Capital Small Finance Bank Ltd IPO

Capital Small Finance Bank Limited was incorporated as `Capital Local Area Bank Limited' on May 31, 1999 at Phagwara district Kapurthala, Punjab, as a public limited company under the Companies Act, 1956, and was granted a certificate of incorporation by the Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh. The name of the Bank was subsequently changed to `Capital Small Finance Bank Limited' pursuant to a shareholders' resolution dated April 2, 2016, to reflect the change in status of the Bank from a local area bank to a small finance bank pursuant to the Reserve Bank of India approval dated March 4, 2016, and a fresh certificate of incorporation was granted by the Registrar of Companies, Punjab and Chandigarh at Chandigarh (RoC) on April 15, 2016. The Bank commenced its business pursuant to a certificate of commencement of business issued by the Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh dated August 12, 1999.

Small finance banks' AUM clocked 26% CAGR during fisca ls 2016-2021. With their localised past experience, SFBs, especially the ones which were existing as local area banks have the ability to manage local stakeholders and maintain operational efficiency more effectively. CRISIL Research expects the sector's loan portfolio to see a strong ~22% CAGR in the near term as most of the SFBs have completed the transition phase and likely to get benefit from the operating leverage. The share of SFBs in deposits as well as credit has seen a steady rise over the years and is expected to reach 1% and 1.5% respectively by fiscal 2024 from the current 0.6% and 1.0% in deposits and credits in fiscal 2021.

Capital Small Finance Bank Limited commenced operations as India's first small finance bank in 2016, and are among the leading SFBs in India in terms of asset quality, cost of funds, retail deposits and CASA deposits for Fiscal 2021.The Company has the most diversified portfolio with sizeable book in multiple asset classes as compared to other SFBs with a highest proportion of secured lending of 99% as of Fiscal 2021 among the SFBs. The Company has the best asset quality among the SFBs represented by lowest GNPA and NNPA of 2.08% and 1.13% respectively as of Fiscal 2021. The Company has an experience of over two decades in the banking industry having operated as the largest local area bank prior to its conversion into a small finance bank.