Capital Small Finance Bank Ltd
Directors Reports
DEAR SHAREHOLDERS,
The Directors of Capital Small Finance Bank Limited ("Bank" or
"Company") are pleased to report that the Bank has continued to deliver strong
financial results, with steady growth in key performance indicators such as total assets,
deposits, and loans disbursed. The Bank has remained focussed on prudent risk management
practices, resulting in a healthy loan portfolio and lower non-performing assets. The net
profit witnessed a significant increase, reflecting the Bank's relentless focus on
operational efficiency and the optimisation of its product and service offerings.
Furthermore, the Bank remains committed to providing
inclusive banking services to underserved communities. Embracing the digital
revolution, it has taken significant strides in its digital transformation journey by
introducing innovative digital products and services, including mobile banking
applications and online account opening. Customer satisfaction scores have steadily
improved due to the Bank's unwavering dedication to customer service excellence. Continual
enhancements to processes and offerings are underway to exceed customer expectations.
The Board extends sincere gratitude to all shareholders for their unwavering trust and
support. The Bank remains steadfast in its commitment to creating sustainable value and
delivering superior returns to its stakeholders.
1. Financial Performance at a Glance Profit and Loss Summary
Rs. in crores
|
FY 2023 |
FY 2022 |
Change Y-o-Y % |
Income |
|
|
|
Interest Earned |
676.0' |
578.22 |
Rs..9' |
Interest Expended |
354.02 |
322.94 |
9.62 |
Net Interest Income |
321.99 |
255.28 |
26.Rs. |
Other Income |
49.47 |
54.Rs. |
(8.69) |
Net Total Income |
37'.46 |
309.46 |
20.03 |
expenses |
Operating Expenses |
222.75 |
Rs.6.25 |
Rs..50 |
Employee Cost |
Rs.Rs..98 |
Rs.6.56 |
Rs..72 |
Other Operating Expenses |
Rs.4.77 |
89.69 |
Rs..8' |
Operating profit before Provisions and Contingencies |
148.71 |
113.21 |
31.36 |
Provisions (other than tax) and Contingencies |
24.55 |
28.72 |
(Rs..52) |
Profit Before Tax |
124.16 |
84.49 |
46.95 |
Tax Expenses |
30.56 |
2'.92 |
39.42 |
Profit after Tax |
93.60 |
62.57 |
49.59 |
Asset and Liability Composition
Rs. in crores
|
FY 2023 |
FY 2022 |
Change Y-o-Y % |
LIABILITIES |
|
|
|
Capital |
34.25 |
34.04 |
0.62 |
Reserves and Surplus |
576.36 |
48'.74 |
Rs..64 |
Deposits |
6,560.62 |
6,046.36 |
8.5' |
Borrowings |
72'.38 |
498.43 |
44.73 |
Other Liabilities and Provisions |
98.Rs. |
93.35 |
5.Rs. |
Total Liabilities |
7,990.77 |
7,153.92 |
11.70 |
Rs. in crores
|
FY 2023 |
FY 2022 |
Change Y-o-Y % |
ASSETS |
|
|
|
Cash and Balances with Reserve Bank of India |
462.65 |
363.99 |
27.Rs.Rs. |
Balances with Banks and Money at call and short notice |
4Rs..2' |
655.06 |
(36.Rs.) |
Investments |
Rs.,488.58 |
Rs.57.06 |
9.69 |
Advances |
5,428.69 |
4634.80 |
Rs..Rs. |
Fixed Assets |
82.59 |
83.59 |
(Rs..20) |
Other Assets |
Rs.Rs..05 |
59.42 |
85.2' |
Total Assets |
7,990.77 |
7,153.92 |
11.70 |
Key Ratios
in %age
|
FY 2023 |
FY 2022 |
Net Interest Margin' |
4.Rs. |
3.74 |
Gross NPAs |
2.77 |
2.50 |
Net NPAs |
Rs..36 |
Rs..36 |
Return on Assets2 |
Rs..22 |
0.92 |
Return on Equity |
Rs..62 |
Rs..95 |
Return on Average Advances |
Rs..89 |
Rs..56 |
Cost of Deposits |
4.90 |
5.02 |
CRAR |
Rs..87 |
Rs..63 |
Notes:
'Net Interest Margin has been computed based on the Net Interest income (Interest
Income - Interest Expense) and average of total assets as reported to Reserve Bank of
India in Form X under Section 27 of the Banking Regulation Act, Rs.49, during the year
2
Return on Assets is calculated with reference to monthly average working funds
(Working funds taken as total of assets excluding accumulated losses, if any)
The Indian economy grew at a robust pace of 7% in FY23, driven by strong private
consumption and investment. This growth led to an increase in demand for credit, which
benefited banking sector and Small Finance Banks (SFBs) the most. The incomes of Indian
households have been rising in recent years, which has also led to an increase in demand
for loans from SFBs. Additionally, the government has been supportive of SFBs, this has
helped SFBs to grow and expand their reach, particularly in underserved areas.
Capital Small Finance Bank Limited has demonstrated a robust financial performance for
the financial year ending March 3', 2023. The Bank has achieved remarkable growth across
key performance indicators, encompassing total assets, deposits, and loans disbursed.
Through its prudent risk management practices, the Bank has effectively maintained a
healthy loan portfolio, while minimising the occurrence of non-performing assets.
The Bank has demonstrated a notable rise in net profit, reflecting through its
relentless focus on operational efficiency and the optimisation of its product and service
offerings. These achievements are a testimony to the exceptional talent of our team,
who continually endeavour to excel in their respective roles.
Capital Small Finance Bank Limited continues to expand its presence across regions,
aiming to provide inclusive banking services to underserved communities, enabling it to
serve a broader customer base and contribute to financial inclusion. Capital Small Finance
Bank Limited acknowledges that its success is intricately linked to the satisfaction of
customers. Therefore, it remains dedicated to understanding the evolving needs and
expectations.
Talking about the Company's liability profile, it is dedicated to strengthening its
existing relationships to ensure the maintenance of high levels of Current Account and
Savings Account (CASA) deposits. The Bank's CASA Ratio has shown consistent improvement
over the past three financial years, reaching 41.88% for the year ending March 3', 2023,
42.16% for the year ending March 3', 2022, and 40.07% for the year ending March 3', 202'.
The focus on cost management is evident in its favourable cost of funds, which stood at
5.Rs.Rs.% for the financial year ended March 3', 2023, and 5.20%
for financial year ending March 31,2022. Additionally, its retail deposits constitute a
significant proportion, accounting for 97.90% as on March 31, 2023. Going forward, the
Bank remains committed to further increasing its CASA and retail deposits to optimise its
cost of funds.
Turning to Assets, the Bank takes pride in maintaining a high proportion of secured
lending, which constitutes 99.82% of the loan book. This focus on secured lending, coupled
with robust credit assessment processes and diligent risk management practices, has
contributed to a strong asset quality. As of March 31, 2023, its Gross Non-Performing
Assets (GNPA) stood low at 2.77%, and Net Non-Performing Assets (NNPA) at 1.36%. This
achievement is a testament to a deep understanding of its target customer base and
extensive experience across various business cycles during our two decades of banking
operations.
Furthermore, the Bank's loan portfolio diversification is noteworthy, with advances in
agriculture, MSME & trading, and mortgages segments amounting to Rs.137.45 crores,
Rs.004.56 crores, and Rs.434.48 crores, respectively, as of March 31, 2023. In the
previous year, as of March 31, 2022, these segments accounted for Rs.780.74 crores,
Rs.092.62 crores and Rs.128.45 crores, respectively. The average ticket size for these
segments as of March 31, 2023, stood at Rs..23 mn, Rs..91 mn and Rs..16 mn respectively.
In order to gain a foothold in new markets where the branch network is not yet
established, the Bank is actively seeking partnerships to expand geographical presence and
better understand these markets. By forging strategic alliances, it aims to mitigate
associated risks while diversifying the range of products and services. Such
collaborations will not only enhance the offerings but also contribute to the overall
growth of Capital Small Finance Bank Limited.
The Bank's profitability and operational metrics have showcased a consistent upward
trend, reflecting
its commitment to excellence. Over the years, the operating profit before provisions
has grown at a remarkable compound annual growth rate (CAGR) of approximately 44%, from
Rs.4.28 crores in FY19 to Rs.48.71 crores in FY23. Furthermore, profit before taxes has
increased from Rs.6.92 crore in the year ended March 31, 2019, to Rs.24.16 crores for year
ended March 31,2023. Similarly, profit after taxes has risen from Rs.9.42 crores in the
financial year ended March 31, 2019, to Rs.3.60 crores for year ended March 31, 2023. This
exceptional performance is a testament to the trust the Bank has built over the years,
supported by its professional and experienced leadership team and reputed shareholders
with a strong commitment to corporate governance.
