to him (Promoter group) of the Bank were re-classified from the 'Promoter/Promoter
Group' category to 'Public' category. Further, the Bank has received no-objection from BSE Limited vide its letter No. LIST/COMP/SJ/551/2025-2026 dated November 14, 2025 and from National Stock Exchange of India Limited vide its letter No. NSE/LIST/COMP/CAPITALSFB/520/2025-2026,
dated November 14, 2025 for reclassification of outgoing Promoter group shareholder as Public Shareholder in accordance with Regulation 31A of the SEBI Listing Regulations.
Further, Mr. Sham Singh Bains (DIN: 01537844) Independent Director, retired on November 08, 2025 pursuant to expiry of his second term in term of the provisions of Act.
Mr. Bhavdeep Sardana (DIN: 03516261) was appointed as Additional Director (Category: Non-Executive
Non-Independent) on August 04, 2025, and regularised as Non-Executive Non-Independent Director, liable to retire by rotation, on the Board of the Bank on
October 23, 2025. There was no other change in the Board of Directors of the Bank during the year under review.
Directors Retiring by Rotation
In terms of Section 152 of the Act, Mr. Balbir Singh (DIN:02284941), Nominee Director being longest in the office is liable to retire by rotation at the ensuing
Annual General Meeting and being eligible for re- appointment, offers himself for re- appointment. The Board is duly constituted as per the provisions of the Banking Regulation Act, 1949, the Act, RBI guidelines for Small Finance Banks and SEBI Listing Regulations, as may be applicable. As of
March 31, 2026, the Board consisted of 10 Directors, including 6 Independent Directors (including one woman director), 1 Non-Executive Non-Independent Director, 1 Nominee Director and
2 Executive Directors.
The Composition of the Board of Directors of the Bank as of March 31, 2026, 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. Bhavdeep Sardana
|
03516261
|
Non-Executive Non- Independent Director
|
|
5 Mr. Balbir Singh
|
02284941
|
Non-Executive Director (Nominee Director of SIDBI)
|
|
6 Mr. Gurpreet Singh Chug
|
01003380
|
Non-Executive Independent Director
|
|
7 Ms. Rachna Dikshit
|
08759332
|
Non-Executive Independent Director
|
|
8 Mr. Nageswara Rao Yalamanchili
|
06651230
|
Non-Executive Independent Director
|
|
9 Mr. Kamaldeep Singh Sangha
|
08242130
|
Non-Executive Independent Director
|
|
10 Mr. Sukhen Pal Babuta
|
01739016
|
Non-Executive Independent
|
|
|
|
Director
|
Certificate of Non-Disqualification of Directors
In terms of Regulation 34(3) read with Schedule V of the SEBI Listing Regulations, the Bank has obtained a certificate from Mr. Bunny Sehgal, Proprietor of B. Sehgal & 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.capital.bank.in/investors/yearly-compliances
Appointments/Resignations of the Key Managerial Personnel
There was no change in the Key Managerial Personnel during the year under review. As of March 31, 2026, and on the date of this report, the following are the Key Managerial Personnel ('KMP') as per Section 203(1) read with Section 2(51) of the Act and Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
29.
Corporate Governance
Corporate governance is the combination of rules, processes or laws by which businesses are operated, regulated or controlled and that aim 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 about 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. The Bank is committed to upholding the highest standards of corporate governance and 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 compliance. The Bank's governance framework is structured to ensure that it is managed in the best interests of all stakeholders, including regulators, depositors, customers, employees, shareholders, and others, while maintaining robust risk management and full compliance with applicable laws and regulations. The Bank believes that strong corporate governance is achieved through the adoption of best management practices, strict adherence to legal and regulatory requirements, and a firm commitment to transparency and ethical conduct. Accordingly, the Bank remains committed to continuously enhancing its governance and assurance practices by benchmarking them against global best practices.
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 of March 31, 2026, comprised a majority of Independent Directors and this is a great step of the Bank towards better corporate governance.
