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డైరెక్టర్ల నివేదిక ESAF Small Finance Bank Ltd.
Mar 31, 2026
On behalf of the Board of Directors (the "Board") of ESAF Small Finance Bank Limited (the "Bank"), it is our pleasure to
present the Tenth Annual Report of the Bank, along with the Audited Financial Statements and Auditor''s Report thereon for
the Financial Year 2025-26.
1. FINANCIAL PERFORMANCE AND STATE OF THE BANK''S AFFAIRS
The highlights of the standalone financial performance of your bank for the Financial Year 2025-26, are presented
below:
|
Particulars |
For the year ended |
For the year ended |
|
Deposits |
25,850.16 |
23,276.44 |
|
Advances |
21,594.23 |
18,027.87 |
|
Total Income |
4,348.23 |
4,329.3 |
|
Interest Expended |
1837.44 |
1810.68 |
|
Operating Expenses |
1798.82 |
1961.51 |
|
Operating Profit |
711.97 |
557.11 |
|
Provisions (Other than Tax) and Contingencies |
940.37 |
1250.08 |
|
Profit/(Loss) Before Tax |
(228.40) |
(692.97) |
|
Provision for Tax |
(62.00) |
(171.58) |
|
Net Profit/(Loss) |
(166.4) |
(521.39) |
|
Profit/(Loss) brought forward |
291.18 |
857.28 |
|
Total Profit/(Loss) available for appropriation |
124.78 |
335.89 |
|
Appropriation |
||
|
Dividend Paid |
- |
36.03 |
|
Transfer to Statutory Reserve |
- |
- |
|
Transfer to Capital Reserve |
23.34 |
8.67 |
|
Transfer to Investment Fluctuation Reserve |
5.31 |
- |
|
Balance carried to Balance Sheet |
96.13 |
291.18 |
|
Earnings per Share |
||
|
Basic (?) |
(3.23) |
(10.13) |
|
Diluted (?) |
(3.22) |
(10.12) |
During the financial year under review, the Bank
continued to witness steady growth in its business
operations, with deposits increasing to '' 25,850.16
crore and advances to '' 21,594.23 crore, reflecting
healthy expansion and improved deployment of
funds.
The Bank reported a significant reduction in losses,
with Net Loss declining to '' 166.40 crore from
'' 521.39 crore in the previous year. This improvement
was supported by better cost management, calibrated
growth, and gradual stabilisation in operating
performance. The Bank''s Total Income remained
broadly stable at '' 4,348.23 crore. Interest Income
for the Financial Year 2025-26 was '' 3,537.18 crore
as against '' 3,857.53 crore in the previous year,
reflecting changes in portfolio mix and prevailing
business conditions.
During the year, the Bank maintained its focus on
strengthening operational efficiency, improving
portfolio quality, and pursuing calibrated growth
across its business segments, which contributed to
the overall stabilisation in financial performance.
The Bank continued its focus on strengthening
portfolio quality and improving collection efficiency
during the year. As at March 31, 2026, the Gross
Non-Performing Assets (GNPA) stood at 5.41% as
compared to 6.87% in the previous year, while Net
Non-Performing Assets (NNPA) stood at 1.8% as
against 2.99% as at 31st March, 2025.
The moderated movement in asset quality indicators
reflects the Bank''s ongoing efforts towards portfolio
stabilisation, improved recovery mechanisms, and
disciplined underwriting practices, contributing to
improved operating performance.
The financial position and performance of the Bank
is given in the Management Discussion & Analysis
Report, which forms part of this Integrated Annual
Report.
The operating environment during the Financial
Year 2025-26 continued to remain challenging
across certain borrower segments, particularly in
the microfinance sector, leading to elevated credit
costs and moderation in profitability. In response,
the Bank continued to strengthen its risk governance
framework through focused monitoring of portfolio
quality, collection efficiency, prudent underwriting
practices and calibrated business growth, supported
by appropriate provisioning and balance sheet
strengthening measures.
The Bank has identified our business segments,
segregating them into Treasury, Wholesale Banking,
Retail Banking and Other Banking Segments after
considering the internal business reporting system and
guidelines issued by the Reserve Bank of India through
its notification DBOD.No.BP.BC.81/ 21.01.018/ 2006¬
07 dated April 18, 2007 and Accounting Standard 17
(AS 17) - ''Segment Reporting''.
Micro Banking
The Micro Banking vertical of the Bank is designed
to provide comprehensive banking services to the
unbanked and underbanked segments, combining
credit and savings-oriented offerings through a
high-touch, doorstep delivery model. The business
is delivered through the Bank''s Micro Banking
(MB) channel and a network of dedicated Business
Correspondents (BCs), enabling deeper customer
engagement and supporting their broader financial
needs.
During the Financial Year 2025-26, the Bank continued
to focus on strengthening its presence in underserved
segments through Micro Banking products. As on
March 31,2026, the Bank had 32,82,895 active Micro
Banking borrowers with a loan book outstanding of
'' 8,746 crore. During the year, the Bank disbursed
loans aggregating to '' 7,163 crore under various Micro
Banking products, reflecting the Bank''s sustained
commitment to inclusive financial growth.
The microfinance sector continued to witness phased
and evolving challenges during the year, with stress
persisting in select geographies and borrower
segments. In this context, the Bank adopted a
calibrated and disciplined approach, with tightening of
underwriting standards, strengthening of credit filters,
and implementation of enhanced guardrails in loan
origination to reinforce credit discipline and portfolio
resilience. The Bank also intensified customer
engagement and education initiatives to promote
responsible borrowing behaviour and improve credit
track record awareness.
The Bank undertook focused initiatives to improve
portfolio monitoring and collections, including
strengthened field-level controls, closer tracking
of early delinquency indicators, and tighter BC
performance oversight. Strategic actions were also
taken to optimise the operating model, including
transition of select portfolios to direct management
to reduce concentration risk and strengthen portfolio
oversight. Further, performance-linked incentive
structures were strengthened to encourage sustained
improvement in collections and portfolio outcomes.
As at 31st March, 2026, the Gross NPA (GNPA) of the
Micro Banking portfolio stood at 13% from 12.7% as at
31st March, 2025, and the Net NPA (NNPA) improved
to 4.37% from 5.81% in the previous year.
Retail Banking
The Bank continued to strengthen its retail banking
franchise during the Financial Year 2025-26,
supported by steady growth in deposits, expansion
of its distribution network, and continued focus on
portfolio diversification.
Liability Franchise
The Bank''s retail liability base continued to grow
steadily during the year, with total deposits increasing
by 11.06% to '' 25,850 crore as on 31st March, 2026.
Retail deposits accounted for approximately 92%
of the overall deposit base, reflecting the strength
of the Bank''s granular franchise and diversified
funding profile. The Bank reported a net accretion of
'' 2,574 crore during the year, supported by sustained
customer engagement across its expanding network.
The CASA base stood at '' 6,180.60 crore, with the
CASA ratio at 23.91% as compared to 24.84% in the
previous year. The marginal moderation in CASA was
aligned with the Bank''s strategy of strengthening
overall deposit mobilisation in a competitive interest
rate environment, while maintaining a stable and
diversified funding profile.
The Bank''s non-resident deposit base continued to
provide meaningful support to the liability franchise,
standing at '' 5,246 crore as on March 31,2026.
Distribution Network
The Bank continued to expand and strengthen its
distribution footprint, with a total of 804 banking
outlets as on March 31, 2026, including presence
across metro, urban, semi-urban and rural centres.
Approximately 25.74% of the outlets are located in
Unbanked Rural Centres (URCs), in line with regulatory
requirements and the Bank''s commitment to financial
inclusion.
Asset Growth and Portfolio Mix
On the retail assets front, the Bank delivered
strong growth during the year, supported by a
strategic rebalancing of the asset mix towards
secured and quality lending segments. The
total retail and corporate loan portfolio grew to
'' 13,680 crore, registering a year-on-year growth of
37.88%.
A key structural transformation during the year was
successful execution of the Bank''s MARG strategy,
representing MSME, Agri, Retail and Gold loans. This
strategy reflects the Bank''s deliberate and calibrated
shift from unsecured lending to a secured and
diversified portfolio with the objective of strengthening
the portfolio quality and supporting sustainable long¬
term growth. During the year, the share of secured
assets grew significantly to approximately 61% of gross
advances, as compared to 52.44% in the previous
year. This transition, achieved ahead of planned
timelines, reflects the Bank''s focus on building a more
resilient, diversified and risk-calibrated asset base,
with reduced reliance on unsecured lending.
Segment Drivers
The shift in asset mix has been driven by continued
traction across secured lending segments, including
gold loans, MSME, agriculture, mobility and affordable
housing.
The gold loan portfolio continued to scale up during
the year, supported by strong customer demand and
improved turnaround time, while maintaining a low
delinquency profile and short tenor characteristics,
thereby contributing positively to portfolio quality and
earnings stability.
The mortgage segment demonstrated steady
progress, crossing the milestone of '' 1,000 crore,
while the mobility portfolio expanded beyond '' 600
crore, reflecting the Bank''s continued focus on scaling
secured retail segments.
The Bank also continued to deepen its presence in
MSME lending, with a focus on granular and cash¬
flow aligned credit solutions, supporting the growth
requirements of small and medium enterprise
customers.
This calibrated shift towards secured lending,
supported by a stable and growing liability franchise,
has resulted in a more granular, diversified and
resilient balance sheet. The increasing share of
secured assets is contributing to improved portfolio
quality, enhanced earnings stability and reduced
credit risk, positioning the Bank for sustainable growth
going forward.
Treasury
The Bank''s Treasury function plays a central role
in managing liquidity, investment portfolio and
balance sheet risks, while supporting overall
financial performance through prudent asset-liability
management practices. The Treasury continues to
focus on optimising returns within the Bank''s risk
appetite, while maintaining adequate liquidity buffers
and ensuring regulatory compliance.
The Bank maintains a diversified portfolio of
investments, primarily in Government Securities, in
line with Statutory Liquidity Ratio (SLR) requirements.
The portfolio is classified under Held-to-Maturity
(HTM), Available-for-Sale (AFS) and Held-for-Trading
(HFT) categories, enabling the Bank to balance
earnings stability with flexibility to respond to market
movements. A significant portion of the portfolio
continues to be held under the HTM category,
providing stability against market volatility and
supporting consistent income generation.
As on March 31, 2026, the Bank''s total investment
portfolio increased to '' 6,399.11 crore from '' 5,995.26
crore in the previous year, reflecting a growth of
6.74%. Treasury performance during the year was
supported by stable liquidity conditions and active
portfolio management, enabling the Bank to generate
investment income of '' 402.7 crore.
The Treasury function continues to operate in a
dynamic interest rate and liquidity environment,
requiring active management of interest rate risk and
funding costs. In this context, the Bank maintains a
prudent ALM (Asset-Liability Management) framework,
aligning the investment portfolio and funding profile
to support balance sheet stability and optimise net
interest income over the medium term. Effective ALM
practices are critical for managing liquidity, interest
rate and funding risks, and are a key contributor to
long-term profitability.
The Bank has also been strengthening its foreign
exchange business in line with its evolving customer
requirements. During the Financial Year 2025-26, the
Bank earned '' 1.8 crore from AD-II foreign exchange
operations. With the commencement of Authorised
Dealer Category-I (AD-I) operations from April 01,
2024, the Bank is well positioned to expand its foreign
exchange capabilities and enhance its offerings to
customers across retail and business segments.
The Treasury function remains focused on balance
sheet optimisation, liquidity management and risk
mitigation, while contributing to stable earnings and
supporting the Bank''s overall growth strategy in a
dynamic market environment. During the year under
review, there was a relaxation of the PSL requirement
by RBI from 75% to 60%. On account of the same, the
Bank has done PSLC Sale and realised '' 127 crore
during Financial Year 2026 as against '' 56 crore
during Financial Year 2025.
4. IT INITIATIVES
Digital Strategy and Transformation
The Bank continues to strengthen its technology
capabilities under its ESAF 2.0 transformation-
StratoNext, a multi-year digital transformation
initiative aimed at modernising the Bank''s technology
infrastructure, enhancing customer experience and
improving operational efficiency. The StratoNext
programme focuses on building a secure, scalable
and regulatory-compliant technology architecture,
while enabling greater agility, high availability and
sustained innovation across the Bank''s operations.
Through this initiative, the Bank is progressively
transitioning towards a more digitally integrated, data-
driven and customer-centric operating model, with
investments in advanced infrastructure, cybersecurity
frameworks and platform integration to support
seamless service delivery and efficient business
operations.
Customer Experience and Digital Channels
The Bank continues to strengthen its digital ecosystem,
offering a wide range of customer touchpoints
including internet banking, mobile banking and digital
payment platforms.
ESAF Mithra App, designed to enhance accessibility
for Micro Banking customers, enables customers
to access real-time loan information, make digital
payments, raise service requests and locate branches
through a user-friendly interface. The application has
witnessed growing adoption with approximately 6.5
lakh users, and supports multiple regional languages,
improving digital accessibility across diverse customer
segments.
Digital channels continue to gain traction, with digital
transactions forming a substantial proportion of total
transactions, underscoring the growing adoption of
technology-enabled banking services.
In addition, WhatsApp Banking, digital alerts and
Customer Relationship Management (CRM) solutions
have been strengthened to improve customer
engagement, responsiveness and service delivery
across channels.
Process Automation and Lending Digitisation
The Bank has made significant progress in digitising
its lending lifecycle, particularly across Micro Banking
and retail segments. The adoption of e-signatures for
microloan disbursals and centralised digital credit
processing has enhanced operational efficiency and
standardisation.
Customer onboarding for microloans has been
largely digitised, supported by handheld devices and
digital documentation processes. The Bank has also
implemented vernacular loan documentation and
digital credit underwriting models based on bureau
inputs and customer analytics, improving accessibility
and credit assessment capabilities. The shift
towards cashless loan disbursements and electronic
documentation has reduced paper usage and
supported the Bank''s sustainability objectives, while
improving turnaround time and customer experience.
Risk Management, Security and Infrastructure
The Bank maintains a strong focus on cybersecurity,
data protection and IT governance, ensuring resilience
of its technology infrastructure in line with regulatory
expectations. Technology initiatives are aligned with
the Bank''s risk management and business continuity
frameworks, ensuring high system availability, data
integrity and secure delivery of services, while
supporting scalable growth. During the year under
review, the Bank developed its own Data Centre (DC)/
Disaster Recovery (DR) Centre as part of its StratoNext
Program.
The Bank continued to place strong emphasis on
enhancing customer experience and service quality,
with a focus on strengthening service standards,
improving grievance redressal mechanisms and
deepening customer engagement across all
touchpoints. Customer service remains a core
element of the Bank''s strategy, supporting customer
retention, trust and long-term growth.
During the year, the Bank undertook multiple
initiatives to strengthen a customer-centric service
culture across its branch network and digital
channels. Structured service excellence programmes
and recognition frameworks played a key role in
reinforcing this approach. In this context, the Bank
successfully obtained ISO 9001:2015 recertification
for Customer Service Quality functions, reaffirming
its commitment to standardised processes and
continuous improvement.
Further, initiatives such as the "Mantra of Service"
programme, which showcases real-life examples of
exceptional service delivery across branches, and
the Customer Service Excellence Awards, helped
promote proactive service behaviour and strengthen
a customer-first mindset across the organisation.
The Bank also strengthened customer engagement
through HNI Customer Testimonials, reinforcing trust
and long-term relationship building.
Customer engagement was further enhanced
through structured feedback mechanisms and direct
outreach initiatives, including customer service calls
and periodic field visits, enabling the Bank to capture
real-time feedback and continuously refine service
delivery processes.
The Bank''s grievance redressal framework, aligned
with regulatory requirements, continued to be
supported by structured mechanisms at both branch
and central levels. Regular Branch-level Customer
Service Committee Meetings (Sampark) and periodic
reviews enabled timely identification and resolution
of customer concerns, while improving coordination
across functions.
To further strengthen service quality, the Bank
deployed continuous monitoring mechanisms such as
Branch Mystery Calling, under which service standards
across branches are assessed across parameters
including customer handling, responsiveness and
product knowledge. These insights, along with
structured feedback and surveys, have contributed to
improved service delivery consistency.
The Bank also continued to focus on capability building
of its workforce, recognising its critical role in delivering
consistent service quality. Structured training
programmes covering service standards, compliance
and digital processes were conducted during the year,
including quarterly training programmes for Regional
and Cluster Heads, supported by internal learning
platforms and knowledge-sharing initiatives such as
"CX Guru".
In parallel, the Bank undertook multiple customer
awareness and financial literacy initiatives aimed at
strengthening responsible banking and digital safety
practices.
Key Customer Awareness Initiatives (2025-26):
⢠31 customer awareness programmes conducted
across India
⢠Programmes aligned with RBI directives on digital
safety, grievance redressal and customer rights
⢠Financial literacy initiatives conducted in
collaboration with industry bodies including
MFIN
These initiatives have contributed to improving
customer awareness, digital security understanding
and overall financial capability, particularly in rural and
semi-urban markets.
Accessibility Initiatives
The Bank remains committed to providing inclusive
banking services and ensuring accessibility for
differently abled persons. In line with regulatory
expectations, the Bank periodically reviews the
facilities and services extended to differently abled
customers and undertakes appropriate measures to
enhance accessibility across its operations.
The Bank has implemented various initiatives to
support differently abled customers, including the
provision of ramp facilities at branches wherever
feasible. In locations where such infrastructure is not
feasible, doorstep banking services are provided to
ensure uninterrupted access to banking services.
The Bank has also enabled Talking ATMs to support
visually impaired customers in conducting transactions
independently. Further, Braille-enabled keypads and
instructions are made available at ATMs to facilitate
ease of use and improve accessibility.
The Bank has an independent Compliance Function,
headed by a Chief Compliance Officer, responsible
for ensuring adherence to applicable regulatory and
statutory requirements across all business operations.
The Compliance Department operates within a
well-defined policy framework and plays a key role
in embedding a strong compliance culture across
the organisation. It is responsible for monitoring
compliance with regulatory guidelines, overseeing
statutory obligations and facilitating timely
dissemination of regulatory instructions across
business and support functions. The function also
supports the Bank through regulatory engagement,
policy review and assessment of new products
and processes to ensure alignment with applicable
regulatory requirements. It coordinates regulatory
submissions and facilitates responses to regulatory
inspections and supervisory observations.
The Bank follows a risk-based approach to compliance
management, supported by structured mechanisms
for identification, assessment and mitigation of
compliance risks. Continuous monitoring and review
processes are in place to ensure timely corrective
actions and enhance overall effectiveness of the
compliance framework.
The Bank''s compliance architecture is designed
to support robust governance, ensure regulatory
alignment and mitigate compliance risks, thereby
reinforcing safe and sustainable business operations.
The Bank follows an integrated risk management
framework aimed at identifying, assessing, monitoring
and mitigating all material risks arising from its
business and operations. The framework is designed
to support sustainable growth while maintaining a
prudent risk profile and fostering a strong risk-aware
culture across the organisation.
Risk governance is overseen by the Board of Directors,
which approves risk management policies in line with
regulatory requirements and internal risk appetite.
The Risk Management Committee of the Board
(RMCB) provides strategic direction by reviewing risk
exposures, policies and procedures, and by ensuring
the effectiveness of the overall risk management
framework.
The Bank''s risk management function is supported
by a dedicated Risk Management Department, which
implements approved policies and coordinates risk
management activities across the Bank. The function
is structured to manage key risk areas, including Credit
Risk, Operational Risk, Market Risk and Information &
Cybersecurity Risk, ensuring focused oversight of all
major risk streams.
At the executive level, specialised risk committeesâ
including the Credit Risk Management Committee,
Operational Risk Management Committee, Asset
Liability Management Committee, Information
Security Governance Committee and Outsourcing
and Vendor Assessment Committeeâare responsible
for monitoring risk exposures, reviewing emerging
risks and initiating corrective actions where required.
These committees provide periodic updates on key
risk indicators, trends and incidents to the RMCB.
The Bank has adopted a risk-based and forward¬
looking approach to capital and risk management
through its Internal Capital Adequacy Assessment
Process (ICAAP), which enables identification and
assessment of material risks and ensures that capital
levels remain commensurate with the Bank''s risk
profile and growth strategy, in line with regulatory
expectations. In addition, the Bank undertakes
periodic stress testing to assess the impact of adverse
scenarios and strengthen its preparedness to manage
emerging risks, thereby enhancing the resilience of its
balance sheet and operations.
Overall, the Bank''s risk management framework
supports robust governance, proactive risk monitoring
and effective capital planning, enabling the Bank
to operate within its risk appetite while pursuing
sustainable growth.
8. HUMAN RESOURCES INITIATIVES
During the Financial Year 2025-26, the Bank
continued its focus on building a high-performance
and inclusive work environment, with emphasis on
employee development, engagement and capability
enhancement aligned to its overall strategic objectives.
The year was marked by significant progress in learning,
transformation and employee engagement initiatives,
supporting both organisational effectiveness and
employee growth.
As part of the Bank''s broader digital transformation
journey, HR processes are being progressively
automated and digitised, including employee
lifecycle management and key processes such as
performance improvement, transfer and placement.
These initiatives are aimed at improving efficiency,
transparency and employee experience.
The Bank''s efforts in leveraging technology for talent
acquisition were recognised through prestigious
external accolades, including the CII Award for "Best
HR Practices" and the ET HR Award for "Excellence in
Use of AI for Talent Acquisition".
Learning and Capability Building
The Bank continued to invest significantly in employee
development, conducting over 2.55 lakh man-hours of
training during the year. Learning and Development
initiatives were structured around key strategic
priorities to support enterprise-wide capability
building.
Training interventions focused on:
⢠Branch capability building, with emphasis on
sales productivity, operational excellence and
customer experience
⢠Induction and functional readiness, enabling
faster onboarding and productivity for new
employees
⢠Technical and process training, including
system adoption, audit readiness and operational
efficiency
⢠Risk, compliance and cyber awareness,
aligned with regulatory requirements
⢠Leadership development and culture¬
building programmes, supporting managerial
effectiveness and change readiness
Large-scale virtual training initiatives were also
conducted to ensure consistent knowledge
dissemination and policy alignment across the
organisation.
Driving High-Performance and Transformation
The Bank continued to promote a high-performance
culture through structured initiatives such as the
Internal Kaizen Competition, with a focus on
enhancing productivity and process efficiency across
functions. Productivity studies were also undertaken
to improve resource utilisation and operational
effectiveness.
Key transformation-focused learning initiatives
supported organisational change and digital adoption,
including flagship programmes such as:
⢠ESAF 2.0 - Go Live workshops
⢠Evolve 2.0 - Transformation training
initiatives
⢠Specialised capability programmes for
auditors and frontline staff
Employee Engagement and Well-being
The Bank continued to strengthen employee
engagement through structured initiatives aimed at
fostering a positive and inclusive workplace culture.
Employee engagement programmes focused on well¬
being, recognition and organisational connectedness,
with strong participation across the workforce.
Key initiatives included:
⢠Wellness programmes on mental and physical
health, including awareness sessions and
preventive health initiatives
⢠Employee recognition programmes aimed at
celebrating performance and engagement
⢠Organisation-wide outreach initiatives such as
"Dil Se Connect", enabling direct interaction with
employees to understand concerns and enhance
support
⢠Social and awareness initiatives, including road
safety campaigns and employee-led community
participation programmes
These initiatives have supported employee well-being,
strengthened organisational connect and reinforced a
positive workplace environment.
9. INFORMATION SECURITY AND CYBER SECURITY
RISK MANAGEMENT
The Bank continues to strengthen its information
security and cyber resilience framework in line with
evolving regulatory requirements and industry
best practices. The Bank has adopted a structured
cybersecurity approach based on globally recognised
frameworks, including the NIST Cybersecurity
Framework, to effectively manage technology and
cyber risks.
The Information Security function operates under
a dedicated division within the Risk Management
Department, led by the Chief Information Security
Officer (CISO), with overall oversight from the Chief Risk
Officer (CRO) and the Board of Directors. Governance
is further supported through the Information
Technology Strategy Committee of the Board and
the Executive Information Security Governance
Committee, which review the Bank''s cybersecurity
posture, key risk indicators and critical incidents.
The Bank follows a structured cyber risk management
framework to identify, assess and mitigate risks across
applications, infrastructure and business processes.
Risk assessments are conducted periodically
and during key changes such as new system
implementations or upgrades, with defined mitigation
plans and continuous monitoring of residual risks.
The Bank has implemented a layered, defence-in¬
depth security architecture supported by centralised
monitoring and response mechanisms. A 24x7 Security
Operations Centre (SOC), enabled by advanced
monitoring tools, facilitates real-time threat detection
and incident response. The Bank is further enhancing
its capabilities through automation and advanced
intelligence-driven mechanisms to improve response
efficiency and strengthen threat management.
To strengthen its security posture, the Bank continues
to deploy advanced controls across its technology
environment, including network security, endpoint
protection, application security and email security
solutions. These measures provide protection against
evolving cyber threats and support secure digital
operations.
As part of its strategic transformation initiatives, the
Bank is implementing enhanced capabilities in areas
such as identity and access management, network
monitoring and anomaly detection, aimed at improving
access governance, proactive threat identification and
overall cyber resilience.
The Bank conducts regular Vulnerability Assessment
and Penetration Testing (VAPT), along with periodic
cyber drills and simulation exercises, to assess
preparedness and strengthen incident response
capabilities. In addition, robust data protection
measures, including encryption and monitoring
controls, are implemented to safeguard sensitive
information.
Operational resilience is supported through well-
defined Business Continuity Planning (BCP) and
Disaster Recovery (DR) frameworks, with periodic
testing to ensure readiness and minimise disruption
to critical operations.
The Bank is certified under ISO/IEC 27001 for
Information Security Management and PCI DSS for
payment security, and complies with applicable
regulatory guidelines issued by RBI and other
regulatory bodies.
10. BUSINESS CONTINUITY MANAGEMENT
The Bank has a Board-approved Business Continuity
Management (BCM) Policy, which is reviewed
periodically to ensure alignment with regulatory
requirements and evolving business needs. The Bank
follows a structured approach to ensure continuity of
critical operations in the event of disruptions.