Moving forward, the focus remains on strengthening of operational and profitability
metrics through several key strategies. Firstly, the aim is to optimise asset-liability
mix in favour of asset creation while increasing the credit to deposit ratio. Secondly, it
continue to emphasise on cost optimisation and efficiency improvement. Lastly, it intends
to enhance its fee income and leverage cross-selling opportunities to further diversify
our revenue streams.
Cost optimisation is a key area of focus and it is proud to have improved operating
expense (opex) ratio as a percentage of average assets, which stood at 2.90% in FY23
compared to 3.33% in FY 2020. The cost-to- income ratio is expected to continue its
improving trajectory and reach approximately 59.97% in FY23, building on the achievements
of 63.42% in FY22 and 70.75% in FY21.
The Board is confident that the continued focus on maintaining strong liabilities and
assets positions will contribute to the sustained growth and success of Capital Small
Finance Bank Limited.
The below table shows improving profitability ratios as a result of margin expansion
and improved efficiencies:
|
FY 2021 |
FY 2022 |
FY 2023 |
Return on Assets (RoA) |
0.70% |
0.92% |
1.22% |
Return on Average Advances |
1.23% |
1.56% |
1.89% |
Return on Equity (RoE) |
9.51% |
12.95% |
16.62% |
2. Dividend:
Based on the robust financial performance and profitability of Capital Small Finance
Bank Limited, the Board of Directors has recommended a Final Dvidend of Rs. 1.20 per
equity share (face value of Rs. 10 each) for
the financial year ending March 31,2023. This dividend payout demonstrates the Bank's
commitment to delivering value to its esteemed shareholders. The Board believes in sharing
the success of the institution with those who have placed their trust and invested
in Capital Small Finance Bank Limited. The Board remains dedicated to maintaining a
healthy dividend payout ratio while carefully considering the need for reinvestment in the
Bank's growth initiatives. The support and confidence of shareholders are greatly
appreciated, and the Board is pleased to reward their trust through this dividend
declaration.
3. Capital Adequacy Ratio (CAR):
The Capital Adequacy Ratio (CAR) plays a vital role in maintaining the stability and
soundness of banks. It is a regulatory requirement that ensures banks have sufficient
capital to absorb potential losses and meet their obligations to depositors and creditors.
By maintaining an adequate capital buffer, banks can mitigate the risk of insolvency and
contribute to the overall resilience of the financial system.
The Bank has developed a well-thought-out capital adequacy plan that considers both
systematic and idiosyncratic risks. Systematic risks are those that affect the entire
banking industry, such as changes in interest rates or economic conditions. Idiosyncratic
risks are those that are specific to a particular bank, such as problems with its lending
or investment activities. Capital Small Finance Bank Limited has made arrangements to
maintain sufficient buffer capital to address any potential stress and to provide ample
growth capital to keep its growth trajectory on track.
The Bank has consistently maintained a strong and healthy Capital Adequacy Ratio, which
reflects its robust capital position and adherence to regulatory requirements. As of the
financial year ending March 31, 2023, Capital Adequacy Ratio stood at 18.87%,
demonstrating its commitment to prudential capital management. This solid capital base
provides a solid foundation for the Bank's operations, supports its growth aspirations,
and instills confidence in our stakeholders. The Bank will continue to prioritise capital
adequacy, ensuring that it has the necessary buffers to navigate any future challenges and
capitalise on emerging opportunities in the dynamic banking landscape.
4. Capital and Debt Structure
a) Authorised Share Capital:
The Bank had authorised capital of Rs.0.00 crores and during the year under review,
there has been no change in the authorised share capital.
b) Issued and Subscribed Share Capital:
The Bank has issued, subscribed and paid up Share Capital of Rs.4.25 crores as on March
31, 2023. The Bank during the current year has issued and allotted 2,08,363 equity shares
to the employees detailing 27,323 Employee Stock Options on April 22, 2022, 1,56,273
Employee Stock Options on May 12, 2022 and 18,350 Employee Stock Option on September 30,
2022 of Rs.0/- each at a premium of Rs.8/- (i.e. at the total issue price of Rs.8/-) per
share and 6417 Equity Shares have been allotted to Material Risk Takers (MRTs as
identified by the Board in terms of Compensation policy) on May 12, 2022 of Rs.0/- each at
face value.
5. Disclosure regarding Employee Stock Option schemes
Capital Small Finance Bank Limited - Employees Stock Option Plan 2018 ("CSFB ESOP
Plan 2018") was approved by the shareholders of the Bank in the Annual General
Meeting held on August 18, 2018, amended further on October 22, 2021, for granting equity
options to its employees. Further the Capital Small Finance Bank Limited - Employees Stock
Option Plan for Material Risk Takers ("CSFB ESOP Plan MRT") was approved by the
shareholders of the Bank through Postal Ballot on July 11, 2020, amended further on
October 22, 2021, for granting equity options to Material Risk Takers (MRTs as identified
by the Board in terms of Compensation policy). The details of the said ESOP schemes as
required under Rule 12 (9) of the Companies (Share Capital and Debentures) Rules, 2014 is
as under:
Scheme |
CSFB ESOP Plan 2018 |
CSFB ESOP Plan for MRTs |
Date of Shareholders approval |
August 18, 2018 |
July 11, 2020 |
Total Number of options approved |
8,54,720 |
1,00,000 |
Exercise price per option |
Rs.8 |
Rs.0 |
Total No. of options outstanding at the beginning of the year |
5,72,439 |
19,251 |
Total options granted during the year |
76,000 |
19,299 |
Scheme |
CSFB ESOP Plan 2018 |
CSFB ESoP Plan for MRTs |
Total options Vested during the year |
2,29,516 |
6,417 |
Total options exercised |
2,01,946 |
6,417 |
the total number of shares arising as a result of exercise of option |
2,01,946 |
6,417 |
Options forfeited/lapsed |
48,600 |
Nil |
Total options in force as on March 31, 2023 |
3,97,893 |
32,133 |
Variation in terms of Options |
Nil |
Nil |
Money realised by exercise of Options |
1,97,90,708 |
64,170 |
Details of Stock Options granted to Directors & KMPs during the year |
KMP : Mr. Amit Sharma: 1,000 Mr. S. K. Dhawan: 1,000 Mrs. Richa Mahajan: 1,000 Mr.
Raghav Aggarwal: 1,000 |
KMP : Mr. Munish Jain: 19,299 |
Any other employee who receives a grant of options in any one year of options
amounting to five percent or more of total options granted during that year |
Nil |
Nil |
Identified employees who were granted options, during any one year, equal to or
exceeding one percent of the issued capital (excluding outstanding, warrants and
conversions) of the Bank at the time of grant |
Nil |
Nil |
The options have been granted basis fair value calculated as per Discounted Cash Flow
Methods.
Further the during the current year,
The Bank has issued and allotted 3,217 Unsecured Unlisted Redeemable
NonConvertible (Lower Tier-II) BASEL II Compliant Bonds 2022 - 23 (SERIES XX) in the
nature of debentures on May 12, 2022 of Rs.,00,000 each at par aggregating to
Rs.2,17,00,000/- on private placement basis with coupon rate of 9.25% p.a. (Simple
Interest) and redemption date of May 12, 2032.
The Bank has redeemed 604 11%Unsecured Redeemable Non-Convertible Subordinated
Bond (Lower Tier II) in the nature of Debenture Series - VII (ISIN number: INE646H08087),
on August 25, 2022 and the interest amount along with principal amount due thereon was
credited to the accounts of debentures holders as on August 25, 2022.
4. Disclosure regarding Sweat Equity Shares
In respect of the disclosure as per Rule 8(13) of the Companies (Share Capital and
Debenture) Rules, 2014, the Bank has not issued any Sweat Equity Shares during the
financial year under review.
5. Issue of Equity Shares with Differential Rights
Pursuant to Rule 4(4) of Companies (Share Capital and Debentures) Rules, 2014, the Bank
has not issued any Equity shares with differential right during the financial year under
review.
