DEAR SHAREHOLDERS,
The Directors of Capital Small Finance Bank Limited ("Bank" or
"Company") are pleased to report that the Bank has continued to deliver strong
financial results, with steady growth in key performance indicators such as total assets,
deposits, and loans disbursed. The Bank has remained focussed on prudent risk management
practices, resulting in a healthy loan portfolio and lower non-performing assets. The net
profit witnessed a significant increase, reflecting the Bank's relentless focus on
operational efficiency and the optimisation of its product and service offerings.
Furthermore, the Bank remains committed to providing inclusive banking services to
underserved communities.
Embracing the digital revolution, it has taken significant strides in its digital
transformation journey by introducing innovative digital products and services, including
mobile banking applications and online account opening. Customer satisfaction scores have
steadily improved due to the Bank's unwavering dedication to customer service excellence.
Continual enhancements to processes and offerings are underway to exceed customer
expectations.
The Board extends sincere gratitude to all shareholders for their unwavering trust and
support. The Bank remains steadfast in its commitment to creating sustainable value and
delivering superior returns to its stakeholders.
Financial Performance Profit and Loss Summary
Rs. in crores
|
FY24 |
FY23 |
Change Y-o-Y % |
Income Earned |
794.33 |
676.01 |
17.50% |
Income Expended |
449.18 |
354.02 |
26.88% |
Net Interest Income |
345.15 |
321.99 |
7.19% |
Other Income |
68.08 |
49.47 |
37.62% |
Net Total Income |
413.23 |
371.46 |
11.24% |
Operating Expenses |
258.33 |
222.75 |
15.97% |
Provision for Advances |
6.69 |
24.55 |
(72.75%) |
Provisions for Taxes |
36.68 |
30.56 |
20.02% |
Profit after Tax |
111.53 |
93.60 |
1916% |
Asset and Liability Composition
Rs. in crores
|
FY24 |
FY23 |
Change Y-o-Y % |
LIABILITIES |
|
|
|
Capital |
45.04 |
34.25 |
31.50% |
Reserves and Surplus |
1,152.38 |
576.36 |
99.94% |
Deposits |
7,477.74 |
6,560.62 |
13.98% |
Borrowings |
472.25 |
721.38 |
(34.54%) |
Other Liabilities and Provisions |
147.87 |
98.16 |
50.64% |
Total Liabilities |
9,295.28 |
7,990.77 |
16.33% |
Rs. in crores
|
FY24 |
FY23 |
Change Y-o-Y % |
ASSETS |
|
|
|
Cash and Balances with Reserve Bank of India |
568.98 |
462.65 |
22.98% |
Balances with Banks and Money at call and short notice |
752.18 |
418.21 |
79.86% |
Investments |
1,705.71 |
1,488.58 |
14.59% |
Advances |
6,074.69 |
5,428.69 |
11.90% |
Fixed Assets |
83.73 |
82.59 |
1.38% |
Other Assets |
109.99 |
110.05 |
(0.05%) |
Total Assets |
9,295.28 |
7,990.77 |
16.33% |
Key Ratios
In %age
|
FY24 |
FY23 |
Net Interest Margin1 |
3.94 |
4.19 |
Gross NPAs |
2.76 |
2.77 |
Net NPAs |
1.40 |
1.36 |
Return on Assets2 |
1.27 |
1.22 |
Return on Equity |
14.64 |
16.62 |
Return on Average Advances |
1.98 |
1.89 |
Cost of Deposits |
5.61 |
4.90 |
Yield on Advance |
11.10 |
10.76 |
CRAR |
27.39 |
18.87 |
Notes: 1 Net Interest Margin has been computed based on the Net Interest
income (Interest Income - Interest Expense) and average of total assets as reported to
Reserve Bank of India in Form X under Section 27 of the Banking Regulation Act, 1949,
during the year
2
Return on Assets is calculated with reference to monthly average working funds
(Working funds taken as total of assets excluding accumulated losses, if any)
The Indian economy grew at one of the fastest pace in the world. This growth led to an
increase in demand for credit, which benefited banking sector and Small Finance Banks
(SFBs) the most. The incomes of Indian households have been rising in recent years, which
has also led to an increase in demand for loans from SFBs. Additionally, the government
has been supportive of SFBs, this has helped SFBs to grow and expand their reach,
particularly in underserved areas.
During the financial year ending March 31, 2024, the Bank experienced a period of
steady and measured growth in its financial performance. Across key performance indicators
such as total assets, deposits, and loans disbursed, there was notable advancement. This
achievement underscores the Bank's commitment to balanced expansion and prudent risk
management, resulting in a healthy loan portfolio and minimal occurrence of non-performing
asset.
The Bank has showcased a commendable trajectory of gradual and sustainable growth in
net profit, a testament to its unwavering commitment to operational efficiency and the
strategic optimization of its product and service offerings. These accomplishments
underscore the dedication and talent of our team, whose relentless pursuit of excellence
in their roles has been instrumental in driving our success.
Capital Small Finance Bank Limited continues to expand its presence across regions,
aiming to provide inclusive banking services to underserved communities, enabling it to
serve a broader customer base and contribute to financial inclusion. Capital Small Finance
Bank Limited acknowledges that its success is intricately linked to the satisfaction of
customers. Therefore, it remains dedicated to understanding the evolving needs and
expectations.
Addressing the Company's liability profile, there is a firm commitment to nurturing
current relationships to uphold elevated levels of Current Account and Savings Account
(CASA) deposits. We have consistently maintained strong CASA levels over the past three
financial years, with ratios remaining steady at 38.30% for the year ending March 31,2024,
41.88% as on March 31, 2023, and 42.16% as on March 31, 2022. Despite the challenges posed
by a rising interest environment, our dedication to cost management is apparent in the
sustained favourable cost of funds. For the financial year ended March 31,2024, it stood
at 5.82%, while for the previous financial year ending March 31, 2023, it was 5.11%.
Additionally, its retail deposits constitute a significant proportion, accounting for
92.94% as on March 31, 2024. Going forward, the Bank remains committed to further
increasing its CASA and retail deposits to optimise its cost of funds.
Turning to Assets, the Bank takes pride in its commitment to maintaining a high
proportion of secured lending, accounting for a substantial 99.9% of the loan book, out of
which ~84% is collateralised with immovable property and fixed deposits. This steadfast
focus on secured lending, complemented by rigorous credit assessment processes and
meticulous risk management practices, has been pivotal in ensuring robust asset quality.
As of March 31, 2024, the Bank's Gross Non-Performing Assets (GNPA) stood impressively low
at 2.76%, while Net Non-Performing Assets (NNPA) remained even lower at 1.40%. Such
remarkable figures stand as a testament to the Bank's profound understanding of its target
customer base and its extensive experience navigating various business cycles throughout
its two decades of banking operations.
We believe interest rates are market driven and our endeavor is to protect our interest
margin. Historically, across interest rate cycles we have been maintaining a spread in the
range of 5.5% -5.9%. Our liability side consists of 80% deposit with 38% CASA and on asset
side 60%-62% of our loan book is floating rate out of which ~80% is MCLR based. The effect
of increase in the MCLR in last year will be visible on their annual reset period in the
coming year.
Furthermore, the Bank's loan portfolio diversification is noteworthy, with advances in
agriculture, MSME & trading, and mortgages segments amounting to Rs. 2,293.12 crores,
Rs. 1,181.59 crores, and Rs. 1,624.03 crores, respectively, as of March 31, 2024. In the
previous year, as of March 31, 2023, these segments accounted for Rs. 2,137.45 crores, Rs.
1,120.46 crores and Rs. 1,434.48 crores respectively. The average ticket size for these
segments as of March 31, 2024, stood at Rs. 1.24 mn, Rs. 1.86 mn and Rs. 1.17 mn
respectively.
In order to gain a foothold in new markets where the branch network is not yet
established, the Bank is actively seeking partnerships to expand geographical presence and
better understand these markets. By forging strategic alliances, it aims to mitigate
associated risks while diversifying the range of products and services. Such
collaborations will not only enhance the offerings but also contribute to the overall
growth of Capital Small Finance Bank Limited.
The Bank has consistently demonstrated impressive growth in both profitability and
operational metrics, underscoring its unwavering dedication to excellence. Over the past
few years, the operating profit before provisions has surged with an outstanding compound
annual growth rate (CAGR) of approximately 35.21%, marking a significant increase from Rs.
