ESAF Small Finance Bank has issued a postal ballot notice seeking shareholder approval for four key resolutions, signaling significant changes in the bank's capital structure and board composition.

Capital Increase Proposed

The bank is proposing to increase its authorized share capital from ₹600.00 crore to ₹1,000.00 crore by creating an additional 40 crore equity shares of ₹10.00 each. This move aims to strengthen the bank's capital adequacy position and support future growth objectives through potential capital raising initiatives.

Board Appointments and Re-appointments

Three significant board-level changes are also up for shareholder approval:

1. Appointment of Karthikeyan Manickam as Non-Executive Independent Director and Part-Time Chairman, effective December 21, 2025, for a three-year term. Manickam, a former Executive Director of Bank of India, brings extensive experience in banking and financial services.

2. Re-appointment of Ms. Kolasseril Chandramohanan Ranjani as Non-Executive Independent Director for another three-year term from December 13, 2025. Ranjani has significant expertise in micro, small, and medium enterprises in India.

3. Appointment of Ajay Sharma as Non-Executive Independent Director for a three-year term starting December 21, 2025. Sharma has over 35 years of experience with IDBI Bank Limited across various departments.

Remuneration Details

The notice specifies that Karthikeyan Manickam will be entitled to a fixed remuneration of ₹20.00 lakh per annum, in addition to sitting fees and reimbursement of expenses for attending board and committee meetings.

Voting Process

The bank has engaged CDSL for facilitating remote e-voting. Shareholders can cast their votes electronically from November 13, 2025, to December 12, 2025. The results will be declared within two working days from the conclusion of the e-voting process.

These proposed changes reflect ESAF Small Finance Bank's efforts to strengthen its governance structure and prepare for future growth. Shareholders will play a crucial role in determining the bank's strategic direction through their votes on these resolutions.

ESAF Small Finance Bank , a prominent player in India's small finance banking sector, has reported its financial results for the second quarter and first half, revealing a strategic shift towards secured lending amidst challenging market conditions.

Financial Performance

The bank reported a net loss of ₹197.00 crores for H1, compared to a loss of ₹521.00 crores in the previous fiscal year. This improvement in the bottom line comes despite headwinds in the banking sector.

For Q2, ESAF Small Finance Bank posted a net loss of ₹115.81 crores, narrowing from a loss of ₹190.07 crores in the corresponding quarter of the previous year.

Growth in Advances and Deposits

Despite the losses, the bank demonstrated resilience in its core business:

• Gross advances grew 4.3% year-on-year to ₹19,137.00 crores
• Deposits increased 5.9% to ₹22,894.00 crores

Strategic Shift to Secured Lending

A significant development is the bank's strategic pivot towards secured loans:

• Secured loans now comprise 86% of the portfolio, up from 61% previously
• This shift aims to improve asset quality and reduce risk

CASA Growth and Deposit Profile

The bank reported strong growth in its low-cost deposits:

• CASA deposits grew 13.7% to ₹6,046.00 crores
• CASA ratio improved to 26.4% from 24.6% last year
• Retail deposits now constitute 96% of total deposits, up from 93% previously

Asset Quality and Capital Adequacy

Asset quality metrics showed mixed trends:

• Gross Non-Performing Assets (GNPA) ratio stood at 6.9%
• Net Non-Performing Assets (NNPA) ratio was 3.8%

The bank maintains a strong capital position:

• Capital Adequacy Ratio: 22.4%
• Tier I Capital Ratio: 16.9%

Key Financial Metrics

Operational Highlights

ESAF Small Finance Bank continues to expand its reach:

• Operating through 788 banking outlets
• Presence across 24 states and 2 Union Territories
• Serving 97.8 lakh customers
• Focus on rural and semi-urban markets

Management Commentary

Kadambelil Paul Thomas, Managing Director & CEO, commented on the results: "The consistent growth in our business and the healthy rise in CASA deposits reflect the deep and enduring trust our customers place in ESAF Bank. Our secured portfolio continues to gain strong traction, driven by growth in gold, mobility, Agri and mortgage loans. These pillars position us well for sustained, quality-led expansion."

The bank's strategic shift towards secured lending, coupled with its strong deposit franchise and capital position, suggests a focus on building a more resilient business model. While the current financial performance shows challenges, the bank's efforts to improve asset quality and expand its secured loan portfolio may pave the way for improved profitability in the future.

Investors and stakeholders will likely keep a close eye on how these strategic initiatives translate into financial performance in the coming quarters.