6. Listed Securities, Debenture Trustee Detail and Credit Rating
The debt securities of the Bank issued in the form of Upper Tier-II Bonds which are
listed on the BSE Limited and detail of the same is as under:
NCD Series |
Coupon Rate |
ISIN Number |
Rating by Brickwork Ratings India Private Limited on April 12, 2023 |
Rating by Care Ratings limited on March 10, 2023 |
Unsecured Redeemable NonConvertible (Upper Tier II), Basel I Compliant Bonds FY 2014 -
15 (series XI) |
11.75% |
INE646H08012 |
BWR A+ Outlook: (Stable) (Reaffirmation) |
CARE A-; Stable (Single A Minus; Outlook: Stable) |
Unsecured Redeemable NonConvertible (Upper Tier II), Basel I Compliant Bonds FY 2015 -
16 (series XIII) |
11.75% |
INE646H08020 |
BWR A+ Outlook: (Stable) (Reaffirmation) |
CARE A-; Stable (Single A Minus; Outlook: Stable) |
Contact details of Debenture Trustee:
Name: IDBI Trusteeship Services Limited Address: Asian Building, 17, R Kamani Marg,
Ballard Estate, Mumbai - 400 001.
E-mail: itsl@idbitrustee.co.in Tel No. 91-22-40807000.
7. Dematerialisation of Securities
The Bank has been issued ISIN for all the Equity Shares and debt securities by NSDL and
CDSL. The equity Shares of all the Directors, KMPs and Promoters have been dematerialised
and the Bank is making all possible efforts to make the security holders aware and get
their securities converted into Dematerialised form.
8. Compliances as per the Reserve Bank of India and the Government of India
The Bank has made statutory compliances with respect to all the applicable
rules/regulations/ guidelines/notifications issued by the Reserve Bank of India and the
Government of India.
9. Information as per Rule 5 (2) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014
(i) The information with regard to employees who are in receipt of remuneration in
excess of Rs.02.00 Lakh per annum or Rs..50 lakhs per month for a part of the year is
enclosed as Annexure - A
(ii) No employee in the Bank was in receipt of the remuneration in excess of that drawn
by the Managing Director and holds by himself or
along with his spouse or dependent children 2% or more equity shares of the Bank.
10. Information pursuant to Section 197(12) of the Companies Act, 2013 read with Rule
5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
The information under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of
the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in
respect of Directors and employees of the Bank is enclosed as Annexure - B to this
report.
11. Transfer of unclaimed dividend to Investor Education and protection fund
Pursuant to the relevant provisions of Section 125 of the Companies Act, 2013 and the
relevant rules made thereunder, the amount of unpaid dividends that are lying unclaimed
for a period of 7 years from the date of its transfer to the unpaid dividend account, is
liable to be transferred to Investor Education and Protection Fund (IEPF).
Accordingly, Unclaimed Dividends for and up to the financial year ended March 31, 2015
have already been transferred to the IEPF. Further, please note that the Unclaimed
Dividend in respect of the financial year ended March 31, 2016 must be claimed by the
concerned Shareholders on or before October 30, 2023 failing which it will be transferred
to IEPF in accordance with the Rules. The data for the same is available on the website of
the Bank at https://www. capitalbank.co.in/unclaimed-dividends.html
The details of Unclaimed Dividends as on March 31, 2023 and the last date for claiming
the same, prior to its transfer to the IEPF, are as under:
Dividend for the year ended |
Date of declaration of Dividend |
Last date for claiming Dividend |
March 31, 2016 |
September 23, 2016 |
October 30, 2023 |
March 31, 2017 |
July 22, 2017 |
August 28, 2024 |
March 31, 2018 |
August 18, 2018 |
September 24, 2025 |
March 31, 2019 |
September 27, 2019 |
November 3, 2026 |
March 31, 2020 |
- |
- |
March 31, 2021 |
August 20, 2021 |
September 26, 2028 |
March 31, 2022 |
August 5, 2022 |
September 11, 2029 |
Transfer of Underlying Equity shares in respect of the unclaimed Dividend to IEPF.
Pursuant to the relevant provisions of Section 124 and Section 125 of the Companies
Act, 2013 read with the IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016, as
amended from time to time, the unclaimed Dividend and the underlying Equity Shares of the
Bank for the Financial Year 2014 -15 (in case where the Dividend for subsequent 7
financial years have not been claimed by the concerned Shareholder), were liable to be
transferred by the Bank to IEPF Authority and the same has been transferred, pursuant to
the notification issued by the Ministry of Corporate Affairs (MCA) Dated October 16, 2017.
12. Explanation or comments on qualifications, reservations or adverse remarks or
disclaimers made by the auditors and the practicing company secretary in their reports
There are no qualifications, reservations or adverse remarks made by the Statutory
Auditors and by Secretarial Auditors in their respective Audit reports.
13. Annual Return pursuant to sub- section 3(a) of Section 134 and sub- section (3) of
Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and
Administration) Rules, 2014,
The Annual Return of the Bank is available on the website of the Bank at www.capitalbank.co.in
in the format (MGT-7) prescribed under the Act.
14. Requirement for maintenance of cost records
The cost records as specified by the Central Government under section 148(1) of the
Companies Act, 2013, are not required to be maintained by the Bank.
15. Disclosure under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3)
of the Companies (Accounts) Rules, 2014
Energy Conservation: Being a Banking Company, energy consumed during this period is
only in the form of electricity and diesel used in generators. The Bank has allocated
specific cost budgets for this purpose and to reduce electric waste for Head Office and
all its branches. The same is also monitored on periodical basis. Other measures like use
of LEDs, power saver air conditioning equipments etc. are being installed for conserving
the energy. There is no capital investment on energy conservation equipment other than
specified.
Technology Absorption: We at CAPITAL SMALL FINANCE BANK LIMITED (CSFB) believe that
the banks with the ability to adopt and integrate information technology will dominate in
the highly competitive domestic market. Accordingly, the Bank continues to leverage
information technology as a strategic tool in business operations for customer delight by
offering efficient and improved services with low cost and using it as a tool to improve
staff productivity, increasing efficiency and more efficient & effective control over
banking operations.
We are convinced that investing in IT is critical and also understand that its
potential and consequences on the banking is enormous. That is why the Bank since its
inception is equipped with a full-fledged Information Technology Department with required
manpower to strengthen develop, maintain and support IT infrastructure.
Foreign exchange earnings and outgo: There was no foreign exchange earning or outgo
during the year under review.
16. Disclosures Under Section Sec 134(3)(l) of the Companies Act, 2013
There are no material changes and commitments, affecting the financial position of the
Bank, which has occurred between the end of the financial year of the Bank to which the
financial statements relates and date of this report.
17. Details of significant & material orders passed by the regulators or courts or
tribunals
There are no significant material orders passed by the Regulators or Courts or Tribunal
which would impact the going concern status of the Bank and its future operations.
18. Disclosure of Penalties imposed on the Bank during the Financial Year
There has been no penalty imposed by the Reserve Bank of India on the Bank except that
of Rs..06 crores during the year ended March 31, 2023 for nonreplenishment of ATMs in
normal course of action in terms of RBI circular no. RBI/2021-22/84 DCM (RMMT) No.
S153/11.01.01/2021-22 on Monitoring of Availability of Cash in ATMs dated August 10, 2021.
19. Compounding Fees paid to SEBI
Pursuant to a voluntary settlement application filed by the Bank before the Securities
and Exchange Board of India on September 2, 2021 (which was physically submitted on
September 8, 2021) in
respect of allotments made by the Bank to more than 49 investors during the Financial
Year 2004 - 05, the Bank has paid an amount of Rs.,80,000 to SEBI as compounding fee.
20. Transfer to reserves in terms of Section 134(3)(j) of the Companies act, 2013
For the financial year ended March 31,2023, the Bank had transferred Rs. 23.40 crores
to the Statutory Reserve Fund (maintained under section 17(1) of the Banking Regulation
Act, 1949. The Bank has transferred Rs..45 crores to Special Reserve maintained under
section 36(viii) of the Income Tax Act, 1961.
21. Deposits
Being a Banking company, the disclosures required as per Rule 8(5)(v) & (vi) of the
Companies (Accounts) Rules, 2014 read with Section 73 and 74 of the Companies Act, 2013
and Companies (Acceptance of Deposits) Rules, 2014 are not applicable. The details of the
deposits received and accepted by your Bank as a Banking company have been disclosed in
the financial statements for the financial year ended March 31, 2023
22. Asset-Liability and Risk Management pursuant to section 134 (3)(n) of Companies
Act, 2013
The Bank has formulated and adopted a robust risk management framework. Whilst the
Board is responsible for framing, implementing and monitoring the said risk management
framework, it has delegated its powers relating to monitoring and reviewing of risk
associated with the business of the Bank to the Risk Management Committee. Bank follows an
integrated approach to managing risks and the processes are embedded in the fundamental
business model. The Risk Management Landscape in the Bank covers the stages of
identifying, assessing, measuring, managing, controlling and reporting risk concerns
across all the risk classes viz. Credit, Market and Operational Risks and Liquidity Risk.