34.28 crores in FY19 to Rs. 154.90 crores in FY24. Moreover, the profit before taxes has
experienced a substantial rise from Rs. 26.92 crore in FY19 to Rs. 148.21 crores in FY24.
Similarly, the profit after taxes has seen a notable escalation from Rs. 19.42 crores in
FY19 to Rs. 111.53 crores in FY24. This remarkable performance stands as a testament to
the Bank's enduring trustworthiness, reinforced by its seasoned leadership and reputable
shareholders who are deeply committed to upholding stringent standards of corporate
governance.
The Bank's profitability and operational metrics have showcased a consistent upward
trend, reflecting its commitment to excellence. This exceptional performance is a
testament to the trust the Bank has built over the years, supported by its professional
and experienced leadership team and reputed shareholders with a strong commitment to
corporate governance.
Moving forward, the focus remains on strengthening of operational and profitability
metrics through several key strategies. Firstly, the aim is to optimise asset-liability
mix in favour of asset creation while increasing the credit to deposit ratio. Secondly, it
continue to emphasise on cost optimisation and efficiency improvement. Lastly, it intends
to enhance its fee income and leverage cross-selling opportunities to further diversify
our revenue streams.
Cost optimization remains a pivotal priority, and the Bank takes pride in its enhanced
operational efficiency, evident in the improved operating expense (opex) ratio as a
percentage of average assets. This ratio has significantly decreased to 2.95% in FY24 from
3.50% in FY19. The cost-to-income ratio is expected to continue its improving trajectory
and reached approximately 62.51% in FY24, building on the achievements of 63.42% in FY22
and 70.75% in FY21.
The Board is confident that the continued focus on maintaining strong liabilities and
assets positions will contribute to the sustained growth and success of Capital Small
Finance Bank Limited.
The below table shows improving profitability ratios as a result of margin expansion
and improved efficiencies:
2. Dividend
Based on the robust financial performance and profitability of Capital Small Finance
Bank Limited, the Board of Directors has recommended a Final Dividend of Rs. 1.20 per
equity share (face value of Rs. 10 each) for the financial year ending March 31,2024. This
dividend payout demonstrates the Bank's commitment to delivering value to its esteemed
shareholders. The Board believes in sharing the success of the institution with those who
have placed their trust and invested in Capital Small Finance Bank Limited. The Board
remains dedicated to maintaining a healthy dividend payout ratio while carefully
considering the need for reinvestment in the Bank's growth initiatives. The support and
confidence of shareholders are greatly appreciated, and the Board is pleased to reward
their trust through this dividend declaration.
Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 ("SEBI Listing Regulations") is not presently applicable,
being your Bank does not fall in top 1000 listed entities, your Bank has not yet
formulated and adopted a Dividend Distribution Policy.
3. Transfer to Reserve
In terms of RBI regulations and other applicable regulations, the Bank has appropriated
the following amounts to various reserves for the financial year ended March 31,2024:
Particulars |
Amount |
|
(Rs.in crore) |
Profit after tax |
111.53 |
Profit brought forward |
233.18 |
Accumulated profit (before appropriations) |
344.71 |
Appropriations |
|
To Statutory Reserve |
27.88 |
To Special Reserve |
4.21 |
To Revenue and other reserves (Investment Fluctuations reserve) |
1.44 |
To Revenue and other reserves (Investment Reserve Account) |
0.41 |
To Revenue and other reserves (Other Revenue reserve) |
0.62 |
Dividend paid during the year |
4.24 |
Balance carried forward to balance sheet |
305.90 |
4 Capital Adequacy Ratio (CAR)
The Capital Adequacy Ratio (CAR) plays a vital role in maintaining the stability and
soundness of banks. It is a regulatory requirement that ensures banks have sufficient
capital to absorb potential losses and meet their obligations to depositors and creditors.
By maintaining an adequate capital buffer, banks can mitigate the risk of insolvency and
contribute to the overall resilience of the financial system.
The Bank has developed a well-thought-out capital adequacy plan that considers both
systematic and idiosyncratic risks. Systematic risks are those that affect the entire
banking industry, such as changes in interest rates or economic conditions. Idiosyncratic
risks are those that are specific to a particular bank, such as problems with its lending
or investment activities. Capital Small Finance Bank Limited has made arrangements to
maintain sufficient buffer capital to address any potential stress and to provide ample
growth capital to keep its growth trajectory on track.
The Bank has consistently maintained a strong and healthy Capital Adequacy Ratio, which
reflects its robust capital position and adherence to regulatory requirements. As of the
financial year ending March 31, 2024, Capital Adequacy Ratio stood at 27.39%,
demonstrating its commitment to prudential capital management. This solid capital base
provides a solid foundation for the Bank's operations, supports its growth aspirations,
and instills confidence in our stakeholders. The Bank will continue to prioritise capital
adequacy, ensuring that it has the necessary buffers to navigate any future challenges and
capitalise on emerging opportunities in the dynamic banking landscape.
5. Capital and Debt Structure
a) Authorised Share Capital:
The Bank had authorised capital of Rs.50.00 crores and during the year under
review, there has been no change in the authorised share capital.
b) Issued and Subscribed Share Capital:
The Bank has issued, subscribed and paid up Share Capital of Rs.45.04 crores as
on March 31, 2024. The Bank, during the current year, has issued and allotted 27,632
equity shares on May 26, 2023, 76,500 equity shares on November 06, 2023 of Rs. 10/-
each at a premium of Rs.88/- (i.e. at the total issue price of Rs. 98/-) per
share to employees of the Bank and 12,850 Equity Shares have been issued and allotted
to Material Risk Takers (MRTs as identified by the Board in terms of Compensation policy)
on May 26, 2023 of Rs.10/- each at face value in the form of Employee Stock Option as per
ESOP Plans of the Bank. Further, the Bank has allotted 10,57,700 equity shares, on
preferential basis, to Max Life Insurance Company Limited on June 17, 2023 of Rs. 10/-
each at a premium of Rs.458/- (i.e. at the total issue price of Rs.468/-) per share. The
Bank has allotted 96,15,384 equity shares of Rs.10/- each at a premium of Rs. 458/- (i.e.
at the total issue price of Rs. 468/-) per share on February 13, 2024 to successful
allottees pursuant to Initial Public Offer ("IPO") of the Bank. The equity
shares issued during the year under review rank pari-passu with the existing equity shares
of the Bank.
With respect to disclosure under Regulation 32(1) of SEBI Listing Regulations, the
Audit Committee of the Board at its meeting held on April 24, 2024, had reviewed and
confirmed that the funds raised through IPO during the year have been fully utilised for
the intended object as mentioned in the offer document and there was no deviation or
variation in utilisation of the said funds.
6 Listing of Equity Shares of the Bank with BSE and NSE
The listing of the Initial Public Offering (IPO) of Capital Small Finance Bank Limited
was made on February 14, 2024 on BSE Limited and National Stock Exchange of India Limited
and thereafter the equity shares of Capital Small Finance Bank Limited becomes open for
trade for public at large.
The listing fee for the FY 2024 - 2025 have been duly paid.
7 Disclosure regarding Employee Stock Option schemes
Capital Small Finance Bank Limited - Employees Stock Option Plan 2018 ("CSFB ESOP
Plan 2018") was approved by the shareholders of the Bank in the Annual General
Meeting held on August 18, 2018, amended further in Extra Ordinary General meeting held on
October 22, 2021, for granting equity options to its employees. Further the Capital Small
Finance Bank Limited - Employees Stock Option Plan for Material Risk Takers ("CSFB
ESOP Plan MRT") was approved by the shareholders of the Bank through Postal Ballot on
July 11, 2020, amended further on October 22, 2021, for granting equity options to
Material Risk Takers (MRTs as identified by the Board in terms of Compensation policy).