As part of this framework, the Bank conducts periodic
Business Impact Analysis (BIA) to identify and prioritise
critical processes, systems and dependencies.
Based on this assessment, comprehensive Business
Continuity Plans (BCP) are maintained, incorporating
defined Recovery Time Objectives (RTO) and Recovery
Point Objectives (RPO) to minimise operational and
financial impact in the event of a disruption.
The Bank''s BCP framework covers a wide range of
potential disruption scenarios, including technology
failures, network outages, cyber incidents and natural
disasters, and provides guidance on response and
recovery mechanisms across business functions,
including outsourced and business correspondent
operations.
To ensure preparedness, the Bank undertakes periodic
testing of business continuity and disaster recovery
arrangements, in line with regulatory expectations.
These exercises help assess the effectiveness of
response mechanisms and strengthen the Bank''s
overall operational resilience.
The Bank has established executive-level crisis
management structures, including a Crisis
Management and Quick Response Team (CMQRT),
which is responsible for initiating immediate actions
and guiding business units during disruption situations
to ensure continuity of operations and protection of
assets.
In addition, a dedicated Cyber Crisis Management
Team (CCMT) is in place to manage cybersecurity
incidents, enabling coordinated response and
mitigation in situations where information systems or
data integrity may be compromised.
The Bank''s BCM framework, supported by structured
governance, periodic testing and dedicated crisis
response mechanisms, ensures operational resilience
and continuity of critical services with minimal
disruption.
11. IMPLEMENTATION OF IND-AS
The Ministry of Finance, Government of India
("GOI"), had vide its press release dated 18th January,
2016, outlined the roadmap for implementation of
|
Sl. No. |
Date of Allotment |
Series |
Number of |
Aggregate |
Coupon Rate |
|
1. |
17th July, 2025 |
1 |
6,500 |
65,00,00,000 |
11.10% |
|
2. |
14th August, 2025 |
2 |
5,000 |
50,00,00,000 |
11.30% |
|
TOTAL |
11,500 |
115,00,00,000 |
|||
Further, pursuant to the shareholders'' approval dated 24th September, 2025 to raise funds through private placement
of Unsecured, Rated, Redeemable Non-Convertible Debentures (NCDs), the Board of Directors in the meeting held
on 03rd November, 2025, considered and approved the proposal to raise funds by way of issue of Unsecured, Rated,
Redeemable Tier II bonds (in the form of Non-Convertible Debentures), aggregating up to '' 1,000 crore (Rupees One
Thousand crore Only) on a private placement basis, in one or more tranches, in compliance with all applicable directions
and regulations of the Reserve Bank of India, SEBI, other governmental authorities, and any other person, as may be
required/ applicable.
Pursuant to the aforesaid approval, the Bank made the following allotments of Listed, Rated, Taxable, Unsecured,
Transferable, Redeemable, Fully Paid Up, Basel II Compliant Lower Tier II Subordinated Bonds in the nature of Non¬
Convertible Debentures having a face value of '' 1,00,000 (Rupees One lakh), during the Financial Year 2025-26:
|
Sl. No. |
Date of Allotment |
Series |
Number of |
Aggregate |
Coupon Rate |
|
1. |
10th November, 2025 |
3 |
15,000 |
150,00,00,000 |
11.30% |
|
2. |
23rd January, 2026 |
4 |
15,000 |
150,00,00,000 |
11.65% |
|
TOTAL |
30,000 |
300,00,00,000 |
|||
International Financial Reporting Standards ("IFRS")
converged Indian Accounting Standards ("Ind AS") for
Scheduled Commercial Bank (excluding RRBs), NBFC
and Insurance companies. The RBI vide its circular
dated 22nd March, 2019, deferred the implementation
of Ind AS for Scheduled Commercial Banks ("SCB") till
further notice, pending the consideration of some
recommended legislative amendments by GOI.
The RBI has not issued any further notification on
implementation of Ind AS for SCBs.
The Bank submits its Proforma Ind-AS financials on half
yearly basis to the RBI based on the GAP assessment
carried out by the Bank. The Bank is currently handling
the impact analysis and reporting offline by using excel
based models. However, the Bank is in the process of
implementing system solutions (Ind AS 109 and 116)
and hiring skilled resources to implement accounting.
As per the requirement of the regulations of Reserve
Bank of India, the Bank has transferred the following
amounts to various reserves during the Financial Year
2025-26:
|
Amount Transferred to |
'' in crore. |
|
Statutory Reserve |
- |
|
Capital Reserve |
23.34 |
|
Investment Fluctuation Reserve |
5.31 |
In view of the loss incurred during the Financial Year
2025-26 and in line with the applicable regulatory
framework and the Bank''s Dividend Distribution
Policy, the Board of Directors has not recommended
any dividend for the Financial Year 2025-26. The
Dividend Distribution Policy, in terms of Regulation
43A of the Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements)
Regulations, 2015 ("SEBI Listing Regulations") and as
reviewed and adopted by the Board of Directors of
the Bank, is available on the Bank''s website athttps://
www.esaf.bank.in/wp-content/uploads/2025/09/
Policy-for-Dividend-Distribution.pdf.
14. CHANGE IN THE NATURE OF BUSINESS
There was no change in the nature of business of the
Bank during the Financial Year 2025-26.
15. CAPITAL AND DEBT STRUCTURE
Authorised Capital
In order to meet Bank''s growth objectives, business
expansion plans and to further strengthen its capital
adequacy position, the Bank felt the need to have
adequate Authorised Capital in order to infuse
additional funds in the form of further capitalisation
and to generate long term resources by issuing
securities so as to maintain a comfortable Capital to
Risk Weighted Assets Ratio (CRAR) and to support the
Bank''s future growth objectives.
Pursuant to approval of the Board of Directors of
the Bank at their meeting held on 20th September,
2025, and in accordance with the consent of the
shareholders and other requisite approvals, the
Authorised Share Capital of the Bank was increased
from '' 600,00,00,000 (Rupees Six Hundred crore)
divided into 60,00,00,000 (Sixty crore) Equity Shares of
'' 10 (Rupees Ten) each to '' 1000,00,00,000 (Rupees
One Thousand crore) divided into 100,00,00,000
(Hundred crore) Equity Shares of '' 10 (Rupees Ten)
each, by creation of additional 40,00,00,000 (Forty
crore) equity shares of '' 10 each and the consequent
alteration of its Memorandum of Association. Further,
Reserve Bank of India had vide its letter dated
13th October, 2025, acknowledged the proposed
increase in Authorised Share Capital and consequent
amendment to be carried out in the Memorandum
of Association of the Bank, subject to compliance
with relevant statutes and circulars/ instructions/
guidelines issued by RBI from time to time.
As on 31st March, 2026, Authorised Capital of the Bank
was '' 1000,00,00,000 (Rupees One Thousand crore)
divided into 100,00,00,000 (Hundred crore) Equity
Shares of '' 10 (Rupees Ten) each.
Paid Up Equity Share Capital
Allotment of Equity Shares pursuant to Exercise of
ESOPs.
During the Financial Year 2025-26, 2,35,161 equity
shares of '' 10 each were issued and allotted to the
eligible employees of the Bank on exercise of Options
granted under ESAF Small Finance Bank Employee
Stock Option Scheme 2019 (''ESOP 2019'').
Consequent to the above, the total issued, subscribed
and paid-up share capital of the Bank as at 31 st
March, 2026, stands at '' 515,66,26,130/- (Rupees
Five Hundred and Fifteen crore Sixty Six lakh Twenty
Six Thousand One Hundred and Thirty) divided into
51,56,62,613 (Fifty One crore Fifty Six lakh Sixty Two
Thousand Six Hundred and Thirteen) Equity Shares
of '' 10 (Rupees Ten) each. The equity shares issued
under the above schemes rank pari-passu with the
existing equity shares of the Bank. Apart from the
above, the Bank did not raise any additional equity
share capital during the year.
Your Bank has not issued any equity shares with
differential voting rights.
The above fund raising was done to augment the Tier
II Capital of the Bank for strengthening the Bank''s
capital adequacy and enhancing the Bank''s long-term
resources. The Audit Committee of the Board ("ACB")
has reviewed and confirmed that the Bank has utilised
the said funds for the above-mentioned purposes.
During the Financial Year 2025-26, the Bank had
redeemed Rated, Listed, Redeemable, Unsecured
Basel III Compliant Tier II bonds in the form of Non¬
convertible Debentures aggregating to '' 40,00,00,000
(Rupees Forty crore).
Your Bank is subject to the Basel II Capital Adequacy
guidelines stipulated by the Reserve Bank of India.
The Capital Adequacy Ratio of the Bank is calculated
Based on the shareholders'' approval dated 14th
August, 2024 to raise funds through private
placement of Unsecured, Rated, Redeemable Non¬
Convertible Debentures (NCDs), the Bank made
the following allotment of Listed, Rated, Taxable,
Unsecured, Transferable, Redeemable, Fully Paid Up,
Basel II Compliant Lower Tier II Subordinated Bonds
in the nature of Non-Convertible Debentures having a
face value of '' 1,00,000 (Rupees One lakh) during the
Financial Year 2025-26:
as per the standardized approach for credit risk. The
Capital Adequacy ratio of the bank as on 31st March,
2026 is 22.22 %, as against the minimum requirement
of 15.00% stipulated by the Reserve Bank of India,
with Tier I Capital being 14.68% (of which, Common
Equity Tier 1 Capital is 14.23%) and Tier II Capital being
7.54%.
17. SUBSIDIARY, JOINT VENTURES AND ASSOCIATE
COMPANIES
The Bank does not have any subsidiary, joint ventures
and associate companies. Hence, the details of this
clause are not applicable to the Bank. Accordingly, the
Bank is also not required to formulate a specific policy
on dealing with material subsidiaries.
|
Sl. No. |
Instrument Name |
Name of the |
Amount ('' in |
Rating |
Date of Rating |
|
1. |
Tier II Bonds |
CARE Ratings |
780 |
CARE A-; |
02nd September, |
|
2. |
Tier II Bonds |
Brickwork |
20 |
BWR BBB / |
19th August, |
18. EMPLOYEE STOCK OPTION SCHEME
The Shareholders of the Bank, in the meeting held
on 03rd January, 2020, had approved the ESAF Small
Finance Bank Employee Stock Option Plan 2019, by
way of a special resolution which also authorized
the Nomination, Remuneration and Compensation
Committee to grant up to 2,25,15,552 (Two crore
Twenty-Five lakh Fifteen Thousand Five Hundred and
Fifty-Two) Employee Stock Options to the employees,
in one or more tranches, from time to time.
The objective of the said scheme is to recognize the
contribution of the employees in formation of the
bank and to create the feeling of inclusiveness and
enable the employees to get a share in the value that
they help to create for the organization over a period
of time. The Bank strongly believes that an equity
component in the compensation goes a long way in
aligning the objectives of an individual with those of
the Bank. The objectives of ESOP 2019 are, among
others, to attract and retain employees with Employee
Stock Options as a compensation tool. Through ESOP
2019, the Bank intends to offer an opportunity of
sharing the value created with those employees who
have contributed or are expected to contribute to the
growth and development of the Bank.
Through the scheme, the Bank intends to grant
equity-based compensation to the employees in two
categories namely:
1) Loyalty Grant to reward eligible employees
for their contributions in the past tenure and
continued employment in the Bank, which is a
one-time grant and;
2) Performance Grant on the basis of employee''s
annual appraisals for their future performance
and continuity of services.
20. SELECTION, APPOINTMENT AND REMUNERATION
OF DIRECTORS
In compliance with the provisions of the Banking
Regulation Act, 1949, the guidelines issued by
the Reserve Bank of India and Section 178 of the
The Nomination, Remuneration and Compensation
Committee has been entrusted with the responsibility
of administering the ESOP 2019 Scheme. As of 31st
March, 2026, the Nomination Remuneration and
Compensation Committee of the Board granted
41,71,325 options as Loyalty Grant under the ESOP
2019 Scheme and 2,03,194 options as Performance
Grant under the ESOP 2019 Scheme, to the employees
identified under the implementation guidelines for
ESAF ESOP 2019 as per the terms of granting.
The aforesaid scheme is available on the website of
the Bank athttps://www.esaf.bank.in/wp-content/
uploads/7075/01/FSAF-Small-Finance-Bank-
Fmployee-Stock-Option-Plan-7019.pdf and are in
compliance with the SEBI (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021 ("SEBI
(SBEB & SE) Regulations, 2021"), as applicable.
The relevant details of the aforesaid scheme, as
required under the SEBI (SBEB & SE) Regulations,
2021, are available on the Bank''s website at https://
www.esaf.bank.in/investor-relation/?id = esop-
disclosures. These details, along with the certificate(s)
from the Secretarial Auditor, as required under the
SEBI (SBEB & SE) Regulations, 2021, stating that the
schemes have been implemented in accordance with
the SEBI (SBEB & SE) Regulations, 2021, as applicable
and also in accordance with the relevant resolution(s)
passed by the members, and will be placed before the
shareholders at the Annual General Meeting ("AGM")
and would be available for inspection by the members
during the AGM.
Credit ratings assigned to various debt instruments of
the Bank during the Financial Year ended 31st March,
2026 are as follows:
Companies Act, 2013, the Bank has formulated
and adopted a Nomination Policy for selection and
appointment/ re-appointment/ removal of Directors,
which is disclosed on our website (www.esaf.bank.
in). Through the said policy, the Bank has formulated
criteria for the appointment of directors, and based
on the said criteria, Nomination, Remuneration and
Compensation Committee of the Board (NRCCB) shall
conduct a due diligence process to determine the
suitability of every person who is being considered
for being appointed or re-appointed as a Director of
the Bank, based on the range of skills, experience,
expertise, qualifications, specialized knowledge etc. of
the candidate, and recommend his/ her appointment
to the Board. The Nomination, Remuneration and
Compensation Committee identifies potential
candidates from diverse backgrounds including, but
not limited to, Accountancy, Agriculture and Rural
Economy, Banking, Co-operation, Finance, Law,
Small Scale Industry, Economics, Human Resources,
Payment and Settlement Systems, Business
Management, Risk Management and Information
Technology, thus providing the Board with members
who have diverse knowledge, practical experience and
skills to serve the business interests of the Bank. Every
such person shall meet the ''fit and proper'' criteria the
Reserve Bank of India may stipulate from time to time,
and accordingly, any appointment or re-appointment
of a Director shall be subject to prior approval by the
NRCCB of the Bank.
The key objectives of the Nomination Policy shall inter-
alia include the following:
⢠To guide the Board in relation to appointment,
re-appointment or removal of directors and lay
down a selection criterion for appointment of
directors.
⢠To ensure compliance with applicable laws, rules
and regulations including compliance to the ''Fit
and Proper criteria'' of Directors at the time of
their appointment and on a continuous basis.
⢠To devise a policy on the size and composition
of the Board taking into account the available
and needed diversity and balance in terms of
experience, knowledge, skills and judgment of
the Directors.
During appointment/ re-appointment/ removal of
Directors of the Bank, your Bank has always ensured
that the provisions of the Companies Act, 2013,
Banking Regulation Act/ RBI Guidelines and directives
and guidelines of SEBI to the extent applicable are
adhered to. In all respects, your Bank has also kept
high standards and met the diversity, structure and
size compositions of the Board and its Committees as
prescribed in various statutes.
The NRCCB is responsible to the Board for leading
the succession planning process in respect of
appointments/ re-appointments in respect of
Directors, employees in the grade of Senior
Management and Key Managerial Personnel of the
Bank.
The Bank has accordingly obtained prescribed
declarations/ undertakings from the Directors as per
the guidelines of the Reserve Bank of India and the
same are placed before the Board of Directors for
its review and noting. An assessment on whether the
Directors fulfill the prescribed criteria is carried out
by the Nomination Remuneration and Compensation
Committee of the Board on an annual basis and also
at the time of their appointment or re-appointment.
Wherever necessary, the Nomination Remuneration
and Compensation Committee is authorized to :
engage the services of an External Consultant(s)/ ''
expert in the field of succession planning, to identify
and assess the suitability of candidates for the post of \
j
a Director of the Bank. ;
The RBI, vide its circular no. RBI/DOR/2025-26/180 i
DOR.HGG.GOV.No.99/29.67.001/2025-26Reserve i
Bank of India (Small Finance Banks - Governance)
Directions, 2025 on Compensation Policy. In
accordance with the aforesaid RBI Circular, the Board
of the Bank has adopted a revised Compensation
Policy for its Whole-time Directors, Chief Executive
Officer of the Bank and other employees. The salient
feature of the Compensation Policy is as follows:
⢠To provide a fair and transparent structure that
helps the Bank to retain and acquire the talent
pool critical to building competitive advantage
and brand equity as a social bank focused
on social transformation and community
development.
The Nomination Policy is available in the website of
the Bank athttps://www.esaf.bank.in/wp-content/
uploads/2026/03/Nomination-Policy.pdf.
The composition of the Board of Directors of the
Bank is governed by the Companies Act, 2013,
the Banking Regulation Act, 1949 and SEBI Listing
Regulations and is in conformity with the same. As of
31 st March, 2026, the Board of Directors comprised
a combination of Eight directors out of which there
were Five Independent Directors including a Woman
Independent Director, One Non-Executive Director
and Two Executive Directors. The size of the Board
is commensurate with the size and business of the
Bank. The Board meets the criteria prescribed under
Section 10(A)(2) of the BR Act and the circulars issued
by the RBI from time to time. The Board mix provides
a combination of professionalism, knowledge,
experience and skills required in the banking industry
and also meets the criteria prescribed under the
Nomination Policy adopted by the Board.
Retirement of Director by Rotation
Section 152 of the Act provides that two-thirds of the
total number of directors are liable to retire by rotation
out of which one-third shall retire from office at every
Annual General Meeting. In terms of Section 149(13),
the provisions of retirement of Directors by rotation
shall not be applicable to Independent Directors and
an Independent Director shall not be included in the
total number of Directors liable to retire by rotation.
Shri. George Ittan Maramkandathil (DIN: 11193648),
Non-Executive Director of the Bank, who retires by
rotation as Director, at the conclusion of this Annual
General Meeting is proposed to be re-appointed and
has offered himself for re-appointment.
Change in Directors during the Financial Year
2025-26
⢠Retirement of Dr. Joseph Vadakkekara Antony
as the Non-Executive Director of the Bank
Dr. Joseph Vadakkekara Antony (DIN: 00181554),
Non-Executive Director of the Bank, retired from
his directorship on completion of his term on 17th
November, 2025. The Board of Directors of the
Bank placed on record their appreciation for the
valuable contributions by Dr. Joseph Vadakkekara
Antony during his tenure as Director of the Bank.
⢠Retirement of Shri. Ravi Venkatraman as the
Non-Executive Independent Director of the
Bank
Shri. Ravi Venkatraman (DIN: 00307328), Non¬
Executive Independent Director of the Bank,
retired from his directorship on completion of
his term on 12th December, 2025. The Board
of Directors of the Bank placed on record their
appreciation for the valuable contributions by
Shri. Ravi Venkatraman during his tenure as
Director of the Bank.
⢠Retirement of Shri. Ajayan Mangalath
Gopalakrishnan Nair as the Non-Executive
Nominee Director of the Bank
Shri. Ajayan Mangalath Gopalakrishnan Nair (DIN:
09782416), Non-Executive Nominee Director
of the Bank, retired from his directorship on
completion of his term on 12th December,
2025. The Board of Directors of the Bank
placed on record their appreciation for the
valuable contributions by Shri. Ajayan Mangalath
Gopalakrishnan Nair during his tenure as
Director of the Bank.
⢠Retirement of Shri. John Samuel as the Non¬
Executive Nominee Director of the Bank
Shri. John Samuel (DIN: 07725212), Non¬
Executive Nominee Director of the Bank, retired
from his directorship on completion of his term
on 12th December, 2025. The Board of Directors
of the Bank placed on record their appreciation
for the valuable contributions by Shri. John
Samuel during his tenure as Director of the Bank.
⢠Re-appointment of Ms. Kolasseril
Chandramohanan Ranjani as Non-Executive
Independent Director of the Bank
Based on the recommendations of the
Nomination Remuneration and Compensation
Committee of the Board and the Board of
Directors and the results of the Performance
Evaluation, the Shareholders through Postal
Ballot on 12th December, 2025 approved the re¬
appointment of Ms. Kolasseril Chandramohanan
Ranjani (DIN: 01735529) as Non-Executive
Independent Director of the Bank for a period
of three consecutive years with effect from 13th
December, 2025.
⢠Retirement of Shri. Ravimohan Periyakavil
Ramakrishnan as Part Time Chairman and
Non-Executive Independent Director of the
Bank
Shri. Ravimohan Periyakavil Ramakrishnan (DIN:
08534931), who was the Part Time Chairman and
Non-Executive Independent Director of the Bank,
retired from the directorship on completion of
his two terms of appointment on 20th December,
2025. The Board of Directors of the Bank placed
on record their appreciation for the valuable
contributions by Shri. Ravimohan Periyakavil
Ramakrishnan during his tenure as the Director
of the Bank.
⢠Appointment of Shri. Karthikeyan Manickam
as Part Time Chairman and Non-Executive
Independent Director of the Bank
Based on the recommendations of the
Nomination Remuneration and Compensation
Committee of the Board and the Board of
Directors, the Shareholders through Postal
Ballot on 12th December, 2025, approved the
appointment of Shri. Karthikeyan Manickam (DIN:
09450145) as a Non-Executive Independent
Director on the Board of the Bank for a period of
three consecutive years commencing from 21st
December, 2025. He assumed as the Part-Time
Chairman of the Bank on 21st December, 2025.
⢠Appointment of Shri. Ajay Sharma as Non¬
Executive Independent Director of the Bank
Based on the recommendations of the
Nomination Remuneration and Compensation
Committee of the Board and the Board of
Directors, the Shareholders through Postal
Ballot on 12th December, 2025, approved the
appointment of Shri. Ajay Sharma as the Non¬
Executive Independent Director of the Bank, for
a period of three consecutive years with effect
from 21st December, 2025.
⢠Retirement of Shri. Thomas Jacob Kalappila
as the Non-Executive Independent Director
of the Bank
Shri. Thomas Jacob Kalappila (DIN: 00812892),
Non-Executive Independent Director of the Bank,
retired from his directorship on completion of
his two terms on 09th March, 2026. The Board
of Directors of the Bank placed on record their
appreciation for the valuable contributions by
Shri. Thomas Jacob Kalappila during his tenure
as Director of the Bank.
Familiarisation Programme
Complying with SEBI Listing Regulations, provisions
of the Companies Act, 2013 and the RBI guidelines,
Familiarization Programmes were conducted during
the Financial Year 2025-26 to give an overview and
introduction to the Independent Directors about the
Bank''s business and operations.
Under this programme, newly appointed directors are
appraised of the organization structure, operational
overview, financial overview, board matters and
procedures, key risk issues and its mitigation strategy,
among others.
Further, all the newly appointed Board Members
undergo a face-to-face induction schedule where the
Bank''s Management Team provides insights about the
affairs of their function and of the Bank as a whole.
The details of the familiarization programme imparted
to Independent Directors are available on the website
of the Bank athttps://www.esaf.bank.in/wp-content/
uploads/2026/05/Familiarisation-Programme-for-
Independent-Directors-1.pdf.
22. EVALUATION OF PERFORMANCE OF THE BOARD
OF 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 has formulated a Performance Evaluation
Policy including a questionnaire for performance
evaluation of the Individual Directors, Committees of
the Board, Chairman, Managing Director and CEO and
the Board as a whole. The questionnaire designed for
the performance evaluation covering various aspects
of performance, including structure of the Board,
meetings of the Board, functions of the Board, role
and responsibilities of the Board, governance and
compliance, evaluation of risks, grievance redressal
for investors, conflict of interest, stakeholder value
and responsibility, relationship among directors,
director competency, Board procedures, processes,
functioning and effectiveness, was circulated to all
the directors of the Bank for the annual performance
evaluation. The appraisal of each of the Directors of
the Bank is done based on the evaluation conducted
with a set of pre-determined evaluation factors.
The performance evaluation of the Board of Directors,
Committees of the Board and individual Directors were
conducted during the Financial Year. The Board and
the Nomination, Remuneration and Compensation
Committee of the Board reviewed the performance of
the Individual Directors and noted that the results of
the performance evaluation indicated a high degree
of satisfaction among directors.
The Policy on Performance Evaluation of Board,
Sub-Committees of the Board and directors is
available on the website of the Bank athttps://www.
esaf.bank.in/wp-content/uploads/2025/02/Policy-
on-Performance-Evaluation-of-the-Board-Sub-
Committees-of-the-Board-and-the-Directors-of-the-
Bank.pdf.
23. CODE OF CONDUCT FOR DIRECTORS AND SENIOR
MANAGEMENT PERSONNEL
In accordance with Regulation 17(5) of SEBI LODR
Regulations, the Bank has adopted the Code of
Conduct for Directors and Senior Management
Personnel. The code of conduct sets forth the guiding
principles for orderly and fair conduct by Directors
and SMPs. All Directors and SMPs have affirmed the
compliance of the code for the Financial Year 2025¬
26 and a declaration to this effect signed by the
Managing Director and CEO forms part of Report on
Corporate Governance. The Bank''s Code of Conduct
for Directors and SMPs is disclosed on the website
of the Bank athttps://www.esaf.bank.in/pdf/policies/
other-disclosures/Code-of-Conduct-for-Directors-
and-Senior-Management-v1.pdf
24. DECLARATION FROM INDEPENDENT DIRECTORS
The Board has received declarations from the
Independent Directors as required under Section
149(7) of the Companies Act, 2013, and the Board
is satisfied that the Independent Directors meet the
criteria of independence as mentioned in Section
149(6) of the Companies Act, 2013 and Regulation
16(1) (b) of SEBI Listing Regulations and that they have
complied with the code of conduct for independent
directors as prescribed under Schedule IV of the
Companies Act, 2013.