The Risk Management Policies adopted and reviewed periodically articulate, codify the
strategy, structure, processes and systems to manage bank wide risks. Expanding business
arenas, deregulation and globalisation of financial activities, emergence of new financial
products and increased level of competition has necessitated the need for an effective and
structured risk management practice in financial institutions.
The Bank has adopted an integrated approach for the management of risk. Effective
internal policies are
developed in tune with the business requirements and best practices. Capital Bank has
formulated Risk Management Policy' which also includes Internal Capital Adequacy
Assessment Policy (ICAAP) for identifying and measuring various operational, credit,
market and solvency risks. Operational risks are managed through comprehensive systems of
internal control, establishing systems and procedures to monitor transactions, maintaining
key back-up procedures and undertaking regular contingency planning. We constantly strive
to enhance the risk management capabilities in accordance with the emerging regulatory
guidelines and the broad risk management principles. The Bank reviews the risk management
system and the progress made in implementing the RBI guidelines on risk management, on a
quarterly basis. The Asset Liability Management Committee (ALCO), consisting of the Bank's
senior management and the Managing Director, is responsible for ensuring adherence to the
limits set by the Board as well as for deciding the business strategy of the Bank (on the
assets and liabilities sides) in line with the Bank's budget and decided risk management
objectives. The Committee actively manages and controls the structure of assets and
liabilities and interest rate sensitivities with a view of optimising profits besides
maintaining capital adequacy and sufficient liquidity. Statements for Structured
Liquidity, Liquidity Coverage and Interest Rate Sensitivity of the bank is being prepared
in line with the RBI guidelines to actively manage the liquidity and interest rate risks.
Liquidity Risk Management has been at the core of sound risk management practices of
banking industry in the modern age. The Liquidity risk is the potential inability to meet
the Bank's liabilities as they become due. It arises when the Banks are unable to generate
cash to cope with a decline in deposits or increase in assets.
The Bank gives utmost importance to manage various risks in most efficient way and has
articulated comprehensive structure for liquidity risk management through various policy
including Contingency Funding Plan (CFP) which aims to address the adverse liquidity
scenarios. It is recommended by ALCO to Risk Management Committee of Board (RMCB) on
annual basis for approval and is reviewed quarterly by the ALCO. In case, any review by
the ALCO results in the funding gap, ALCO will be responsible to establish an action plan
on the same which shall be approved by the
RMCB. Further the decision to use the lines of defence as per the CFP lies with the
ALCO. The contingency is defined in various scenarios. The comprehensive CFP endeavours to
monitor liquidity on real time basis, with a wide and unrelated range of lines of defence,
along with proper channel of reporting, escalation and decision making.
Further, the Bank has formulated Stress Testing Framework for evaluation of Bank's
financial position under a severe but plausible scenario to assist in decision making
within the Bank. It enables the Bank in forward looking assessment of risks. It
facilitates internal and external communication and helps senior management understand the
condition of the Bank in the stressed situations. Stress testing outputs are extremely
useful in decision making process in terms of potential actions like risk mitigation
techniques, contingency plans, capital and liquidity management in stressed conditions.
Stress testing forms an integral input of the internal capital adequacy assessment
process (ICAAP), which requires the Bank to undertake forward-looking stress testing that
identifies severe events or changes in market conditions that could adversely impact the
Bank. The stress testing reports provide the senior management with a thorough
understanding of the material risks to which the Bank may be exposed and to help in
potential actions like mitigation techniques, contingency plans, capital and liquidity
management in stressed conditions etc. Further, stress testing is an important input in
identifying, measuring and controlling funding liquidity risks, in particular for
assessing the Bank's liquidity profile and the adequacy of liquidity buffers in case of
both bank- specific and market-wide stress events.
The Bank has a strong impetus on risk management and it realised that risk management
is backbone of banking industry and being an evolving topic, the bank attempts to keep
evolving various newer avenues to manage risk effectively and efficiently as per the risk
management policy and framework of the bank so that the whole structure is well aligned
with the risk appetite, risk assessment and risk mitigation strategy of the Bank.
23. Independent Directors Declaration in terms of Section 134(3)(d); Section 149(6) of
Companies Act 2013
The composition of Board of Directors of the Bank is governed by the provisions of the
Companies Act, 2013 and the Banking Regulation Act, 1949. The Board of the Bank as on
March 31, 2023 consisted
of twelve Directors, out of which seven directors are independent Directors.
The Bank has obtained declaration of Independence from Mr. Rakesh Soni, Ms. Harmesh
Khanna, Mr. Sham Singh Bains, Mr. Navin Kumar Maini, Mr. Gurdeep Singh, Mr. Gurpreet Singh
Chug and Mr. Nageswara Rao Yalamanchili and they meet the criteria of independence as laid
down under Section 149(6) of the Companies Act, 2013. Further, all the Independent
Directors have complied with the Code for Independent Directors prescribed in Schedule IV
to the Act. The separate meeting of Independent Directors was conducted on December 13,
2022.
Pursuant to the Rule 8(5) (iiia) of the Companies (Accounts) Rules, 2014, the Board
opines that all the Independent Directors of the Bank adhere to corporate integrity,
possess the requisite expertise, experience and qualifications to discharge the
responsibilities as an Independent Director as mandated by the Companies Act, 2013 and
other applicable laws.
All the Independent Directors of the Bank have been registered and are members of the
Independent Directors Databank maintained by the Indian Institute of Corporate Affairs
(IICA). Six Independent Directors were already granted exemption from appearing for the
Online Proficiency Self-Assessment test conducted by IICA. One Independent Director, Mr.
Gurpreet Singh Chug has appeared for the online Proficiency Self-Assessment test during
the year and passed the same.
24. Company's Policy on Directors' Appointment & Remuneration including criteria
for determining Qualifications, Attributes, Independence etc. in terms of Section
134(3)(e); Section 178(1) & (3) of the Companies Act 2013
Basis the Fit and Proper' criteria laid down by the Reserve Bank of India, the
Nomination and Remuneration Committee (NRC) conducts the due diligence of the Board
members on yearly basis except for the Directors who are member of the NRC.
Further Board also conducts due diligence of all the Directors on yearly basis. The due
diligence process involves considering the appointment and remuneration of Directors and
Key Managerial Personnel as per the guidelines issued by Reserve Bank of India and the
Companies Act, 2013. The process contains detailed procedures for determining
qualifications , positive attributes, due diligence mechanism and reference checks for
appointment of Directors and Key Managerial Personnel.
The Bank has put in place the Compensation Policy for Employees including MD & CEO,
WTD and other Material Risk Takers (MRTs) and Comprehensive Compensation policy for
Non-Executive Directors with a key objective to support organisational strategy by helping
to build a competitive, high performance and accompany with an entrepreneurial culture
that attracts, retains, motivates and rewards high performing employees as well as
properly compensate the employees vis-a-vis their risk and performance involvement. The
policies are available on the website of the Bank at www.capitalbank.co.in.
25. Performance Evaluation of Board in terms of Section 134(3)(p) of the Companies Act,
2013
The Nomination and Remuneration Committee (NRC) and the Board has approved the
evaluation process for evaluating the performance of the Board and Committees as whole and
individual director. A separate meeting of Independent Directors was held on December 13,
2022 which carried out the annual evaluation of the performance of NonExecutive
Non-Independent Directors, Executive Directors, Chairperson, Board as a Whole and Board
Committees. Further the Board of Directors in its meeting held on February 9, 2023 had
also conducted the Annual evaluation of performance of Board as a whole, Board Committees,
Chairperson, Managing Director, Non-Executive Directors.
26. State of the Company's Affairs in terms of Section 134(3)(i) of the Companies Act
2013
The state of affairs of the Company in details has been given separately in different
sections of the Board Report and also under Management Discussion and Analysis. There was
no change in status of the Bank during the year ended March 31, 2023.
27. Name of the companies which have become or ceased to be Subsidiaries/ Associates or
Joint Ventures during the year in terms of Section 134(3) (q) read with Rule 8(5)(iv) of
Companies (Account) Rules, 2014
No Company have become or ceased to be the Subsidiary, Joint venture or Associate
Company of the Bank during the financial year.
28. Disclosure Under the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 in terms of the Sexual Harassment of Women at the
workplace (Prevention, Prohibition & Redressal) Act, 2013
The Bank has formulated Internal Compliant Committees at Head office level and at
Cluster level (for Branches). The composition of the committees is in consonance with the
provisions of the Sexual Harassment of women at the workplace (Prevention, Prohibition
& Redressal) Act, 2013. These committees are formulated for redressal of complaints
for Sexual Harassment of women at the workplace and take all necessary measures to ensure
a harassment-free workplace. The Bank believes that all employees, including other
individuals who are dealing with the bank have the right to be treated with dignity.
