ESAF Small Finance Bank Ltd Directors Report

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 Banks 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 Banks future growth objectives.

Pursuant to approval of the Board of Directors of the Bank at their meeting held on 20^th 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 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 to Rs. 1000,00,00,000 (Rupees One Thousand crore) divided into 100,00,00,000 (Hundred crore) Equity Shares of Rs. 10 (Rupees Ten) each, by creation of additional 40,00,00,000 (Forty crore) equity shares of Rs. 10 each and the consequent alteration of its Memorandum of Association. Further, Reserve Bank of India had vide its letter dated 13^th 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 31^st March, 2026, Authorised Capital of the Bank was Rs. 1000,00,00,000 (Rupees One Thousand crore) divided into 100,00,00,000 (Hundred crore) Equity Shares of Rs. 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 Rs. 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 Rs. 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 Rs. 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.

Debt Capital

Based on the shareholders approval dated 14^th August, 2024 to raise funds through private placement of Unsecured, Rated, Redeemable NonConvertible 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 Rs. 1,00,000 (Rupees One lakh) during the Financial Year 2025-26:

Further, pursuant to the shareholders approval dated 24^th 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 03^rd 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 Rs. 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 NonConvertible Debentures having a face value of Rs. 1,00,000 (Rupees One lakh), during the Financial Year 2025-26:

The above fund raising was done to augment the Tier II Capital of the Bank for strengthening the Banks capital adequacy and enhancing the Banks 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 Nonconvertible Debentures aggregating to Rs. 40,00,00,000 (Rupees Forty crore).

16. CAPITAL ADEQUACY

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

as per the standardized approach for credit risk. The Capital Adequacy ratio of the bank as on 31^st 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.

18. EMPLOYEE STOCK OPTION SCHEME

The Shareholders of the Bank, in the meeting held on 03^rd 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 employees 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 31^st 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.

19. CREDIT RATING

Credit ratings assigned to various debt instruments of the Bank during the Financial Year ended 31^st March, 2026 are as follows:

20. SELECTION, APPOINTMENT AND REMUNERATION OF DIRECTORS

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 a Director of the Bank.

The RBI, vide its circular no. RBI/DOR/2025-26/180 DOR.HGG.GOV.No.99/29.67.001/2025-26Reserve 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.

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 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 17^th 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), NonExecutive Independent Director of the Bank, retired from his directorship on completion of his term on 12^th 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 12^th 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 NonExecutive Nominee Director of the Bank

Shri. John Samuel (DIN: 07725212), NonExecutive Nominee Director of the Bank, retired from his directorship on completion of his term on 12^th 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 12^th December, 2025 approved the reappointment 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 13^th 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 20^th 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 12^th 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 21^st December, 2025. He assumed as the Part-Time Chairman of the Bank on 21^st December, 2025.

• Appointment of Shri. Ajay Sharma as NonExecutive 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 12^th December, 2025, approved the appointment of Shri. Ajay Sharma as the NonExecutive Independent Director of the Bank, for a period of three consecutive years with effect from 21^st 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 09^th 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 Banks 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.

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.

23. CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT PERSONNEL

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 18^th December, 2020) have qualified the online proficiency self-assessment as required under the aforesaid rule within the prescribed timeline.

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 2025-26 has been annexed to the Annual Report.

27. MEETINGS OF THE BOARD

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.

As on 31^st March, 2026, the Bank had Twelve (12) Board Committees:

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 nonindependent directors.

During the Financial Year 2025-26, the Independent Directors of the Bank met on 07^th 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:

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:

Following changes took place in the list of Key Managerial Personnel during the Financial Year 2025-26:

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 31^st 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 31^st 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 decisionmaking 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 Banks 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

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 Banks broader objective of promoting sustainable practices, financial inclusion, customer awareness and values-based banking.

Corporate Social Responsibility

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

applicable CSR Rules. The Banks 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 Rs. 2,34,82,404/- towards CSR activities. Against this requirement, the Bank spent Rs. 5,87,00,000/- during the year. The unspent amount of Rs. 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.

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.

Maternity Benefit Act, 1961

The Bank confirms compliance with the provisions of the Maternity Benefit Act, 1961, to the extent applicable to its employees.

35. OVERALL REMUNERATION

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 anticorruption, anti-bribery, and anti-money laundering practices.

37. CODE OF CONDUCT TO REGULATE, MONITOR AND REPORT INSIDER TRADING

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. S503/ 08.61.005/2025- 26 dated 21^st April, 2025, the Shareholders of the Bank in the 09^th Annual General Meeting held on 24^th 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 09^th Annual General Meeting till the end of the 12^th 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 27^th 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 03^rd May, 2026 was sought. RBI vide letter dated 12^th 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 12^th 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 10^th 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 shareholders of the Bank in the 9^th Annual General Meeting held on 24^th 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 14^th 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.

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 arms 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.

41. 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.

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) 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

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 Rs. 71,59,689.13/- and foreign currency earnings of Rs. 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 AUDITORS 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.

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 your 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 subsection (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

55. STRICTURES AND PENALTIES

The penalties or strictures imposed by the regulators on the Bank are as follows:

Acknowledgement

The Directors place on record their sincere appreciation for the guidance and support received from the Reserve Bank of India, Government of India,

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 Banks 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.