Further, Capital Small Finance Bank Limited - Employees Stock Option Plan 2023 ("CSFB
ESOP Plan 2023") was approved by the shareholders of the Bank in the Extra Ordinary
General Meeting held on May 12, 2023 for granting equity options to its employees. The
details of the said ESOP schemes as required under Rule 12 (9) of the Companies (Share
Capital and Debentures) Rules, 2014 are as under:
Scheme |
CSFB ESOP |
CSFB ESOP |
CSFB ESOP |
|
Plan 2018 |
Plan for MRTs |
Plan 2023 |
Date of Shareholders approval |
August 18, 2018 |
July 11, 2020 |
May 12, 2023 |
Total number of Options approved |
8,54,720 |
1,00,000 |
6,85,049 |
Exercise price per Option |
Rs. 98 |
Rs. 10 |
Rs. 171 |
Total No. of Options outstanding at the beginning of the year |
3,97,893 |
32,133 |
- |
Total Options granted during the year |
- |
13,875 |
6,82,000 |
Total Options vested during the year |
- |
12,850 |
- |
Total Options exercised |
1,04,132 |
12,850 |
- |
Total number of shares arising as a result of exercise of Option |
1,04,132 |
12,850 |
- |
Options forfeited / lapsed |
38,761 |
26,741 |
1,500 |
Scheme |
CSFB ESOP |
CSFB ESOP |
CSFB ESOP |
|
Plan 2018 |
Plan for MRTs |
Plan 2023 |
Total Options in force as on March 31,2024 |
2,55,000 |
6,417 |
6,80,500 |
Variations in terms of Options |
Nil |
Nil |
Nil |
Money realised by exercise of Options |
Rs. 1,02,04,936 |
Rs. 1,28,500 |
- |
Details of number of Stock Options granted to Directors and KMPs
during the year |
KMP : Mr. Munish Jain: |
KMP : Mr. Munish Jain: |
KMP : Mr. Munish Jain: |
|
NIL |
13,875 |
NIL |
|
Mr. Amit Sharma: |
Mr. Amit Sharma: |
Mr. Amit Sharma: |
|
NIL |
NIL |
3,000 |
Any other employee who receives a grant of Options in any one year
of Options amounting to five percent or more of total Options granted during that period |
Nil |
Nil |
Nil |
Identified employees who were granted options, during any one year,
equal to or exceeding one percent of the issued capital (excluding outstanding, warrants
and conversions) of the Bank at the time of grant |
Nil |
Nil |
Nil |
8. Non-Convertible Bonds
During the financial year under review:
The Bank has issued and allotted 3,099 Unsecured Redeemable Subordinated Non-
Convertible (Lower Tier-II) BASEL II Compliant Bonds 2023 - 24 (SERIES XXI) in the nature
of debentures on May 26, 2023 of Rs. 1,00,000 each at par aggregating to Rs.
30,99,00,000/- on private placement basis with coupon rate of 10% p.a. (Simple Interest)
and redemption date of May 26, 2033.
The Bank has redeemed 503 units of 11% Unsecured Redeemable Non-Convertible
Subordinated Bond (Lower Tier II) in the nature of Debenture Series - VIII (ISIN:
INE646H08137), on May 04, 2023 and the interest amount along with principal amount due
thereon was credited to the accounts of debentures holders as on May 04, 2023.
The Bank has redeemed 310 units of 11% Unsecured Redeemable Non-Convertible
Subordinated Bond (Lower Tier II) in the nature of Debenture Series - IX (ISIN:
INE646H08145), on May 20, 2023 and the interest amount along with principal amount due
thereon was credited to the accounts of debentures holders as on May 20, 2023.
9 Sweat Equity Shares and Equity ^ with Differentia: Rights
Listed Securities, Debenture Trustee Detail and Credit Rating
The debt securities of the Bank issued in the form of Upper Tier-II Bonds & Lower
Tier II Bonds, which are listed on the BSE Limited and detail of the same is as under:
NCD Series |
Coupon Rate |
ISIN |
Rating by Brickwork Ratings India Private Limited on April 12, 2023 |
Rating by Brickwork Ratings India Private Limited on April 12, 2024 |
Rating by Care Ratings Limited on March 13, 2023 |
Rating by Care Ratings Limited on March 12, 2024 |
Unsecured Redeemable Non-Convertible (Upper Tier II), Basel I
Compliant Bonds 2014-15 (Series XI) |
11.75% |
INE646H08012 |
BWR A+ Outlook: (Stable) (Reaffirmation) |
BWR A+ Outlook: (Stable) (Reaffirmation) |
CARE A-; Stable (Single A Minus; Outlook: Stable) |
CARE A-; Stable (Single A Minus; Outlook: Stable) |
Unsecured Redeemable Non-Convertible (Upper Tier II), Basel I
Compliant Bonds 2015-16 (SERIES XIII) |
11.75% |
INE646H08020 |
BWR A+ Outlook: (Stable) (Reaffirmation) |
BWR A+ Outlook: (Stable) (Reaffirmation) |
CARE A-; Stable (Single A Minus; Outlook: Stable) |
CARE A-; Stable (Single A Minus; Outlook: Stable) |
The Bank has got the following credit rating in respect of unlisted debt securities of
the Bank issued in the form of Lower Tier-II Bonds
NCD Series |
Coupon Rate |
ISIN |
Rating by Brickwork Ratings India Private Limited on April 12, 2023 |
Rating by Brickwork Ratings India Private Limited on April 12, 2024 |
Rating by Care Ratings Limited on March 13, 2023 |
Rating by Care Ratings Limited on March 12, 2024 |
Unsecured Redeemable Non-Convertible Lower Tier II Basel-II Compliant
Bonds 2018-19 in the nature of debentures (Series-XVII) |
10% |
INE646H08129 |
BWR A+ Outlook: (Stable) (Reaffirmation) |
BWR A+ Outlook: (Stable) (Reaffirmation) |
CARE A; Stable |
CARE A; Stable |
Contact Details of Debenture Trustee:
Name : IDBI Trusteeship Services Limited
Address : Universal Insurance Building, Ground Floor, Sir PM. Road, Fort, Mumbai -
400001
E-mail : itsl@idbitrustee.co.in
Tel No. +91-22-40807000
Dematerialisation of Securities
The Bank has issued ISIN for the Equity Shares and all the debt securities by NSDL and
CDSL. The equity Shares of all the Directors, KMPs and Promoters have been dematerialised
and the Bank is making all possible efforts to make the security holders aware and get
their securities converted into Dematerialised form. Out of total paid up capital 85.50%
of equity shares are in dematerialization form.
12 Compliances as per the Reserve Bank of India and the Government of India
The Bank has made statutory compliances with respect to all the applicable
rules/regulations/ guidelines/notifications issued by the Reserve Bank of India and the
Government of India.
13 Particulars of employees
The information in terms of Section 197(12) of the Act read with Rule 5(2) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure
A. Further, the statement containing particulars of employees as required under
Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure
B and forms part of this report. The statement containing particulars of employees as
required under Section 197(12) of the Act read with Rule 5(3) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this
report. In terms of Section 136 of the Act, the same would be available for inspection
during working hours at the Registered Office of the Bank. A copy of this statement may be
obtained by the Members by writing to the Company Secretary of the Bank.
14 Transfer of unclaimed dividend to Investor Education and Protection Fund
Pursuant to the relevant provisions of Section 125 of the Companies Act, 2013 and the
relevant rules made thereunder, the amount of unpaid dividends that are lying unclaimed
for a period of 7 years from the date of its transfer to the unpaid dividend account, is
liable to be transferred to Investor Education and Protection Fund ("IEPF").
Shareholders may note that both the unclaimed dividend and corresponding shares, which
have been transferred to IEPF in previous financial years, including all benefits arising
on such shares, can be claimed from IEPF as per the procedure provided under the
applicable provisions of the Companies Act, 2013. The Company sends periodic intimation to
shareholders, advising them to lodge their claims with respect to unclaimed dividend. Mr.
Amit Sharma, Company Secretary, has been appointed as nodal officer to ensure compliance
with the IEPF Rules. The detail of Nodal officer is available on the website of the Bank.
Accordingly, Unclaimed Dividends for and up to the financial year ended March 31, 2016
have already been transferred to the IEPF. Further, please note that the Unclaimed
Dividend in respect of the financial year ended March 31, 2017 must be claimed by the
concerned Shareholders on or before August 28, 2024 failing which it will be transferred
to IEPF in accordance with the Rules. The data for the same is available on the website of
the Bank at https://www.capitalbank. co.in/investors/disclosures-under-regulation-62-Of-
the-LODR/unclaimed-dividends-equity
The details of Unclaimed Dividends as on March 31, 2024 and the last date for claiming
the same, prior to its transfer to the IEPF, are as under:
Dividend for the year ended |
Date of declaration of Dividend |
Last date for claiming Dividend |
Unclaimed Dividend as on March 31, 2024 (Amt. in Rs. ) |
March 31, 2017 |
July 22, 2017 |
August 28, 2024 |
2,21,556.40 |
March 31, 2018 |
August 18, 2018 |
September 24, 2025 |
2,16,652.80 |
March 31, 2019 |
September 27, 2019 |
November 03, 2026 |
1,04,140.00 |
March 31, 2020 |
- |
- |
- |
March 31, 2021 |
August 20, 2021 |
September 26, 2028 |
1,39,522.00 |
March 31, 2022 |
August 05, 2022 |
September 11, 2029 |
5,52,360.58 |
March 31, 2023 |
August 11, 2023 |
September 10, 2030 |
7,08,493.50 |
Transfer of Underlying Equity shares in respect of the unclaimed Dividend to IEPF
Pursuant to the relevant provisions of Section 124 and Section 125 of the Companies
Act, 2013 read with the IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016, as
amended from time to time, the unclaimed Dividend and the underlying Equity Shares of the
Bank for the Financial Year 2015 -16 (in case where the Dividend for subsequent 7
financial years have not been claimed by the concerned Shareholder), were liable to be
transferred by the Bank to IEPF Authority and the same has been transferred, pursuant to
the notification issued by the Ministry of Corporate Affairs (MCA) Dated October 16, 2017.