The cases reported to the Bank, if any were duly addressed and resolved. There is no
pending complaint under the said act.
The following is the summary of the complaints received and disposed off during the
Financial Year 2022 - 23
In Head Office (including Regional Offices)
a) No. of SH complaints received: Nil
b) No. of SH complaints disposed off: Nil In Branches:
a) No. of SH complaints received: Nil
b) No. of SH complaints disposed off: Nil
The Committee believes in ethics and takes appropriate action against the employees who
have violated the norms, which includes disciplinary action such as warning letter and in
some cases termination of employment depending upon the gravity of violation.
29. Adequacy of Internal Financial Controls Related to Financial Statements
The Companies Act, 2013 has introduced a reasonably advanced reporting concept for
auditors i.e. Internal Financial Control (IFC) over financial reporting. Auditors of the
Company are required to report on adequacy and operating effectiveness of internal
financial controls of the Company with report on financial statements prepared under
section 143 of the Companies Act, 2013.
The Bank as per the requirement of section 134(5) (e) has adopted the policies and
procedures to ensure orderly and efficient conduct of its business, including adherence to
the Company's policies, safeguarding of its assets prevention and detection of frauds and
errors, accuracy and completeness of accounting records, timely preparation of reliable
financial information.
During the year under review, the Statutory Auditors and the Secretarial Auditors have
not reported any instances of frauds committed in the Bank by its Officers or Employees to
the Audit Committee under section 143(12) of the Companies Act, 2013, details of which
needs to be mentioned in the Report.
30. Directors
The Board of the Bank is duly constituted in accordance with the provisions of Banking
Regulation Act, 1949, the Companies Act, 2013 and other applicable law/guidelines.
Mr. Sarvjit Singh Samra has held the office as Managing Director & CEO of the Bank
w.e.f. April 24, 2019 for a period of three years. He has been further reappointed as
Managing Director and CEO of the Bank w.e.f. April 24, 2022 for a period of three years.
Mr. Sarvjit Singh Samra has been instrumental in taking key decisions from day one that
have contributed to the Bank emerging as the most preferred Bank in its area of operation.
His vision to serve common man and the local touch has given the Bank a competitive edge
over other banks operating in the area and the Bank is able to provide safe, efficient and
service oriented repository of savings to the local community while reducing their
dependence on moneylenders by making need-based credit easily available
Appointment of Part-time Chairman
During the year under review, the Reserve Bank of India conveyed the approval for the
appointment of Mr. Navin Kumar Maini (DIN: 00419921) as Part-time Chairman of Capital
Small Finance Bank Limited for a period of three years w.e.f. April 24, 2022.
Retirement/Appointment of Directors in compliance to Section 10(2A)(i) of the Banking
Regulation Act, 1949
The Board is duly constituted as per the provisions of Banking Regulation Act, 1949,
Companies Act, 2013, RBI guidelines for Small Finance Banks and SEBI (Listing Obligations
and Disclosure Requirements) Regulations 2015, as may be applicable.
During the year Mr. Madan Gopal Sharma (DIN: 00398326) ceased to be the Director and
Part - time Chairman of the Bank w.e.f April 23, 2022 on completion of his tenure. Further
Mr. Sarvjit Singh Samra (DIN: 00477444) has been re-appointed as Managing Director and
Chief Executive Officer (CEO) w.e.f April 24, 2022 till the completion of the three years.
Further during the year under review,
the Board of Directors in its meeting held on June 29, 2022, on the recommendation of
Nomination and Remuneration Committee, had appointed Mr. Nageswara Rao Yalamanchili as
Additional Director (Independent) w.e.f. June 29, 2022 and reappointed Mr. Sham Singh as
Independent Director w.e.f. November 9, 2022 subject to the approval of Shareholders of
the Bank. Further the Shareholders of the Bank in the Annual General Meeting held on
August 05, 2022 had approved the appointment of Mr. Nageswara Rao Yalamanchili (DIN:
06651230) as Independent Director w.e.f. June 29, 2022 and Mr. Balbir Singh as Non -
Executive Director (Nominee Director) w.e.f march 09, 2022 and re-appointed Mr. Sham Singh
as Independent Director w.e.f. November 9, 2022
Directors Retiring by Rotation
In terms of Section 152 of the Companies Act, 2013, Mr. Dinesh Gupta, director being
longest in the office shall retire at the forthcoming Annual General Meeting and being
eligible for re- appointment, offers himself for re- appointment.
Appointments/Resignations of the Key Managerial Personnel
The Bank had following key managerial personnel as on April 1, 2022:
Name |
Designation |
Mr. Sarvjit Singh Samra |
Managing Director and Chief Executive officer |
Mr. Munish Jain |
Chief Financial Officer and Chief Operating Officer |
Mr. Amit Sharma |
Company Secretary and Compliance Officer |
Mr. Santosh Kumar Dhawan |
Head of Credit |
Mr. Raghav Aggarwal |
Chief Risk Officer |
Ms. Richa Mahajan |
Chief Compliance Officer |
The Board in its meeting held on February 9, 2023 has reclassified KMPs. Accordingly,
as on March 31,2023 following are the KMPs of the Bank:
Name |
Designation |
Mr. Sarvjit Singh Samra |
Managing Director and Chief Executive officer |
Mr. Munish Jain |
Chief Financial Officer and Chief Operating Officer |
Mr. Amit Sharma |
Company Secretary and Compliance Officer |
Further, there was no appointment/resignation of any Key Managerial Personnel during
the financial year.
31. Corporate Governance
Corporate governance is the combination of rules, processes or laws by which businesses
are operated, regulated or controlled and that aims at effective, transparent, and
responsible management of a company within the applicable statutory and regulatory
structures.
Over the last several years, the external environment in which public companies operate
has become increasingly complex for companies and shareholders alike. The increased
regulatory burdens imposed on public companies in recent years have added to the costs and
complexity of overseeing and managing a corporation's business and bring new challenges
from operational, regulatory and compliance perspectives. Many cases of Management
failures and financial crisis have been reported in the finance industry during the
financial year and all these are the cause of poor corporate governance.
Your Bank has formulated a Corporate Governance framework which ensures timely
disclosures and
filing of correct information regarding our financials and performance, as well as the
leadership and governance of the Bank. The Board is constituted professionally with a
strong commitment to shareholder value, transparency, accountability, ethical standards
and regulatory compliances.
The Board's supervisory role is independent and separate from the executive management
and the Board Committees. The Composition of the Board of Directors as on March 31,2023
comprised of majority of Independent directors and this is a great step of the Bank
towards better Corporate Governance.
The Board presently comprises of twelve Directors including one woman director and it
provides diverse combination of professionalism, knowledge, expertise and experience as
required in the banking business for long-term success. The Board has seven Independent
Directors constituting more than one-half of its total membership strength including one
women Director and 3 Nominee Directors. The Directors have distinguished themselves in
different walks of life through experience and expertise.
MEETINGS OF THE BOARD AND COMMITTEES OF THE BOARD > Board of Directors
The Board of Directors of the Bank meets regularly to discuss and decide on various
business policies, strategies and other businesses. The Board meetings are convened in
compliance with the provisions of the Companies Act, 2013, Secretarial Standard and other
laws applicable to the Bank. The Board met 7 times during the year under review and the
requisite quorum was present in all the meetings.