In the opinion of the Board, all the Independent
Directors meet the criteria with regards to integrity,
expertise and experience as required under applicable
laws.
All Independent Directors of the Bank have registered
themselves in the data bank as specified under
Section 150 of the Companies Act, 2013, read with
Rule 6 of Companies (Appointment and Qualifications
of Directors) Rules, 2014 and have qualified the
prescribed proficiency test. The Independent Directors
(not exempted under the Companies (Appointment
and Qualification of Directors) Fifth Amendment
Rules, 2020 as notified on 18th December, 2020)
have qualified the online proficiency self-assessment
as required under the aforesaid rule within the
prescribed timeline.
The terms and conditions of appointment of
Independent Directors are available on the website of
the Bankhttps://www.esaf.bank.in/pdf/policies/other-
disclosures/Terms%70and%70conditions%70of%70
appointment%70of%70Independent-Directors.pdf.
25. DIRECTORS AND OFFICERS LIABILITY INSURANCE
POLICY
The Bank has a Directors and Officers Liability
Insurance Policy which protects Directors and Officers
of the Bank from any breach of fiduciary duty.
The Bank is committed to achieving and adhering to
the highest standards of Corporate Governance and it
consistently benchmarks itself with the best practices
in this regard. A report on Corporate Governance for
the Financial Year 2025-26 has been annexed to the
Annual Report.
The Board of Directors met Twelve (12) times during
the Financial Year 2025-26.
The meetings of the Board of Directors were convened
in accordance with applicable laws and standards and
the intervening gap between the said meetings did
not exceed 120 days. The details of Board Meetings
and details of attendance of each director have been
disclosed in the Corporate Governance Report which
forms part of the Annual Report of the Bank for the
Financial Year 2025-26. During the year, Dr. Vinod
Vijayalekshmi Vasudevan had sought leave of absence
from Two (2) meetings of the Board of Directors.
|
Sr. No. |
Name of the Committees |
|
8. |
Customer Service Committee of the Board (CSCB) |
|
9. |
Human Resource Committee of the Board (HRCB) |
|
10. |
Special Committee of the Board for Monitoring and Follow-up of Cases of Frauds (SCBMF) |
|
11. |
Review Committee of the Board for identification and Classification of Wilful Defaulters (RCBWD) |
|
12. |
Those Charged With Governance Committee of the Board (TCWGCB) |
The details of composition, number of meetings held and date thereof and terms of reference of the above Committees
are available in the Corporate Governance Report which forms part of the Annual Report of the Bank for the Financial
Year 2025-26.
28. MEETING OF INDEPENDENT DIRECTORS
As per the requirement of Section 149(8) read with Schedule IV of Act and Regulation 25 of SEBI Listing Regulations,
meeting of the Independent Directors of the Bank is required to be held at least once a year in absence of non¬
independent directors.
During the Financial Year 2025-26, the Independent Directors of the Bank met on 07th March, 2026, chaired by Shri.
Thomas Jacob Kalappila and attended by all the Independent Directors of the Bank.
29. KEY MANAGERIAL PERSONNEL
The following officials of the Bank are the "Key Managerial Personnel" pursuant to the provisions of Section 203 of the
Companies Act, 2013:
|
Sl. No. |
Name of the Key Managerial Person |
Designation |
|
1. |
Dr. Kadambelil Paul Thomas |
Managing Director and CEO |
|
2. |
Shri. George Kalaparambil John |
Executive Director |
|
3. |
Shri. Gireesh C. P. |
Chief Financial Officer |
|
4. |
Shri. Ranjith Raj P. |
Company Secretary |
In addition to the above, the Board of the Bank has designated the following senior officials of the Bank as Key Managerial
Personnel in terms of Section 2(51) of the Companies Act, 2013:
As on 31st March, 2026, the Bank had Twelve (12) Board Committees:
|
Sr. No. |
Name of the Committees |
|
1. |
Audit Committee of the Board (ACB) |
|
2. |
Nomination, Remuneration and Compensation Committee of the Board (NRCCB) |
|
3. |
Risk Management Committee of the Board (RMCB) |
|
4. |
Corporate Social Responsibility and Sustainability Committee of the Board (CSRSCB) |
|
5. |
Stakeholders Relationship Committee of the Board (SRCB) |
|
6. |
Management Committee of the Board (MCB) |
|
7. |
IT Strategy Committee of the Board (ITSCB) |
|
Sl. No. |
Name of the Key Managerial Person |
Designation |
|
|
1. |
Shri. Sudev Kumar V |
Executive Vice President |
|
|
2. |
Shri. Wilson Cyriac |
Chief Risk Officer |
|
|
3. |
Shri. Sivakumar P |
Head - Internal Audit |
|
|
Following changes took place in the list of Key Managerial Personnel during the Financial Year 2025-26: |
|||
|
Sl. No. |
Name of the Key |
Nature of Change |
|
|
1. |
Shri. Hemant Kumar Tamta |
Shri. Hemant Kumar Tamta, Executive Vice President, ceased to be the Key |
|
|
2. |
Shri. George Thomas |
Shri. George Thomas, Executive Vice President, relieved from his responsibilities |
|
|
3. |
Shri. Hari Velloor |
Shri. Hari Velloor, Executive Vice President, ceased to be the Key Managerial |
|
30. INTERNAL FINANCIAL CONTROLS
The Board of Directors confirms that your Bank has
laid down a set of standards, processes and structures
which enable it to implement internal financial controls
across the organisation with reference to Financial
Statements and that such controls are adequate
and are operating effectively. The Internal Financial
Control framework of the Bank ensures that:
⢠Internal Financial Controls are established for
critical and material processes handled by the
Bank.
⢠Draw up recommendations based on good
practices to develop or strengthen the internal
control systems.
⢠Ensure that, the IFCs are adequate and operating
effectively, by periodic review and testing.
⢠Periodic reporting of the status to the Audit
Committee of the Board.
⢠The existence and adequacy of IFCs is
demonstrated to various internal and external
stakeholders.
The Internal Audit Department of the Bank has tested
each of the controls and during the year under review,
there are no material or serious observations of
inefficiency or inadequacy of such controls.
31. DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 134(3) of the Companies Act,
2013, the Board of Directors hereby declare and
confirm to the best of their knowledge and belief that:
i) in the preparation of the annual accounts for
the year ended 31st March, 2026, the applicable
accounting standards had been followed along
with proper explanation relating to material
departures;
ii) such accounting policies as specified in Schedule
III to the Financial Statements have been selected
and applied consistently and judgements and
estimates have been made that are reasonable
and prudent so as to give a true and fair view of
the state of affairs of the Bank as at 31st March,
2026 and of the profit of the Bank for the year
ended on that date;
iii) proper and sufficient care has been taken for
maintenance of adequate accounting records in
accordance with the provisions of the Companies
Act, 2013 for safeguarding the assets of the Bank
and for preventing and detecting frauds and
other irregularities;
iv) annual accounts have been prepared on a going
concern basis;
v) internal financial controls to be followed by the
Bank were in place and that the same were
adequate and were operating effectively, and
vi) proper system to ensure compliance with the
provisions of all applicable laws was in place and
the same was adequate and operating effectively.
32. ENVIRONMENT SOCIAL AND GOVERNANCE
PRACTICES AND CORPORATE SOCIAL
RESPONSIBILITY
The Bank remains committed to integrating
Environmental, Social and Governance ("ESG")
principles into its strategy, operations and decision¬
making processes, with the objective of ensuring
sustainable growth while balancing the interests of
its stakeholders, including shareholders, employees,
customers, communities, regulators and the
environment.
During the year under review, the Bank continued
to strengthen its sustainability governance
framework through oversight by the Corporate
Social Responsibility and Sustainability Committee
of the Board, supported by the ESG Management
Committee and the Sustainability Council. The Bank
also undertook initiatives to embed SDG-linked ESG
metrics across key departments and reviewed its
sustainability-related policy framework to ensure
consistency, clarity and effective governance.
In line with regulatory guidance issued by the Reserve
Bank of India on assessment and management of
climate-related financial risks, the Bank initiated steps
to integrate climate-risk considerations into its overall
risk management framework. The Bank commenced a
climate-risk assessment project during the year, with
appropriate governance structures, internal oversight
mechanisms and defined milestones.
The Bank has received ISO 26000:2010 certification
for social responsibility, covering areas such
as community engagement and development,
environmental stewardship, human rights, labour
practices, consumer protection, fair operating
practices and organisational governance. Further,
the Bank''s ESG score assigned by CareEdge ESG
Ratings was upgraded to 75.4, placing the Bank in the
CareEdge-ESG 1 category.
The Bank continued to undertake initiatives in
financial inclusion, livelihood promotion, education,
healthcare, water and sanitation, environmental
sustainability, diversity, equity and inclusion, and
community development. During the year, the Bank
conducted various ESG-focused awareness and
community engagement programmes, including
initiatives around environmental conservation,
financial literacy, responsible consumption, inclusive
banking and social banking. The Bank also observed
Corporate Social Responsibility
The Bank has adopted a Board-approved Corporate
Social Responsibility Policy in accordance with
Section 135 of the Companies Act, 2013, read with
the Companies (Corporate Social Responsibility
Policy) Rules, 2014, as amended from time to time.
The CSR Policy sets out the Bank''s approach towards
undertaking CSR activities in areas including financial
inclusion, livelihood promotion, education, healthcare,
water and sanitation, environmental sustainability and
other activities specified under Schedule VII to the
Companies Act, 2013. The CSR Policy is available on
the Bank''s website at https://www.esaf.bank.in/wp-
content/uploads/2025/08/CSR-Policy.pdf.
The Corporate Social Responsibility Committee of
the Board reviews and recommends the CSR Policy,
annual action plan, CSR projects, expenditure and
monitoring mechanism to the Board. Based on the
recommendations of the Committee, the Board
approved the CSR projects and CSR expenditure for
the financial year under review.
As a voluntary commitment towards inclusive and
sustainable development, the Bank allocates 5% of
its average net profits, computed in accordance with
Section 135 of the Companies Act, 2013, towards CSR
activities, as against the statutory requirement of 2%.
During the financial year 2025-26, the Bank
undertook CSR projects directly and / or through
eligible implementing agencies, in accordance with
Section 135 of the Companies Act, 2013 and the
thematic programmes such as Environment Week,
Balajyothi Week, Vayojyoti Week, Financial Literacy
Week and Banking on Values Week, aimed at engaging
employees, customers and communities across
different segments. These programmes supported
the Bank''s broader objective of promoting sustainable
practices, financial inclusion, customer awareness
and values-based banking.
applicable CSR Rules. The Bank''s CSR initiatives during
the year focused on financial inclusion, livelihood
promotion, education, healthcare, water and
sanitation, development of collective enterprises and
environmental sustainability.
For the Financial Year 2025-26, the Bank was
required to spend '' 2,34,82,404/- towards CSR
activities. Against this requirement, the Bank spent
'' 5,87,00,000/- during the year. The unspent amount
of '' 4,51,32,000/-, relating to ongoing projects,
was transferred to the Unspent Corporate Social
Responsibility Account within the prescribed timeline,
in accordance with Section 135(6) of the Companies
Act, 2013.
The Annual Report on CSR Activities, containing the
composition of the CSR Committee, brief outline of the
CSR Policy, details of CSR projects, CSR expenditure,
unspent amount, implementing agencies and other
prescribed particulars, is annexed to this Report as
Annexure I.
33. BUSINESS RESPONSIBILITY AND SUSTAINABILITY
REPORT
During the year, the Bank continued to strengthen
its ESG framework through responsible governance
practices, sustainable banking initiatives, prudent
environmental management, financial inclusion,
women empowerment, community development,
employee well-being, and transparent sustainability
disclosures. Guided by its triple-bottom-line
philosophy, the Bank also advanced its Business
Responsibility and Sustainability Reporting (BRSR)
framework and ESG performance monitoring, ESG
governance framework through Board oversight,
implementation of its ESG Roadmap, reaffirming
its commitment to creating long-term value for all
stakeholders.
BRSR for Financial Year 2025-26 is a part of the
Annual Report of the Bank and is also available on the
Bank''s website at https://www.esaf.bank.in/investor-
relation/?id=annual-reports.
34. DISCLOSURE UNDER THE SEXUAL HARASSMENT
OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION AND REDRESSAL) ACT, 2013
The Bank continues with the belief of zero tolerance
towards sexual harassment in the workplace and
continues to uphold and maintain itself as a safe and
non-discriminatory organization. To achieve the same,
the Bank reinforces the understanding and awareness
of The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
("POSH"). The Bank has in place, a policy in line with the
requirements of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal)
Act, 2013 and an Internal Complaints Committee has
been set up for redressal of complaints. Any complaint
pertaining to sexual harassment is diligently reviewed
and investigated, and treated with great sensitivity.
The Internal Committee members have been trained
in handling and resolving complaints and have also
designed an online e-learning POSH Awareness
module, which covers the larger employee base.
During the Financial Year 2025-26, 4 (Four) complaints
were received and the same was disposed of. There
were no complaints pending for a period exceeding
ninety days.
The Bank confirms compliance with the provisions
of the Maternity Benefit Act, 1961, to the extent
applicable to its employees.
The information required pursuant to Section 197
read with Rule 5(1) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules,
2014, in respect of Directors / employees of the Bank,
is attached as Annexure II to this report.
36. WHISTLE BLOWER POLICY/ VIGIL MECHANISM
The Bank has implemented a vigil mechanism through
the adoption of a Whistle Blower and Protected
Disclosure Policy in compliance with the relevant
provisions of the Companies Act, 2013 and rules
thereunder. The Bank provides an opportunity to
employees, vendors and directors to raise concerns
relating to fraud, malpractice or any other activity
or event which is against the interest of the Bank
or society as a whole. The details of Whistle Blower
complaints received and subsequent action taken
and the functioning of the Whistle Blower mechanism
are reviewed periodically by the Audit Committee
of the Board. During the Financial Year 2025-26, 17
complaints were received under the Whistle Blower
Mechanism. The functioning of the mechanism is
reviewed by the Audit Committee from time to time.
No employee of the Bank has been denied access
to the Audit Committee for raising a whistle blower
complaint.
To demonstrate our commitment to combating
corruption, bribery, and money laundering, we
have implemented targeted initiatives across critical
domains such as the Prevention of Corruption
Act, Know Your Customer (KYC) and Anti-Money
Laundering (AML) regulations. These initiatives include
comprehensive training for our employees on anti¬
corruption, anti-bribery, and anti-money laundering
practices.
The policies are available on the official website of
the Bank athttps://www.esaf.bank.in/wp-content/
uploads/2025/04/Whistle-Blower-Policy-V-8.0.pdf
and https://www.esaf.bank.in/pdf/policies/KYC%20
AML%20CFT%20Policy%20Extracts.pdf
37. CODE OF CONDUCT TO REGULATE, MONITOR
AND REPORT INSIDER TRADING
The Bank has in place, a Policy for Monitoring Insider
Trading which inter alia acts as the Code of Conduct
to Regulate, Monitor and Report ("Code") insider
trading in the securities of the Bank and the Code
of Practices and Procedures for Fair Disclosure of
Unpublished Price Sensitive Information ("UPSI").
The Code, inter alia, prohibits dealing in securities by
insiders while in possession of UPSI. The said Code
has been amended, from time to time, to give effect
to the various notifications/circulars of the Securities
and Exchange Board of India ("SEBI") with respect to
the SEBI (Prohibition of Insider Trading) Regulations,
2015. The Policy for Monitoring of Insider Trading is
available on the Bank''s website athttps://www.esaf.
bank.in/wp-content/uploads/707 5/07/Policy-for-
Monitoring-of-Insider-Trading.pdf.
In accordance 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 ("RBI
Guidelines") issued by RBI, Banks shall appoint the
Statutory Auditors for a continuous period of three
(3) years, subject to the firms satisfying the eligibility
norms each year and the approval of RBI on an annual
basis.
Based on the approval of Reserve Bank of India vide
letter No. Ref CO.DOS.RPD.No. S503/ 08.61.005/2025-
26 dated 21st April, 2025, the Shareholders of the
Bank in the 09th Annual General Meeting held on 24th
September, 2025 had appointed M/s. Sundaram &
Srinivasan, Chartered Accountants (Firm Registration
Number: 004207S) as the Joint Statutory Auditors of
the Bank for a period of three financial years who will
hold office from the conclusion of the 09th Annual
General Meeting till the end of the 12th Annual General
Meeting of the Bank, subject to the approval of the
Reserve Bank of India to be obtained by the Bank for
the Financial Year 2026-27 and Financial Year 2027¬
28. Since the asset size of the Bank is above the said
limit, the Bank is required to appoint Joint Statutory
Auditors and has presently appointed M/s. Kirtane
and Pandit LLP and M/s. Sundaram & Srinivasan,
as Joint Statutory Auditors, wherein M/s. Kirtane &
Pandit LLP will be completing their tenure of three
years upon conclusion of the ensuing Annual General
Meeting of the Bank and they will not be eligible to be
appointed further.
The Board at its meeting held on 27th February, 2026
approved the eligibility of existing Statutory Auditors
M/s. Sundaram & Srinivasan, Chartered Accountants,
Mumbai, FRN 004207S for holding of office for the
2026-27 and appointment of new Statutory Auditors
by providing first preference to M/s. Rodi Dabir and
Co, Chartered Accountants, Nagpur, FRN108846W
for three years respectively, and has directed to seek
approval of Reserve Bank of India (RBI). In accordance
with the same, approval from RBI vide letter dated
03rd May, 2026 was sought. RBI vide letter dated 12th
May, 2026 accorded the approval for appointment of
M/s. Sundaram & Srinivasan, Chartered Accountants,
Mumbai, FRN 004207S and M/s. Rodi Dabir and Co,
Chartered Accountants, Nagpur, FRN108846W as the
joint statutory auditors of our Bank for 2026-27 for
their second and first year respectively.
Based on recommendation of Audit Committee of
the Bank and the approval of Reserve Bank of India
(RBI) vide their letter no. S1041/08.61.005/2026-27
dated 12th May, 2026, the Board of Directors, subject
to approval of the Shareholders and prior approval
of the Reserve Bank of India (RBI) every year, had
proposed the appointment of M/s. Rodi Dabir and
Co, Chartered Accountants, Nagpur, FRN108846W as
Joint Statutory Auditors of the Bank from 2026-2027
for a period of 3 years . Accordingly, the proposal for
their appointment is being placed in the ensuing 10th
Annual General Meeting.
The Statutory Auditors have confirmed their eligibility
under Section 141 of the Act and as per the guidelines
issued by RBI from time to time. Further, as required
under the relevant provisions of SEBI Listing
Regulations, the Statutory Auditors had also confirmed
that they had subjected themselves to the peer review
process of the Institute of Chartered Accountants of
India ("ICAI") and they hold a valid certificate issued by
the Peer Review Board of ICAI.
Pursuant to the provisions of Section 204 of
the Companies Act, 2013, and the Companies
(Appointment and Remuneration of Managerial
Personnel) Rules, 2014 and Regulation 24A of SEBI
LODR Regulations, 2015, the shareholders of the
Bank in the 9th Annual General Meeting held on
24th September, 2025, had appointed M/s. SEP and
Associates, (Firm Registration No: P2019KE075600),
Company Secretaries, Ernakulam, as the Secretarial
Auditor of the Bank for conducting Secretarial Audit
for the Financial Year 2025-26 to 2029-2030, i.e., till
the conclusion of the 14th Annual General Meeting of
the Bank.
The Secretarial Audit Report does not contain any
qualification, reservation or adverse remark and the
report for the Financial Year 2025-26 is enclosed
herewith as Annexure - III. The Bank has complied with
the Secretarial Standards i.e., SS-1 and SS-2, relating
to ''Meetings of the Board of Directors'' and ''General
Meetings'', respectively, as specified by the Institute
of Company Secretaries of India and notified by the
Ministry of Corporate Affairs under Section 118(10) of
the Companies Act, 2013.
In terms of the provisions of the SEBI Listing
Regulations, your Bank has submitted the Annual
Secretarial Compliance Report for FY 2025-26 to
the Stock Exchanges within the prescribed time
and the same is available on websites of BSE (www.
bseindia.com), NSE (www.nseindia.com) and on the
Bank''s website at https://www.esaf.bank.in/investor-
relation/?id=secretarial-compliance-report
55. STRICTURES AND PENALTIES
The penalties or strictures imposed by the regulators on the Bank are as follows:
|
Sl. No. |
Name of the regulatory/ enforcement |
Amount |
Brief of the case |
|
|
1. |
Office of the Superintendent, |
GST, West |
'' 1580/- |
An Audit was conducted in the state of West Bengal |
|
2. |
Office of the Superintendent, |
GST, West |
'' 87,484/- |
An Audit was conducted in the state of West Bengal |
40. PARTICULARS OF CONTRACT OR ARRANGEMENTS
WITH RELATED PARTIES
During the year, your Bank has not entered into
any materially significant transaction with its related
parties, which could lead to a potential conflict of
interest between the Bank and these parties. All the
related party transactions that were entered into
during the year were on an arm''s length basis and
in the ordinary course of business. Hence, pursuant
to Section 134(3)(h) of the Act read with Rule 8(2)
of the Companies (Accounts) Rules, 2014, there are
no related party transactions to be reported under
Section 188(1) of the Act and disclosure in Form AOC-
2 is not applicable to the Bank.
The Bank has a Board approved ''Related Party
Transaction Policy''. The same is available on the Bank''s
website athttps://www.esaf.bank.in/wp-content/
uploads/2026/02/Related-Party-Transaction-Policy-1.
pdf.
Pursuant to the provisions of Section 134(3) (a)
and Section 92(3) of the Act read with Rule 12(1) of
the Companies (Management and Administration)
Rules, 2014, the Annual Return of the Bank for
the Financial Year 2025-26 will be hosted on the
bank''s website at https://www.esaf.bank.in/investor-
relation/?id=annual-return.
42. DETAILS IN RESPECT OF FRAUDS, IF ANY,
REPORTED BY AUDITORS:
There were no frauds reported by the Statutory
Auditors for the Financial Year 2025-26.
None of the Directors of the Bank are disqualified as
per provisions of Section 164(2) of the Companies
Act, 2013. The Directors have made necessary
disclosures, as required under various provisions of
the Companies Act, 2013, Securities and Exchange
Board of India Regulations and guidelines of Reserve
Bank of India.
44. PARTICULARS REGARDING CONSERVATION
OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNINGS AND OUTGO
PURSUANT TO SECTION 134 (3) (Q) OF THE
COMPANIES ACT, 2013 READ WITH RULE 8(3) OF
THE COMPANIES (ACCOUNTS) RULES, 2014
i) Particulars relating to conservation of energy and
technology absorption are not material to banking
operations. However, the Bank continues to
undertake various initiatives aimed at improving
energy efficiency, optimising resource utilisation
and reducing its environmental footprint across
its offices, branches and operational locations.
Details of the same are available in the BRSR
section of the Integrated Annual Report for
2025-26 and is also available on the Bank''s
website at https://www.esaf.bank.in/investor-
relation/?id=annual-reports.
The Bank has used information technology
extensively in its operations as detailed in the
para on ''Technology and Digitisation''.
ii) Foreign Exchange earnings and outgo are part
of the normal banking business of your Bank.
During the Financial Year 2025-26, the Bank had
foreign currency expenditure of '' 71,59,689.13/-
and foreign currency earnings of '' 14,38,028.98/-
during the period.
45. DETAILS OF APPLICATION MADE OR PROCEEDING
PENDING UNDER INSOLVENCY AND BANKRUPTCY
CODE 2016
During the year under review, there were no
applications made nor proceedings pending in the
name of the Bank under the Insolvency Bankruptcy
Code, 2016.
46. DETAILS OF DIFFERENCE BETWEEN VALUATION
AMOUNT ON ONE TIME SETTLEMENT AND
VALUATION WHILE AVAILING LOAN FROM
BANKS AND FINANCIAL INSTITUTIONS
During the year under review, the Bank has not
entered into any one-time settlement in respect
of loans taken from banks or financial institutions.
Accordingly, the disclosure of details of difference
between the valuation amount at the time of one-time
settlement and the valuation while availing such loans
is not applicable.
47. MATERIAL CHANGES AND COMMITMENTS
AFFECTING FINANCIAL POSITION OF THE BANK
There have been no material changes and
commitments between the end of the Financial Year
2025-26 and the date of this report, affecting the
financial position of the Bank.
48. EXPLANATIONS OR COMMENTS BY THE BOARD
ON EVERY QUALIFICATION, RESERVATION OR
ADVERSE REMARK OR DISCLAIMER MADE IN
THE STATUTORY AUDITOR''S REPORT OR IN THE
SECRETARIAL AUDIT REPORT
The Statutory Auditors'' Report on the financial
statements of the Bank and the Secretarial Audit
Report for the financial year under review do not
contain any qualification, reservation or adverse
remark.
49. INFORMATION ABOUT THE FINANCIAL
PERFORMANCE/ FINANCIAL POSITION OF THE
SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE
COMPANIES
The Bank does not have any subsidiaries, associates
or joint venture companies.
Being a Banking Company, the disclosures required
as per Rule 8(5)(v) and (vi) of the Companies Accounts
Rules, 2014, read with Section 73 and 74 of the
Companies Act, 2013, are not applicable to your Bank.
51. LOANS / GUARANTEES / INVESTMENTS
Being a Banking Company, the provisions of Section
186 of the Companies Act, 2013 is not applicable.
The Bank is not required to maintain cost records
as specified by the Central Government under sub¬
section (1) of Section 148 of the Companies Act, 2013.
53. SIGNIFICANT AND MATERIAL ORDERS
In accordance with Rule 8(5)(vii) of the Companies
(Accounts) Rules, 2014, there have been no significant
and material orders passed by the regulators or
courts or tribunals impacting the going concern status
and the future operations of the Bank.
The Directors place on record their sincere
appreciation for the guidance and support received
from the Reserve Bank of India, Government of India,
The MCA has issued General Circular No. 20/2020
dated 05th May, 2020 read with other relevant
circulars, including General Circular No. 10/2022
dated 28th December, 2022 and applicable circulars/
notifications issued by SEBI relaxing the requirement
of dispatching physical copies of the Annual Report
and the Notice convening the AGM to Shareholders.