15 Annual Return pursuant to sub- section (3) of Section 92 of the Companies Act, 2013
The Annual Return of the Bank is available on the website of the Bank at www.capitalbank.co.in
in the format (MGT-7) prescribed under the Act.
16 Requirement for maintenance of cost records
The cost records as specified by the Central Government under section 148(1) of the
Companies Act, 2013, are not required to be maintained by the Bank.
17 Disclosure under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of
the Companies (Accounts) Rules, 2014
Energy Conservation:
Being a Banking Company, energy consumed during this period is only in the form of
electricity and diesel used in generators. The Bank has allocated specific cost budgets
for this purpose and to reduce electric waste for Head Office and all its branches. The
same is also monitored on periodical basis. Other measures like use of LEDs, power saver
air conditioning equipment etc. are being installed for conserving the energy. There is no
capital investment on energy conservation equipment other than specified.
Technology Absorption:
We at Capital Small Finance Bank Limited (CSFB) believe that the banks with the ability
to adopt and integrate information technology will dominate in the highly competitive
domestic market. Accordingly, the Bank continues to leverage information technology as a
strategic tool in business operations for customer delight by offering efficient and
improved services with low cost and using it as a tool to improve staff productivity,
increasing efficiency and more efficient & effective control over banking operations.
We are convinced that investing in IT is critical and also understand that its
potential and consequences on the banking is enormous. That is why the Bank since its
inception is equipped with a full-fledged Information Technology Department with required
manpower to strengthen develop, maintain and support IT infrastructure.
Foreign exchange earnings and outgo:
There was no foreign exchange earnings or outgo during the year under review.
18 Disclosures under Section Sec 134(3)(l) of the Companies Act, 2013
There are no material changes and commitments, affecting the financial position of the
Bank, which has occurred between the end of the financial year of the Bank to which the
financial statements relates and date of this report.
19 Details of significant & material orders passed by the regulators or courts or
tribunals
There are no significant material orders passed by the Regulators or Courts or Tribunal
which would impact the going concern status of the Bank and its future operations.
20 Disclosure of Penalties imposed on the Bank during the Financial Year
I. Please refer note 16 to Schedule 18 forming part of the financial statements, which
forms part of this annual report.
II. Penalties imposed by stock exchanges or SEBI or any statutory authority, on any
matter relating to capital markets
During the review period, the Company was listed on Stock Exchanges on February 14,
2024. Consequently, the Quarterly Results for the Quarter and Nine Months Ended December
31, 2023 were approved by the Board of Directors on February 27, 2024, and subsequently
submitted to BSE Limited on the same date, thus resulting a delay of 13 days, for which
penalty was imposed by BSE Limited and the same has been deposited by the Company in
compliance with SEBI Listing Regulations.
21 Deposits
Being a Banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the
Companies (Accounts) Rules, 2014 read with Section 73 and 74 of the Companies Act, 2013
and Companies (Acceptance of Deposits) Rules, 2014 are not applicable. The details of the
deposits received and accepted by your Bank as a Banking company have been disclosed in
the financial statements for the financial year ended March 31,2024.
22 Asset-Liability and Risk Management pursuant to section 134(3)(n) of Companies Act,
2013
The Bank has formulated and adopted a robust risk management framework. Whilst the
Board is responsible for framing, implementing and monitoring the said risk management
framework, it has delegated its powers relating to monitoring and reviewing of risk
associated with the business of the Bank to the Risk Management Committee. Bank follows an
integrated approach to managing risks and the processes are embedded in the fundamental
business model. The Risk Management Landscape in the Bank covers the stages of
identifying, assessing, measuring, managing, controlling and reporting risk concerns
across all the risk classes viz. Credit, Market and Operational Risks and Liquidity Risk.
The Risk Management Policies adopted and reviewed periodically articulate, codify the
strategy, structure, processes and systems to manage bank wide risks. Expanding business
arenas, deregulation and globalisation of financial activities, emergence of new financial
products and increased level of competition has necessitated the need for an effective and
structured risk management practice in financial institutions.
The Bank has adopted an integrated approach for the management of risk. Effective
internal policies are developed in tune with the business requirements and best practices.
The Bank has formulated Risk Management Policy' which also includes Internal Capital
Adequacy Assessment Policy (ICAAP) for identifying and measuring various operational,
credit, market and solvency risks. Operational risks are managed through comprehensive
systems of internal control, establishing systems and procedures to monitor transactions,
maintaining key back-up procedures and undertaking regular contingency planning. We
constantly strive to enhance the risk management capabilities in accordance with the
emerging regulatory guidelines and the broad risk management principles. The Bank reviews
the risk management system and the progress made in implementing the RBI guidelines on
risk management, on a quarterly basis. The Asset Liability Management Committee (ALCO),
consisting of the Bank's senior management and the Managing Director, is responsible for
ensuring adherence to the limits set by the Board as well as for deciding the business
strategy of the Bank (on the assets and liabilities sides) in line with the Bank's budget
and decided risk management objectives. The Committee actively manages and controls the
structure of assets and liabilities and interest rate sensitivities with a view of
optimising profits besides maintaining capital adequacy and sufficient liquidity.
Statements for Structured Liquidity, Liquidity Coverage and Interest Rate Sensitivity of
the bank is being prepared in line with the RBI guidelines to actively manage the
liquidity and interest rate risks.
Liquidity Risk Management has been at the core of sound risk management practices of
banking industry in the modern age. The Liquidity risk is the potential inability to meet
the Bank's liabilities as they become due. It arises when the Banks are unable to generate
cash to cope with a decline in deposits or increase in assets.
The Bank gives utmost importance to manage various risks in most efficient way and has
articulated comprehensive structure for liquidity risk management through various policy
including Contingency Funding Plan (CFP) which aims to address the adverse liquidity
scenarios. It is recommended by ALCO to Risk Management Committee of Board (RMCB) on
annual basis for approval and is reviewed quarterly by the ALCO. In case, any review by
the ALCO results in the funding gap, ALCO will be responsible to establish an action plan
on the same which shall be approved by the RMCB. Further the decision to use the lines of
defence as per the CFP lies with the ALCO. The contingency is defined in various
scenarios. The comprehensive CFP endeavours to monitor liquidity on real time basis, with
a wide and unrelated range of lines of defence, along with proper channel of reporting,
escalation and decision making.
The Bank has constituted a Risk Management Committee. The details of the said committee
and its terms of reference are set out in the report on corporate governance, which forms
part of this annual report.
Further, the Bank has formulated Stress Testing Framework for evaluation of Bank's
financial position under a severe but plausible scenario to assist in decision making
within the Bank. It enables the Bank in forward looking assessment of risks. It
facilitates internal and external communication and helps senior management understand the
condition of the Bank in the stressed situations. Stress testing outputs are extremely
useful in decision making process in terms of potential actions like risk mitigation
techniques, contingency plans, capital and liquidity management in stressed conditions.
Stress testing forms an integral input of the internal capital adequacy assessment
process (ICAAP), which requires the Bank to undertake forward-looking stress testing that
identifies severe events or changes in market conditions that could adversely impact the
Bank. The stress testing reports provide the senior management with a thorough
understanding of the material risks to which the Bank may be exposed and to help in
potential actions like mitigation techniques, contingency plans, capital and liquidity
management in stressed conditions etc. Further, stress testing is an important input in
identifying, measuring and controlling funding liquidity risks, in particular for
assessing the Bank's liquidity profile and the adequacy of liquidity buffers in case of
both bank-specific and market-wide stress events.