Details of the composition of the Board, dates of the meetings of the Board held during
the Financial Year 2022 - 23 and details of attendance of Directors at the meetings of
Board and Annual General Meeting ("AGM") held during the Financial Year 2022-23
are as follows:
Name of the Director |
Category |
Total Number of Board Meeting held during the Year: 7 Meetings |
AGM |
May 13, 2022 |
June 29, 2022 |
August 10, 2022 |
September 1, 2022 |
October 18, 2022 |
February 9, 2023 |
March 29, 2023 |
August 5, 2022 |
Mr. Sarvjit Singh Samra |
Managing Director |
A |
A |
A |
A |
A |
A |
A |
A |
Mr. Dinesh Gupta |
Non-Executive NonIndependent Director |
A |
A |
A |
A |
A |
A |
A |
A |
Mr. Mahesh Parasuraman |
A |
LOA |
A |
A |
A |
A |
A |
LOA |
Mr. Srinath Srinivasan |
A |
A |
A |
A |
A |
A |
A |
LOA |
Mr. Balbir Singh |
LOA |
A |
LOA |
LOA |
LOA |
LOA |
A |
LOA |
Mr. Gurdeep Singh |
Non-Executive Independent Director |
A |
A |
LOA |
LOA |
A |
LOA |
A |
LOA |
Mr. Gurpreet Singh Chug |
A |
A |
A |
A |
A |
A |
A |
A |
Ms. Harmesh Khanna |
A |
A |
LOA |
A |
A |
A |
LOA |
A |
Mr. Navin Kumar Maini |
Z |
z |
Z |
z |
z |
z |
z |
z |
Mr. Rakesh Soni |
A |
A |
LOA |
A |
A |
A |
LOA |
A |
Mr. Sham Singh Bains |
A |
A |
A |
A |
A |
A |
A |
A |
Mr. Nageswara Rao Yalamanchili |
NA* |
NA* |
A |
A |
A |
A |
A |
A |
> Committees of Directors
The Bank has several committees which have been established as a part of best Corporate
Governance practices and are in compliance with the requirements of the relevant
provisions of applicable laws and statutes. The Bank has following Committees of the Board
as on March 31, 2023
COMPOSITION OF COMMITTEES OF DIRECTORS AS ON MARCH 31, 2023
Name of Director |
Category |
Name of the Board Level Committees |
Nomination and
Remuneration
Committee |
Securities Committee |
Audit Committee |
Corporate Social
Responsibility
Committee |
Management Committee |
Risk Management
Committee |
Stakeholders' Relationship
Committee |
Special Committee on Frauds |
IPO Committee |
IT Strategy Committee* |
Mr. Sarvjit Singh Samra |
Managing Director |
|
|
|
0 |
0 |
|
|
A |
A |
A |
Mr. Dinesh Gupta |
Non-Executive Non- Independent Director |
|
& |
A |
|
A |
A |
A |
A |
A |
|
Mr. Mahesh Parasuraman |
|
|
|
|
|
|
|
|
A |
|
Mr. Srinath Srinivasan |
|
|
|
|
|
|
|
|
A |
|
Mr. Balbir Singh |
|
|
|
|
|
|
|
|
|
|
Mr. Gurdeep Singh |
Non-Executive Independent Director |
A |
A |
|
A |
|
|
A |
|
|
|
Mr. Gurpreet Singh Chug |
& |
|
A |
|
A |
A |
|
A |
0 |
0 |
Ms. Harmesh Khanna |
|
|
A |
|
A |
A |
|
A |
|
|
Mr. Navin Kumar Maini |
|
|
|
|
|
|
A |
0 |
|
|
Mr. Rakesh Soni |
A |
|
& |
A |
A |
A |
|
|
|
|
Mr. Sham Singh Bains |
A |
A |
A |
A |
|
|
A |
|
|
|
Mr. Nageswara
Rao
Yalamanchili |
|
|
|
|
|
|
|
|
|
A |
1. Nomination and Remuneration Committee
Composition as on March 31, 2023 |
Number and Dates of Meetings held during the Financial Year |
Name |
Nature of Directorship |
Chairperson / Member |
Number of Meetings held: 6 |
Mr. Gurpreet Singh Chug |
Independent Director |
0 Chairperson |
Dates of the meetings: April 29, 2022
June 24, 2022
August 6, 2022
November 21, 2022
February 24, 2023
March 22, 2023 |
Mr. Sham Singh Bains |
Independent Director |
A Member |
Mr. Rakesh Soni |
Independent Director |
A Member |
Mr. Gurdeep Singh |
Independent Director |
A Member |
Brief Terms of Reference and Responsibilities:
1. To consider Fit and proper' criteria for directors at the time of
appointment/renewal of appointment of the Bank
2. The consider the remuneration proposed to be paid to Managing Director/Whole Time
Director as per Compensation Policy of the Bank and recommendation of same to the Board.
3. Take into account, financial position of the company, trend in the industry,
appointee's qualification, experience, past performance, past remuneration etc.
4. To consider to be in a position to bring about objectivity in determining the
remuneration package while striking a balance between the interest of the Bank and the
shareholders.
2. Securities Committee
Composition as on March 31, 2023 |
Number and Dates of Meetings held during the Financial Year |
Name |
Nature of Directorship |
Chairperson / Member |
Number of Meetings held: 7 |
Mr. Dinesh Gupta |
Non - Executive Director |
z Chairperson |
Dates of the meetings: April 22, 2022
May 12, 2022
June 27, 2022
September 17, 2022
September 30, 2022
December 26, 2022
March 31, 2023 |
Mr. Sham Singh Bains |
Independent Director |
A Member |
Mr. Gurdeep Singh |
Independent Director |
A Member |
Brief Terms of Reference and Responsibilities:
1. To consider and approve the share/bond transfers lodged by the members with the
Bank.
2. To verify the compliance of RBI and other legal regulations for allotment of
securities.
3. To consider manner, holding and other credentials of holder of securities.
4. To consider the basis of allotment of securities as per authorisation of the Board
and all other aspects with regard to the Issue.
6. Risk Management Committee
Composition as on March 31, 2023 |
Number and Dates of Meetings held during the Financial Year |
Name |
Nature of Directorship |
Chairperson / Member |
Number of Meetings held: 4 |
Ms. Harmesh Khanna |
Independent Director |
A Chairperson |
Dates of the meetings: May 06, 2022
August 01, 2022
November 30, 2022
February 13, 2023 |
Mr. Rakesh Soni |
Independent Director |
A Member |
Mr. Gurpreet Singh Chug |
Independent Director |
A Member |
Mr. Dinesh Gupta |
Non-Executive Director |
A Member |
Brief Terms of Reference and Responsibilities:
1. To review the Credit Risk Management System - Exposure Norms, Concentration of
Advances, Credit wise & segment wise classification of Advances, Quality of Loan
Portfolio, independent validation of credit rating, risk pricing of assets.
2. To review the Market Risk - present market positions, liquidity risk, interest rate
risk and minutes of ALCO, Review and approval of market risk limits.
3. To review the report on Internal Capital Adequacy Assessment.
4. To review IT risk assessment.
5. To review operation Risk assessment with special attention to KYC, Re KYC, AML
aspects.
6. To Review the Risk Management and Asset & Liability Policy.
7. To review the Contingency Plan.
8. To review the Risk Appetite Statement.
7. IT Strategy Committee
Composition as on March 31, 2023 |
Number and Dates of Meetings held during the Financial Year |
Name |
Nature of Directorship |
Chairperson / Member |
Number of Meetings held: 4 |
Mr. Gurpreet Singh Chug |
Independent Director |
A Chairperson |
Dates of the meetings: June 28, 2022
September 08, 2022
December 26, 2022
March 14, 2023 |
Mr. Nageswara Rao Yalamanchili |
Independent Director |
A Member |
Mr. Sarvjit Singh Samra |
Managing Director |
A Member |
Mr. Munish Jain |
Chief Financial Officer |
A Member |
Mr. Harvinder Singh |
Chief Information Officer |
A Member |
Mr. Vimal Kumar Kamal |
Chief Information Security Officer |
A Member |
The Company Secretary acts as a Secretary to the Committee.
Brief Terms of Reference and Responsibilities:
1. Perform oversight functions over the IT Steering Committee (at a senior management
level).
2. Investigate activities within this scope.
3. Seek information from any employee.
4. Obtain outside legal or professional advice.
5. Secure attendance of outsiders with relevant expertise, if it considers necessary.
6. Work in partnership with other Board committees and Senior Management to provide
input, review and amend the aligned corporate and IT strategies.
8. Stakeholders' Relationship Committee
Composition as on March 31, 2023 |
Number and Dates of Meetings held during the Financial Year |
Name |
Nature of Directorship |
Chairperson / Member |
Number of Meetings held: 1 |
Mr. Dinesh Gupta |
Non-Executive Director |
A Chairperson |
Dates of the meetings: December 14, 2022 |
Mr. Navin Kumar Maini |
Independent Director |
A Member |
|
Mr. Sham Singh Bains |
Independent Director |
A Member |
|
Mr. Gurdeep Singh |
Independent Director |
A Member |
|
Brief Terms of Reference and Responsibilities:
1. Formulation of procedures in line with the statutory guidelines to ensure speedy
disposal of various requests received from shareholders from time to time;
2. Review of adherence to the service standards adopted by our Bank in respect of
various services being rendered by the Registrar and Share Transfer Agent;
3. Consider and resolve grievances of security holders of our Bank.
4. Review of measures taken for effective exercise of voting rights by shareholders.
5. Review of the various measures and initiatives taken by our Bank for reducing the
quantum of unclaimed dividends and ensuring timely receipt of dividend warrants/annual
reports/statutory notices by the shareholders of our Bank;
6. Carrying out any other functions contained in the Companies Act, 2013 and/or equity
listing agreements (if applicable).
