Capital Small Finance Bank (CSFB) has received a significant request from one of its promoters, Dinesh Gupta, seeking reclassification from the 'promoter' category to 'public' category. This move comes as part of a broader shift in Gupta's involvement with the bank.

Key Points of the Reclassification Request

• Resignation from Board: Dinesh Gupta stepped down from the Board of Directors of Capital Small Finance Bank, effective August 14, 2025.
• Current Shareholding: Gupta holds 2,95,920 shares, representing 0.65% of the bank's total shareholding.
• Extended Reclassification: The request includes 13 related persons and entities from the promoter group.
• Collective Holdings: The additional entities hold a small percentage of shares, with some holding no shares at all.

Reasons for Reclassification

Dinesh Gupta cited several reasons for his reclassification request:

1. Professional Engagements: Extensive commitments to professional and family pursuits.
2. No Operational Involvement: Gupta is no longer directly or indirectly associated with the bank's business operations.
3. Lack of Influence: He does not exercise any influence over the bank's policy decisions.

Compliance with SEBI Regulations

In his application dated September 12, 2025, Gupta confirmed adherence to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

• Maintains less than 1% of total voting rights in the bank.
• Does not exercise direct or indirect control over the bank's affairs.
• Holds no special rights through formal or informal agreements.
• Has no representation on the Board and is not a Key Managerial Personnel (KMP).
• Is not classified as a fugitive economic offender or willful defaulter.

Future Commitments

Gupta has made several commitments for a period of three years post-reclassification:

• Will not be represented on the bank's Board of Directors.
• Will not act as a Key Managerial Personnel of the bank.
• Will promptly notify the bank of any changes in circumstances affecting these undertakings.

Next Steps

The reclassification request will be placed before the Board of Directors of Capital Small Finance Bank for consideration and approval. If approved, it will be submitted to the relevant stock exchanges for further processing.

This move by Dinesh Gupta represents a significant change in the ownership structure of Capital Small Finance Bank and aligns with regulatory requirements for promoter reclassification in the Indian banking sector.

Capital Small Finance Bank has reported a 7% year-on-year increase in quarterly profit, reaching ₹32.00 crores, despite facing challenges from its NBFC/MFI exposure. The bank demonstrated resilience in its core operations while navigating through sector-specific headwinds.

Key Financial Highlights

• Profit Growth: Quarterly profit rose to ₹32.00 crores, marking a 7% year-on-year increase.
• Deposit Growth: Total deposits grew by 17.1% year-on-year to ₹9,110.00 crores.
• Advance Growth: Gross advances increased by 16.4% to ₹7,437.00 crores.
• Net Interest Margin (NIM): The bank maintained a healthy NIM of 4.1%.
• CASA Ratio: Current Account Savings Account (CASA) ratio stood at 35.9%.

Asset Quality and Credit Costs

The bank's asset quality faced some pressure, primarily due to its NBFC/MFI exposure:

• Gross NPAs: Stood at 2.7%
• Credit Costs: Rose to 0.37%, with 0.19% attributed to slippage from NBFC/MFI exposure
• NBFC/MFI Exposure: Remains below 1% of the total portfolio

Operational Performance

• Operating Profit: Grew by 24%, supported by a 38% increase in non-interest income
• Branch Expansion: Plans to add 20-25 branches in the fiscal year

Management Outlook

The bank's management expects the MFI-related credit cost increase to be temporary and limited to the first quarter. They have set a target of 20% advance growth for the fiscal year.

Analyst Conference Call Insights

During the earnings conference call, the bank's management provided additional context and future outlook:

• Deposit Strategy: The bank raised deposits after interest rate cuts, focusing on competitive pricing while maintaining cost efficiency.
• Credit Growth: Targeting 20% credit growth for FY'26, with a focus on secured lending in MSME, mortgage, and agriculture segments.
• Geographical Expansion: Aiming to reduce dependency on Punjab while exploring growth opportunities in Haryana and other states.
• Asset Quality: Management expressed confidence in recovering from the recent NBFC/MFI-related slippage and maintaining stable asset quality going forward.
• Net Interest Margin: The bank aims to maintain its NIM around the current level of 4.1%, leveraging its growing fixed-rate advance book and improved CD ratio.

Capital Small Finance Bank's performance in the face of sector-specific challenges underscores its resilient business model and strategic focus on secured lending. As the bank continues to expand its geographical footprint and diversify its loan book, it remains well-positioned to capitalize on growth opportunities in the small finance banking sector.