The Bank has a strong impetus on risk management and it realised that risk management
is backbone of banking industry and being an evolving topic, the bank attempts to keep
evolving various newer avenues to manage risk effectively and efficiently as per the risk
management policy and framework of the bank so that the whole structure is well aligned
with the risk appetite, risk assessment and risk mitigation strategy of the Bank. The risk
management committee monitor and review the risk management plan and to perform functions
as defined under the Act and SEBI Listing Regulations.
23. Independent Directors Declaration in terms of Section 134(3)(d); Section 149(6) of
Companies Act, 2013 and Regulation 16(1)(b) of SEBI Listing Regulations
The composition of Board of Directors of the Bank is governed by the provisions of the
Companies Act, 2013 and the Banking Regulation Act, 1949. The Board of the Bank as on
March 31, 2024 consisted of thirteen Directors, out of which seven directors are
independent Directors.
Ms. Rachna Dikshit, Mr. Kamaldeep Singh Sangha and Mr. Sukhen Pal Babuta were appointed
as Independent Director, during the year under review, on the Board of the Bank.
The Bank has obtained declaration of Independence from Mr. Navin Kumar Maini, Mr.
Gurpreet Singh Chug, Mr. Sham Singh Bains, Ms. Rachna Dikshit, Mr. Kamaldeep Singh Sangha,
Mr. Sukhen Pal Babuta and Mr. Nageswara Rao Yalamanchili and they meet the criteria of
independence as laid down under Section 149(6) and 149(7), Schedule IV of the Companies
Act, 2013 and Regulation 16(1)(b) & Regulation 25(8) of SEBI Listing Regulations.
Further, all the Independent Directors have complied with the Code for Independent
Directors prescribed in Schedule IV to the Act. The separate meeting of Independent
Directors were conducted on February 01,2024 & February 26, 2024.
Pursuant to the Rule 8(5)(iiia) of the Companies (Accounts) Rules, 2014, the Board
opines that all the Independent Directors of the Bank adhere to corporate integrity,
possess the requisite expertise, experience and qualifications to discharge the
responsibilities as an Independent Director as mandated by the Companies Act, 2013 and
other applicable laws and fulfil the conditions of independence specified in the Act and
the SEBI Listing Regulations and that they are independent of the management.
All the Independent Directors of the Bank have been registered and are members of the
Independent Directors Databank maintained by the Indian Institute of Corporate Affairs
(IICA). Three Independent
Directors were already granted exemption. Three Independent Directors had already
passed the online Proficiency Self-Assessment test. Mr. Kamaldeep Singh Sangha shall
appear for Online Proficiency Self Assessment Test in due compliance of law.
24. Company's Policy on Directors' Appointment & Remuneration including criteria
for determining Qualifications, Attributes, Independence etc. in terms of Section
134(3)(e); Section 178(1) & (3) of the Companies Act, 2013
Basis the Fit and Proper' criteria laid down by the Reserve Bank of India, the
Nomination and Remuneration Committee (NRC) conducts the due diligence of the Board
members on yearly basis except for the Directors who are member of the NRC.
Further Board also conducts due diligence of all the Directors on yearly basis. The due
diligence process involves considering the appointment and remuneration of Directors and
Key Managerial Personnel as per the guidelines issued by Reserve Bank of India and the
Companies Act, 2013. The process contains detailed procedures for determining
qualifications, positive attributes, due diligence mechanism and reference checks for
appointment of Directors and Key Managerial Personnel.
The Bank has put in place the Compensation Policy for Employees including MD & CEO,
WTD and other Material Risk Takers (MRTs) and Comprehensive Compensation policy for
Non-Executive Directors with a key objective to support organisational strategy by helping
to build a competitive, high performance and accompany with an entrepreneurial culture
that attracts, retains, motivates and rewards high performing employees as well as
properly compensate the employees vis-a-vis their risk and performance involvement. The
policies are available on the website of the Bank at https://www.capitalbank.co.in/
investors/secreterial-policies.
25. Performance Evaluation of Board in terms of Section 134(3)(p) of the Companies Act,
2013
The Nomination and Remuneration Committee (NRC) and the Board has approved the
evaluation process for evaluating the performance of the Board and Committees as whole and
individual director. The separate meeting of Independent Directors held on February 26,
2024 which carried out the annual evaluation of the performance of Non- Executive
Non-Independent Directors, Executive Directors, Chairperson, Board as a Whole and Board
Committees.
Further the Board of Directors in its meeting held on February 27, 2024 had also
conducted the Annual evaluation of performance of Board as a whole, Board Committees,
Chairperson, Managing Director, Non Executive Directors
In accordance with the provisions of Section 149(8) read with Schedule IV, Section
178(2) of the Companies Act, 2013 Regulation 17 and other applicable Regulations of SEBI
Listing Regulations, and in consonance with Guidance Note on Board Evaluation issued by
the SEBI, the Board assesses the performance of the Individual Director, Board Committees
and Board as a whole on the basis of various criteria with the aim to improve the
effectiveness of the individual Director, Committees and the Board. The description and
process of annual performance evaluation has been provided in Report on Corporate
Governance annexed with Board's Report as Annexure C.
26. State of the Company's Affairs in terms of Section 134(3)(i) of the Companies Act,
2013
The state of affairs of the Company in details has been given separately in different
sections of the Board Report and also under Management Discussion and Analysis. There was
no change in status of the Bank during the year ended March 31, 2024.
27 Name of the companies which have become or ceased to be Subsidiaries/ Associates or
Joint Ventures during the year in terms of Section 134(3) (q) read with Rule 8(5)(iv) of
Companies (Account) Rules, 2014
No company have become or ceased to be the Subsidiary, Joint venture or Associate
Company of the Bank during the financial year.
28 Disclosure Under the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 in terms of the Sexual Harassment of Women at the
Workplace (Prevention, Prohibition & Redressal) Act, 2013
The Bank has formulated Internal Complaint Committees at Head office level and at
Cluster level (for Branches). The composition of the committees is in consonance with the
provisions of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition
& Redressal) Act, 2013. These committees are formulated for redressal of complaints
for Sexual Harassment of women at the workplace ("SH") and take all necessary
measures to ensure a harassment- free workplace. The Bank believes that all employees,
including other individuals who are dealing with the Bank have the right to be treated
with dignity.
The following is the summary of the complaints received and disposed off during the
Financial Year 2023-24:
In Head Office (including Regional Offices)
a) No. of SH complaints received: Nil
b) No. of SH complaints disposed off: Nil
In Branches:
a) No. of SH complaints received: Nil
b) No. of SH complaints disposed off: Nil
The Committee believes in ethics and takes appropriate action against the employees who
have violated the norms, which includes disciplinary action such as warning letter and in
some cases termination of employment depending upon the gravity of violation.
29 Adequacy of Internal Financial Controls Related to Financial Statements
The Companies Act, 2013 has introduced a reasonably advanced reporting concept for
auditors i.e. Internal Financial Control (IFC) over financial reporting. Auditors of the
Company are required to report on adequacy and operating effectiveness of internal
financial controls of the Company with report on financial statements prepared under
section 143 of the Companies Act, 2013.
The Bank as per the requirement of section 134(5)(e) of the Companies Act, 2013 has
adopted the policies and procedures to ensure orderly and efficient conduct of its
business, including adherence to the Company's policies, safeguarding of its assets,
prevention and detection of frauds and errors, accuracy and completeness of accounting
records, timely preparation of reliable financial information.
During the year under review, the Statutory Auditors and the Secretarial Auditors have
not reported any instances of frauds committed in the Bank by its Officers or Employees to
the Audit Committee under section 143(12) of the Companies Act, 2013, details of which
needs to be mentioned in the Report.
30 Directors
The Board of the Bank is duly constituted in accordance with the provisions of Banking
Regulation Act, 1949, the Companies Act, 2013 and other applicable law/ guidelines.
Mr. Sarvjit Singh Samra has held the office as Managing Director & CEO of the Bank
w.e.f. April 24, 2019 for a period of three years. He has been further re-appointed as
Managing Director and CEO of the Bank w.e.f. April 24, 2022 for a period of three years.
Mr. Sarvjit Singh Samra has been instrumental in taking key decisions from day one that
have contributed to the Bank emerging as the most preferred Bank in its area of operation.
His vision to serve common man and the local touch has given the Bank a competitive edge
over other banks operating in the area and the Bank is able to provide safe, efficient and
service oriented repository of savings to the local community while reducing their
dependence on moneylenders by making need-based credit easily available.