3. Audit Committee
Composition as on March 31, 2023 |
Number and Dates of Meetings held during the Financial Year |
Name |
Nature of Directorship |
Chairperson / Member |
Number of Meetings held: 5 |
Mr. Rakesh Soni |
Independent Director |
& Chairperson |
Dates of the meetings: May 05, 2022
August 03, 2022
August 31,2022
October 17, 2022
February 08, 2023 |
Ms. Harmesh Khanna |
Independent Director |
A Member |
Mr. Gurpreet Singh Chug |
Independent Director |
A Member |
Mr. Dinesh Gupta |
Non - Executive Director |
A Member |
Mr. Sham Singh Bains |
Independent Director |
A Member |
Brief Terms of Reference and Responsibilities:
1. The Audit Committee has the powers to investigate any activity, seek information
from any employee of the Bank, obtain outside legal or other professional advice; Such
powers as may be prescribed under the Companies Act, 2013 (together with the rules
thereunder) and SEBI Listing Regulations.
2. Oversight of the Bank's financial reporting process and the disclosure of its
financial information to ensure that the financial statement is correct, sufficient and
credible.
3. Recommendation for appointment, replacement, reappointment and approval for
remuneration and terms of appointment of statutory auditors of the Bank.
4. Monitoring the end use of funds raised through public offers and related matter.
5. Evaluation of internal financial controls and risk management systems.
6. Approval or any subsequent modification of transactions of the Bank with related
parties.
7. To formulate, review and make recommendations to the Board to amend the Audit
Committee charter from time to time.
8. To review the functioning of the whistle blower mechanism.
9. To review the working of compliance and Vigil Department division.
10. Carrying out any other function as may be required / mandated as per the provisions
of the Companies Act, 2013, the SEBI Listing Regulations, any directions, circulars,
notification issued by the Reserve Bank of India and/or any other applicable laws.
4. Corporate Social Responsibility Committee
Composition as on March 31, 2023 |
Number and Dates of Meetings held during the Financial Year |
Name |
Nature of Directorship |
Chairperson / Member |
Number of Meetings held: 2 |
Mr. Sarvjit Singh Samra |
Managing Director |
O Chairperson |
Dates of the meetings: May 12, 2022
August 31,2022 |
Mr. Rakesh Soni |
Independent Director |
A Member |
Mr. Sham Singh Bains |
Independent Director |
A Member |
Mr. Gurdeep Singh |
Independent Director |
A Member |
The Company Secretary acts as a Secretary to the Committee.
Brief Terms of Reference and Responsibilities:
1. To formulate and recommend to the Board of Directors, the CSR Policy, indicating the
CSR activities to be undertaken as specified in Schedule VII of the Companies Act, 2013,
as amended.
2. To recommend to the Board of Directors, the amount of expenditure to be incurred on
the CSR activities.
3. To monitor the CSR Policy and its implementation by the Bank from time to time.
4. To approve the CSR projects of the Bank.
5. To perform such other functions or responsibilities and exercise such other powers
as may be conferred upon the CSR Committee in terms of the provisions of Section 135 of
the Companies Act, 2013, as amended and the rules framed thereunder.
5. Management Committee
Composition as on March 31, 2023 |
Number and Dates of Meetings held during the Financial Year |
Name |
Nature of Directorship |
Chairperson / Member |
Number of Meetings held: 5 |
Mr. Sarvjit Singh Samra |
Managing Director |
& Chairperson |
Dates of the meetings: May 06, 2022
August 01, 2022
September 15, 2022
November 30, 2022
February 13, 2023 |
Ms. Harmesh Khanna |
Independent Director |
A Member |
Mr. Rakesh Soni |
Independent Director |
A Member |
Mr. Gurpreet Singh Chug |
Independent Director |
A Member |
Mr. Dinesh Gupta |
Non-Executive Director |
A Member |
Brief Terms of Reference and Responsibilities:
1. To consider and review the Financial Statements.
2. To review the performance of the Bank against projections as per Business Plan.
3. To review and approve the business plan.
4. To consider and approve Half yearly budget.
5. To review non-performing borrower accounts.
6. To review the operations/ payment channels/ issue of debit cards.
7. To review investment portfolio of the bank as well as Investment Exposure Norms.
8. To reviews limits of Money Market Instruments (Call/Term/Notice) Limits as per the
RBI guidelines.
9. To approve yearly Investment Strategy, appointment of Investment Officers and
approve Securities Broker
10. To review Internal Auditors remarks in Concurrent Audit of Investments.
Attendance Record of Committee meetings
Details of attendance of Directors at the meetings of Committee of the Directors during
the Financial Year 2022 - 23 are as follows:
Name of The Board Level Committees |
Nomination and
Remuneration
Committee |
Securities Committee |
Audit Committee |
Corporate Social
Responsibility
Committee |
Management Committee |
Risk Management
Committee |
Stakeholders' Relationship
Committee |
Special Committee on Frauds |
IPO Committee |
IT Strategy
Committee |
No. of meetings held during FY 2023 |
6 |
7 |
5 |
2 |
5 |
4 |
1 |
Nil |
2 |
4 |
Name of Director |
Category |
No. of meeting attended by members |
Mr. Sarvjit Singh Samra |
Managing Director |
- |
- |
- |
2 out of 2 |
5 out of 5 |
- |
- |
- |
2 out of 2 |
4 out of 4 |
Mr. Dinesh Gupta |
Non-Executive Non-Independent
Director |
- |
7 out of 7 |
5 out of 5 |
- |
4 out of 5 |
4 out of 4 |
1 out of 1 |
- |
2 out of 2 |
- |
Mr. Mahesh Parasuraman |
- |
- |
- |
- |
- |
- |
- |
- |
2 out of 2 |
- |
Mr. Srinath Srinivasan |
- |
- |
- |
- |
- |
- |
- |
- |
2 out of 2 |
- |
Mr. Balbir Singh |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Mr. Gurdeep Singh |
Non-Executive Independent Director |
5 out of 6 |
6 out of 7 |
- |
2 out of 2 |
- |
- |
NIL out of 1 |
- |
- |
- |
Mr. Gurpreet Singh Chug |
6 out of 6 |
- |
5 out of 5 |
- |
5 out of 5 |
4 out of 4 |
- |
- |
2 out of 2 |
4 out of 4 |
Ms. Harmesh Khanna |
- |
- |
5 out of 5 |
- |
5 out of 5 |
4 out of 4 |
- |
- |
- |
- |
Mr. Navin Kumar Maini |
- |
- |
- |
- |
- |
- |
1 out of 1 |
- |
- |
- |
Mr. Rakesh Soni |
6 out of 6 |
|
5 out of 5 |
2 out of 2 |
4 out of 5 |
4 out of 4 |
|
|
|
|
Mr. Sham Singh Bains |
6 out of 6 |
7 out of 7 |
5 out of 5 |
2 out of 2 |
- |
- |
1 out of 1 |
- |
- |
- |
Mr. Nageswara Rao Yalamanchili |
- |
- |
- |
- |
- |
- |
- |
- |
- |
1 out of 4 |
32. Meeting of independent directors
Pursuant to the Part VII of the Schedule IV of Companies Act, 2013 (Code for
Independent Directors), the independent directors of the Company shall hold at least one
meeting in a financial year, without the attendance of non-independent directors and
members of management. Accordingly, a meeting of Independent Directors of the Bank was
held on December 13, 2022.
33. Details of General Body Meetings
Sr. No. |
Year |
Particulars of Meeting |
Date & Time |
Location |
Special Resolutions passed, if any |
1 |
2022 - 23 |
23rd AGM |
August 5, 2022 at 11 a.m. |
Through Video Conferencing ("VC") / Other Audio-Visual Means
("OAVM") |
To Re-Appoint Mr. Sham Singh Bains (DIN: 01537844) as a Non- Executive Independent
director for a second term of Three years. |
34. Corporate Social Responsibility
As a responsible citizen, Capital Small Finance Bank Limited strongly believes in the
idea of paying back to the society in order to run a sustainable business. Accordingly, in
Capital Small Finance Bank Limited Corporate Social Responsibility is considered as an
important function. Our Corporate Social Responsibility (CSR) activities include
encouraging education, promoting sports and improving health care. We are managing
education centres for underprivileged children.
The Company's CSR policy and programmes are in accordance with Section 135 of Companies
Act, 2013, the Bank takes multiple initiatives in the areas of education, Rural Sports
Development and health. Corporate Social Responsibility Policy of the Bank can also be
accessed from the website of the Bank https://www.capitalbank.co.in/codes-policies.html
The Annual Report on CSR activities as required to be given under Section 135 of the
Companies Act, 2013 and Rule 8 of the Companies (Corporate Social Responsibility Policy)
Rules, 2014 has been provided as Annexure - C which forms part of the Board's
Report.
