ESAF Small Finance Bank has encountered a significant regulatory challenge in its proposed shareholding restructure, as revealed in a recent communication from the Reserve Bank of India (RBI). The central bank has not approved a key element of the bank's arrangement scheme, specifically the acquisition of shares exceeding 5% by Dia Vikas Capital.

RBI's Decision and Its Implications

The RBI's decision, communicated to ESAF Small Finance Bank on October 27, 2025, marks a pivotal moment for the bank's corporate structure. This development has prompted the bank's board to reassess its options and evaluate the consequences of this regulatory stance.

Key Points of the Situation:

1. RBI's Stance: The central bank has not acceded to Dia Vikas Capital's acquisition of shares exceeding 5% of ESAF Small Finance Bank's paid-up share capital.
2. Scheme of Arrangement: This decision impacts a previously disclosed Scheme of Arrangement between the bank's promoter company and its identified shareholders.
3. Board's Response: ESAF's board is currently evaluating the implications and exploring alternative courses of action.

Regulatory Compliance and Future Steps

The bank has emphasized its commitment to ensuring that the promoter shareholding complies with the RBI Bank Ownership Directions 2023. In light of the RBI's decision, the following steps are being considered:

• Reassessment of the implications on the Scheme approved by the promoter company's board on December 10, 2024.
• Exploration of alternative strategies to achieve the intended objectives of the Scheme.
• The Scheme will not be filed with the National Company Law Tribunal pending these deliberations.

Disclosure and Transparency

In adherence to SEBI's Listing Obligations and Disclosure Requirements Regulations, ESAF Small Finance Bank has promptly disclosed this material development to the stock exchanges. The bank has committed to providing further updates as more information becomes available.

This regulatory development underscores the complex landscape of banking sector regulations in India, particularly concerning ownership structures in small finance banks. As ESAF Small Finance Bank navigates these challenges, stakeholders will be keenly watching for further updates and the bank's strategy to align with regulatory requirements while pursuing its corporate objectives.

ESAF Small Finance Bank has received a significant boost in its leadership structure with the Reserve Bank of India (RBI) approving the appointment of Shri. Karthikeyan M as the bank's new Part-Time Chairman. This development marks a crucial step in the bank's governance framework and strategic direction.

Key Appointment Details

Appointment Process and Next Steps

The appointment of Shri. Karthikeyan M follows a structured process that began with the bank's internal recommendations. The Nomination, Remuneration and Compensation Committee, along with the Board of Directors, had initially recommended his appointment in August 2025. This recommendation was subject to RBI approval, which has now been granted.

The bank has confirmed that it will seek shareholder approval for Shri. Karthikeyan M's appointment as a Non-Executive Independent Director within the required timelines. This step is crucial to complete the appointment process and ensure compliance with regulatory requirements.

Regulatory Compliance

ESAF Small Finance Bank's announcement adheres to the disclosure requirements under Regulation 30 of the Securities and Exchange Board of India (SEBI) Listing Obligations and Disclosure Requirements Regulations, 2015. The bank has promptly informed the stock exchanges about this significant development, demonstrating its commitment to transparency and regulatory compliance.

Implications for ESAF Small Finance Bank

The appointment of a new Part-Time Chairman is expected to bring fresh perspectives to ESAF Small Finance Bank's leadership. As the banking sector continues to evolve, especially in the small finance segment, strong governance and experienced leadership are crucial for navigating challenges and capitalizing on opportunities.

Investors and stakeholders will likely watch closely how this appointment influences the bank's strategic direction and operational efficiency in the coming years. The bank's ability to leverage Shri. Karthikeyan M's expertise could play a significant role in its future growth and market position.

As ESAF Small Finance Bank moves forward with this new appointment, the financial community will be keen to observe any potential shifts in the bank's approach to market expansion, product innovation, and overall business strategy under the guidance of its new Part-Time Chairman.