Members who wish to have a physical copy may write
to the Company Secretary of the Bank at investor.
[email protected] or submit a written request
to the Registered Office of the Bank. In accordance
with the aforesaid circulars, the web link of the Annual
Report and the Notice convening the AGM of the Bank
is being sent in electronic mode only to members
whose e-mail address is registered with the Bank or
the Depository Participant(s). Those members, whose
email address is not registered with the Bank or with
their respective Depository Participant(s) and who
wish to receive the Notice of the AGM and the Annual
Report for the financial year ended 31st March, 2026,
can get their email address registered by following the
steps as detailed in the Notice convening the AGM.
The Annual Reports of your Bank are available on the
Bank''s website at https://www.esaf.bank.in/investor-
relation/?id=annual-reports.
other government and regulatory authorities, banks,
financial institutions and other stakeholders.
The Directors also acknowledge the continued support
and guidance received from M/s. ESAF Financial
Holdings Private Limited, the Corporate Promoter of
the Bank.
The Directors express their sincere gratitude to the
Bank''s valued customers and clients for their continued
trust and patronage. The Board further places on
record its deep appreciation for the commitment,
dedication and contribution of all employees of the
Bank towards the growth and progress of the Bank.
For and on behalf of the Board of Directors
Sd/- Sd/-
Shri. Karthikeyan Manickam Dr. Kadambelil Paul Thomas
DIN:09450145 DIN:00199925
Chairman Managing Director and CEO
Date: 30th April 2026
Place: Thrissur
Mar 31, 2025
|
For the year ended |
For the year ended |
|
|
Deposits |
2,32,764 |
1,98,678 |
|
Advances |
1,80,279 |
1,82,931 |
|
Total Income |
43,293 |
42,603 |
|
Total Expenditures Excluding Tax |
50,223 |
36,899 |
|
Profit/(Loss) before tax |
(6,930) |
5,704 |
|
Provision for Tax |
(1,716) |
1,448 |
|
Net Profit/(Loss) |
(5,214) |
4,256 |
|
Profit/(Loss) Brought Forward |
8,573 |
5,420 |
|
Total Profit/(Loss) Available for Appropriation |
3,359 |
9,676 |
|
Appropriation |
||
|
Dividend Paid |
360 |
- |
|
Transfer to Statutory Reserve |
- |
1,064 |
|
Transfer to Capital Reserve |
87 |
10 |
|
Transfer to Investment Fluctuation Reserve |
- |
29 |
|
Balance Carried to Balance Sheet |
2,912 |
8,573 |
|
Earnings per Share |
||
|
Basic (?) |
(10.13) |
8.96 |
|
Diluted (?) |
10.12 |
8.94 |
Key Performance Highlights
On a Standalone basis, Loss After Tax of the Bank was
'' 5,214 million in Financial Year 2024-25 compared to
Profit after tax of Rs. 4,256 million in Financial Year
2023-24. Interest Income of the Bank for the Financial
Year 2024-25 was '' 38,622 million as against '' 38,186
million in Financial Year 2023-24 marking a growth
of around 1.14%. Further, the Bank had Capital and
Reserves of '' 19,450 million as on March 31, 2025
(? 24,861 million as on March 31, 2024). The book
value per Equity Share was at '' 37.74 as on March
31, 2025 (? 48.29 as on March 31, 2024). Analysis of
the Bank''s performance is covered in detail in the
Management Discussion and Analysis section of the
Annual Report.
2. Our Business Segments
The Bank has identified our business segments,
segregating them into Treasury, Wholesale Banking,
Retail Banking and Other Banking Segments after
considering the internal business reporting system
and guidelines issued by the Reserve Bank of
India through its notification DBOD.No.BP.BC.81/
21.01.018/ 2006-07 dated 18th April, 2007 and
Accounting Standard 17 (AS 17) - ''Segment Reporting''.
3. Business Overview
Micro Assets
The Micro Assets product vertical of the Bank is set
up with the objective of providing quality banking
services to the unbanked and underbanked through
doorstep banking services. In order to provide high-
touch customer service, the Micro Asset business of
the Bank is delivered through Micro Banking Channel
and through dedicated Business Correspondents
(BCs). Micro assets loans are given to individuals of a
group or to individuals without a group for any income
generation activity, to set up, expand their own or
their family members'' micro or small businesses, or
meet any other household needs for improving the
quality of life.
During the Financial Year 2024-25, the Bank continued
to focus on expanding its outreach and deepening its
presence in the underserved and financially excluded
segments through its micro banking and allied lending
products. As on 31st March, 2025, the Bank had a total
of 32,88,736 active micro banking borrowers, with
a loan book outstanding of '' 88,566 million. During
the year, the Bank disbursed loans aggregating to
'' 52,453 million under various microloan products,
demonstrating its continued commitment to
promoting inclusive financial growth.
The micro banking operations were expanded into new
geographies, including the states of Andhra Pradesh,
Telangana, and Sikkim, in addition to deepening reach
in the existing operational areas. This expansion
was supported by onboarding additional Business
Correspondents (BCs), enhancing last-mile delivery
and customer service capabilities.
The microfinance sector faced notable stress during
the Financial Year 2024-25, arising from regional over¬
leverage and localised disruptions, which impacted
borrower repayment behaviour in select geographies.
These challenges were further compounded by socio¬
political developments in certain states, leading to
elevated credit risk in specific pockets. In response,
and in alignment with the advisory framework issued
by the Microfinance Institutions Network (MFIN), the
Bank adopted a conservative approach to growth
in the micro banking segment. Guardrails were
introduced to enhance borrower-level assessment,
restrict exposure in stressed regions, and reinforce
ethical and compliant lending and collection practices.
As a result of these calibrated measures, the overall
size of the Bank''s micro banking portfolio moderated
during the year, reflecting a deliberate and risk¬
conscious business strategy.
As a strategic step towards enhancing control over
operations and improving risk oversight, the Bank
decided during the year to directly manage a portion
of its microloan portfolio that was previously serviced
through one of its Business Correspondents. This
transition was primarily aimed at reducing the Bank''s
concentration risk arising from reliance on a single
Business Correspondent and ensuring greater
resilience in field-level execution.
As part of this transition, 5,109 employees of the
Business Correspondent were seamlessly onboarded
into the Bank''s rolls. The Bank ensured that the
transition was implemented in a structured manner to
avoid disruption to customer service, and to maintain
continuity in borrower engagement. Necessary
capacity-building efforts were undertaken to integrate
the workforce into the Bank''s systems, processes, and
compliance framework, thereby aligning them with
organisational standards and expectations.
The Bank has undertaken corrective measures to
address delinquencies, including strengthening
its collection infrastructure, reinforcing risk-based
supervision, and calibrating sourcing in high-risk
geographies. These efforts are aimed at ensuring
sustained asset quality and responsible credit delivery
in line with regulatory expectations.
Retail Banking
The Bank continued to strengthen its position in
the retail banking segment during the Financial Year
2024-25, driven by consistent growth in deposits, a
robust branch expansion strategy, and focused asset
diversification. As on March 31,2025, the Bank''s total
retail liability book stood at '' 2,32,764 million, with
a net accretion of '' 34,086 million in total deposits
during the year. The Bank achieved a year-on-year
growth of 17% in its retail liabilities portfolio, reflecting
continued trust and engagement from its growing
customer base.
The Bank''s retail deposit franchise remains a key
strength, providing stability to the overall funding
profile. The CASA (Current Account and Savings
Account) ratio improved from 22.66% in Financial Year
2024 to 24.84% in Financial Year 2025, with a total
CASA book of '' 57,828 million as on March 31, 2025.
The CD (Credit-to-Deposit) ratio of the Bank remained
at a comfortable level, indicating prudent balance
sheet management and healthy liquidity coverage.
The Bank''s non-resident deposit base stood at
'' 49,740 million as of March 31, 2025, contributing
meaningfully to the overall liability position.
The Bank continued to expand its physical presence
across the country, with the total number of banking
outlets reaching 787 as on March 31,2025. During the
year, 34 new branches were opened, of which two (2)
outlets were established in Unbanked Rural Centres
(URCs). Out of the total 787 banking outlets, 200 are
located in URCs, 81 in metro centres, 164 in urban, 321
in semi-urban, and 21 in rural areas. Approximately
25.4% of the Bank''s outlets are in URCs, aligning well
with the regulatory mandate of maintaining at least
25% presence in unbanked rural locations. The Bank
also maintained a strong ATM network, with 693 ATMs
as on March 31,2025, including a net addition of 81
ATMs during the year.
On the retail assets front, the Bank witnessed robust
and broad-based growth during the year, contributing
significantly to the expansion of the overall balance
sheet. The total retail and corporate loan portfolio grew
to '' 99,222 million as on March 31, 2025, registering
a year-on-year increase of 68.36%. The Bank followed
a conscious strategy of product diversification and
customer segment expansion, focusing on secured
and semi-secured asset classes.
Among the key drivers, the gold loan portfolio
recorded aggressive growth, supported by strong
operational execution, increased customer demand,
and competitive turn around time. The Bank scaled
up its gold loan operations across existing and
newly identified markets, enhancing both reach
and efficiency. This segment continues to offer low
delinquency levels and shorter tenor dynamics,
thereby supporting risk-adjusted returns.
In addition, the mortgage loan segment witnessed
healthy traction, backed by demand in self-occupied
and small-ticket housing segments across semi¬
urban and rural areas. The Bank also deepened its
presence in the MSME lending space, catering to
small and medium business owners through tailored
credit offerings aligned with their working capital
and expansion needs. These efforts collectively
contributed to a more granular and diversified retail
book, aligned with the Bank''s prudent risk appetite
and long-term asset quality objectives.
Treasury
The Treasury Department is responsible for
maintaining the Statutory Liquidity Ratio (SLR) and
Cash Reserve Ratio (CRR) of the Bank, as well as
handling its investments in securities under different
market segments. Treasury also manages the balance
sheet liquidity and ensures compliance with statutory
requirements. It manages the treasury needs of
customers for a fee.
Our Bank maintains a portfolio of Government
Securities in line with the regulatory norms governing
the Statutory Liquidity Ratio (SLR). A significant portion
of these SLR securities are in ''Held-to-Maturity'' (HTM)
category, while some are in ''Available for Sale'' (AFS)
and "Held for Trading" (HFT) categories.
As on March 31, 2024, the total investment in
securities was '' 56,229 million, which increased
by 6.62% to '' 59,953 million as on March 31, 2025.
The Bank has generated income from investment of
'' 5,334 million and '' 16 million from AD-II foreign
exchange activities for the Financial Year ended on
March 31,2025. The Bank was granted AD-1 License
for operating in foreign exchange markets vide license
FE.KOC.01/2023 dated April 20, 2023, and as per the
approval received from Reserve Bank of India. The
Bank started AD-1 operations from April 01,2024.
4. IT Initiatives
Technology-driven business model with a basket
of myriad products and customer friendly digital
technology platform
The Bank offers its customers a multitude of digital
products, including the internet banking portal, an
uncomplicated but effective mobile banking interface
for retail customers, SMS alerts, bill payments, and
RuPay branded ATM cum debit cards. All banking
and payment transactions, such as remittances and
utility payments, can be completed through these
platforms. The Bank''s customers are also able to
register to savings accounts on a UPI-based mobile
applications. The Bank''s account opening, and loan
underwriting processes have been digitalised by
using tablets, which brought down the turn around
time and offered better service to customers. CASA
accounts can be opened through tablets, which
enable doorstep services to customers.
By leveraging technology solutions, the Bank provides
customers with pre-generated kits immediately upon
account opening, enabling them to use the ATM
cum debit card provided with the pre-generated kits
without having to wait for the card to be activated
across channels, thereby resulting in increased
customer satisfaction. The Bank has crossed a
milestone in technology with the successful adoption
of e-signatures for microloan disbursals.
The Bank has a digitalised central credit-processing
unit for its microloans and has implemented all Micro
Banking Loan Documents in vernacular languages.
We have enabled a Digital Receipt Printing facility right
after collection is completed in the field. The customer
onboarding process has been predominantly
digitalised for its microloans. The Bank leverages
technology for underwriting and credit sanctioning for
its loan products based on inputs from credit bureaus
and/or the customer data analytics. The Bank has
implemented technology solutions that enable it to
ensure cashless disbursement of loans and electronic
signing for microloans, both of which have reduced
paperwork hence committing to the sustainability
commitments.
The Bank''s collections mechanism has also been
digitalised with mobile applications and a payment
gateway through which the borrowers can repay
their loans. The Bank is continuously working towards
improving its customers'' experience using technology
and has implemented a Customer Relationship
Management solution to better handle customer
requests. The Bank believes that such initiatives have
helped us improve our customer service and enable
delivery of services in a more cost-effective manner.
WhatsApp Banking became a simple platform to avail
a host of basic banking services, which is a faster,
convenient, and secure platform at the comfort
and safety from anywhere. Customers can also get
information on various products/ interest rates/
branch locations etc.
The Bank has enabled customer-facing channel
features like Electronic Payment Advice through
branches, Additional Mobile Banking registration
facility for international customers, Offline Account
statement feature in Corporate Internet Banking (CIB),
and additional SMS and e-mail notifications on both
successful and failed login attempts in CIB.
5. Customer Service Quality
The Bank is committed to becoming one of the leading
Social Banks in India by delivering superior customer
experiences. It has implemented a robust Grievance
Redressal Mechanism and Policy aligned with the
Reserve Bank of India guidelines, ensuring efficient
resolution of customer queries and complaints.
The Customer Service Quality department regularly
reports to the Board on grievance handling and
initiatives to enhance service standards. Multiple
customer communication channels have been
established, including a 24x7 toll-free call centre with
multi-language and IVR support, website grievance
links, branch-level support, an escalation matrix with
contact details, customer care emails, complaint
boxes, and registers. Periodic surveys are conducted
to gauge customer satisfaction across regions.
Various committeesâsuch as the Branch-level
Customer Service Committee, Standing Committee
on Customer Service, and the Board-level Customer
Service Committee-review the effectiveness of
customer service across organisational levels.
Key achievements and initiatives during the Financial
Year 2024-2025 :
⢠ISO 9001:2015 recertification for Customer
Service Quality functions.
⢠Zero awards /penalties from the Banking
Ombudsman.
⢠The Head of Customer Service Quality - Shri.
Abiesh Jose- was awarded the Best CX Leader
of the Year in Digital Customer Experience
Conference and Awards 2024 by Gain Skills
Group.
⢠Awarded Best Small Finance Bank of the Year
in India Banking Summit and Awards 2024, by
Synnex India Group.
⢠Initiatives like the Customer Service Excellence
Awards to promote branch-level engagement.
⢠Implementation of the Five-S initiative for branch
transformation and service productivity.
⢠Initiatives to train and equip the customer-facing
staff using knowledge-building series like the CX
Guru emails.
⢠Field visits to micro banking customers to gather
feedback on various banking processes and
dipstick surveys to assess satisfaction levels.
⢠A year-long Customer Awareness Programme,
in line with RBI directives, covering topics such
as grievance redressal, digital banking, customer
rights, and safe banking practices, with specific
programmes conducted starting from January
and spanning across the calendar year 2025.
These initiatives reflect the Bank''s ongoing efforts to
elevate customer satisfaction and service excellence.
6. Compliance Functions
The Bank has a dedicated independent Compliance
Department headed by a Chief Compliance Officer,
which operates as per a well-documented compliance
policy for ensuring regulatory / statutory compliance,
across all businesses and operations. The key functions
of the Compliance Department shall include ensuring
core compliance areas such as statutory, regulatory,
and other related mechanisms for dissemination
of regulatory prescriptions and guidelines amongst
respective functions and monitoring compliance
with regulatory guidelines, oversight of statutory
compliances, correspondence with the RBI, vetting
the guidelines/ circulars issued, new products, and
processes for compliance with regulatory guidelines,
vetting of Bank''s Policies, coordinating and monitoring
submission of the RBI returns, coordinating collection
of inputs from various departments for the RBI
inspection and for rectification of the RBI inspection
irregularities etc. The Bank has a well-defined and
structured mechanism to assess the compliance
risk and monitor its mitigation measures thereby
ensuring the effectiveness of the compliance function
in managing the compliance risk.
7. Risk Management
The Bank follows a risk management approach
that involves identifying, assessing, and continually
monitoring different types of risks. The Bank''s Board
of Directors oversees risk management governance,
approving policies updated in accordance with
regulatory guidelines and internal directives. The
Risk Management Committee of the Board (RMCB)
establishes and reviews processes and standards for
risk management functions. The Risk Management
Department coordinates bank-wide risk management
efforts, implementing approved policies and
procedures. It comprises five divisions managing
major risk streams: Credit risk, Operational risk,
Market risk, Information and Cybersecurity risk, and
Anti-Money Laundering and Transactional risks.
The Bank''s executive-level risk management
committees, such as the Credit Risk Management
Committee, Operational Risk and Business Continuity
Management Committee, Market Risk and Asset
Liability Management Committee, Information
Security Governance Committee, and Outsourcing
and Vendor Assessment Committee, consistently
evaluate their respective risks and take preventive and
corrective actions as needed. The Committees report
significant risk events, risk levels, and trends to the Risk
Management Committee of the Board. The Chief Risk
Officer, who directly reports to the Managing Director
and CEO, oversees all risk management functions.
The Bank developed a robust Internal Capital
Adequacy Assessment Process to identify, assess,
and monitor material risks, ensuring capital adequacy
commensurate with the Bank''s risk profile and growth
strategy and satisfying the regulatory norms. Periodic
stress testing is conducted to ensure that the Bank
can effectively manage and mitigate both existing and
emerging risks.
8. Human Resources Initiatives
The Bank considers its human capital as one of
its most valuable assets. A content, engaged, and
purpose-driven workforce is integral to delivering
the joy of banking to our customers and enabling the
Bank''s strategic objectives.
During the year, the Bank undertook a strategic
initiative to bring a portion of its microloan portfolio
under direct management, which was previously
handled through a Business Correspondent. As
part of this initiative, 5,109 employees of a Business
Correspondent were successfully transitioned to the
Bank''s rolls. This resulted in a significant expansion of
the Bank''s workforce, increasing the total employee
strength to 12,520 as on March 31, 2025. The
transition was executed with careful planning to
ensure operational continuity, regulatory compliance,
and alignment with the Bank''s culture and systems.
To support this large-scale integration and promote
alignment with the Bank''s culture, policies, and
processes, the Bank launched a structured three-
phase orientation and training programme titled
"Unnati", conducted across multiple locations in
61 batches. The initiative enhanced transitioning
employees'' understanding of banking products and
instilled a sense of belonging and shared purpose.
The Bank continued to nurture a high-performance and
value-driven culture. In Financial Year 2024-25, the HR
Department conducted an Employee Feedback Survey
to assess engagement levels and cultural alignment.
The Bank received an employee engagement score of
85.6%, and an Employee Net Sentiment (eNS) Score
of 39, which is widely considered excellent, indicating
high employee satisfaction and strong alignment with
the Bank''s vision, mission and values.
In alignment with the principles of continuous
improvement, the Bank has adopted the Kaizen
framework across departments. The HR team
coordinated bank-wide participation in the Kaizen
Competition organised by the Kerala Productivity
Council on November 26-27, 2024. Six departments
of the Bank participated, and the Customer Service
Quality (CSQ) Department was honoured with the
Bronze Award for exemplary implementation of 5S
practices.
The Bank remains committed to the holistic well-being
of its employees. The HR Employee Engagement team
conducted a range of programmes that focused on life
experiences, recognition, health, and team bonding.
Notable initiatives included:
⢠Community Service and Social Impact:
Employees actively participated in the Wayanad
landslide rescue and relief efforts in 2024,
contributing both monetarily and through
volunteer work. Recruitment drives were also
conducted to support affected families, resulting
in employment offers to five fresh graduates.
⢠The Bank also organised donation drives
supporting destitute homes and old age homes
in Thrissur, with employees personally visiting 12
facilities and distributing essentials, creating a
profound and humane impact.
⢠Blood Donation Camps were organised across
multiple locations, reinforcing the Bank''s social
responsibility ethos.
⢠Celebrating Employees: Through the "Wall
of Joy" displayed at all branches and offices,
the Bank commemorates milestones such as
birthdays, work anniversaries, marriages, and
achievements. Motherhood Hampers are gifted
to female employees welcoming new children,
celebrating parenthood as a shared joy.
⢠Employee engagement events, such as Fun Days,
interactive games, team-building activities, and
wellness programmes focusing on mental and
physical health, were conducted throughout the
year.
To foster a culture of learning and development,
the Bank continued to invest in capability building.
Through the ESAF Online Academy, employees
accessed topic-specific training sessions. The Bank
also maintains tie-ups with coaching institutes for
professional certification courses at concessional fees
and provides incentives for successful completions.
Senior staff are regularly nominated for advanced
training programmes offered by reputed financial
education institutions.
The Human Resources function is focused on building
an ecosystem that attracts, retains, and develops
talent to meet evolving business needs. The Bank is
committed to fostering a work environment where
employees are:
⢠Competent and committed
⢠Collaborative and customer-centric
⢠Content and continuously learning
⢠Contributing meaningfully to organisational goals
The HR function also ensures that performance
is continuously monitored and improved through
structured goal-setting and appraisal mechanisms. All
statutory, regulatory, and internal policy requirements
are adhered to in the administration of HR practices.
The Human Resources Department of the Bank has
been reassessed and certified to be in conformance
with ISO 9001:2015, reinforcing its commitment
to providing quality HR services and supporting
employees in their journey of continuous improvement
and performance excellence.
9. Information Security and Cyber Security Risk
Management
The Bank has established a dedicated Information
Security Division under its Risk Management
Department. This division is led by the Chief
Information Security Officer (CISO), who reports to the
Chief Risk Officer (CRO), with the CRO reporting to the
Bank''s senior management. The Bank''s Information
Security and Cyber Security Policies, approved by
the Board of Directors, provide a robust framework
for managing technology and cyber security risks.
Governance function is further strengthened by
the Information Technology Strategy Committee of
the Board and the Executive Information Security
Governance Committee.
The Bank is ISO/IEC 27001 certified for Information
Security Management for its internal banking systems
and related IT systems, PCI DSS certified for payment
card data protection reflecting its commitment to
global best practices and regulatory compliance.
The Security Operations Centre (SOC) operates 24/7,
enabling real time monitoring, threat detection and
rapid incident response. The Bank leverages advanced
monitoring tools and analytics to proactively manage
cybersecurity threats across its IT environment. To
promote a culture of cybersecurity awareness, the
Bank implements a comprehensive training and
awareness programmes that includes customers,
employees, vendors and business partners. This
includes periodic training sessions via digital learning
platforms, instructor-led programmes and regular
communication through internal and external
channels, including social media.
The Bank is committed to ensure the confidentiality,
integrity and availability of data across all stages - at
rest, in use, and in transit. Continuous efforts are made
to strengthen data privacy and security practices for
customers, employees, and stakeholders. By adhering
to the leading industry standards and engaging with
key regulatory bodies such as RBI, CERT-IN, IDRBT,
UIDAI, SEBI and CSITE, the Bank maintains its vigilance
against emerging cyber threats and ensures ongoing
compliance with all applicable regulations.
10. Business Continuity Management
The Bank has a Business Continuity Management
Policy, approved by the Board of Directors and
reviewed on an annual basis. The Bank conducts
Business Impact Analysis (BIA) annually and prepares
a Business Continuity Plan (BCP) Document, which
deals with the measures to manage any unplanned
disruption in services. The document identifies and
prioritises processes and systems and evaluates
the potential effects of natural and man-made
events or disasters on the IT and other services that
support business. It also analyses the potential loss
in transactions to the Bank in case of disruption,
Critical and Non- Critical applications, their Recovery
Point Objective (RPO) and Recovery Time Objective
(RTO). The BCP contains the details of key outsourcing
arrangements and BC arrangements, how to deal with
different business scenarios, certain situations like
power failure, Cyber-attacks, Hardware and Software
failures, Network failures, Natural disasters, etc.
The Bank has an executive level Crisis Management
and Quick Response Team (CMQRT), which is
responsible for initiating immediate actions in the
event of the occurrence of a crisis and to guide
business units/ Departments on steps to be taken
to protect the assets and to ensure continuity of
business. The CMQRT initiates remedial actions in
case of any breakdown or failure of critical systems,
occurrence of natural disasters or accidents or any
other events affecting business continuity.
The Bank also has an executive level Cyber Crisis
Management Team (CCMT). The CCMT would be
activated in case of a Cyber Security Crisis situation,
wherein security characters of information are
compromised as a result of failure of an IT system
or network of IT systems, due to technical reasons,
intentional acts or negligence, leading to consequences
that may threaten lives, financial position, the trust,
national security, and public confidence.
11. Implementation of Ind AS
The Ministry of Finance, Government of India
("GOI"), had vide its press release dated January 18,
2016, outlined the roadmap for implementation of
International Financial Reporting Standards ("IFRS")
converged Indian Accounting Standards ("Ind AS") for
Scheduled Commercial Bank (excluding RRBs), NBFC
and Insurance companies. The RBI vide its circular
dated March 22, 2019, deferred the implementation
of Ind AS for Scheduled Commercial Banks ("SCB") till
further notice, pending the consideration of some
recommended legislative amendments by GOI.
The RBI has not issued any further notification on
implementation of Ind AS for SCBs.
The Bank submits its Proforma Ind-AS financials on half
yearly basis to the RBI, based on the GAP assessment
carried out by the Bank. The Bank is currently
handling the impact analysis and reporting offline by
using excel based models. However, the Bank is in the
process of implementing system solutions (Ind AS 109
and 116) and hiring skilled resources to implement
Ind AS accounting.
12. Transfer to Reserves
As per the requirement of the regulations of Reserve
Bank of India, the Bank has transferred the following
amount to various reserves during the Financial Year
2024-25:
|
Amount Transferred to |
'' in million. |
|
Statutory Reserve |
- |
|
Capital Reserve |
87 |
|
Investment Fluctuation Reserve |
- |
13. Dividend
As there is no profit generated during the Financial
Year, no dividend is proposed to be declared.