The Bank undertakes its Corporate Social Responsibility activities through Capital
Foundation (a Society Registered under the Societies Registration Act, 1860). During the
Year under Societies review the Bank has disbursed the entire amount of its CSR obligation
to the Capital Foundation. As per the report received from the Capital Foundation
Rs.0,574,051/- including the interest thereon has remained unspent as some of the Ongoing
Projects has not been fully matured. Accordingly, as approved by the CSR Committee, the
Capital Foundation has transferred the said unspent amount to Unspent Corporate
Social Responsibility Account in accordance with the provisions of Section 135 (6) of
the Companies Act, 2013.
35. Green Initiatives
"Unite to make this planet green and clean"
Deforestation is one of the most pressing environmental issues and a harsh reality of
the present times. Large-scale deforestation and various other human activities have
drastically added to the Global warming and Have caused a major shift in weather patterns
across the world. Usage of paper is one of the major reasons for cutting down of trees
which in long term is unsustainable.
Keeping in view the harsh reality the MCA Took a Great action towards it by coming out
with the "Green Initiative in the Corporate Governance" through its circular No.
17/2011 dated April 21, 2011 and No. 18/2011 dated April 29, 2011 dated April 29, 2011.
Under this MCA has provided a welcoming facility of serving notices / documents by
companies' to its shareholders through electronic mode. After this great initiative taken
by the MCA, companies' are no longer required to give Notice including the Annual Return
in physical form to its stakeholders. They can provide in electronic mode at the
Registered E-mail Id of the stakeholders.
In view of the said concern we request all the stakeholders to get their E-mail
registered with the Bank so to get the annual Reports at the E-mail ids instead through
paper mode.
Also, registering your e-mail address with us will ensure that we can directly connect
with you and no important communication from our side will be missed by you as a
shareholder of the Bank.
36. Vigil Mechanism
The Bank has implemented a Whistleblower Policy, which is periodically reviewed,
pursuant to which safeguards are being provided against victimisation of employees and
directors. The Policy allows to raise concerns on Reportable Matters (as defined in the
policy) such as breach of Bank's Code of Conduct, fraud, bribery, corruption, employee
misconduct, illegality, health & safety, environmental issues and wastage/
misappropriation of bank funds/assets, etc. and also provides for direct access to the
Ombudsperson, in exceptional cases. The policy is available on the Bank's intranet and
website of the Bank. The Whistleblower Policy complies with all the requirements of Vigil
mechanism as stipulated under Section 177 of the Companies Act, 2013, and other applicable
laws, rules and regulations, as may be applicable. The updated Whistleblower Policy is
also available on the website of the Bank at link www. capitalbank.co.in.
The Bank has also appointed Chief of Internal Vigilance to ensure compliance with all
the internal guidelines issued by the Bank from time to time.
The functioning of the Policy is reviewed by the Audit Committee from time to time.
During the review period, no concern has been reported in accordance with the said policy
Neither the complainants have been denied access to the Audit Committee of the Board.
37. Loans, Guarantees or Investments in securities
Pursuant to Section 186 (11) of the Companies Act, 2013, the provisions of Section 186
of Companies Act, 2013, except sub-section (1), do not apply to any loan made, guarantee
given or security provided or investment made by a banking company in the ordinary course
of business. Therefore, the said provision is not applicable to the Bank.
38. The details of application made or any proceeding pending under the Insolvency and
Bankruptcy Code, 2016 (31 of 2016) during the year along with their status as at the end
of the financial year:
During the year, no application was made/ proceeding is pending against the Bank.
39. The details of difference between amount of valuation done at the time of one-time
settlement and the valuation done while taking loan from the banks or financial
institutions along with the reason thereof:
There was no instance of one-time settlement with
any other bank/financial institution during the year ended March 31, 2023.
40. Contracts or Arrangements with Related Parties
All related party transactions that were entered during the Financial Year 2022 - 23
were in the ordinary course of the business of the Bank and were on arm's length basis and
the same is enclosed as Annexure- D in the prescribed format AOC-2 to this Report.
There were no materially significant related party transactions entered by the Bank with
Promoters, Directors, Key Managerial Personnel or other persons which may have a potential
conflict with the interest of the Bank. All such Related Party Transactions are being
placed before the Board/Audit Committee for approval, wherever applicable.
Members can also refer the disclosure of transactions with related parties during the
financial year under review as set out in the note no. 12 of the Schedule 18 of the
Financial Statements of the Bank.
Moreover, the disclosures required under Regulation 53(f) of SEBI (Listing Obligations
and Disclosures Requirement), 2015 is not applicable on Banking Companies.
41. Disclosure pursuant to Section 197(14) of the Companies Act, 2013
The Bank does not have any holding or subsidiary companies, therefore no disclosure is
required to be made pursuant to the provisions of Section 197(14) of the Companies Act,
2013 and as per the relevant rules thereunder.
42. Disclosure pursuant to Section 177(8) of the Companies act, 2013
During the Financial Year 2022- 2023 there was no recommendation of the Audit Committee
which was not accepted by the Board.
43. Change in Nature of Business
Pursuant to the relevant provision of Rule 8(5) of the Company (Accounts) Rules, 2014,
there is no change in the nature of Business of the Bank.
44. Auditors & Auditors' Report Statutory Auditors and Audit
The members at the 22nd Annual General Meeting (AGM) of the Bank held on
August 20, 2021 had, subject to the approval of RBI, had appointed M/s. T.R Chadha &
Co. LLP, Chartered Accountants as Statutory Auditors for a period of three (3) years to
hold office till the conclusion of 25th AGM in connection with the audit of the
books of account of
the Bank. However, their appointment was subject to the approval from Reserve Bank of
India as per the resolution passed in the AGM. The Reserve Bank of India gave approval of
appointment for Financial Year 2022 - 23 vide its letter dated June 8, 2022.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank had appointed
M/s Deepak Arora & Associates, Practicing Company Secretaries through its partner Mr.
Deepak Arora (FCS No. 5104 and COP No. 3641) to conduct Secretarial Audit of the Bank.
The Secretarial Audit Report is annexed herewith as Annexure- E to this report.
No qualifications, reservations or adverse remarks are reported by M/s Deepak Arora
& Associates, Practicing Company Secretaries, Secretarial Auditors of the Bank, in
their Secretarial Audit report.
45. Directors' Responsibilities Statement
The Board of Directors acknowledge the responsibility for ensuring compliance with the
provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013, in
preparation of annual accounts for the financial year ended March 31, 2023 and state that:
1. In the preparation of the annual accounts for the financial year ended March 31,
2023 the applicable accounting standards had been followed along with proper explanation
relating to material departures;
2. The Directors had selected accounting policies and applied them consistently and
made judgments and estimates that are reasonable and prudent to give a true and fair view
of the state of affairs of the Company as at March 31, 2023 and of the profit of the
Company for that period;
3. The Directors had taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act 2013 for
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities;
4. Directors had prepared the annual accounts on a going concern basis;
5. The Directors had laid down internal financial controls to be followed by the Bank
and that such internal financial controls are adequate and were operating effectively.
6. The Directors had devised proper systems to ensure compliance with the provisions of
all applicable laws and that such systems were adequate and operating effectively.
46. Details in respect of frauds reported by auditors under subsection (12) of section
143 other than those which are reportable to the Central Government;
There are no frauds reported by Auditors under sub section (12) of section 143 of the
Companies Act, 2013
47. Compliance with Secretarial Standards
The Bank has complied with the all applicable Secretarial Standards issued by the
Institute of Company Secretaries of India on regular basis.
48. Acknowledgment
The Board of Directors is grateful to the Government of India, Reserve Bank of India,
various State Governments, SEBI, IRDA and regulatory authorities in India and overseas for
their valuable guidance, support and cooperation.
The Directors record their sincere gratitude to the Bank's shareholders, esteemed
customers and all other well-wishers for their continued patronage. The Directors express
their appreciation for the contribution made by every member of the staff in ensuring high
level of growth that the Bank has achieved during the year.
The Board also places on record its gratitude to the Shareholders, Bankers, Customers,
Suppliers and other stakeholders who have extended their valuable sustained support, co-
operation and encouragement.
The Directors wish to express their gratitude to Investment Banks, rating agencies and
Stock Exchanges for their wholehearted support. The Directors look forward to their
continued contribution in realisation of the corporate goals in the years ahead. We wish
to apprise our worthy members who have entrusted their trust and confidence in the Bank
that Capital Small Finance Bank will venture to strive hard to take long strides ahead
with freshly instilled energies.
For and on behalf of the Board of Directors Sarvjit Singh Samra
Managing Director & CEO DIN: 0047744
Gurpreet Singh Chug
Independent Director DIN:01003380
Place: Jalandhar Date: May 19, 2023