Part-time Chairman
Pursuant to the approval of the Reserve Bank of India, Mr. Navin Kumar Maini (DIN:
00419921) is acting as Part-time Chairman of Capital Small Finance Bank Limited for a
period of three years w.e.f. April 24, 2022.
Retirement/Appointment of Directors in compliance to Section 10(2A)(i) of the Banking
Regulation Act, 1949
The Board is duly constituted as per the provisions of Banking Regulation Act, 1949,
Companies Act, 2013, RBI guidelines for Small Finance Banks and SEBI Listing Regulations,
as may be applicable.
During the year under review, Mr. Gurdeep Singh (DIN: 01572748) ceased to be the
Director of the Bank w.e.f June 13, 2023 pursuant to his resignation due to personal
circumstances and commitments.
During the year under review, Ms. Harmesh Khanna (DIN: 03078018) ceased to be the
Director of the Bank w.e.f August 21,2023 on completion of her tenure.
During the year under review, Mr. Rakesh Soni (DIN: 07262045) ceased to be the Director
of the Bank w.e.f August 21, 2023 on completion of his tenure.
Further, during the year under review, with the recommendation of Nomination and
Remuneration Committee, Mr. Munish Jain (DIN: 10132430) was appointed as Additional
Director w.e.f. August 28, 2023 and thereafter appointed as Whole Time Director
(designated as Executive Director) of the Bank for a period of three years w.e.f. August
28, 2023 till August 27, 2026. The shareholders of the Bank approved the said appointment
in Extra - Ordinary General meeting held on September 25, 2023. He also remained as the
Chief Financial Officer of the Bank during the year (ceased as Chief Financial Officer of
the Bank w.e.f. April 24, 2024).
Further, during the year under review, the Board of Directors in its meeting held on
June 26, 2023 on the recommendation of Nomination and Remuneration Committee, had
appointed Mr. Kamaldeep Singh Sangha (DIN : 08242130) and Ms. Rachna Dikshit (DIN :
08759332) as Additional Directors (Independent) w.e.f. June 26, 2023.
Further, during the year under review, the Board of Directors in its meeting held on
August 11,2023 on the recommendation of Nomination and Remuneration Committee, had
appointed Mr. Sukhen Pal Babuta (DIN : 01739016) as Additional Director (Independent)
w.e.f. August 11, 2023.
Further, during the year under review, Mr. Navin Kumar Maini (DIN : 00419921) was
re-appointed as Independent Director for second term of three years w.e.f. January 30,
2024 to January 29, 2027 and the Shareholders of the Bank, vide special resolution,
approved the same in its Extra - Ordinary General meeting held on September 25, 2023.
Further, during the year under review, Mr. Gurpreet Singh Chug (DIN : 01003380) was
re-appointed as Independent Director for second term of three years w.e.f. February 23,
2024 to February 22, 2027 and the Shareholders of the Bank, vide special resolution,
approved the same in its Extra - Ordinary General meeting held on September 25, 2023.
Further the Shareholders of the Bank in the Annual General Meeting held on August
11,2023 had approved the appointment of Mr. Kamaldeep Singh Sangha (DIN : 08242130) &
Ms. Rachna Dikshit (DIN : 08759332) as Independent Director w.e.f. June 26, 2023. Further,
the shareholders of the Bank in Extra - Ordinary General meeting held on September 25,
2023 approved the appointment of Mr. Sukhen Pal Babuta (DIN : 01739016) as Independent
Director w.e.f. August 11, 2023.
Directors Retiring by Rotation
In terms of Section 152 of the Companies Act, 2013, Mr. Mahesh Parasuraman (DIN:
00233782) Nominee Director being longest in the office shall retire at the forthcoming
Annual General Meeting and being eligible for re- appointment, offers himself for
reappointment.
Appointments/Resignations of the Key Managerial Personnel
The Bank had following Key Managerial Personnel ("KMPs") as on April 1, 2023:
Name |
Designation |
Mr. Sarvjit Singh Samra |
Managing Director and Chief Executive Officer |
Mr. Munish Jain |
Chief Financial Officer and Chief Operating Officer |
Mr. Amit Sharma |
Company Secretary and Compliance Officer |
The Board in its meeting held on August 29, 2023 has elevated Mr. Munish Jain as
Executive Director and Chief Financial Officer. Accordingly, as on March 31, 2024,
following are the KMPs of the Bank:
Name |
Designation |
Mr. Sarvjit Singh Samra |
Managing Director and Chief Executive Officer |
Mr. Munish Jain |
Executive Director and Chief Financial Officer |
Mr. Amit Sharma |
Company Secretary and Compliance Officer |
Further, there was no appointment / resignation of any Key Managerial Personnel during
the financial year. Post the completion of FY24, the Board of Directors appointed Mr.
Aseem Mahajan as the Chief Financial Officer w.e.f. April 24, 2024 of the Bank and
pursuant to said appointment, Mr. Munish Jain ceased to hold the position of Chief
Financial Officer of the Bank as on even date.
31 Corporate Governance
Corporate governance is the combination of rules, processes or laws by which businesses
are operated, regulated or controlled and that aims at effective, transparent, and
responsible management of a company within the applicable statutory and regulatory
structures.
Over the last several years, the external environment in which public companies operate
has become increasingly complex for companies and shareholders alike. The increased
regulatory burdens imposed on public companies in recent years have added to the costs and
complexity of overseeing and managing a corporation's business and bring new challenges
from operational, regulatory and compliance perspectives. Many cases of Management
failures and financial crisis have been reported in the finance industry during the
financial year and all these are the cause of poor corporate governance.
Your Bank has formulated a Corporate Governance framework which ensures timely
disclosures and filing of correct information regarding our financials and performance, as
well as the leadership and governance of the Bank. The Board is constituted professionally
with a strong commitment to shareholder value, transparency, accountability, ethical
standards and regulatory compliances.
The Board's supervisory role is independent and separate from the executive management
and the Board Committees. The Composition of the Board of Directors as on March 31,2024
comprised of majority of Independent directors and this is a great step of the Bank
towards better Corporate Governance.
The Board presently comprises of thirteen Directors including one-woman director and it
provides diverse combination of professionalism, knowledge, expertise and experience as
required in the banking business for long-term success. The Board has seven Independent
Directors constituting more than one-half of its total membership strength including one
women Director and three Nominee Directors. The Directors have distinguished themselves in
different walks of life through experience and expertise. The Company recognises and
embraces the benefits of having a diverse Board of Directors to enhance the quality of its
performance. The Company considers increasing diversity at Board level as an essential
element in maintaining a competitive advantage in the complex business that it operates.
The identified key skills/ expertise/competencies of the Board and mapping with individual
director are provided in the Corporate Governance Report', forms a part of this
Report.
The Company has duly framed policies and codes which are required under the Act, SEBI
Listing Regulations and other Laws/Rules/Regulations as applicable on the Company. The
policies/codes as required to disclose on the website of the Company are available at
https://www.capitalbank.co.in.
A report on Corporate Governance and Certificate from the Company Secretary in Practice
confirming compliance of conditions, as stipulated under SEBI Listing Regulations, is
annexed as Annexure C and forms an integral part of this Annual Report.
Code of Conduct for Directors and SMPs
In accordance with Regulation 17(5) of SEBI Listing Regulations, the Bank has adopted
the Code of Conduct for Directors and Senior Management Personnel ("SMPs"). The
code of conduct sets forth the guiding principles for orderly & fair conduct by
Directors and SMPs. All Directors and SMPs have affirmed the compliance of the code for
the FY24 and a declaration to this effect signed by the MD & CEO forms part of Report
on Corporate Governance annexed with Board's Report as Annexure C. The Bank's Code
of Conduct for Directors and SMPs is disclosed on the website of the Bank at https://www.
capitalbank.co.in/investors/secreterial-policies
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD
Board of Directors
Details of the Board of Directors and Board meetings held during the year, are provided
in the Corporate Governance Report', forms a part of this Report.
During the year under review, twelve Board Meetings were convened and held, the details
of which are given in the Corporate Governance Report', forms a part of this Report.
The maximum interval between any two consecutive
Committees of Directors
The Bank has several committees which have been established as a part of best Corporate
Governance practices and are in compliance with the requirements of the relevant
provisions of applicable laws and statutes. The Bank has following Committees of the Board
as on March 31, 2024
Details of the Committees, along with their composition, charters and meetings held
during the year, are provided in the Corporate Governance Report', forms a part of
this Report. During the financial year 2023-24, the Board has accepted all the
recommendations of its Committees.