14. Change in the Nature of Business
There was no change in the nature of business of the
Bank during the Financial Year 2024-25.
15. Capital and Debt Structure
a. Share Capital
There were no changes in the Authorised Capital
of the Bank during the Financial Year 2024-25.
During Financial Year 2025, the Bank issued
and allotted 6,47,594 equity shares of '' 10/-
each, pursuant to exercise of stock options by
employees of the Bank, under the Bank''s
Employee Stock Option Scheme, 2019.
Consequent to the above, the total issued and
paid-up equity share capital ofthe Bank increased
from '' 5,14,77,98,580 to '' 5,15,42,74,520 as on
31 March, 2025. The equity shares issued under
the above schemes rank pari-passu with the
existing equity shares of the Bank. Apart from
the above, the Bank did not raise any additional
equity share capital during the year.
b. Debt Capital
During the Financial Year 2024-25, the Bank did
not raise any Debt Capital through Issue of Debt
securities under private placement basis.
16. Capital Adequacy
The Bank is subject to the Basel II Capital Adequacy
guidelines stipulated by the Reserve Bank of India.
The Capital Adequacy Ratio of the Bank is calculated
as per the standardised approach for credit risk. The
Capital Adequacy Ratio of the Bank as on March 31,
2025 is 21.84%, as against the minimum requirement
of 15.00% stipulated by the Reserve Bank of India.
17. Subsidiary, Joint Ventures and Associate
Companies
The Bank does not have any subsidiary, joint ventures
and associate companies. Hence, the details of this
clause are not applicable to the Bank. Accordingly, the
Bank is also not required to formulate a specific policy
on dealing with material subsidiaries.
18. Employee Stock Option Scheme
In order to recognise the contribution of the
employees in the formation of the Bank and to
create the feeling of inclusiveness and enable the
employees to get a share in the value that they help
to create for the organisation over a period of time,
the Bank has formulated ESAF Small Finance Bank
Employee Stock Option Plan 2019 (ESAF ESOP 2019)
by way of a special resolution which also authorised
the Nomination, Remuneration and Compensation
Committee to grant up to ''2,25,15,552 (Two Crore
Twenty-Five Lakhs Fifteen Thousand Five Hundred and
Fifty-Two) Employee Stock Options to the employees,
in one or more tranches, from time to time. The
Bank strongly believes that an equity component in
the compensation goes a long way in aligning the
objectives of an individual with those of the Bank. The
objectives of ESAF ESOP 2019 are, among others, to
attract and retain employees with Employee Stock
Options as a compensation tool. Through ESAF ESOP
2019, the Bank intends to offer an opportunity of
sharing the value created with those employees who
have contributed or are expected to contribute to the
growth and development of the Bank.
Through the scheme, the Bank intends to grant
equity-based compensation to the employees in two
categories namely:
1) Loyalty Grant to reward eligible employees
for their contributions in the past tenure and
continued employment in the Bank, which is a
one-time grant and;
2) Performance Grant on the basis of employee''s
annual appraisals for their future performance
and continuity of services.
The Nomination, Remuneration and Compensation
Committee has been entrusted with the responsibility
of administering the ESOP 2019 Scheme. As of
March 31, 2024, the Nomination Remuneration and
Compensation Committee of the Board granted
11,25,590 options as the first instalment of loyalty
grant under the ESOP 2019 Scheme, to the employees
identified under the implementation guidelines for
ESAF ESOP 2019 as per the terms of granting. During
the Financial Year 2024-25, Loyalty Grant to reward
eligible employees for their contributions in the past
tenure and continued employment in the Bank was
granted.
Disclosure as mandated under the provisions of
Regulation 14 of the SEBI (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021 is as
follows:
A. Relevant disclosures in terms of the ''Guidance
note on accounting for employee share-
based payments'' issued by ICAI or any other
relevant accounting standards as prescribed
from time to time.
Details have been provided in Part B - Other
Disclosure Note No. 8 of the Notes forming part
of financial statements for the year ended March
31, 2025 in the Bank''s Annual Report 2024-25.
Annual Report of the Bank is available on the
Bank''s website at https://www.esafbank.com/
investor-relation/?id=annual-reports
B. Diluted EPS on issue of shares pursuant
to all the schemes covered under the
regulations shall be disclosed in accordance
with ''Accounting Standard 20 - Earnings Per
Share'' issued by ICAI or any other relevant
accounting standards as prescribed from
time to time.
There were 6,47,594 shares issued pursuant to
ESAF ESOP Plan 2019 during the Financial Year
2024-25.
|
Total number |
2,25,15,552 (Two Crore Twenty- |
|
Vesting requirements |
12 Months |
|
Exercise price |
The Exercise Price shall be |
|
Maximum |
Options granted shall vest The Exercise Period in respect |
|
Source |
Primary |
|
Variation |
Nil |
C. Details related to Employee Stock Option
Plan (ESOP 2019):
1. A description of each ESOS that existed
at any time during the year, including the
general terms and conditions of each ESOS
ESAF Small Finance Bank- Employee Stock Option
Plan 2019 (ESOP 2019)
The Bank, pursuant to the resolutions passed
by the Board on December 23, 2019 and
Shareholders on January 03, 2020, adopted
the ESAF ESOP Plan 2019 with the objective to
attract, retain, and motivate the best available
talent by way of rewarding employee stock
options for their performance and to motivate
them to participate in the growth of the Bank,
besides creating long term wealth in their hands.
The ESOP grant is of two types (i) loyalty grant
and (ii) performance grant.
As on March 31, 2025, no options under
performance grant have been granted by the
Bank under the ESAF ESOP Plan 2019. The
Nomination and Remuneration Committee
of the Bank on June 28, 2021 granted loyalty
grant to its eligible employees. Post IPO of the
Bank, the ESAF ESOP Plan 2019 was ratified
and amended by the shareholders in the 07th
Annual General Meeting held on December
29, 2023. The ESOP 2019 has been framed
and implemented in compliance with the SEBI
(Share Based Employee Benefits) Regulations,
2014 now SEBI (Share Based Employee Benefits
and Sweat Equity) Regulations, 2021 ("SEBI
SBEB Regulations") relevant guidance notes
and accounting standards. The Nomination and
Remuneration Committee has been entrusted
with the responsibility of administering the ESOP
2019.
2. Method used to account for ESOS -Intrinsic
or fair value.
Fair value
3. Where the Bank opts for expensing of
the options using the intrinsic value of
the options, the difference between the
employee compensation cost so computed
and the employee compensation cost that
shall have been recognised if it had used the
fair value of the options shall be disclosed.
The impact of this difference on profits and
on EPS of the Bank shall also be disclosed.
Not applicable as fair value method was used.
*Lapsed options are oeing added oack to the esop pool and are available for future grants.
5. Weighted-average exercise prices and weighted-average fair values of options shall be disclosed
separately for options whose exercise price either equals or exceeds or is less than the market price
of the stock.
In case of all the grants, exercise price of options and grants were below the market price at the time of grant.
1. Weighted-average exercise price - '' 17.13/-
2. Weighted-average fair value - '' 60.22/-
6. Employee-wise details (name of employee, designation, number of options granted during the year,
exercise price) of options granted to -
(a) senior managerial personnel as defined under Regulation 16(d) of the Securities and Exchange Board
of India (Listing Obligations and Disclosure Requirements) Regulations, 2015:
4. Option movement during the year (For each ESOS):
|
Amount Transferred to |
As on March 31, 2025 |
|
Number of options outstanding at the beginning of the period |
10,09,667 |
|
Number of options granted during the year |
11,25,590 |
|
Number of options forfeited / lapsed during the year* |
4,98,848 |
|
Number of options vested during the year |
- |
|
Number of options exercised during the year |
6,47,594 |
|
Number of shares arising as a result of exercise of options |
6,47,594 |
|
Money realised by exercise of options (''), if scheme is implemented directly by the Bank |
12.14 million |
|
Loan repaid by the Trust during the year from exercise price received |
NA |
|
Number of options outstanding at the end of the year |
9,88,815 |
|
Number of options exercisable at the end of the year |
- |
|
Sl. No. |
Name of the |
Designation |
Number of Options |
Exercise price |
|
1. |
Shri. George |
Executive Director |
40,809 |
'' 15.51 |
|
2. |
Shri. George Thomas |
Executive Vice President |
22,653 |
'' 15.51 |
|
3. |
Shri. George Chacko |
Chief Compliance |
1,285 |
'' 15.51 |
|
4. |
Shri. Raniith Rai P. |
Company Secretary |
2.891 |
'' 1551 |
(b) any other employee who receives a grant in any one year of option amounting to 5% or more of
option granted during that year:
Nil
(c) identified employees who were granted option, during any one year, equal to or exceeding 1% of the
issued capital (excluding outstanding warrants and conversions) of the Bank at the time of grant:
Nil
7. A description of the method and significant assumptions used during the year to estimate the fair
value of options including the following information:
The fair value of the options/units is estimated on the date of the grant using the Black-Scholes options pricing
model, with the following assumptions:
|
March 31, 2025 |
|
|
Dividend Yield |
0.00% |
|
Expected life |
1 Year |
|
Risk free interest rate |
6.97% |
|
Volatility |
0.39% |
The measure of volatility used in the Black-Scholes options pricing model is the annualised standard deviation of
the continuously compounded rates of return on the stock over a period of time.
The certificate issued by the Secretarial Auditor of the Bank as per Regulation 13 of Securities and Exchange Board
of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, will be available for inspection by
Shareholders of the Bank during Annual General Meeting.
19. Credit Rating
Credit ratings assigned to various debt instruments of the Bank during the Financial Year ended March 31,2025 are as
follows:
|
Sl. No. |
Instrument Name |
Name of the |
Amount |
Rating |
Date of Re¬ |
|
1. |
Tier-II Bonds |
CARE Ratings Limited |
3,600 |
CARE A; (Outlook: Negative) |
March 28, 2025 |
|
2. |
Tier-II Bonds |
Brickwork Ratings |
200 |
BWR A/ Stable |
October 04, 2024 |
20. Selection, Appointment and Remuneration of
Directors
In compliance with the provisions of the Banking
Regulation Act, 1949, the guidelines issued by
the Reserve Bank of India and Section 178 of the
Companies Act, 2013, the Bank has formulated
and adopted a Nomination Policy for selection and
appointment/ re-appointment/ removal of Directors,
which is disclosed on our website (www.esafbank.
com). Through the said policy, the Bank has formulated
criteria for the appointment of directors, and based
on the said criteria, Nomination, Remuneration and
Compensation Committee of the Board (NRCCB) shall
conduct a due diligence process to determine the
suitability of every person who is being considered
for being appointed or re-appointed as a Director of
the Bank, based on the range of skills, experience,
expertise, qualifications, specialised knowledge etc. of
the candidate, and recommend his/ her appointment
to the Board. The Nomination, Remuneration and
Compensation Committee identifies potential
candidates from diverse backgrounds including but,
not limited to Accountancy, Agriculture and Rural
Economy, Banking, Co-operation, Finance, Law,
Small Scale Industry, Economics, Human Resources,
Payment and Settlement Systems, Business
Management, Risk Management and Information
Technology, thus providing the Board with members
who have diverse knowledge, practical experience and
skills to serve the business interests of the Bank. Every
such person shall meet the ''fit and proper'' criteria the
Reserve Bank of India may stipulate from time to time,
and accordingly, any appointment or re-appointment
of a Director shall be subject to prior approval by the
NRCCB of the Bank.
The key objectives of the Nomination Policy shall inter-
alia include the following:
⢠To guide the Board in relation to appointment,
re-appointment or removal of directors and lay
down a selection criterion for appointment of
directors.
⢠To ensure compliance with applicable laws, rules
and regulations including compliance to the ''Fit
and Proper criteria'' of Directors at the time of
their appointment and on a continuous basis.
⢠To devise a policy on the size and composition
of the Board taking into account the available
and needed diversity and balance in terms of
experience, knowledge, skills and judgment of
the Directors.
During appointment/ re-appointment/ removal of
Directors of the Bank, the Bank has always ensured
that, the provisions of the Companies Act, 2013,
Banking Regulation Act/ RBI Guidelines and directives
and guidelines of SEBI to the extent applicable are
adhered to. In all respects, the Bank has also kept
high standards and met the diversity, structure and
size compositions of the Board and its Committees as
prescribed in various statutes.
The NRCCB is responsible to the Board for leading
the succession planning process in respect of
appointments/ re-appointments in respect of
Directors, employees in the grade of Senior
Management and Key Managerial Personnel of the
Bank.
The Bank has accordingly obtained prescribed
declarations/ undertakings from the Directors as per
the guidelines of the Reserve Bank of India and the
same are placed before the Board of Directors for
its review and noting. An assessment on whether the
Directors fulfill the prescribed criteria is carried out
by the Nomination Remuneration and Compensation
Committee of the Board on an annual basis and also
at the time of their appointment or re-appointment.
Wherever necessary, the Nomination Remuneration
and Compensation Committee is authorised to
engage the services of an External Consultant(s)/
expert in the field of succession planning, to identify
and assess the suitability of candidates for the post of
a Director of the Bank.
The RBI, vide its circular no. DOR. Appt.
BC.No.23/29.67.001/2019-20 dated November 4th,
2019, has issued the Guidelines on Compensation
of Whole Time Directors / Chief Executive Officers /
Material Risk Takers and Control Function Staff of
Private Sector Banks on Compensation Policy. In
accordance with the aforesaid RBI Circular, the Board
of the Bank has adopted a revised Compensation
Policy for its Whole-time Directors, Chief Executive
Officer of the Bank and other employees. The salient
feature of the Compensation Policy is as follows:
⢠To provide a fair and transparent structure that
helps the Bank to retain and acquire the talent
pool critical to building competitive advantage
and brand equity as a social bank focused in social
transformation and community development.
21. Board of Directors
The composition of the Board of Directors of the Bank
is governed by the Companies Act, 2013, the Banking
Regulation Act, 1949 and SEBI Listing Regulations and is
in conformity with the same. As of March 31,2025, the
Board of Directors comprised a combination of Eleven
directors out of which there were six Independent
Directors including a Woman Independent Director,
two Non-Executive Nominee Directors, one Non¬
Executive Director and Two Executive Directors. The
size of the Board is commensurate with the size
and business of the Bank. The Board mix provides
a combination of professionalism, knowledge and
experience required in the banking industry and also
meets the criteria prescribed under the Nomination
Policy adopted by the Board.
Retirement of Director by Rotation
Section 152 of the Act provides that, two-thirds of the
total number of directors are liable to retire by rotation
out of which one-third shall retire from office at every
Annual General Meeting. In terms of Section 149(13),
the provisions of retirement of Directors by rotation
shall not be applicable to Independent Directors and
an Independent Director shall not be included in the
total number of Directors liable to retire by rotation.
Dr. Joseph Vadakkekara Antony (DIN: 00181554), Non¬
Executive Director of the Bank, who retires by rotation
as Director, at the conclusion of this Annual General
Meeting is proposed to be re-appointed and has
offered himself for re-appointment.
Change in Directors during the Financial Year
2024-25
⢠Appointment of Shri. George Kalaparambil
John as Executive Director (Whole-Time
Director) of the Bank
The Board of Directors in their meeting held on
May 18, 2024, in line with the approval received
from Reserve Bank of India ("RBI") dated May 16,
2024 had appointed Shri. George Kalaparambil
John (DIN: 00694646) as Additional Executive
Director of the Bank in terms of Section 152,160
and 203 of the Companies Act, 2013, with
effect from May 18, 2024, considering his vast
knowledge and experience in the field of Banking,
Finance, Agriculture and Rural Economy, Co¬
operation, Human Resources and Business
Management.
The Shareholders in the 08th Annual General
Meeting of the Bank held on August 14, 2024,
approved the appointment of Shri. George
Kalaparambil John as the Executive Director of
the Bank, who was appointed as an Executive
Director (Whole-Time Director), for a period of
three consecutive years with effect from May 18,
2024 up to May 17, 2027.
⢠Re-appointment of Dr. Kadambelil Paul
Thomas (DIN: 00199925) as the Managing
Director and CEO of the Bank and approval
of revision of remuneration
Dr. Kadambelil Paul Thomas (DIN: 00199925),
Managing Director and CEO of the Bank was
appointed for a period of three years with effect
from October 01, 2024, including the revision
in remuneration structure beginning from April
01, 2024 on the basis of the approval from the
Reserve Bank of India vide letter DoR. GOV. No.
S2250/ 29.44.005/ 2024-2025 dated July 16,
2024 and recommendation of the Nomination,
Remuneration and Compensation Committee of
the Board.
The Shareholders approved the re-appointment
of Dr. Kadambelil Paul Thomas as the Managing
Director and CEO of the Bank for a period of
three consecutive years with effect from October
01, 2024 including the revision in remuneration
structure beginning from April 01, 2024 in their
08th Annual General Meeting held on August 14,
2024.
⢠Re-appointment of Dr. Vinod Vijayalekshmi
Vasudevan (DIN: 02503201) as Non¬
Executive Independent Director of the Bank
The Board of Directors in their meeting held on
June 14, 2024, on recommendation from the
Nomination, Remuneration and Compensation
Committee of the Board (NRCCB) in the Meeting
dated May 06, 2024 had re-appointed Dr. Vinod
Vijayalekshmi Vasudevan (DIN: 02503201) as
Non-Executive Independent Director of the Bank
for a further term considering his experience,
expertise in various fields and his performance
as Non-Executive Independent Director of the
Bank.
The Shareholders in the 08th Annual General
Meeting of the Bank held on August 14, 2024,
approved the re-appointment of Dr. Vinod
Vijayalekshmi Vasudevan (DIN: 02503201) as
Non-Executive Independent Director of the Bank,
who shall not be liable to retire by rotation for
a period of three consecutive years with effect
from December 22, 2024.
Familiarisation Programme
Complying with SEBI Listing Regulations, provisions
of the Companies Act, 2013 and the RBI guidelines,
Familiarisation Programmes were conducted during
the Financial Year 2024-25 to give an overview and
introduction to the Independent Directors about the
Bank''s business and operations.
Under this programme, newly appointed directors are
appraised with the organisation structure, operational
overview, financial overview, board matters and
procedures, key risk issues and its mitigation strategy,
among others.
Further, all the newly appointed Board Members
undergo a face to face induction schedule where the
Bank''s Management Team provides insights about the
affairs of their function and of the Bank as a whole.
The details of the familiarisation programme imparted
to Independent Directors are available on the website
of the Bank at www.esafbank.com.
22. Evaluation of Performance of the Board of
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 has formulated a Performance Evaluation
Policy including a questionnaire for performance
evaluation of the Individual Directors, Committees of
the Board, Chairman, Managing Director and CEO and
the Board as a whole. The questionnaire designed for
the performance evaluation covering various aspects
of performance, including structure of the board,
meetings of the board, functions of the board, role
and responsibilities of the board, governance and
compliance, evaluation of risks, grievance redressal
for investors, conflict of interest, stakeholder value
and responsibility, relationship among directors,
director competency, board procedures, processes,
functioning and effectiveness, was circulated to all
the directors of the Bank for the annual performance
evaluation. The appraisal of each of the Directors of
the Bank is done based on the evaluation conducted
with a set of pre-determined evaluation factors:
⢠The performance evaluation of the Board as a
whole shall be carried out by all the Directors;
⢠The performance evaluation of the Board
Committee(s) shall be carried out by the
members of each of the Committees;
⢠The performance evaluation of Managing
Director and CEO/ Executive Director shall be
done by all the Directors except the Managing
Director and CEO.
⢠The performance evaluation of Chairman of
the Bank is done by all the Directors except the
person being evaluated.
⢠The performance evaluation of Independent
Directors is done by all the Directors except the
person being evaluated.
⢠The performance evaluation of the Non-Executive
Director is done by all the Directors except the
person being evaluated.
The performance evaluation of the Board of Directors,
Committees of the Board and individual Directors
were conducted during the Financial Year 2024-25.
The Board and the Nomination, Remuneration and
Compensation Committee of the Board reviewed the
performance of the Individual Directors and noted that
the results of the performance evaluation indicated a
high degree of satisfaction among directors.
23. Code of Conduct for Directors and Senior
Management Personnel
In accordance with Regulation 17(5) of SEBI LODR
Regulations, the Bank has adopted the Code of
Conduct for Directors and Senior Management
Personnel. The code of conduct sets forth the guiding
principles for orderly and fair conduct by Directors
and SMPs. All Directors and SMPs have affirmed the
compliance of the code for the Financial Year 2024¬
25 and a declaration to this effect signed by the
Managing Director and CEO forms part of Report on
Corporate Governance. The Bank''s Code of Conduct
for Directors and SMPs is disclosed on the website of
the Bank.
24. Declaration from Independent Directors
The Board has received declarations from the
Independent Directors as required under Section
149(7) of the Companies Act, 2013, and the Board
is satisfied that the Independent Directors meet the
criteria of independence as mentioned in Section
149(6) of the Companies Act, 2013 and Regulation
16(1) (b) of SEBI Listing Regulations and that they have
complied with the code of conduct for independent
directors as prescribed under Schedule IV of the
Companies Act, 2013.
In the opinion of the Board, all the Independent
Directors meet the criteria with regards to integrity,
expertise and experience as required under
applicable laws.
All Independent Directors of the Bank have registered
themselves in the data bank as specified under
Section 150 of the Companies Act, 2013, read with
Rule 6 of Companies (Appointment and Qualifications
of Directors) Rules, 2014 and have qualified the
prescribed proficiency test. The Independent
Directors (not exempted under the Companies
(Appointment and Qualification of Directors) Fifth
Amendment Rules, 2020 as notified on December
18, 2020) have qualified the online proficiency self¬
assessment as required under aforesaid rule within
the prescribed timeline.
The terms and conditions of appointment of
Independent Directors are available on the website of
the Bank.
25. Directors and Officers Liability Insurance Policy
The Bank has a Directors and Officers Liability
Insurance Policy which protects Directors and Officers
of the Bank from any breach of fiduciary duty.
26. Corporate Governance
The Bank is committed to achieving and adhering to
the highest standards of Corporate Governance and it
consistently benchmarks itself with the best practices
in this regard. A report on Corporate Governance for
the Financial Year 2024-25 has been annexed to the
Annual Report.
27. Meetings of the Board
The Board of Directors met Eleven (11) times during
the Financial Year 2024-25.
The meetings of the Board of Directors were convened
in accordance with applicable laws and standards and
the intervening gap between the said meetings was
not exceeding 120 days. The details of Board Meetings
and details of attendance of each Director have been
disclosed in the Corporate Governance Report which
forms part of the Annual Report of the Bank for the
Financial Year 2024-25. During the year, Shri. Vinod
Vijayalekshmi Vasudevan has sought leave of absence
from Two (2) Meetings and Shri. Gabriel John Samuel
had sought leave of absence from One (1) meeting of
the Board of Directors.
As on March 31.7075. the Rank had Eleven (11) Board Committees''
|
Sl. No. |
Name of the Committee |
|
1. |
Audit Committee of the Roard (ACR) |
|
2. |
Risk Management Committee of the Roard (RMCR) |
|
3. |
Nomination, Remuneration and Compensation Committee of the Roard (NRCCR) |
|
4. |
IT Strategy Committee of the Roard (ITSCR) |
|
5. |
Management Committee of the Roard (MCR) |
|
6. |
Corporate Social Responsibility and Sustainability Committee of the Roard (CSRSCR) |
|
7. |
Customer Service Committee of the Roard (CSCR) |
|
8. |
Special Committee of the Roard for Monitoring and Follow-up Cases of Frauds (SCRMF) |
|
9. |
Stakeholders Relationship Committee of the Roard (SRCR) |
|
10. |
Human Resource Committee of the Roard (HRCR) |
|
11. |
Review Committee of the Board for Identification and Classification of Wilful Defaulters (RCBWD) |
|
Sl. No. |
Name of the Key Managerial Person |
Designation |
|
4. |
Shri. Sudev Kumar V. |
Executive Vice President |
|
5. |
Shri. Wilson Cyriac |
Chief Risk Officer |
|
6. |
Shri. Sivakumar P. |
Head - Internal Audit |
|
Following changes took place in the list of Key Managerial Personnel during the Financial Year 2024-25: |
||
|
Sl. No. |
Name of the Key Managerial Person |
Nature of Change |
|
1. |
Shri. E. A. Jacob |
Shri. E. A. Jacob, Chief of Internal Vigilance of the |
|
2. |
Shri. Sudev Kumar V. |
Shri. Sudev Kumar V., the Chief Compliance Officer |
30. Internal Financial Controls
The Board of Directors confirms that the Bank has laid
down a set of standards, processes and structures
which enable it to implement internal financial
controls across the organisation with reference to
Financial Statements and that such controls are
adequate and are operating effectively. The Internal
Financial Control framework of the Rank ensures that:
⢠Internal Financial Controls are established for
critical and material processes handled by the
Rank.
⢠Draw up recommendations based on good
practices to develop or strengthen the internal
control systems.
⢠Ensure that the IFCs are adequate and operating
effectively, by periodic review and testing.
⢠Periodic reporting of the status to the Audit
Committee of the Roard.
⢠The existence and adequacy of IFCs is
demonstrated to various internal and external
stakeholders.
The Internal Audit Department of the Rank has tested
each of the controls and during the year under review,
there are no material or serious observations of
inefficiency or inadequacy of such controls.
Note: High Value Fraud Monitoring Committee of the Board (HVFMCR) was dissolved and new committee named
Special Committee of the Board for Monitoring and Follow-up Cases of Frauds (SCRMF) was constituted by the Rank
on July 26, 2024.
Review Committee of the Board for Identification and Classification of Wilful Defaulters (RCBWD) was constituted by the
Rank on March 21,2025.
The details of composition, number of meetings held and date thereof and terms of reference of the above Committees
are available in the Corporate Governance Report which forms part of the Annual Report of the Rank for the Financial
Year 2024-25.