The Board presently comprises ten Directors and it provides a diverse combination of professionalism, knowledge, expertise and experience as required in the banking business for long-term success. The Board has six Independent Directors constituting more than one-half of its total membership strength (including one woman Director), one Nominee Director, one Non-Executive Non-Independent Director and two Executive 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 part of this Report. The Bank has duly framed policies and codes which are required under the Act, 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. capital.bank.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
The 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 and fair conduct by Directors and SMPs. All Directors and SMPs have affirmed compliance with the code for the FY26 and a declaration to this effect signed by the MD & CEO forms part of Corporate Governance Report 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.capital.bank.in/ investors/secreterial-policies
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
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Board of Directors
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Board Committees
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Details of the Board of Directors and Board meetings held during the year are provided in the \u2018Corporate Governance Report\u2019, annexed with Board\u2019s Report as
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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.
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Annexure-C.
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During the year under review, eight Board Meetings were convened and held, the details of which are given in the \u2018Corporate Governance Report\u2019, forms a part of this Report. The maximum interval between any two consecutive meetings did not exceed 120 days as prescribed under the Act.
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The details of the Board Committees of the Bank, including, re-constitution, their terms of reference, number and date of meetings held during FY26 and attendance thereof are disclosed in the Corporate Governance Report annexed with Board\u2019s Report as
Annexure-C
. No instances have been observed where the Board has not accepted recommendations of any of the Board committees.
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30.
Meeting of Independent Directors
As per the requirement of the Section 149(8) read with Schedule IV of Act (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, two meetings of the Independent Directors of the Bank were held, i.e., first on December 30, 2025 and second meeting held on March 18, 2026, which were exclusively attended by Independent Directors.
31.
Details of General Body Meetings
A. Location and time of last three Annual General Meetings (AGMs) and details of special resolutions passed thereat:
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Financial Year
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Particulars of Meeting
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Date and Time
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Location
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Special Resolution passed, if any
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FY23
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24
th
Annual General Meeting
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August 11, 2023, at 11:00 am
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Through Video Conferencing (\u2018VC\u2019)/Other Audio \u2013 Visual Means (\u2018OAVM\u2019)
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\u2022
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
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\u2022
TO APPROVE THE UPDATED REMUNERATION OF MR. SARVJIT SINGH SAMRA (DIN: 00477444), MANAGING DIRECTOR & CEO FOR FINANCIAL YEAR 2023-24 ONWARDS
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FY24
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25
th
Annual General Meeting
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August 30, 2024, at 11:00 am (IST)
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Through Video Conferencing (\u2018VC\u2019)/Other Audio \u2013 Visual Means (\u2018OAVM\u2019)
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\u2022
TO APPROVE THE REMUNERATION OF MR. SARVJIT SINGH SAMRA (DIN: 00477444), MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER FROM APRIL 01, 2024, TO APRIL 23, 2025
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\u2022
TO APPROVE THE REMUNERATION OF MR. MUNISH JAIN (DIN: 10132430), EXECUTIVE DIRECTOR FROM APRIL 01, 2024, TO AUGUST 27, 2026 \u2022 RATIFICATION OF CSFB LIMITED - EMPLOYEE STOCK OPTION PLAN FOR MATERIAL RISK TAKERS
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FY25
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26
th
Annual General Meeting
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August 01, 2025, at 11:00 am (IST)
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Through Video Conferencing (\u2018VC\u2019)/Other Audio \u2013 Visual Means (\u2018OAVM\u2019)
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\u2022
TO APPROVE THE REMUNERATION OF MR. SARVJIT SINGH SAMRA (DIN: 00477444), MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER WITH EFFECT FROM APRIL 01, 2025
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\u2022
TO APPROVE THE REMUNERATION OF MR. MUNISH JAIN (DIN: 10132430), WHOLE TIME DIRECTOR DESIGNATED AS EXECUTIVE DIRECTOR WITH EFFECT FROM APRIL 01, 2025
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B. Postal Ballot during FY26
Pursuant to provisions of Section 110 and other applicable provisions, if any, of the Act, 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 and subsequent circulars issued in this regard, the latest being 3/2025 dated September 22, 2025 issued by the Ministry of Corporate Affairs and other applicable rules/regulations/guidelines/circulars/notifications, the Bank has received shareholders' approval by passing following resolutions through Postal Ballot, as per following details:
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Date of Postal Ballot Notice
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Agenda Heading
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Type of resolution
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Date of Passing the resolution through Postal Ballot