32 Meeting of independent directors
As per the requirement of the Section 149(8) read with Schedule IV of Companies Act,
2013 (Code for Independent Directors) and Regulation 25 of SEBI Listing Regulations, the
independent directors of the Company shall hold at least one meeting in a financial year,
without the attendance of non-independent directors and members of management.
During the year under review, the Independent Directors of the Bank met 2 (Two) times
on February 01,2024 & February 26, 2024.
33 Details of General Body Meetings
S. No.Year |
Particulars Of Meeting |
Date & Time |
Location |
Special Resolution Passed, If Any |
1. 2023 - 2024 |
Extra - Ordinary General Meeting |
May 12, 2023 at 11:30 am |
Through Video Conferencing ("VC") / Other Audio - Visual Means
("OAVM") |
Issuance of equity shares by way of preferential issue on private
placement basis and execution of transaction documents in respect thereof To consider and
approve CSFB Limited - Employees Stock Option Plan 2023 "CSFB ESOP Plan 2023" To
re-appoint Mr. Gurdeep Singh (DIN : 01572748) as a non- executive independent director for
a second term of three years |
2.2023 - 2024 |
24th Annual General Meeting |
August 11, 2023 at 11:00 am |
Through Video Conferencing ("VC") / Other Audio - Visual Means
("OAVM") |
To approve the revised remuneration of Mr. Sarvjit Singh Samra (DIN:
00477444), Managing Director & CEO for the period commencing from April 24, 2022 till
April 23, 2023 To approve the updated remuneration of Mr. Sarvjit Singh Samra (DIN:
00477444), Managing Director & CEO for financial year 2023-24 onwards |
3.2023 - 2024 |
Extra - Ordinary General Meeting |
September 25, 2023 at 11:00 am |
Through Video Conferencing ("VC") / Other Audio - Visual Means
("OAVM") |
To consider and approve the Initial Public Offer To consider and approve
adoption of new Articles of Association to re-appoint Mr. Navin Kumar Maini (DIN :
00419921) as a non- executive Independent Director for a second term of three years To
re-appoint Mr. Gurpreet Singh Chug (DIN : 01003380) as a non- executive Independent
Director for a second term of three years To approve the appointment of Mr. Munish Jain
(DIN : 10132430) as Whole time Director (designated as Executive Director) of the Bank |
34 Corporate Social Responsibility
As a responsible citizen, Capital Small Finance Bank Limited strongly believes in the
idea of paying back to the society in order to run a sustainable business. Accordingly, in
Capital Small Finance Bank Limited Corporate Social Responsibility is considered as an
important function. Our Corporate Social Responsibility (CSR) activities include
encouraging education, promoting sports, eradicating hunger and improving health care. We
are managing education centres for underprivileged children.
The Company's CSR policy and programmes are in accordance with Section 135 of Companies
Act, 2013, the Bank takes multiple initiatives in the areas of education, Rural Sports
Development and health. Corporate Social Responsibility Policy of the Bank can also be
accessed from the website of the Bank https://
www.capitalbank.co.in/investors/secreterial-policies
The Annual Report on CSR activities as required to be given under Section 135 of the
Companies Act, 2013 and Rule 8 of the Companies (Corporate Social Responsibility Policy)
Rules, 2014 has been provided as Annexure D which forms part of the Board's Report.
The Bank undertakes its Corporate Social Responsibility activities through Capital
Foundation (a Society Registered under the Societies Registration Act, 1860). During the
Year under Societies review, the Bank has disbursed the entire amount of its CSR
obligation to the Capital Foundation. As per the report received from the Capital
Foundation ^1,71,95,835/- including the interest thereon has remained unspent for
the FY'24 as some of the Ongoing Projects has not been fully matured. Accordingly, as
approved by the CSR Committee, the Capital Foundation has transferred the said unspent
amount to Unspent Corporate Social Responsibility Account in accordance with the
provisions of Section 135(6) of the Companies Act, 2013.
35 Green Initiatives
"Unite to make this planet green and clean"
Deforestation is one of the most pressing environmental issues and a harsh reality of
the present times. Large-scale deforestation and various other human activities have
drastically added to the Global warming and have caused a major shift in weather patterns
across the world. Usage of paper is one of the major reasons for cutting down of trees
which in long term is unsustainable.
Keeping in view the harsh reality, the MCA took a great action towards it by coming out
with the "Green Initiative in the Corporate Governance" through its circular No.
17/2011 dated April 21, 2011 and No. 18/2011 dated April 29, 2011 dated April 29, 2011.
Under this MCA has provided a welcoming facility of serving notices / documents by
companies' to its shareholders through electronic mode. After this great initiative taken
by the MCA, companies' are no longer required to give Notice including the Annual Return
in physical form to its stakeholders who are having email Id. They can provide in
electronic mode at the Registered E-mail Id of the stakeholders.
In view of the said concern, we request all the stakeholders to get their E-mail
registered with the Bank so to get the Annual Reports at the E-mail ids instead through
paper mode.
Also, registering your e-mail address with us will ensure that we can directly connect
with you and no important communication from our side will be missed by you as a
shareholder of the Bank.
36 Vigil Mechanism
The Bank has implemented a Whistleblower Policy, which is periodically reviewed,
pursuant to which safeguards are being provided against victimisation of employees and
Directors. The Policy allows to raise concerns on Reportable Matters (as defined in the
policy) such as breach of Bank's Code of Conduct, fraud, bribery, corruption, employee
misconduct, illegality, health & safety, environmental issues and wastage/
misappropriation of bank funds/assets, etc. and also provides for direct access to the
Ombudsperson, in exceptional cases. The policy is available on the Bank's intranet and
website of the Bank. The Whistleblower Policy complies with all the requirements of Vigil
mechanism as stipulated under Section 177 of the Companies Act, 2013, and other applicable
laws, rules and regulations, as may be applicable. The updated Whistleblower Policy is
also available on the website of the Bank at link www. capitalbank.co.in.
The Bank has also appointed Chief of Internal Vigilance to ensure compliance with all
the internal guidelines issued by the Bank from time to time.
The functioning of the Policy is reviewed by the Audit Committee from time to time.
During the review period, no concern has been reported in accordance with the said policy
and none of any complainant has been denied access to the Audit Committee of the Board.
37 Loans, Guarantees or Investments in securities
Pursuant to Section 186(11) of the Companies Act, 2013, the provisions of Section 186
of Companies Act, 2013, except sub-section (1), do not apply to any loan made, guarantee
given or security provided or investment made by a banking company in the ordinary course
of business. Therefore, the said provision is not applicable to the Bank.
38 The details of application made or any proceeding pending under the Insolvency and
Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end
of the financial year:
During the year, no application was made/ proceeding is pending against the Bank.
39 The details of difference between amount of valuation done at the time of one-time
settlement and the valuation done while taking loan from the banks or financial
institutions along with the reason thereof:
There was no instance of one-time settlement with any other bank/financial institution
during the year ended March 31, 2024.
40 Contracts or Arrangements with Related Parties
All related party transactions that were entered during the Financial Year 2023-24 were
in the ordinary course of the business of the Bank and were on arm's length basis and the
same is enclosed as Annexure E in the prescribed format AOC-2 to this Report. There
were no materially significant related party transactions entered by the Bank with
Promoters, Directors, Key Managerial Personnel or other persons which may have a potential
conflict with the interest of the Bank. All such Related Party Transactions are being
placed before the Board/Audit Committee for approval, wherever applicable.
Members can also refer the disclosure of transactions with related parties during the
financial year under review as set out in the note no. 12 of the Schedule 18 of the
Financial Statements of the Bank.
41 Disclosure pursuant to Section 197(14) of the Companies Act, 2013
The Bank does not have any holding or subsidiary company, therefore no disclosure is
required to be made pursuant to the provisions of Section 197(14) of the Companies Act,
2013 and as per the relevant rules thereunder.
42 Disclosure pursuant to Section 177(8) of the Companies Act, 2013
During the Financial Year 2023- 2024, there was no recommendation of the Audit
Committee which was not accepted by the Board.
43 Change in Nature of Business
Pursuant to the relevant provision of Rule 8(5) of the Company (Accounts) Rules, 2014,
there is no change in the nature of Business of the Bank.