28. Meeting of Independent Directors
As per the requirement of the Section 149(8) read with Schedule IV of Act and Regulation 25 of SFRI Listing Regulations,
a meeting of the Independent Directors of the Rank is required to be held at least once a year in absence of Non¬
Independent Directors.
During the Financial Year 2024-25, the Independent Directors of the Rank met on March 29, 2025, chaired by Shri.
Thomas Jacob Kalappila and attended by all the Independent Directors of the Rank.
29. Key Managerial Personnel
The following officials of the Bank are the "Key Managerial Personnel" pursuant to the provisions of Section 203 of the
Companies Act, 2013:
|
Sl. No. |
Name of the Key Managerial Person |
Designation |
|
1. |
Dr. Kadambelil Paul Thomas |
Managing Director and CFO |
|
2. |
Shri. George Kalaparambil John |
Executive Director |
|
3. |
Shri. Gireesh C. P. |
Chief Financial Officer |
|
4. |
Shri. Ranjith Raj P. |
Company Secretary |
In addition to the above, the Board of the Bank has designated the following senior officials of the Bank as Key Managerial
Personnel in terms of Section 2(51) of the Companies Act, 2013:
|
Sl. No. |
Name of the Key Managerial Person |
Designation |
|
1. |
Shri. George Thomas |
Executive Vice President |
|
2. |
Shri. Hari Velloor |
Executive Vice President |
|
3. |
Shri. Hemant Kumar Tamta |
Executive Vice President |
31. Directors'' Responsibility Statement
Pursuant to Section 134(3) of the Companies Act,
2013, the Roard of Directors hereby declare and
confirm to the best of their knowledge and belief that:
i) in the preparation of the annual accounts for
the year ended March 31, 2025, the applicable
accounting standards had been followed along
with proper explanation relating to material
departures;
ii) such accounting policies as specified in Schedule
III to the Financial Statements have been selected
and applied consistently and judgements and
estimates have been made that are reasonable
and prudent so as to give a true and fair view of
the state of affairs of the Bank as at March 31,
2025 and of the profit of the Bank for the year
ended on that date;
iii) proper and sufficient care has been taken for
maintenance of adequate accounting records in
accordance with the provisions of the Companies
Act, 2013 for safeguarding the assets of the Rank
and for preventing and detecting frauds and
other irregularities;
iv) annual accounts have been prepared on a going
concern basis;
|
1. |
CSR & Sustainability Committee |
1 |
Board Level Committee - Oversees the Bank''s |
|
2. |
ESG Management Committee |
2 |
Reviews the Sustainability Vision, policies & |
|
3. |
Sustainability Council |
3 |
Implementation of Strategies through the |
|
4. |
Department Level |
4 |
Change agents in the departments |
v) internal financial controls to be followed by the
Bank were in place and that the same were
adequate and were operating effectively, and
vi) proper system to ensure compliance with the
provisions of all applicable laws was in place and
the same was adequate and operating effectively.
32. Environment Social and Governance Practices
and Corporate Social Responsibility
In accordance with Section 135 of the Companies
Act, 2013, read with the Companies (Corporate Social
Responsibility Policy) Rules, 2014, as modified from
time to time, the Bank has established the Corporate
Social Responsibility and Sustainability Committee of
the Board (CSRSCB).
Environment Social and Governance Practices
In the financial and banking industry, ESG has become
a critical area of focus and the Bank endeavours to
The Bank follows a social business strategy seeking
a Triple Bottom Line impact: People; Planet; and
Prosperity and believes that the social, environmental,
and economic outcomes of our business create
synergies that have an amplified impact on our
stakeholders. The legacy of a mission, fighting the
partiality of prosperity® (i.e., the drive for inclusion
of marginalised sections of society and the equity of
opportunities) led to the formation of our Bank. With a
vision to become India''s leading social bank that offers
equal opportunities for the whole society, the Bank
has adopted various policies to implement our Triple
Bottom Line approach, including an Environmental,
Social and Governance ("ESG") policy. Pursuant to
the ESG policy, we are committed to (i) the protection
of the environment and ensuring sustainable
development, (ii) promoting financial inclusion and
gender equality through specialised financial services;
continually improve its ESG performance. There is a
robust ESG policy framework which articulates ESG
focus areas and provides guidance for ESG practices
such as corporate governance, environmental and
employee related initiatives, policy revisions and other
ESG related projects undertaken. ESG Management
Committee as well as CSR Management Committee
reviews the Sustainability vision, policies and
strategies. There is a Sustainability Council in the Bank,
comprising representatives from relevant functions
for the implementation of the framework. This council
plays a critical role in providing data on various ESG
parameters which is subsequently collated, analysed
and reported to the Head of Sustainable Banking.
The council is oriented and strengthened on various
aspects related to Environmental Performance
including ESG. The progress is also reported to the
CSRSCB and the Board periodically.
and (iii) establishing a governance framework to
ensure accountability, transparency and compliance
with internal and external ESG standards. The Bank
was awarded with Sustainability Champion Award
2024 by Net Zero Alliance. Our ESG grading scores
from CARE Advisory Research & Training Limited have
been favourable in the consecutive Financial Years
of 2023-24 and 2024-25. CARE Advisory Research &
Training Limited''s ESG specialist team undertook the
ESG Grading of our Bank during October 22, 2024.
We received a rating of CareEdge ESG 2 (good), with
an overall score of 68.1 compared with the industry
average overall score of 59.8. The Bank has adopted a
four-year ESG Roadmap for 2023-27 as follows:
⢠Impacting 10 million (One Crore) Direct
Customers with any of many SDGs.
⢠Fostering Local Sustainable Economic Growth
through 1 million Joint Liability Groups.
⢠Fostering Food Security through financial services
to 5 million Farmers.
⢠Fostering Energy Security through 2,00,000
Renewable Energy Installations (1GW).
⢠Energy conservation and greater reliance to
renewable energy in operations in line with
government''s net zero plan.
The Bank has received ISO 26000:2010 certification
during the Financial Year 2023-24. It is a recognition
for the Bank''s range of inclusive financial services
for social and environmental resilience and returns
to individuals, professionals and businesses through
ethical practices and global standards. It is a
comprehensive certification on Social Responsibility,
covering seven core subjects:
⢠Community Engagement and Development
⢠Environmental Stewardship
⢠Human Rights
⢠Labour Practices
⢠Consumer Protection
⢠Fair Operating Practices
⢠Organisational Governance
Corporate Social Responsibility
The Bank has adopted a Board-approved CSR
policy in compliance with the requirements of the
Companies Act, 2013 and the Companies (Corporate
Social Responsibility) Rules, 2014. The Bank''s CSR
focus areas are education, healthcare, sanitation and
livelihood development. The Bank has entered into
a Memorandum of Understanding dated December
20, 2021 with ESAF Foundation (formerly known as
Evangelical Social Action Forum), pursuant to which
ESAF Foundation provides services to the Bank for the
execution of CSR projects, including providing project
proposals, timelines and budgetary estimates for CSR
projects within the focus areas. The Memorandum
of Understanding is valid for a term of four years.
The Bank has also entered into an agreement with
Prachodhan Development Services dated August 29,
2022, pursuant to which it provides services to us for
the execution of certain CSR projects. The agreement
is valid for a term of four years.
The CSRSCB is in charge of reviewing and
recommending to the Board the Bank''s numerous
CSR activities, including the status of the Bank''s CSR
Projects. The Board has examined and approved
the CSR Policy, Projects, Project Expenditure,
and associated topics based on the CSRSCB''s
recommendations. Following that, the Bank
ESAF Small Finance Bank
implemented the CSR Projects with Board approval.
The CSR Policy of the Bank is available on the Bank''s
website: www.esafbank.com.
The Bank''s CSR Projects and CSR Project Expenditure
for Fiscal Year 2024-25 are in accordance with the CSR
mandate as specified in Sections 134 and 135 ofthe Act
read with Schedule VII to the Act and the Companies
(Corporate Social Responsibility Policy) Rules, 2014, as
amended from time to time, and in accordance with
notifications issued by the Government of India from
time to time.
Every year, the Bank allocates 5% of its average net
profits, computed in accordance with the manner
as prescribed in the Section 135 of the Companies
Act, 2013, as against the requirement of 2%. During
the Financial Year 2024-25, the Bank has allocated
'' 19,08,00,000 towards CSR expenditures, as against
the allocation of '' 12,25,00,000 for the Financial Year
2023-24. The CSR projects and programmes were
implemented directly and/ or through implementing
partner organisations with a proven track record of
implementing process-efficient CSR projects and/
or programmes that were scalable, sustainable,
outcome-driven, and committed to making a positive
societal impact in Fiscal Year 2024-25. Based on the
CSRSCB''s review and recommendation, the Board
reviewed and approved all CSR Projects, CSR Project
Expenditure Payments and CSR Administration
Overhead Expenses, including the Unspent CSR
Project Expenditure Funds of Financial Year 2024-25,
which were transferred to the Unspent CSR Account
Financial Year 2024-25 on March 31,2025. The Annual
Report on CSR Activities, which is annexed to this
report as Annexure - I, contains a brief summary of the
CSR Policy, including an overview of the programmes
implemented, the makeup of the CSR Committee,
and CSR expenditure for the fiscal year under review.
This year, we have innovated a new CSR initiative of
industry academia integration by a new CSR project -
ESAF Chair for Business on Values at IRMA (Institute of
Rural Management Anand). This synergy to promote
value-based businesses will show forth long-term
impact. Similarly, another CSR innovation was the
establishment of Centre of Excellence in collective
enterprises that will nurture collective enterprises
starting from small JLGs to big FPOs.
33. Business Responsibility and Sustainability
Report
In May 2021, the SEBI made an amendment to
Regulation 34(2)(f) of the SEBI Listing Regulations,
by introducing enhanced disclosure requirements
35. Overall Remuneration
Details of remuneration as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
|
Ratio of Remuneration of Each Director to Median |
I he ratio of remuneration of each Director to median |
|
|
MD & CEO |
70 times |
|
|
Other Directors |
Other directors are not paid any |
|
|
The percentage increase in remuneration of each |
⢠Managing Director and CEO - 9.91% (Fixed Pay) ⢠Chief Financial Officer - 25.72% ⢠Company Secretary - 2.30% |
|
|
The percentage increase in the median remuneration |
Reduction of 14.19% in the median remuneration mainly |
|
|
The number of permanent employees on the rolls of |
12,520 |
|
|
Average percentile increase already made in the |
Average increase of 10% was made to the salaries of |
|
|
i) Affirmation that the remuneration is as per the |
The remuneration is as per the Compensation Policy of |
|
|
Statement showing |
|
|
i) The name of every employee, who if employed |
Dr. Kadambelil Paul Thomas, Managing Director and |
|
ii) The name of every employee, who, if employed |
NIL |
|
iii) The name of every employee, who, if employed |
NIL |
regarding ESG parameters through a revised format
called the Business Responsibility and Sustainability
Report ("BRSR"). The Business Responsibility Report
has been replaced by BRSR, which is a more
comprehensive disclosure that can showcase ESG
performance with enhanced transparency, shifting
the focus to quantifiable metrics by providing essential
and voluntary indicators rather than qualitative and
subjective metrics. The Bank has published the BRSR
for the Financial Year 2024-25.
BRSR for Financial Year 2024-25 is a part of the Annual
Report of the Bank and is also available on the Bank''s
website.
34. Disclosure under the Sexual Harassment of
Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013
The Bank continues with the belief of zero tolerance
towards sexual harassment in workplace and
continues to uphold and maintain itself as a safe and
non-discriminatory organisation. To achieve the same,
the Bank reinforces the understanding and awareness
of The Prevention of Sexual Harassment of Women
at Workplace (Prevention, Prohibition and Redressal)
Act, 2013 ("POSH"). The Bank has in place, a policy in
line with the requirements of the Prevention of Sexual
Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 and an Internal
Complaints Committee has been set up for redressal
of complaints. Any complaint pertaining to sexual
harassment is diligently reviewed and investigated,
and treated with great sensitivity. The Internal
Committee members have been trained in handling
and resolving complaints and have also designed an
online e-learning POSH Awareness module, which
covers the larger employee base.
During the Financial Year 2024-25, 4 (Four) complaints
were received and the same was disposed of. There
were no complaints pending for a period exceeding
ninety days.
36. Whistle Blower Policy/ Vigil Mechanism
The Bank has implemented a vigil mechanism through
the adoption of a Whistle Blower and Protected
Disclosure Policy in compliance with the relevant
provisions of the Companies Act, 2013 and rules
thereunder. The Bank provides an opportunity to
raise concerns of employees, vendors and directors
relating to fraud, malpractice or any other activity
or event which is against the interest of the Bank
or society as a whole. The details of Whistle Blower
complaints received and subsequent action taken and
the functioning of the Whistle Blower mechanism are
reviewed periodically by the Audit Committee of the
Board. During the Financial Year 2024-25, 7 (Seven)
complaints were received under the Whistle Blower
Mechanism. The functioning of the mechanism is
reviewed by the Audit Committee from time to time.
No employee of the Bank has been denied access
to the Audit Committee for raising a whistle blower
complaint.
The policies are available on the official website of the
Bank. (www.esafbank.com)
37. Code of Conduct to Regulate, Monitor and
Report Insider Trading
The Bank has in place, a Policy for Monitoring Insider
Trading which inter alia acts as the Code of Conduct
to Regulate, Monitor and Report ("Code") insider
trading in the securities of the Bank and the Code
of Practices and Procedures for Fair Disclosure of
Unpublished Price Sensitive Information ("UPSI").
The Code, inter alia, prohibits dealing in securities by
insiders while in possession of UPSI. The said Code
has been amended, from time to time, to give effect
to the various notifications/circulars of the Securities
and Exchange Board of India ("SEBI") with respect to
the SEBI (Prohibition of Insider Trading) Regulations,
2015. The Policy for Monitoring of Insider Trading is
available on the Bank''s website viz., URL: https://www.
esafbank.com/policies/.
38. Statutory Auditors
In accordance 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 ("RBI
Guidelines") issued by RBI, banks shall appoint the
Statutory Auditors for a continuous period of three
(3) years, subject to the firms satisfying the eligibility
norms each year and the approval of RBI on an annual
basis.
Based on the approval of Reserve Bank of India vide
letter No. Ref CO.DOS.RPD.No. S2270/ 08-61- 005/
2023-24 dated June 23, 2023, the Shareholders of
the Bank in the 07th Annual General Meeting held
on December 29, 2023 had appointed M/s. Kirtane
and Pandit, Chartered Accountants (Firm Registration
Number: 105215W/ W100057) as the Joint Statutory
Auditors of the Bank for a period of three financial
years who will hold office from the conclusion of
the 07th Annual General Meeting till the end of the
10th Annual General Meeting of the Bank, subject
to the approval of the Reserve Bank of India to be
obtained by the Bank for the Financial Year 2024-25
and Financial Year 2025-26. Since the asset size of
the Bank is above the said limit, the Bank is required
to appoint Joint Statutory Auditors and has presently
appointed M/s. Kirtane and Pandit LLP and M/s.
Abarna and Ananthan, as Joint Statutory Auditors,
wherein M/s. Abarna and Ananthan will be completing
their tenure of three years upon conclusion of the
ensuing annual general meeting of the bank and they
will not be eligible to be appointed further.
The Board at its meeting held on March 21, 2025
approved the eligibility of existing Statutory Auditors
M/s. Kirtane & Pandit LLP, Chartered Accountants,
Pune, FRN 105215W/W100057 for holding of office
for the 2025-26 and appointment of new Statutory
Auditors by providing first preference to M/S
Sundaram & Srinivasan, Chartered Accountants,
Mumbai, FRN 004207S for three years respectively,
and has directed to seek approval of Reserve Bank
of India (RBI). In accordance with the same, approval
from RBI vide letter dated March 27, 2025 were
sought. RBI vide letter dated April 21, 2025 accorded
the approval for appointment of M/s. Kirtane & Pandit
LLP, Chartered Accountants, Pune, FRN 105215W/
W100057 and M/S Sundaram & Srinivasan, Chartered
Accountants, Mumbai, FRN 004207S as the joint
statutory auditors of our Bank for 2025-26 for their
third and first year respectively.
Based on recommendation of Audit Committee
of the Bank and the approval of Reserve Bank of
India (RBI) vide their letter no. Ref DOS.CO.RPD.
No.S503/08.61.005/2025-26 dated April 21, 2025,
the Board of Directors, subject to approval of the
Shareholders and prior approval of the Reserve Bank of
India (RBI) every year, had proposed the appointment
of M/s Sundaram & Srinivasan, Chartered Accountants
as Joint Statutory Auditors of the Bank from FY 25-26
for a period of 3 years . Accordingly, the proposal for
their appointment is being placed in the ensuing 9th
Annual General Meeting.
The Statutory Auditors have confirmed their eligibility
under Section 141 of the Act and as per the guidelines
issued by RBI from time to time. Further, as required
under the relevant provisions of SEBI Listing
Regulations, the Statutory Auditors had also confirmed
that they had subjected themselves to the peer review
process of the Institute of Chartered Accountants of
India ("ICAI") and they hold a valid certificate issued by
the Peer Review Board of ICAI.
39. 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 and Regulation 24A of SEBI
LODR Regulations, 2015, the Board of Directors
of the Bank in the meeting held on May 16, 2025,
has proposed the appointment of M/s. SEP and
Associates, (Firm Registration No: P2019KE075600),
Company Secretaries, Ernakulam, as the Secretarial
Auditor of the Bank for conducting Secretarial Audit
for the Financial Year 2025-26 to 2029-2030, till the
conclusion of the 14th Annual General Meeting of
the Bank, subject to the approval of shareholders..
The Secretarial Audit Report does not contain any
qualification, reservation or adverse remark and the
report for the Financial Year 2024-25 is enclosed
herewith as Annexure - II. The Bank has complied with
the Secretarial Standards specified by the Institute
of Company Secretaries of India and notified by the
Ministry of Corporate Affairs under Section 118(10) of
the Companies Act, 2013.
40. Particulars of contract or arrangements with
Related Parties
During Financial Year 2024-25, all related party
transactions were entered in the ordinary course of
the business of the Bank and on an arm''s length basis.
Accordingly, there were no transactions entered
during the fiscal year that fall under the scope of
Section 188(1) of the Companies Act, 2013, hence,
form AOC-2 is not applicable to the Bank.
41. Annual Return
Pursuant to the provisions of Section 134(3) (a)
and Section 92(3) of the Act read with Rule 12(1) of
the Companies (Management and Administration)
Rules, 2014, the Annual Return of the Bank for the
Financial Year 2024-25 will be hosted on the Bank''s
website at https://www.esafbank.com/investor-
relation/?id=annual-return.
42. Details in respect of frauds, if any, reported by
Auditors:
There were no frauds reported by the Statutory
Auditors for the Financial Year 2024-25.
43. Statutory Disclosures
None of the Directors of the Bank are disqualified as
per provisions of Section 164(2) of the Companies
Act, 2013. The Directors have made necessary
disclosures, as required under various provisions of
the Companies Act, 2013, Securities and Exchange
Board of India Regulations and guidelines of Reserve
Bank of India.
44. Particulars regarding Conservation of Energy,
Technology Absorption and Foreign Exchange
Earnings and Outgo pursuant to Section 134 (3)
(q) of the Companies Act, 2013 read with Rule
8(3) of the Companies (Accounts) Rules, 2014
i) The Bank has no activity relating to conservation
of energy or technology absorption.
ii) During the Financial Year 2024-25, the Bank had
foreign currency expenditure of '' 95,28,363/-
and '' 8,48,957.93/- of foreign currency earnings
during the period.
45. Details of application made or proceeding
pending under insolvency and bankruptcy code
2016
During the year under review, there were no
applications made nor proceedings pending in the
name of the Bank under the Insolvency Bankruptcy
Code, 2016.
46. Details of difference between valuation
amount on one time settlement and valuation
while availing loan from Banks and Financial
Institutions
During the year under review, there has been no
one-time settlement of loans taken from Banks and
Financial Institutions.
47. Material changes and commitments affecting
financial position of the Bank
There have been no material changes and
commitments between the end of the Financial Year
2024-25 and the date of this report, affecting the
financial position of the Bank.
48. Explanations or comments by the Board on every
qualification, reservation or adverse remark
or disclaimer made in the Statutory Auditor''s
Report or in the Secretarial Audit Report
There are no qualifications, reservations, adverse
remarks or disclaimers in the Auditor''s Report and the
Secretarial Audit Report.
49. I nformation about the Financial Performance/
Financial Position of the Subsidiaries, Associates
and Joint Venture Companies
The Bank does not have any subsidiaries, associates
or joint venture companies.
50. Deposits
Being a Banking Company, the disclosures required
as per Rule 8(5)(v) and (vi) of the Companies Accounts
Rules, 2014, read with Section 73 and 74 of the
Companies Act, 2013, are not applicable to the Bank.
51. Loans / Guarantees / Investments
Being a Banking Company, the provisions of Section
186 of the Companies Act, 2013 is not applicable.
52. Cost Records
The Bank is not required to maintain cost records
as specified by the Central Government under sub¬
section (1) of Section 148 of the Companies Act, 2013.
53. Significant and material orders
In accordance with Rule 8(5)(vii) of the Companies
(Accounts) Rules, 2014, there have been no significant
and material orders passed by the regulators or
courts or tribunals impacting the going concern status
and the future operations of the Bank.
54. Dispatch of Annual Report
The MCA has issued General Circular No. 20/2020
dated May 05, 2020 read with other relevant
circulars, including General Circular No. 10/2022
dated December 28, 2022 and applicable circulars/
notifications issued by SEBI relaxing the requirement
of dispatching physical copies of the Annual Report
and the Notice convening the AGM to Shareholders.
Members who wish to have a physical copy may write
to the Company Secretary of the Bank at investor.
[email protected] or submit a written request
to the Registered Office of the Bank. In accordance
with the aforesaid circulars, the web link of the Annual
Report and the Notice convening the AGM of the Bank
is being sent in electronic mode only to members
whose e-mail address is registered with the Bank or
the Depository Participant(s). Those members, whose
email address is not registered with the Bank or with
their respective Depository Participant(s) and who
wish to receive the Notice of the AGM and the Annual
Report for the financial year ended March 31, 2025,
can get their email address registered by following the
steps as detailed in the Notice convening the AGM.
The Annual Reports of the Bank are available on the
Bank''s website viz., URL: https://www.esafbank.com/
report/esaf-small-finance-bank-annual-reports/.
55. Strictures and Penalties
The Denalties or strictures imDosed bv the regulators on the Bank is as follows:
|
Sl. No. |
Nameof the regulatory/ enforcement |
Amount |
Brief of the case |
|
1. |
Commercial Tax Officer, Purasavakkam, |
73,816 |
Penalty on non-reversal of Input Tax Credit and Non¬ |
|
2. |
Deputy Commissioner of State Tax, |
5,30,794 |
Allegation of Eway bills wrongly generated by vendor |
|
3. |
Deputy Commissioner of State Tax, |
2,49,639 |
Allegation of Eway bills wrongly generated by vendor |
|
4. |
BSE Limited |
11,800 |
BSE Limited had levied a fine of '' 11,800/- (including |
Acknowledgement
The Directors are grateful to the Reserve Bank of India, other government and regulatory authorities, other Banks, and
financial institutions for their support and guidance. The Directors gratefully acknowledge the excellent relationship
with the Board of M/s. ESAF Financial Holdings Private Limited, Corporate Promoter of the Bank and their continued
guidance and support for executing various activities of the Bank. The Directors also place on record their sincere
thanks to the valued clients and customers for their patronage. The Board also expresses its deep sense of appreciation
to all employees of the Bank for their commitment and contribution to the growth of the Bank.
For and on behalf of the Board of Directors
Sd/- Sd/-
Ravimohan Periyakavil Ramakrishnan Kadambelil Paul Thomas
DIN: 08534931 DIN: 00199925
Chairman Managing Director & CEO
Date: May 16, 2025
Place: Thrissur
Mar 31, 2023
DIRECTORSâ REPORT
To,
The Members of
ESAF Small Finance Bank Limited
On behalf of the Board of Directors (the "Board") of ESAF Small Finance Bank Limited (the "Bank"), it is our immense
pleasure to present the Seventh Annual Report of the Bank along with the Audited Financial Statements and Auditor''s
Report thereon for the Financial Year 2022-23.
1. Financial Highlights and State of the Bank''s Affairs
|
Particulars |
For the Year ended |
For the Year ended |
|
31st March 2023 |
31st March 2022 |
|
|
Deposits |
1,46,656 |
1,28,151 |
|
Advances |
1,39,243 |
1,16,370 |
|
Total Income |
31,416 |
21,475 |
|
Total Expenditures excluding Tax |
27,355 |
20,737 |
|
Profit Before Tax |
4,060 |
738 |
|
Provision for Tax |
1,037 |
191 |
|
Net Profit |
3,023 |
547 |
|
Profit brought forward |
3,215 |
3,062 |
|
Total Profit available for appropriation |
6,238 |
3,610 |
|
Appropriation |
||
|
Transfer to Statutory Reserve |
756 |
137 |
|
Transfer to Capital Reserve |
3 |
37 |
|
Transfer to Investment Fluctuation Reserve |
59 |
221 |
|
Balance carried to Balance Sheet |
5,420 |
3,215 |
|
Earnings per Share - |
||
|
Basic (Rs.) |
6.73 |
1.22 |
|
Diluted (Rs.) |
6.71 |
1.22 |
On a Standalone basis, Profit After Tax of the Bank was Rs. 3,023 million in Financial Year 2022-23 compared to
Rs. 547 million in Financial Year 2021-22. Interest Income of the Bank for Financial Year 2022-23 was
Rs. 28,536.59 million as against Rs. 19,399.25 million in Financial Year 2021-22 marking a growth of around 47.10%.
Further, the Bank had Capital and Reserves of Rs. 17,091.29 million as on 31st March 2023 (Rs. 14,067.96 million
as on 31st March 2022). The book value per Equity Share was at Rs. 38.03 as on 31st March 2023 (Rs. 31.30 as on
31st March 2022). Further details on the financial performance of your Bank are available in the Management
Discussion and Analysis Report, which forms an integral part of the Annual Report.