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Number of Votes
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Percentage of Votes
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In favour
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Against
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In favour
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Against
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August 14, 2025
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TO APPROVE THE APPOINTMENT OF MR. BHAVDEEP SARDANA (DIN: 03516261) AS A NON \u2013 EXECUTIVE NON \u2013 INDEPENDENT DIRECTOR ON THE BOARD OF THE BANK WITH EFFECT FROM AUGUST 04, 2025
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Ordinary Resolution
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October 23, 2025
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2,45,44,040
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8,725
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99.964
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0.036
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January 29, 2026
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TO APPROVE THE REVISION IN THE REMUNERATION OF MR. MUNISH JAIN (DIN: 10132430), WHOLE TIME DIRECTOR DESIGNATED AS EXECUTIVE DIRECTOR WITH EFFECT FROM APRIL 01, 2025
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Ordinary Resolution
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March 25, 2026
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2,10,62,867
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6,100
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99.971
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0.029
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January 29, 2026
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TO APPROVE RE- APPOINTMENT OF MR. MUNISH JAIN (DIN: 10132430) AS WHOLE \u2013 TIME DIRECTOR DESIGNATED AS EXECUTIVE DIRECTOR WITH EFFECT FROM AUGUST 28, 2026
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Ordinary Resolution
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March 25, 2026
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2,10,62,899
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6,068
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99.971
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0.029
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January 29, 2026
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TO APPROVE PAYMENT OF REMUNERATION TO MR. SHAHBAZ SINGH SAMRA, RELATED PARTY, AND HOLDING THE OFFICE OR PLACE OF PROFIT
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Ordinary Resolution
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March 25, 2026
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1,30,44,112
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53,872
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99.589
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0.411
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Mr. Bunny Sehgal, Proprietor of B. Sehgal and Associates (Membership No.: F11407 and COP No.: 15161), Practising Company Secretary 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 Act 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 FY26
No Extraordinary General Meeting ('EGM') of the Shareholders was conducted during the FY26.
32.
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, ready relief, eradicating hunger and improving health care. We are also managing education centres for underprivileged children. The Bank's CSR policy and programmes are in accordance with Section 135 of Act, the Bank takes multiple initiatives in the areas of education, green belt, environment, rural sports development, inclusion & empowerment and health. During the year under review, the Bank provided support to flood
Corporate Social Responsibility Policy of the Bank can also be accessed from the website of the Bank
https://www.capital.bank.in/investors/secreterial-policies The Annual Report on CSR activities as required to be given under Section 135 of the Act 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. TheBankundertakesitsCorporateSocialResponsibility activities through various implementing agencies and `1,12,19,244.23 has remained unspent as some of the Ongoing Projects has not been fully matured. Further, 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 Act.
Impact Assessment of CSR Projects
The Bank's average CSR obligation in the three immediately preceding financial years does not exceed
`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.
33.
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 Act read with rules made thereunder permits circulation of financial statements, and notices, among others, to Shareholders through electronic mode as per the records of the Bank's Registrar and Share Transfer Agent or as provided by the Depositories. In view of the same, the Bank hereby requests all the stakeholders to get their Email address registered with the Bank so as to get the Annual Reports at the Email IDs eliminating the usage of paper mode. Also, registering your Email address with the Bank will ensure that the Bank can directly connect with you and no important communication from the Bank's side will be missed by you as a shareholder of the Bank.
34.
Vigil Mechanism
relief victims.
The Bank values reliability, fairness and equality which form the 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 Whistle-blower Policy, which is periodically reviewed, which provides safeguard against victimisation of employees and Directors. The Policy allows employees 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, among others, and also provides for direct access to the Ombudsperson, i.e., Chairman of the Audit Committee of the Bank, in exceptional cases. The policy is available on the Bank's intranet and website. The Whistle-blower Policy complies with all the requirements of Vigil mechanism as stipulated under Section 177 of the Act and Regulation 4(2)(d) and Regulation 22 of the SEBI Listing Regulations, and other applicable laws, rules and regulations, as applicable. The updated Whistle-blower Policy is also available on the website of the Bank at link
www.capital.bank.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. The Audit Committee reviews the whistle-blower complaints on quarterly basis. During the review period, no concern has been reported in accordance with the said policy and none of the complainants has been denied access to the Audit Committee of the Board.