44 Auditors & Auditors' Report
Statutory Auditors and Audit
M/s T R Chadha & Co. LLP, Chartered Accountants (Regd. No. 006711N/N500028) were
appointed as Statutory Auditors of the Company for three Financial Years starting from
2021-22 by the Shareholders of the Bank in its Annual General Meeting held on August 20,
2021. The continuation of the term of Statutory Auditors was subject to the approval from
Reserve Bank of India every year as per the resolution passed in the AGM. The Reserve Bank
of India gave approval of appointment for Financial Years 2021-22 and 2022-23.
The Board of Directors, on the recommendation of the Audit Committee, approved the
continuation of the term of M/s TR Chadha & Co. LLP as Statutory Auditor for the FY24
in its meeting held on May 19, 2023 and applied with RBI for approval of the same.
However, as per communication received from the RBI vide email dated September 13,
2023, M/s T R Chadha & Co. LLP has been found ineligible for appointment as Statutory
Auditor for FY24.
The Board of Directors of the Bank in its meeting held on February 27, 2024 took note
of the casual vacancy and cessation of the term of M/s T R Chadha & Co. LLP and
approved the profiles of two firms in order of preference for the appointment as Statutory
Auditors of the Bank for the Financial Year 2023-24, subject to the approval of the
Reserve Bank of India (RBI).
The Bank has received the approval of Reserve Bank of India (RBI') vide its
letter dated March 01, 2024 for the appointment M/s S C V & Co. LLP (FRN 000235N/
N500089), Chartered Accountants as Statutory Auditors of the Bank for the Financial Year
2023-2024 and the Bank has appointed M/s S C V & Co. LLP (FRN 000235N/N500089),
Chartered Accountants as Statutory Auditors of the Bank for the Financial Year 2023-2024
till the conclusion of Annual General Meeting to be held in the Financial 2024-25 to fill
the casual vacancy.
No qualifications, reservations or adverse remarks are reported by Statutory Auditors
of the Bank, in their Audit report. Information referred to in the Auditors' Report are
self-explanatory and do not call for any further comments.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank had appointed
M/s Deepak Arora & Associates, Practicing Company Secretaries through its partner Mr.
Deepak Arora (FCS No. 5104 and COP No. 3641) to conduct Secretarial Audit of the Bank.
The Secretarial Audit Report is annexed herewith as Annexure F to this report.
No qualifications, reservations or adverse remarks are reported by M/s Deepak Arora
& Associates, Practicing Company Secretaries, Secretarial Auditors of the Bank, in
their Secretarial Audit report.
Information referred to in the Secretarial Auditors' Report are self-explanatory and do
not call for any further comments.
Cost Audit
The Bank is not required to appoint a Cost Auditor. Therefore, maintenance of cost
records as specified under subsection (1) of section 148 of the Companies Act, 2013, is
not applicable to the Bank.
Annual Secretarial Compliance Report
A Secretarial Compliance Report, pursuant to Regulation 24A of the SEBI Listing
Regulations, for the financial year 2023-24 on compliance of all applicable SEBI
Regulations and circulars/ guidelines issued thereunder, has been obtained from M/s Deepak
Arora & Associate, Practicing Company Secretaries and the same is available on the
website of the Company and Stock Exchanges.
45 Familiarisation Programme for Independent Directors
In accordance with Regulation 25(7) of SEBI Listing Regulations and RBI guidelines, the
Bank, at the Board / Committee meetings, presentations and deep dive sessions, covered
important areas of the Bank such as annual plans and strategies, compensation strategy,
impact of inflation, non-financial risks, customer services framework, risk management,
priority sector lending, liquidity, new regulatory guidelines, etc. during the year under
review for the Independent Directors to enable them to familiarise with the Bank, its
Management, Bank's Business, and its operations for better understanding of their
responsibilities, roles, and rights for effective contribution in sustainable growth of
the Bank. The details thereof is disclosed in the Report on Corporate Governance annexed
with Board's Report as Annexure C and on the website of the Bank under
https://www.capitalbank.co.in/ investors/secreterial-policies
46 Management Discussion and Analysis Report
The Management Discussion and Analysis Report of the financial conditions and results
of operations of the Company for the year under review, as required under Regulation
34(2)(e) of SEBI Listing Regulations, is being given separately and forms a part of the
Annual Report.
47 Directors' Responsibility Statement
The Board of Directors acknowledge the responsibility for ensuring compliance with the
provisions of Section 134(3) (c) read with Section 134(5) of the Companies Act, 2013, in
preparation of annual accounts for the financial year ended March 31,2024 and state that:
In the preparation of the annual accounts for the financial year ended March 31, 2024,
the applicable accounting standards had been followed along with proper explanation
relating to material departures;
The Directors had selected accounting policies and applied them consistently and made
judgments and estimates that are reasonable and prudent to give a true and fair view of
the state of affairs of the Company as at March 31, 2024 and of the profit of the Company
for that period;
The Directors had taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act 2013 for
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities;
Directors had prepared the annual accounts on a going concern basis; o
The Directors had laid down internal financial controls to be followed by the Bank and
that such internal financial controls are adequate and were operating effectively.
The Directors had devised proper systems to ensure compliance with the provisions of
all applicable laws and that such systems were adequate and 6% operating effectively.
48 Compliance with Secretarial Standards
The Bank has complied with the all applicable Secretarial Standards issued by the
Institute of Company Secretaries of India on regular basis.
49 Investor Relations
Your Company interacted with investors and analysts through one-on-one meetings,
conference call and regular quarterly meetings during the year. Earnings call
transcripts/recording of the meeting on quarterly/ event-based meetings are posted on the
website of the Company.
50 Prevention of Insider Trading
In compliance with the provisions of Securities Exchange Board of India (Prohibition of
Insider Trading) Regulations, 2015 (SEBI (PIT) Regulations'), the Board has adopted
a code of conduct to regulate, monitor and report trading by Designated Persons to
preserve the confidentiality of price sensitive information, to prevent misuse thereof and
regulate trading by designated persons. It prohibits the dealing in the Company's shares
by the promoters, promoter group, directors, designated persons and their immediate
relatives, and connected persons, while in possession of unpublished price sensitive
information in relation to the Company and during the period(s) when the Trading Window,
to deal in the Company's shares, is closed. Pursuant to the above, the Company has put in
place adequate and effective system of internal controls to ensure compliance with the
requirements of the SEBI (PIT) Regulations. The code is available on the Company's website
at https:// www.capitalbank.co.in/investors/secreterial-policies
The Board of Directors have also formulated a code of practices and procedures for fair
disclosure of unpublished price sensitive information containing policy for determination
of legitimate purposes' as a part of this Code, which is available on the Company's
website at https://www.capitalbank.co.in/investors/ secreterial-policies
51 Awards and Recognitions
During the year under review, your Company has received the following awards and
certifications:
Honoured with BFSI Best Brands 2024
Received the LACP Vision Awards Platinum Winner Worldwide in 2023
Bestowed with the LACP Vision Awards Platinum- Technical Achievement Award in 2023
Honoured with the LACP Vision Awards Top 100 Reports Worldwide in 2023
Received the Great Place to Work certification in 2023
52 Acknowledgment
The Board of Directors is grateful to the Government of India, Reserve Bank of India,
various State Governments, SEBI, IRDA and regulatory authorities in India and overseas for
their valuable guidance, support and cooperation.
The Directors record their sincere gratitude to the Bank's shareholders, esteemed
customers and all other well-wishers for their continued patronage. The Directors express
their appreciation for the contribution made by every member of the staff in ensuring high
level of growth that the Bank has achieved during the year.
The Board also places on record its gratitude to the Shareholders, Bankers, Customers,
Suppliers and other stakeholders who have extended their valuable sustained support,
co-operation and encouragement.
The Board would also like to thank BSE Limited, National Stock Exchange of India Ltd.,
National Securities Depository Limited, Central Depository Services (India) Limited,
Registrar & Share Transfer Agent, Vendors and Service Providers for their continued
support & co-operation.
The Directors wish to express their gratitude to Investment Banks & rating agencies
for their wholehearted support. The Directors look forward to their continued contribution
in realisation of the corporate goals in the years ahead. We wish to apprise our worthy
members who have entrusted their trust and confidence in the Bank that Capital Small
Finance Bank Limited will venture to strive hard to take long strides ahead with freshly
instilled energies.
For and on behalf of the Board of Directors |
Sarvjit Singh Samra |
|
Managing Director & CEO |
|
DIN: 0047744 |
|
Gurpreet Singh Chug |
Place : Jalandhar |
Independent Director |
Date : May 09, 2024 |
DIN:01003380 |