2. Transfer to Reserves
As per the requirement of the RBI Regulations, the Bank has transferred the following amount to various reserves
during the Financial Year 2022-23:
3. Dividend
Considering the need to preserve capital, your directors have decided to retain the profits earned to serve the
working capital requirements of the Bank. Hence, no dividend is proposed to be declared.
4. Change in the Nature of Business
There was no change in the nature of business of the Bank during the Financial Year 2022-23.
5. Capital and Debt Structure
a. Change in Capital Structure
There were no changes in the Authorised Capital
of the Bank during the Financial Year 2022-23.
As on 31st March 2023, Authorised Capital of
the Bank was Rs. 600,00,00,000 (Rupees Six
Hundred Crore) divided into 60,00,00,000 (Sixty
Crore) Equity Shares of Rs. 10 (Rupees Ten) each.
There were no changes in the issued, subscribed
and paid-up share capital of the Bank during the
Financial Year 2022-23. As on 31st March 2023,
the issued, subscribed and paid-up share
capital of the Bank stands at Rs. 449,47,37,980
(Rupees Four Hundred and Forty-Nine Crore
Forty-Seven Lakhs Thirty-Seven Thousand
Nine Hundred and Eighty only) divided into
44,94,73,798 (Forty-Four Crore Ninety-Four
Lakh Seventy-Three Thousand Seven
Hundred and Ninety-Eight) Equity Shares of
Rs. 10 (Rupees Ten) each.
The total number of shareholders of the Bank as
on 31st March 2023 was 87.
b. Debt Capital
There were no changes to the Debt Capital of the
Bank during the Financial Year 2022-23. As on
31st March 2023, the total outstanding debt capital,
both listed and unlisted was Rs. 1,930 million.
6. Capital Adequacy
Your Bank is subject to the Basel II Capital Adequacy
guidelines stipulated by the RBI. The Capital
Adequacy Ratio of the Bank is calculated as per the
standardised approach for credit risk. The Capital
Adequacy ratio of the Bank as on 31st March 2023
is 19.83%, as against the minimum requirement of
15.00% stipulated by the Reserve Bank of India.
7. Our Business Segments
The Bank has identified our business segments,
segregating them into Treasury, Wholesale Banking,
Retail Banking and Other Banking Segments
after considering the internal business reporting
system and guidelines issued by the RBI through
its notification DBOD.No.BP.BC.81/ 21.01.018/
2006-07 dated April 18, 2007 and Accounting
Standard 17 (AS 17) - ''Segment Reporting''.
8. Employee Stock Option Scheme
The Shareholders of the Bank, in the meeting held
on 3rd January 2020, had approved the ESAF Small
Finance Bank Employee Stock Option Plan 2019,
by way of a special resolution that also authorised
the Nomination Remuneration and Compensation
Committee to grant up to Rs. 2,25,15,552 (Two Crore
Twenty-Five Lakh Fifteen Thousand Five Hundred
and Fifty-Two) Employee Stock Options to the
Employees, in one or more tranches, from time to
time. The objective of the said scheme is to recognise
the contribution of the employees in the formation of
the Bank and to create a feeling of inclusiveness and
enable the employees to get a share in the value that
they help to create for the organisation over a period
of time. The Bank strongly believes that an equity
component in the compensation goes a long way in
aligning the objectives of an individual with those of
the Bank. The objectives of ESOP 2019 are, among
others, to attract and retain employees with Employee
Stock Options as a compensation tool. Through ESOP
2019, the Bank intends to offer an opportunity to
share the value created with those employees who
have contributed or are expected to contribute to the
growth and development of the Bank.
Through the scheme, the Bank intends to grant
equity-based compensation to the employees in two
categories namely:
1) Loyalty Grant to reward eligible employees
for their contributions in the past, tenure and
continued employment in the Bank, which is a
one-time grant.
2) Performance Grant on the basis of employee''s
annual appraisals for their future performance
and continuity of services.
The Nomination and Remuneration Committee
has been entrusted with the responsibility of
administering the ESOP 2019 Scheme. As of
31st March 2023, the Nomination Remuneration and
Compensation Committee of the Board granted
11,25,590 options as the first instalment of loyalty
grant under the ESOP 2019 Scheme, to the employees
identified under the implementation guidelines
for ESAF ESOP 2019 as per the terms of granting.
However, no ESOP was granted or exercised during
the Financial Year 2022-23.
10. Selection, Appointment and Remuneration
of Directors
In compliance with the provisions of the Banking
Regulation Act, 1949, the guidelines issued by
the Reserve Bank of India and Section 178 of the
Companies Act, 2013, the Bank has formulated
and adopted a Nomination Policy for selection and
appointment/ re-appointment/ removal of Directors,
which is disclosed on our website (www.esafbank.
com). Through the said policy, the Bank has formulated
criteria for the appointment of directors, and based
on the said criteria, Nomination Remuneration and
Compensation Committee of the Board (NRCCB) shall
conduct a due diligence process to determine the
suitability of every person who is being considered
for being appointed or re-appointed as a Director of
the Bank, based on the range of skills, experience,
expertise, qualifications, specialised knowledge etc.
of the candidate, and recommend his/her appointment
to the Board. The Nomination Remuneration and
Compensation Committee identifies potential
candidates from diverse backgrounds including but,
not limited to Accountancy, Agriculture and Rural
Economy, Banking, Co-operation, Finance, Law, Small
Scale Industry, Economics, Human Resources, Payment
and Settlement Systems, Business Management,
Risk Management and Information Technology, thus
providing the Board with members who have diverse
knowledge, practical experience and skills to serve the
business interests of the Bank. Every such person shall
meet the ''fit and proper'' criteria the Reserve Bank of
India may stipulate from time to time, and accordingly,
any appointment or re-appointment of a Director shall
be subject to prior approval by the NRCCB of the Bank.
The key objectives of the Nomination Policy shall
inter alia include the following:
⢠To guide the Board in relation to the
appointment, re-appointment or removal of
directors and lay down a selection criterion for
appointment of directors.
⢠To ensure compliance with applicable laws, rules
and regulations including compliance to the ''Fit
and Proper criteria'' of Directors at the time of
their appointment and on a continuous basis.
⢠To devise a policy on the size and composition
of the Board taking into account the available
and needed diversity and balance in terms of
experience, knowledge, skills and judgment
of the Directors.
During appointment/ re-appointment/ removal of
Directors of the Bank, your Bank has always ensured
that, the provisions of the Companies Act, 2013,
Banking Regulation Act/ RBI Guidelines and directives
and guidelines of SEBI to the extent applicable are
adhered to. In all respects, your Bank has also kept
high standards and met the diversity, structure and
size compositions of the Board and its Committees
as prescribed in various statutes.
The NRCCB is responsible to the Board for
leading the succession planning process in
respect of appointments/ re-appointments in
respect of Directors, employees in the grade
of Senior Management and Key Managerial
Personnel of the Bank.
The Bank has accordingly obtained prescribed
declarations/ undertakings from the Directors as per
the guidelines of the Reserve Bank of India and the
same are placed before the Board of Directors for its
review and noting. An assessment on whether the
Directors fulfill the prescribed criteria is carried out
by the Nomination Remuneration and Compensation
Committee of the Board on an annual basis and also
at the time of their appointment or re-appointment.
Wherever necessary, the Nomination Remuneration
and Compensation Committee is authorised to
engage the services of an External Consultant(s)/
expert in the field of succession planning, to identify
and assess the suitability of candidates for the post
of a Director of the Bank.
The RBI, vide its circular no. DOR. Appt.BC.No.23/29.
67.001/2019-20 dated 04th November 2019, has
issued the Guidelines on Compensation of Whole
Time Directors / Chief Executive Officers / Material
Risk Takers and Control Function Staff of Private
Sector Banks on Compensation Policy. In accordance
with the aforesaid the RBI Circular, the Board of the
Bank has adopted a revised Compensation Policy for
its Whole-time Directors, Chief Executive Officer of the
Bank and other employees. The salient feature of the
Compensation Policy is as follows:
⢠To provide a fair and transparent structure that
helps the Bank to acquire and retain the talent
pool critical to building competitive advantage and
brand equity as a social bank focussed on social
transformation and community development.
11. Board of Directors
The composition of the Board of Directors of the
Bank is governed by the Companies Act 2013,
the Banking Regulation Act, 1949 and SEBI Listing
Regulations and is in conformity with the same. As of
31st March 2023, the Board of Directors comprised
a combination of nine Directors out of which there
were six Independent Directors including a Woman
Independent Director, two Non-Executive Nominee
Directors and one Executive Director. The size of the
Board is commensurate with the size and business
of the Bank. The Board mix provides a combination
of professionalism, knowledge and experience
required in the banking industry and also meets
the criteria prescribed under the Nomination Policy
adopted by the Board.
Change in Directors during the Financial
Year 2022-23
⢠Withdrawal of Nomination of Shri. Saneesh
Singh (DIN: 02254868) and Shri. Chandanathil
Pappachan Mohan (DIN: 02661757) as
Nominee Directors by M/s. ESAF Financial
Holdings Private Limited, the Corporate
Promoter of the Bank
> The Board of Directors vide Circular
Resolution dated 03rd August 2022,
accepted the withdrawal of nomination
of Shri. Saneesh Singh (DIN: 02254868)
from the Board of Directors of the Bank
by M/s. ESAF Financial Holdings Private
Limited, the Corporate Promoter of the
Bank, with effect from 26th July 2022.
> The Board of Directors vide Circular
Resolution dated 01st November 2022,
accepted the withdrawal of nomination of
Shri. Chandanathil Pappachan Mohan (DIN:
02661757) from the Board of Directors of
the Bank by M/s. ESAF Financial Holdings
Private Limited, the Corporate Promoter of
the Bank, with effect from 31st October 2022.
⢠Retirement of Shri. Alex Parackal George
and Smt. Asha Morley as the Non-Executive
Independent Directors of the Bank
Shri. Alex Parackal George (DIN: 07491420)
and Smt. Asha Morley (DIN: 02012799),
Non-Executive Independent Directors of
the Bank, retired from their directorship on
completion of their two terms as Independent
Directors on 12th December 2022. The Board
of Directors of the Bank placed on record their
appreciation for the valuable contributions by
Shri. Alex Parackal George and Smt. Asha Morley
during their tenure as Directors of the Bank.
⢠Re-appointment of Shri. Ravimohan
Periyakavil Ramakrishnan as Non-Executive
Independent Director of the Bank and Part
Time Chairman of the Board
Based on the recommendation of Nomination
Remuneration and Compensation
Committee of the Board and the Board
of Directors, the Shareholders in the 06th
Annual General Meeting of the Bank held
on 13th December 2022, approved the
re-appointment of Shri. Ravimohan Periyakavil
Ramakrishnan (DIN: 08534931) as Non-Executive
Independent Director of the Bank for a period
of three consecutive years with effect from
21st December 2022 up to 20th December 2025.
The Board of Directors had re-appointed Shri.
Ravimohan Periyakavil Ramakrishnan as the
Part-Time Chairman of the Board for a period
of three consecutive years with effect from
21st December 2022 up to 20th December 2025.
⢠Appointment of Dr. Vinod Vijayalekshmi
Vasudevan as Independent Director of the
Bank
The Board of Directors in their meeting
held on 22nd December 2021 had appointed
Dr. Vinod Vijayalekshmi Vasudevan (DIN:
02503201) as Additional Director (Independent
Director) of the Bank in terms of Section 149
and 161 of the Companies Act, 2013, with
effect from 22nd December 2021, considering
his vast knowledge and experience in
the field of Information Technology and
Business Management.
The Shareholders in the 06th Annual
General Meeting of the Bank held on
13th December 2022 approved the appointment
of Dr. Vinod Vijayalekshmi Vasudevan as the
Non-Executive Independent Director of the
Bank, who was appointed as an Additional
Director (Independent Director) with effect
from 22nd December 2021, for a period of
three consecutive years with effect from
22nd December 2021 up to 21st December 2024.
⢠Appointment of Smt. Kolasseril
Chandramohanan Ranjani and Shri. Ravi
Venkatraman as Non-Executive Independent
Directors of the Bank
Based on the recommendation of Nomination
Remuneration and Compensation
Committee of the Board and the Board
of Directors, the Shareholders in the 06th
Annual General Meeting of the Bank held on
13th December 2022, approved the appointment
of Smt. Kolasseril Chandramohanan Ranjani
(DIN: 01735529) and Shri. Ravi Venkatraman
(DIN: 00307328) as Non-Executive Independent
Directors of the Bank for a period of
three consecutive years with effect from
13th December 2022 up to 12th December 2025.
⢠Appointment of Shri. John Samuel as Non¬
Executive Nominee Director of the Bank,
on the basis of the nomination of Shri.
Kadambelil Paul Thomas, Individual Promoter
of the Bank
Based on the recommendations of the
Nomination Remuneration and Compensation
Committee of the Board, the Board of Directors
in the meeting held on 03rd December 2022
approved the appointment of Shri. John Samuel
(DIN: 07725212) as a Non-Executive Nominee
Director on the Board of the Bank for a period
of three consecutive years with effect from
13th December 2022 up to 12th December 2025.
Shri. John Samuel, who retires by rotation
as Director, at the conclusion of the ensuing
Annual General Meeting of the Bank is proposed
to be re-appointed and has offered himself for
re-appointment.
⢠Appointment of Shri. Ajayan Mangalath
Gopalakrishnan Nair as Non-Executive
Nominee Director of the Bank, on the basis
of the nomination of ESAF Financial Holdings
Private Limited, Corporate Promoter of the
Bank
Based on the recommendations of
the Nomination Remuneration and
Compensation Committee of the Board, the
Board of Directors in the meeting held on
03rd December 2022 approved the appointment
of Shri. Ajayan Mangalath Gopalakrishnan Nair
(DIN: 09782416) as a Non-Executive Nominee
Director on the Board of the Bank for a period
of three consecutive years with effect from
13th December 2022 up to 12th December 2025.
As on the date of this report, the Bank has Nine
Directors out of which there are Six Independent
Directors including a Woman Independent
Director. The brief profiles of the Directors
are available on the website of the Bank on
www.esafbank.com.
Familiarisation Programme
Complying with SEBI Listing Regulations , provisions
of the Companies Act, 2013 and the RBI guidelines,
Familiarisation Programmes were conducted
during the Financial Year 2022-23 to give an
overview and introduction to the Independent
Directors about the Bank''s business and operations.
Under this programme, newly appointed directors
are appraised with the organisation structure,
operational overview, financial overview, board
matters and procedures, key risk issues and its
mitigation strategy, among others.
Further, all the newly appointed Board Members
undergo a face to face induction schedule where the
Bank''s Management Team provides insights about
the affairs of their function and of the Bank as a
whole. The details of the familiarisation programme
imparted to Independent Directors are available on
the website of the Bank at www.esafbank.com.
12. Evaluation of Performance of the
Board of Directors
The Board has formulated a Performance Evaluation
Policy including a questionnaire for performance
evaluation of the Individual Directors, Committees of
the Board, Chairman, Managing Director and CEO and
the Board as a whole. The questionnaire designed for
the performance evaluation covering various aspects
of performance, including structure of the board,
meetings of the board, functions of the board, role
and responsibilities of the board, governance and
compliance, evaluation of risks, grievance redressal
for investors, conflict of interest, stakeholder value
and responsibility, relationship among directors,
director competency, board procedures, processes,
functioning and effectiveness, was circulated to all
the directors of the Bank for the annual performance
evaluation. The appraisal of each of the Directors of
the Bank is done based on the evaluation conducted
with a set of pre-determined evaluation factors:
⢠The performance evaluation of the Board as a
whole shall be carried out by all the Directors.
⢠The performance evaluation of the Board
Committee(s) shall be carried out by the
members of each of the Committees.
⢠The performance evaluation of Managing
Director and CEO/ Executive Director shall be
done by all the directors except the Managing
Director and CEO.
⢠The performance evaluation of Chairman of
the Bank is done by all the Directors except the
person being evaluated.
⢠The performance evaluation of Independent
Directors is done by all the Directors except the
person being evaluated.
⢠The performance evaluation of the
Non-Executive Director is done by all the
Directors except the person being evaluated.
The performance evaluation of the Board of
Directors, Committees of the Board and individual
Directors was conducted during the Financial Year.
The Board and the Nomination Remuneration and
Compensation Committee of the Board reviewed
the performance of the Individual Directors
and noted that the results of the performance
evaluation indicated a high degree of satisfaction
among directors.
13. Declaration from Independent Directors
The Board has received declarations from the
Independent Directors as required under Section
149(7) of the Companies Act, 2013, and the Board
is satisfied that the Independent Directors meet the
criteria of independence as mentioned in Section
149(6) of the Companies Act, 2013 and Regulation
16(1) (b) of SEBI Listing Regulations and that they have
complied with the code of conduct for independent
directors as prescribed under Schedule IV of the
Companies Act, 2013.
In the opinion of the Board, all the Independent
Directors meet the criteria with regards to integrity,
expertise and experience as required under
applicable laws.
All Independent Directors of the Bank have
registered themselves in the data bank as specified
under Section 150 of the Companies Act, 2013,
read with Rule 6 of Companies (Appointment
and Qualifications of Directors) Rules, 2014 and
have qualified the prescribed proficiency test.
The Independent Directors (not exempted under
the Companies (Appointment and Qualification of
Directors) Fifth Amendment Rules, 2020 as notified
on 18th December 2020) have qualified the online
proficiency self-assessment as required under
aforesaid rule within the prescribed timeline.
The terms and conditions of appointment of
Independent Directors are available on the
website of the Bank.
14. Directors and Officers Liability Insurance
Policy
The Bank has a Directors and Officers Liability
Insurance Policy which protects Directors and Officers
of the Bank from any breach of fiduciary duty.
15. Corporate Governance
The Bank is committed to achieving and adhering
to the highest standards of Corporate Governance
and it consistently benchmarks itself with the best
practices in this regard. A report on Corporate
Governance for the Financial Year 2022-23 has been
annexed to the Annual Report.
16. Meetings of the Board
The Board of Directors met Fourteen (14) times
during the Financial Year 2022-23.
The meetings of the Board of Directors were
convened in accordance with applicable laws and
standards and the intervening gap between the said
meetings was not exceeding 120 days. The details
of Board Meetings are available in the Corporate
Governance Report which forms part of the Annual
Report of the Bank for the Financial Year 2022-23.
During the year, Dr. Vinod Vijayalekshmi Vasudevan
had sought leave of absence from three (3) meetings
of the Board and Dr. V. A. Joseph had sought
leave of absence from one (1) meeting of the
Board of Directors.
As on 31st March 2023, the Bank had (11) Board
Committees:
|
Sl. No. |
Name of the Committee |
|
1. |
Audit Committee of the Board |
|
2. |
Risk Management Committee of the Board |
|
3. |
Nomination, Remuneration and |
|
4. |
IT Strategy Committee of the Board |
|
5. |
Customer Service Committee of the Board |
|
6. |
Corporate Social Responsibility and |
|
7. |
Customer Service Committee of the Board |
|
8. |
High Value Fraud Monitoring Committee of |
|
9. |
Stakeholders Relationship Committee of |
|
10. |
Human Resource Committee of the Board |
|
11. |
IPO Steering Committee of the Board |
The details of composition, number of meetings
held and date thereof and terms of reference of the
above Committees are available in the Corporate
Governance Report which forms part of the Annual
Report of the Bank for the Financial Year 2022-23.
17. Key Managerial Personnel
The following officials of the Bank are the "Key
Managerial Personnel" pursuant to the provisions of
Section 203 of the Companies Act, 2013:
|
Sl. No. |
Name of the Key |
Designation |
|
1. |
Shri. Kadambelil Paul |
Managing Director |
|
Thomas |
and CEO |
|
|
2. |
Shri. Gireesh C. P. |
Chief Financial Officer |
|
3. |
Shri. Ranjith Raj P. |
Company Secretary |
In addition to the above, the Board of the Bank has designated the following senior officials of the Bank as Key
Managerial Personnel in terms of Section 2 (51) of the Companies Act, 2013:
|
Sl. No. |
Name of the Key Managerial Person |
Designation |
|
1. |
Shri. George K. John |
Executive Vice President |
|
2. |
Shri. George Thomas |
Executive Vice President |
|
3. |
Shri. Hari Velloor |
Executive Vice President |
|
4. |
Shri. Hemant Kumar Tamta |
Executive Vice President |
|
5. |
Shri. Wilson Cyriac |
Chief Risk Officer |
|
6. |
Shri. E. A. Jacob |
Chief of Internal Vigilance |
|
7. |
Shri. Antoo P. K. |
Head - Internal Audit |
|
8. |
Shri. Sudev Kumar V. |
Chief Compliance Officer |
Following changes took place in the list of Key Managerial Personnel during the Financial Year 2022-23:
|
Sl. No. |
Name of Key Managerial |
Nature of Change |
|
1. |
Shri. Hari Velloor |
Shri. Hari Velloor was appointed as the Executive Vice President of the |
|
2. |
Shri. Hemant Kumar Tamta |
Shri. Hemant Kumar Tamta was appointed as the Executive Vice President |
|
3. |
Shri. Antoo P. K. |
Shri. Antoo P. K. Head - Internal Audit of the Bank, ceased to be the Key |
|
4. |
Shri. Sivakumar P. |
Shri. P. Sivakumar was appointed as the Head - Internal Audit of the |
|
5. |
Shri. Ajayan M. G. |
Shri. Ajayan M. G. ceased to be the Executive Vice President - IT and |
The brief profiles of the Key Managerial Personnel
are available on the website of the Bank at
www.esafbank.com.
18. Internal Financial Controls
The Board of Directors confirms that your Bank has
laid down a set of standards, processes and structures
which enable it to implement Internal Financial
controls across the organisation with reference to
Financial Statements and that such controls are
adequate and are operating effectively. The Internal
Financial Control framework of the Bank ensures that:
⢠Internal Financial Controls are established
for critical and material processes
handled by the Bank.
⢠Draw up recommendations based on good
practices to develop or strengthen the internal
control systems.
⢠Ensure that the IFCs are adequate and operating
effectively, by periodic review and testing.
⢠Periodic reporting of the status to the Audit
Committee of the Board.
⢠The existence and adequacy of IFCs is
demonstrated to various internal and
external stakeholders.
The Internal Audit Department of the Bank has
tested each of the controls and during the year under
review, there are no material or serious observations
of inefficiency or inadequacy of such controls.
19. Implementation of Ind AS
The Ministry of Finance, Government of
India ("GOI"), had vide its press release dated
18th January 2016 outlined the roadmap for
implementation of International Financial Reporting
Standards ("IFRS") converged Indian Accounting
Standards ("Ind AS") for Scheduled Commercial Bank
(excluding RRBs), NBFC and Insurance companies.
The RBI vide its circular dated 22nd March 2019,
deferred the implementation of Ind AS for Scheduled
Commercial Banks ("SCB") till further notice,
pending the consideration of some recommended
legislative amendments by GOI. The RBI has not
issued any further notification on implementation of
Ind AS for SCBs.
The Bank submits its Proforma Ind-AS financials
on half yearly basis to the RBI based on the GAP
assessment carried out by the Bank. The Bank is
currently handling the impact analysis and reporting
offline by using excel based models. However, the Bank
is in the process of implementing system solutions
(Ind AS 109 and 116) and hiring skilled resources to
implement Ind-AS accounting.
20. Directors'' Responsibility Statement
Pursuant to Section 134(3) of the Companies Act,
2013, the Board of Directors hereby declare and
confirm to the best of their knowledge and belief that:
i) I n the preparation of the annual accounts for
the year ended 31st March 2023, the applicable
accounting standards had been followed
along with proper explanations relating to
material departures;
ii) Such accounting policies as specified in
Schedule III to the Financial Statements have
been selected and applied consistently and
judgements and estimates have been made that
are reasonable and prudent so as to give a true
and fair view of the state of affairs of the Bank as
at 31st March 2023 and of the profit of the Bank
for the year ended on that date;
iii) Proper and sufficient care has been taken for
maintenance of adequate accounting records in
accordance with the provisions of the Companies
Act, 2013 for safeguarding the assets of the
Bank and for preventing and detecting frauds
and other irregularities;
iv) Annual accounts have been prepared on a
going concern basis;
v) Internal financial controls to be followed by
the Bank were in place and that the same were
adequate and were operating effectively;
vi) Proper system to ensure compliance with
the provisions of all applicable laws was
in place and the same was adequate and
operating effectively.
21. Environment Social and Governance
Practices and Corporate Social
Responsibility
In accordance with Section 135 of the Companies
Act, 2013, read with the Companies (Corporate Social
Responsibility Policy) Rules, 2014, as modified from
time to time, the Bank has established the Corporate
Social Responsibility and Sustainability ("CSRSCB")
Committee of the Board.
Environment Social and Governance
Practices
In the financial and banking industry, ESG has become
a critical area of focus and the Bank endeavours to
continually improve its ESG performance. There is a
robust ESG policy framework which articulates ESG
focus areas and provides guidance for ESG practices
such as corporate governance, environmental and
employee related initiatives, policy revisions and
other ESG related projects undertaken. There is a
Sustainability Council comprising representatives
from relevant functions for the implementation of
the framework. This council plays a critical role in
providing data on various ESG parameters which is
subsequently collated, analysed and reported to the
Head of Sustainable Banking. The progress is also
reported to the CSRSCB and the Board periodically.
The Bank follows a social business strategy seeking
a Triple Bottom Line impact: people; planet; and
prosperity and believe that the social, environmental,
and economic outcomes of our business create
synergies that have an amplified impact on our
stakeholders. The legacy of a mission, fighting the
partiality of prosperity (i.e., the drive for inclusion
of marginalised sections of society and the equity
of opportunities) led to the formation of our Bank.