Loans, Guarantees or Investments in
35.
Securities
Pursuant to Section 186(11) of the Act, the provisions of Section 186 of Act, 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
36.
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 under review, no application was made or any proceeding is pending against the Bank under the Insolvency and Bankruptcy Code, 2016.
The details of difference between amount of valuation done at the time of one-time
37.
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 under review.
Particulars of Contracts or Arrangements
38.
with Related Parties
All related party transactions conducted during the year under review were in ordinary course of the business of the Bank and carried out at arm's length basis. During the year under review, there were no material significant transactions with related parties
(Promoters, Directors, Key Managerial Personnel or other persons) that could potentially create conflict of interest with the interest of the Bank. The Audit Committee has accorded omnibus approval for related party transactions which are of a repetitive nature and entered in the ordinary course of business. Further, the Audit Committee of the Bank reviewed details of all related party transactions entered by the Bank on quarterly basis. As per Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, there are no related party transactions that are required to be reported in Form AOC-2. The requisite disclosure has been made under Schedule 18 of the note no. 12 forming part of audited financial statements for the financial year ended March 31, 2026.
The Materiality Policy for Related Party Transactions as approved by the Board can be accessed on the website of your Bank at https://www.capital.bank.in/ investors/secreterial-policies
Disclosure pursuant to Section 197(14)
39.
of the Act
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 Act and as per the relevant rules thereunder.
Disclosure pursuant to Section 177(8) of
40.
the Act
Thecomposition,roleandfunctionsofAuditCommittee of Board is provided in Corporate Governance Report, which forms part of this Board's Report. During FY26, the Board has accepted all the recommendations made by Audit Committee of Board and hence, no further explanation in the same regard is required to be provided in this Report.
41.
Change in Nature of Business
Pursuant to the relevant provision of Rule 8(5) of the Companies (Accounts) Rules, 2014, there were no changes in the nature of Business of the Bank during FY26.
42.
Auditors and Auditors' Report
Statutory Auditors and Audit
In consonance with the 'Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs)' dated April 27, 2021, issued by RBI, Banks are required to appoint Statutory Auditors for a continuous period of three years, subject to the audit firms meeting eligibility criteria annually and obtaining RBI approval on an annual basis.
Post filing the casual vacancy and
FY24, M/s SCV & Co. LLP (FRN 000235N/N500089), Chartered Accountants were appointed as Statutory Auditors of the Bank for the period of two years effective from FY25, which was approved by shareholders of the Bank in 25th Annual General Meeting held on August 30, 2024.
The said Auditors have provided audit report on the financial statements for the FY26. 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. Further, in accordance with Section 143(12) of the Act, the auditors have not identified any instances of fraud within your Bank by its officers or The said Statutory Auditors have confirmed their eligibility in adherence to Section 141 of the Act and the guidelines issued by the RBI from time to time. Moreover, pursuant to the relevant provisions of SEBI Listing Regulations, the Statutory Auditors have also confirmed their adherence to the peer review process as mandated by the Institute of Chartered Accountants of India ('ICAI'). The Statutory Auditors also possess a valid certificate issued by the Peer Review Board of
ICAI, ensuring their competence and professionalism in their field.
As the tenure of three years of M/s SCV & Co. LLP as Statutory Auditors is going to complete as per Guidelines for Appointment of Statutory Central Auditors (SCAs)/Statutory Auditors (SAs) of Commercial Banks (excluding RRBs), UCBs and NBFCs (including HFCs), the Board of Directors, on the recommendation of the Audit Committee, in its meeting held on April 29, 2026, approved the appointment of G S A & Associates LLP (FRN 000257N/N500339) as Statutory Auditor of the Bank for the period of three (03) years effective from FY27, which was proposed for the approval of the Shareholders of the Bank in 27th Annual General meeting scheduled to be held on June 25, 2026. The said appointment shall also be subject to approval of Reserve Bank of India ("RBI") every year. The Bank has received the approval of Reserve Bank of India ('RBI') vide its letter dated April 16, 2026, for the appointment of M/s. G S A & Associates LLP (FRN 000257N/N500339), Chartered Accountants as Statutory Auditors of the Bank for FY27.
audit for
Secretarial
the
Auditor
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of Listing Regulations, the Bank appointed M/s Deepak Arora & Associates, Practicing Company Secretaries through its partner Mr. Deepak Arora (FCS No. 5104 and COP No. 3641) as Secretarial Auditor for five years w.e.f. FY26 to conduct Secretarial Audit of the Bank. M/s Deepak Arora & Associates have confirmed their eligibility as Secretarial Auditors of the
Bank for FY27 under the provisions of Section 204 of the Act.
The Secretarial Auditors have not reported any instance of fraud in accordance with Section 143(12) of the Act during the year under review and their report. does not contain any qualification, reservation, or adverse remark for FY26. The Secretarial Audit Report for FY26 in form MR-3 is annexed with Board's Report as
Annexure-E
.
Information referred to in the Secretarial Auditors' Report are self-explanatory and do not call for any further comments.
43.
Cost Audit
Being the Banking Company, the Bank is not required to appoint a Cost Auditor.
44.
Annual Secretarial Compliance Report
The Bank has undertaken an audit for FY26 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.
Familiarisation Programme for
45.
Independent Directors
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. The familiarisation programme helps ensure that Directors stay up to date with the Bank's business, regulatory environment, and overall operations. This, in turn, enables them to make well-informed decisions in the best interests of the Bank and its stakeholders.
In line with Regulation 25(7) of SEBI Listing Regulations and RBI guidelines, the Bank organised presentations, deep-dive sessions, and discussions during Board and Committee meetings throughout the year. These sessions covered key aspects such as annual plans and strategies, compensation approach, the impact of inflation, non-financial risks, customer service framework, risk management, priority sector lending, liquidity, and new regulatory developments. These interactions were designed to help Independent Directors gain a deeper understanding of the Bank, its management, business operations, and overall functioning, enabling them to effectively carry out their roles and responsibilities and contribute meaningfully to the Bank's sustainable growth.
Further, updates on key regulatory developments including RBI and other regulatory circulars/ notifications/guidelines, among others, 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.capital.bank.in/investors/secreterial-policies
Management Discussion and Analysis
46.
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 Act, in preparation of annual accounts for the financial year ended March 31, 2026, and state that:
1. In the preparation of the annual accounts for the financial year ended March 31, 2026, the applicable accounting standards had been followed along with proper explanation relating to material departures.
2. 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, 2026 and of the profit of the Bank for the year ended on that date.
3. 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.
4. Directors had prepared the annual accounts on a going concern basis.
5. 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.
6. 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.
51.
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 Bank 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.capital.bank.in/investors/ secreterial-policies
48.
Compliance with Secretarial Standards
The Bank is in compliance with the applicable Secretarial Standards, i.e., SS-1 and SS-2 relating to Meetings of the Board of Directors and General Meetings respectively issued by the Institute of Company Secretaries of India on regular basis.
Compliance with Maternity Benefit Act,
49.
The Bank has complied with the applicable provisions related to Maternity Benefit Act, 1961.
50.
Investor Relations
The Bank interacted with investors and analysts through one-on-one meetings, conference calls, 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.
The Board of Directors 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.capital.bank.in/investors/ secreterial-policies
52.
Anti-Bribery and Anti-Corruption Policy
The Bank upholds a strict 'zero-tolerance approach' towards bribery, corruption, and unethical practices and is committed to conduct all its dealings and operations with professionalism, fairness, and integrity. In alignment with this commitment, the Bank implemented an Anti-Bribery and Anti- Corruption Policy that has been approved by the Board. This policy outlines the fundamental principles for conducting Banking business in a transparent, honest, and ethical manner. The policy can be accessed on the website of the Bank at https://www.capital.bank.in/codes-and-policies
53.
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 ongoing basis.
This is primarily provided to 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 within 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.
54.
Awards and Recognitions
55.
Acknowledgment
The Board of Directors is grateful to the Government of India,ReserveBankofIndia,variousStateGovernments, 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 placed 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.
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For and on behalf of the Board of Directors
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Sd/-
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Sarvjit Singh Samra
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Managing Director & CEO
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DIN: 00477444
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Sd/-
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Gurpreet Singh Chug
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Independent Director
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DIN: 01003380
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Place: Jalandhar
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Date: April 29, 2026
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