The Bank''s vision is to be India''s leading social bank
that offers equal opportunities through universal
financial access and inclusion and livelihood and
economic development. The Bank has adopted
various policies to implement our triple bottom
line approach, including an Environmental, Social
and Governance ("ESG") policy. Pursuant to the ESG
policy, we are committed to (i) the protection of the
environment and ensuring sustainable development,
(ii) promoting financial inclusion and gender equality
through specialised financial services; and (iii)
establishing a governance framework to ensure
accountability, transparency and compliance with
internal and external ESG standards. In 2020, the
Bank won the "Global Sustainability Award 2020"
for outstanding achievements in sustainability
management by the Energy and Environment
Foundation. Our ESG Grading scores from CARE
Advisory Research & Training Limited in its report
titled "ESG Grading Report of ESAF Small Finance
Bank" published in June, 2023 were: (i) 62% for the
Environmental pillar, with remarks including our
commitment to green finance and environment
conscious operations; (ii) 68% for the Social pillar,
with remarks including that we have demonstrated
healthy labour management practices, including
the implementation of various policies that
embody international and national human rights
standards; and (iii) 76% for the Governance pillar,
with remarks including that we have aligned with
leading governance practices, such as adequate
independence of our Board (66% independent
members on the Board) and committee levels.
We received a rating of CareEdge ESG 3 (good), with
an overall score of 71 compared with the industry
average overall score of 59.8. CARE Advisory Research
& Training Limited''s ESG specialist team undertook
the ESG Grading of our Bank during May, 2023.
Corporate Social Responsibility
The Bank has adopted a Board-approved CSR
policy in compliance with the requirements of the
Companies Act, 2013 and the Companies (Corporate
Social Responsibility) Rules, 2014. The Bank''s CSR
focus areas are education, healthcare, sanitation
and livelihood development. The Bank has entered
into a memorandum of understanding dated
20th December 2021 with ESAF Foundation (formerly
known as Evangelical Social Action Forum), pursuant
to which the ESAF Foundation provides services to
the Bank for the execution of CSR projects, including
providing project proposals, timelines and budgetary
estimates for CSR projects within the focus areas.
The memorandum of understanding is valid for a
term of four years. The Bank has also entered into an
agreement with Prachodhan Development Services
dated 29th August 2022, pursuant to which it provides
services to us for the execution of certain CSR projects.
The agreement is valid for a term of four years.
The CSRSCB is in charge of reviewing and
recommending to the Board the Bank''s numerous
CSR activities, including the status of the Bank''s CSR
Projects. The Board has examined and approved
the CSR Policy, Projects, Project Expenditure,
and associated topics based on the CSRSCB''s
recommendations. Following that, the Bank
implemented the CSR Projects with Board approval.
The CSR Policy of the Bank is available on the Bank''s
website: www.esafbank.com
The Bank''s CSR Projects and CSR Project Expenditure
for Fiscal Year 2022-23 are in accordance with the
CSR mandate as specified in Sections 134 and 135
of the Act read with Schedule VII to the Act and
the Companies (Corporate Social Responsibility
Policy) Rules, 2014, as amended from time to time,
and in accordance with notifications issued by the
Government of India from time to time.
Every year, the Bank allocates 5% of its average net
profits, computed in accordance with the manner
as prescribed in the Section 135 of the Companies
Act, 2013 as against the requirement of 2%.
During the Financial Year 2022-23, the Bank has
allocated Rs. 8,26,00,000 towards CSR expenditures,
as against the allocation of Rs. 8,76,00,000 for the
Financial Year 2021-22.
The CSR projects and programmes were
implemented directly and/or through implementing
partner organisations with a proven track record of
implementing cost and process efficient CSR projects
and/or programmes that were scalable, sustainable,
outcome driven, and committed to making a positive
societal impact in Fiscal Year 2022-23. Based on the
CSRSCB''s review and recommendation, the Board
reviewed and approved all CSR Projects, CSR Project
Expenditure Payments, and CSR Administration
Overhead Expenses, including the Unspent CSR
Project Expenditure Funds of Financial Year
2022-23, which were transferred to the Unspent CSR
Account Financial Year 2022-23 on 31st March 2023.
The Annual Report on CSR Activities, which is annexed
to this report, contains a brief summary of the CSR
Policy, including an overview of the programmes
implemented, the makeup of the CSR Committee,
and CSR expenditure for the fiscal year under review.
22. Business Responsibility and Sustainability
Report
In May 2021, the SEBI made an amendment to
Regulation 34(2)(f) of the SEBI Listing Regulations,
by introducing enhanced disclosure requirements
regarding ESG parameters through a revised format
called the Business Responsibility and Sustainability
Report ("BRSR"). The Business Responsibility
Report has been replaced by BRSR, which is a more
comprehensive disclosure that can showcase ESG
performance with enhanced transparency, shifting
the focus to quantifiable metrics by providing essential
and voluntary indicators rather than qualitative and
subjective metrics. The Bank has published a BRSR for
Financial Year 2022-23, even though SEBI mandated
only top 1,000 listed organisations to do so from
Financial Year 2022-23 onwards, endeavouring to be
at the forefront of sustainability reporting by being
an early adopter of BRSR.
BRSR for Financial Year 2022-23 is part of
the Annual Report of the Bank and is also
available on the Bank''s website viz., URL:
https://www.esafbank.com/report/esaf-small-
finance-bank-annual-reports/
23. Human Resources Initiatives
As on 31st March 2023, the total number of
employees of the Bank was 5034. The Bank believes
its employees are one of the most important assets
and that a content and happy workforce will deliver
the joy of banking to our customers and drive
our performance.
Internal promotions are conducted every year
based on a well-defined process, published in
advance to make the process fully transparent.
Promoted employees are given special training
on leadership and team building. The Bank
recognises the importance of continuous learning
and has adopted a comprehensive learning and
development policy.
Each employee onboarded has to mandatorily
undergo a minimum of two weeks'' training, which
includes on-the-job training in Microfinance at the
banking outlets. After the on-the-job training at the
banking outlets, they are given one week''s residential
induction training and also another week''s training
on core banking solution software.
The Bank has facilitated a culture of self-learning
for its employees by establishing an online learning
portal, ESAF Small Finance Bank Online Academy.
The Bank conducts various topic-based training
sessions for our employees and also has tie-ups with
coaching institutes in multiple locations for approved
certification courses at concessional fees for
employees and gives incentives to those employees
who pass those courses. The Bank also regularly
nominates senior staff to attend programmes
arranged by certain financial educational institutes.
24. Disclosure under the Sexual Harassment
of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013
The Bank continues with the belief of zero tolerance
towards sexual harassment in workplace and
continues to uphold and maintain itself as a safe
and non-discriminatory organisation. To achieve
the same, the Bank reinforces the understanding
and awareness of The Sexual Harassment of
Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013 ("POSH"). The Bank has in place,
a policy in line with the requirements of the Sexual
Harassment of Women at Workplace (Prevention,
Prohibition & Redressal) Act, 2013 and an Internal
Complaints Committee has been set up for redressal
of complaints. Any complaint pertaining to sexual
harassment is diligently reviewed and investigated,
and treated with great sensitivity. The Internal
Committee members have been trained in handling
and resolving complaints and have also designed an
online e-learning POSH Awareness module, which
covers the larger employee base.
During the Financial year 2022-23, no complaints
were received under the Policy.
25. Compliance Functions
The Bank has a dedicated independent Compliance
Department headed by a Chief Compliance Officer,
which operates as per a well-documented compliance
policy for ensuring regulatory compliance, across all
businesses and operations. The key functions of the
Compliance Department shall include ensuring core
compliance areas such as statutory, regulatory, and
other related mechanisms for the dissemination of
regulatory prescriptions and guidelines amongst
respective functions and monitoring compliance with
regulatory guidelines, compliances, correspondence
with the RBI, vetting the guidelines/ circulars issued,
for compliance with regulatory guidelines and vetting
of Bank''s Policies, coordinating and monitoring
submission of the RBI returns, coordinating
collection of inputs from various departments for
the RBI Inspection and for rectification of the RBI
inspection irregularities etc. The Bank has a well
defined and structured mechanism to assess the
compliance risk and monitor its mitigation measures
thereby ensuring the effectiveness of the compliance
function in managing the compliance risk.
26. Risk Management
The Bank identifies, assesses and manages all
material risks associated with its various operations
on a proactive basis. Risk Management governance
in the Bank is overseen by the Board of Directors.
The Board approves the Risk management policies
which are reviewed, from time to time, with updated
regulatory guidelines and internal instructions.
The Risk Management Committee of the Board
(RMCB) sets the processes and standards for risk
management functions and periodically reviews
the same. The Risk Management Department
coordinates the bank-wide risk management and
implements the policies and procedures approved
by the Board and the RMCB. The Department has five
divisions for managing the major risk streams, Credit
risk, Operational risk, Market risk, Information and
Cyber security risk and Transactional risks.
Executive-level risk management committees, namely,
Credit Risk Management Committee, Operational
Risk and Business Continuity Management
Committee, Market Risk & Asset Liability Management
Committee, Information Security Governance
Committee and Outsourcing & Vendor Assessment
Committee regularly assess the respective risks
and initiate remedial actions wherever warranted.
The executive-level committees periodically report
the various risk events, levels and direction of major
risks to the Risk Management Committee of the
Board. Chief Risk Officer who reports directly to
the Managing Director and CEO, co-ordinates the
risk management functions. The Bank has a robust
Internal Capital Adequacy Assessment Process by
which all material risks the Bank is facing in its course
of business are identified, assessed and monitored.
Capital requirement commensurate with the risk
profile of the Bank is assessed and capital planning
for ensuring growth in future, as per the business
strategy of the Bank, also is undertaken periodically.
Stress testing is carried out periodically to ensure that
the Bank can mitigate and manage the existing and
emerging risks.
27. Information Security and Cyber Security
Risk Management
The Information Security Policy and the Cyber Security
Policy approved by the Board of Directors provide the
base for information technology risk management
and security administration. The Information
Security Governance of the Bank is spearheaded
by the Board of Directors, Information Technology
Strategy Committee of the Board and the Executive
Level Information Security Governance Committee.
The Bank has a dedicated Information Security
Division which functions under the Risk Management
Department. The Information Security Division is
headed by the Chief Information Security Officer,
who reports to the Chief Risk Officer.
The Bank adopts best practices to ensure the safety
and security of customer transactions, data privacy
and information security in all three modes of data
at rest, data in use and data in transit. The Bank
liaisons with various authorities like CSITE (Cyber
Security Information Technology Examination) Cell,
the RBI, CERT-In (Computer Emergency Response
Team-India), IDRBT, etc. to keep abreast of the
security incidents, measures and for regulatory
compliance on an ongoing basis.
28. Business Continuity Management
The Bank relies on increasingly complex technology
and business models to deliver our products.
Technology-based products include interconnected
ATM networks, tele-banking, core banking solutions,
a mobile banking application and internet
banking solutions.
The Bank has established a business continuity plan,
which involves the creation and implementation of
strategies that recognise threats and risks that the
Bank may be subject to, with a focus on the protection
of personnel and assets, while maintaining continued
operations in the event of a disaster. The process
defines potential risks, measures their impact,
designs safeguards and procedures to mitigate
those risks, tests those procedures to ensure that
they work, and executes the implementation part.
These plans and processes are periodically reviewed
to ensure that they are effective and functional.
The Bank has an executive-level Crisis Management
and Quick Response Team that is responsible for
initiating immediate actions in the event of the
occurrence of a crisis and to guide the business units
on steps to be taken to protect the assets and to
ensure continuity of business. The Crisis Management
and Quick Response Team is responsible for
initiating remedial actions in case of any breakdown
or failure of critical systems, occurrence of natural
disasters or accidents or any other events affecting
business continuity.
29. IT Initiatives
Technology driven model with an advanced
digital technology platform
The Bank offers its customers various digital
platforms, including an internet banking portal, a
mobile banking platform, SMS alerts, bill payments
and RuPay branded ATM cum debit cards. All banking
and payment transactions, such as remittances and
utility payments, can be completed through these
platforms. The Bank''s customers are also able to
register to savings accounts on a unified payment
interface based mobile applications.
The Bank''s account opening and loan underwriting
processes have been digitalised by using tablets,
which enabled it to reduce the turnaround time and
offer better service to customers. CASA accounts
can be opened through tablets, which enables
it to provide doorstep services to its customers.
By leveraging technology solutions, the Bank provides
customers with pre-generated kits immediately upon
account opening, enabling them to use the ATM-cum-
debit card provided with the pre-generated kits
without having to wait for the ATM-cum-debit card
to be activated across channels, thereby resulting
in increased customer satisfaction. The Bank has
crossed a milestone in technology with the successful
adoption of e-signatures for Micro Loan disbursals.
As at 31st March 2023, the Bank has disbursed
over 0.53 million loans using e-signatures, which
showcases its commitment to digital advancement.
Through the adoption of e-signatures, the Bank has
saved paper, which was earlier being utilised for
the purpose of loan disbursement documentation,
involving handwritten signatures. This will indirectly
save water and reduce deforestation as per our
commitment to reduce greenhouse gas emissions
commitment set forth in the Bank''s ESG policy.
The Bank has a digitalised central credit-processing
unit for its micro loans. The customer onboarding
process has been predominantly digitalised for its
micro loans. The Bank leverages technology for
underwriting and credit sanctioning for its loan
products based on inputs from credit bureaus and/
or the customer data analytics. It has implemented
technology solutions that enable it to ensure cashless
disbursement of loans and implemented electronic
signing for micro loans, both of which have reduced
paperwork. The Bank''s collections mechanism has
also been digitalised through the use of mobile
applications and a payment gateway through which
the borrowers can repay their loans.
The Bank is continuously working towards
improving its customers'' experience through the
use of technology and has implemented a customer
relationship management solution to better handle
customer requests. The Bank believes that such
initiatives have helped us improve our customer
service and enable delivery of services in a more
cost-effective manner.
30. Customer Service Quality
The Bank makes use of both interactive voice response systems and call centre agents to manage its customers''
queries. The call centre facility is available to the customers 24 hours per day, seven days per week. The call centre
agents are multi-lingual and can assist the customers in most languages spoken in areas where the Bank operates.
All calls made to the call centre are recorded and these recordings are made available to the Bank for monitoring,
quality control and reference purposes. Daily reports of all calls handled by the call centre are monitored by the
Customer Service Quality department. The call centre facility is managed by FIS.
The customer service quality department also conducts fortnightly review calls to discuss areas of improvement
to ensure the efficient resolution of customer complaints. The Department undertakes surveys from customers to
obtain their feedback on the quality of the Bank''s customer service.
31. Overall Remuneration
Details of remuneration as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:
32. Whistle Blower Policy/ Vigil Mechanism
The Bank has implemented a Vigil mechanism
through the adoption of a Whistle Blower and
Protected Disclosure Policy in compliance with the
relevant provisions of the Companies Act, 2013 and
rules thereunder. The Bank provides an opportunity
to raise concerns of employees, vendors and
directors relating to fraud, malpractice or any other
activity or event which is against the interest of the
Bank or society as a whole. The details of Whistle
Blower complaints received and subsequent action
taken and the functioning of the Whistle Blower
mechanism are reviewed periodically by the Audit
Committee of the Board. During the Financial Year
2022-23, four complaints were received under the
Whistle Blower Mechanism. The functioning of the
Mechanism is reviewed by the Audit Committee from
time to time. No employee of the Bank has been
denied access to the Audit Committee for raising a
whistle blower complaint.
The policies are available on the official website of
the Bank. (www.esafbank.com)
33. Code Of Conduct To Regulate, Monitor And
Report Insider Trading
The Bank has in place, a Policy for Monitoring Insider
Trading which inter alia acts as the Code of Conduct
to Regulate, Monitor and Report ("Code") insider
trading in the securities of the Bank and the Code
of Practices and Procedures for Fair Disclosure of
Unpublished Price Sensitive Information ("UPSI").
The Code, inter alia, prohibits dealing in securities
by insiders while in possession of UPSI. The said
Code has been amended, from time to time, to give
effect to the various notifications/circulars of the
Securities and Exchange Board of India ("SEBI") with
respect to the SEBI (Prohibition of Insider Trading)
Regulations, 2015.
The Policy for Monitoring of Insider Trading
is available on the Bank''s website viz., URL:
https://www.esafbank.com/policies/.
34. Statutory Auditors
The Shareholders of the Bank in the Annual
General Meeting held on 29th September 2021
had appointed M/s. Deloitte Haskins and Sells,
Chartered Accountants with Firm Registration
number 117365W, based on the approval of the
Reserve Bank of India vide letter No. Ref DOS.ARG.
No.AS-10/08.61.005/2019-20 dated 08th May 2020 as
the Statutory Auditors of the Bank for a continuous
period of two years, to hold office from the
conclusion of the 05th Annual General Meeting till
the conclusion of the 07th Annual General Meeting
of the Bank, subject to the satisfaction of eligibility
norms each year. They have been the Statutory
Auditors of the Bank since the conclusion of the
04th Annual General Meeting of the Bank.
As per the RBI Circular Ref.No.DoS.CO.ARG/
SEC.01/08.91.001/2021-22 dated 27th April 2021,
entities with asset size of Rs. 150,000 million and
above as at the end of the previous year, shall conduct
the statutory audit under the joint audit of a minimum
of two audit firms [Partnership firms/Limited Liability
Partnerships (LLPs)]. As the asset size of the Bank as
on 31st March 2022 was Rs. 177,070 million, based on
the recommendation of the Audit Committee of the
Board and Board of Directors, the Shareholders of
the Bank in the 06th Annual General Meeting held on
13th December 2022 had appointed M/s. Abarna and
Ananthan, Chartered Accountants (Firm Registration
Number: 000003S) as the Joint Auditor of Bank for
a period of three financial years who will hold office
from the conclusion of the 6th Annual General Meeting
till the end of the 9th Annual General Meeting.
Considering the completion of tenure of
M/s. Deloitte Haskins & Sells, Chartered Accountants,
and based on the approval of Reserve Bank of India
vide letter No. Ref CO.DOS.RPD.No. S2270/08-61-
005/2023-24 dated 23rd June 2023 as the Statutory
Auditors of the Bank for the Financial Year 2023-24,
the Audit Committee and the Board of Directors have
recommended the appointment of M/s. Kirtane and
Pandit LLP, Chartered Accountants (Firm Registration
No. 105215W/W100057) as the Joint Statutory
Auditors of the Bank for the Financial Year 2023-24.
The Board of Directors in its meeting held on
08th February 2023 had approved an aggregate
professional fee of Rs. 8.50 million plus GST and
reimbursement of reasonable out of pocket expenses
for the Financial Year 2022-23, to be allocated by the
Bank between M/s. Deloitte Haskins and Sells and
M/s. Abarna and Ananthan , Chartered Accountants,
depending on roles and responsibilities and the
scope of work undertaken by each of them during
the course of audit.
35. 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 Board of Directors of
the Bank in the meeting held on 08th February 2023
has appointed Shri. M. Vasudevan, FCS, Practicing
Company Secretary (COP: 2437), Thrissur, holding
Membership No. F 4177 for a third term to conduct
a Secretarial Audit of the Bank for the Financial Year
2022-23 and to hold the office till the conclusion
of Seventh Annual General Meeting of the Bank.
The Secretarial Audit Report does not contain any
qualification, reservation or adverse remark and
the report for the Financial Year 2022-23 is enclosed
herewith as Annexure - III. The Bank has complied
with the Secretarial Standards specified by the
Institute of Company Secretaries of India and notified
by the Ministry of Corporate Affairs under Section
118(10) of the Companies Act, 2013.
36. Pillar III Disclosures
The Pillar III Disclosures of the Bank as on 31st March
2023, are enclosed herewith as Annexure-IV.
37. Particulars of contracts or arrangements
with Related Parties
All Related Party Transactions are entered into
with the prior approval of the Audit Committee
of the Board and an omnibus approval of the
Audit Committee is obtained for the Related Party
Transactions which are repetitive in nature. All the
transactions with related parties are reviewed by
the Audit Committee and the Board on a quarterly
basis. The details of transactions to be reported
under 134(3)(h) read with Rule 8(2) of the Companies
(Accounts) Rules, 2014, in Form AOC-2 are enclosed
herewith as Annexure-I.
38. Annual Return
Pursuant to the provisions of Section 134(3)
(a) and Section 92(3) of the Act read with Rule
12(1) of the Companies (Management and
Administration) Rules, 2014, the Annual Return of
the Bank is available on the Bank''s website viz., URL:
https://www.esafbank.com/investor-relations-info/.
39. Details in respect of frauds, if any, reported
by Auditors:
There were no frauds reported by the Statutory
Auditors for the Financial Year 2022-23.
40. Statutory Disclosures
None of the Directors of the Bank are disqualified as
per provisions of Section 164(2) of the Companies
Act, 2013. The Directors have made necessary
disclosures, as required under various provisions of
the Companies Act, 2013, Securities and Exchange
Board of India Regulations and guidelines of the
Reserve Bank of India.
41. Information as per Section 134 (3) (q) of the
Companies Act, 2013 read with Rule 8 of the
Companies (Accounts) Rules, 2014
i) The Bank has no activity relating to the
conservation of energy or technology absorption.
ii) During the Financial Year 2022-23, the
Bank had foreign currency expenditure of
Rs. 86,52,450.94/- and there were no foreign
currency earnings during the period.
42. Material changes and commitments
affecting financial position of the Bank
There have been no material changes and
commitments between the end of the Financial Year
2022-23 and the date of this report, affecting the
financial position of the Bank.
43. Explanations or comments by the Board on
every qualification, reservation, adverse
remark or disclaimer made in the Statutory
Auditor''s Report or in the Secretarial Audit
Report
There are no qualifications, reservations, adverse
remarks or disclaimers in the Auditor''s Report and
the Secretarial Audit Report.
44. Information About the Financial
Performance/ Financial Position of the
Subsidiaries, Associates and Joint Venture
Companies
The Bank does not have any subsidiaries, associates
or joint venture companies.
45. Deposits
Being a Banking Company, the disclosures required
as per Rule 8(5)(v) and (vi) of the Companies Accounts
Rules, 2014, read with Sections 73 and 74 of the
Companies Act, 2013, are not applicable to your Bank.
46. Loans / Guarantees / Investments
Being a Banking Company, the provisions of Section
186 of the Companies Act, 2013 is not applicable.
47. Cost Records
The Bank is not required to maintain cost records as
specified by the Central Government under sub-section
(1) of Section 148 of the Companies Act, 2013.
48. Significant and Material Orders
In accordance with Rule 8(5)(vii) of the Companies
(Accounts) Rules, 2014, there have been no significant
and material orders passed by the regulators or
courts or tribunals impacting the going concern
status and the future operations of the Bank.
49. Despatch Of Annual Report
The MCA has issued General Circular No.
20/2020 dated 05th May 2020 read with other
relevant circulars, including General Circular No.
10/2022 dated 28th December 2022 and applicable
circulars/ notifications issued by SEBI relaxing the
requirement of dispatching physical copies of the
Annual Report and the Notice convening the AGM to
Shareholders. Members who wish to have a physical
copy may write to the Company Secretary of the Bank
at [email protected] or submit a
written request to the Registered Office of the Bank.
In accordance with the aforesaid circulars, the web
link of the Annual Report and the Notice convening
the AGM of the Bank is being sent in electronic mode
only to members whose e-mail address is registered
with the Bank or the Depository Participant(s).
Those members, whose email address is not registered
with the Bank or with their respective Depository
Participant(s) and who wish to receive the Notice of
the AGM and the Annual Report for the financial year
ended 31st March 2023, can get their email address
registered by following the steps as detailed in the
Notice convening the AGM. The Annual Reports of
your Bank are available on the Bank''s website viz., URL:
https://www.esafbank.com/report/esaf-small-
finance-bank-annual-reports/.
50. Strictures and Penalties
Your Bank was not imposed any penalty or strictures
imposed by the SEBI /or any other statutory
authorities on matters relating to the capital market.
Acknowledgement
The Directors are grateful to the Reserve Bank of
India, other government and regulatory authorities,
other banks and financial institutions for their
support and guidance. The Directors gratefully
acknowledge the excellent relationship with the
Board of M/s. ESAF Financial Holdings Private Limited,
Corporate Promoter of the Bank and their continued
guidance and support for executing various activities
of the Bank. The Directors also place on record their
sincere thanks to the valued clients and customers
for their patronage. The Board also expresses its
deep sense of appreciation to all employees of the
Bank for their commitment and contribution to the
growth of the Bank.
For and on behalf of the Board of Directors
Sd/- Sd/-
Ravimohan Periyakavil Ramakrishnan Kadambelil Paul Thomas
DIN:08534931 DIN:00199925
Chairman Managing Director & CEO
Date: 06th September 2023
Place: Thrissur
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మరింత సమాచారం ESAF Small Finance Bank Ltd.
-
ESAF Small Finance Bank Ltd. కంపెనీ వివరాలు
- కంపెనీ ప్రొఫైల్
- కంపెనీ చరిత్ర
- నిర్వహణ బృందం
- క్యాపిటల్ స్ట్రక్చర్
- ప్రొడక్ట్ మిక్స్
- బ్యాంకర్/ఆడిటర్/రిజిస్ట్రార్
-
కంపెనీ చరిత్ర
- బిఎస్ఇ ధర చరిత్ర
- ఎన్ఎస్ఇ ధర చరిత్ర
-
ESAF Small Finance Bank Ltd. ముఖ్య ఆర్థిక నిష్పత్తులు
- నిష్పత్తులు
-
ESAF Small Finance Bank Ltd. ఫలితాలు
- క్వార్టర్లీ ఫలితాలు
- హాఫ్ ఇయర్లీ ఫలితాలు
- 9నెలల ఫలితాలు
- వార్షిక ఫలితాలు
-
ESAF Small Finance Bank Ltd. ఆర్థిక డేటా
- ఆడిట్ ఫలితాలు
- క్యాష్ ఫ్లో
- బ్యాలెన్స్ షీట్
-
ESAF Small Finance Bank Ltd. నివేదికలు
- అకౌంటింగ్ విధానాలు
- ఆడిటర్స్ నివేదిక
- డైరక్టర్స్ నివేదిక
- ఖాతాకు గమనికలు
-
ESAF Small Finance Bank Ltd. కార్పొరేట్ ప్రకటనలు
- బుక్ క్లోజర్
- డివిడెండ్
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