14 PROVISIONS AND CONTINGENT LIABILITIES & CONTINGENT ASSETS

14.1 As per AS 29 (Provisions, Contingent Liabilities and Contingent Assets), a provision is recognized when there is a
present obligation as a result of past events and it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are
not discounted to its present value and are determined based on best estimate required to settle the obligation
at the balance sheet date. These are reviewed at each balance sheet date and adjusted to reflect the current best
estimates.

14.2 A disclosure of contingent liability is made when there is:

• possible obligation arising from a past event, the existence of which will be confirmed by occurrence or non¬
occurrence of one or more uncertain future events not within the control of the Bank; or

• present obligation arising from a past event which is not recognized as it is not probable that an outflow of
resources will be required to settle the obligation or a reliable estimate of the amount of the obligation cannot

be made.

14.3 When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources
is remote, no provision or disclosure is made.

14.4 Contingent assets, if any, are not recognized/ disclosed in the financial statements since this may result in the
recognition of income that may never be realized.

14.5 In cases where the available information indicates that the loss on the contingency is reasonably possible but the
amount of loss cannot be reasonably estimated, a disclosure to this effect is made in the financial statements. In
case of remote possibility, neither provision nor disclosure is made in the financial statements.

15 CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash in hand (including balance in ATM), balances with the RBI, balances with other

banks in current accounts and money at call and short notice.

16 TRANSACTION INVOLVING FOREIGN EXCHANGE

16.1 Accounting for transactions involving foreign exchange is done in accordance with Accounting Standard (AS) 11,
"The Effects of Changes in Foreign Exchange Rates".

16.2 All transactions in foreign currency are recognized at the exchange rate as notified by the Foreign Exchange
Dealers Association of India (FEDAI).

16.3 Foreign currency monetary items are reported using the exchange rate prevailing at the Balance Sheet date.

16.4 Non-monetary items which are measured in terms of historical cost denominated in foreign currency are reported
using the exchange rate as notified by Foreign Exchange Dealers Association of India (FEDAI) at the date of
transaction. Non-monetary items which are measured at Fair Value or other similar value denominated in a foreign
currency are translated using the exchange rate at the date when such value is determined.

16.5 Exchange differences arising on settlement of monetary items or on reporting of such monetary items at rates
different from those at which they were initially recorded during the year, or reported in previous financial
statements, are recognized as income or expense in the year in which they arise.

17 SHARE ISSUE EXPENSES

Share issue expenses are adjusted from Share Premium Reserve as permitted by Section 52 of the Companies Act,

2013.

18 CORPORATE SOCIAL RESPONSIBILITY

Expenditure towards corporate social responsibility, in accordance with The Companies Act, 2013, is recognized in the

Profit and Loss Account.

1 CAPITAL

1.1 Regulatory Capital

The Capital to risk-weighted asset ratio (‘Capital Adequacy Ratio') of the Bank has been computed in accordance with
the Reserve Bank of India (‘RBI') circular no. RBI/DOR/2025-26/182 DOR.CAP.REC.101/21-01-002/2025-26, dated
November 28, 2025, on "Prudential Norms on Capital Adequacy".

As on March 31, 2026, the Bank's Capital Adequacy Ratio stood at 22.31% (Previous year: 25.39%), well above the
regulatory minimum requirement of 15% prescribed for Small Finance Banks by the RBI.

1.1.2 Tier I Capital Infusion

During the year ended March 31, 2026, the Bank has allotted 1,71,834 equity shares (2,04,417 equity shares during
the year ended March 31,2025) to employees of the Bank in form of employee stock options as per the ESOP plan

of the Bank.

1.1.3 Tier 2 Capital Issuance/Maturity/Redemption
Issuance

The Bank has not raised any Tier II Capital during the year ended March 31,2026 and March 31, 2025.

1.1.5 Proposed Dividend

For the year ended March 31, 2026, the Board of Directors, in the meeting held on April 29, 2026 recommended a
dividend of '5.00 per equity share ('4.00 per equity share for the year ended March 31, 2025) having face value of
'10 each. The recommendation made is in accordance with the guidelines issued by the Reserve Bank of India on
declaration of dividend by banks.

According to the AS 4 - ‘Contingencies and events occurring after the balance sheet date' as notified by the
Ministry of Corporate Affairs through Companies (Accounting Standards) Rules, 2021, the Bank has not accounted
proposed dividend (including tax) as a liability. However, the proposed dividend has been considered as a deduction
while computing capital funds for the purpose of Capital Adequacy Ratio calculation.

1.1.6 Drawdown from Reserves

There has been no draw down from reserves during the year ended March 31,2026 and March 31,2025 other than
those disclosed under Schedule 2.

12 RELATED PARTY DISCLOSURE

12.1 Related parties as per Accounting Standard 18
Key Management Personnel:

a. Mr. Sarvjit Singh Samra - Managing Director

b. Mr. Munish Jain - Executive Director

c. Mr. Aseem Mahajan- Chief Financial Officer (w.e.f. April 24, 2024)

d. Mr. Amit Sharma - Company Secretary
Relatives of Key Management Personnel:

a. Mr. Sarvjit Singh Samra: Mr. Amarjit Singh Samra, Mr. Amardeep Samra, Mrs. Surinder Kaur Samra,
Mrs. Navneet Samra, Mrs. Amarpreet Kaur Hayer, Mr. Shahbaz Singh Samra, Mr. Sangram Singh Samra and Sarvjit

Singh Samia HUF.

b. Mr. Munish Jain: Mr. Kimti Lal Jain, Mr. Vishal Jain, Mrs. Usha Jain, Mrs. Ruchi Jain, Mrs. Ritu Jain,
Mr. Aagam Jain, Mr. Gaurish Jain and Munish Jain HUF.

c. Mr. Aseem Mahajan: Mr. Chander Kant Mahajan, Mrs. Sumita Mahajan, Mrs. Isha Sehgal, Mrs. Ritika Mahajan,
Mr. Ayaan Mahajan and Mr. Izaan Mahajan.

d. Mr. Amit Sharma: Mr. Mangal Chand Sharma, Mrs. Bimla Sharma, Mrs. Gitika Sharma, Mr. Kunal Sharma,
Miss Amayra Sharma, Mrs. Poonam Sharma, Mrs. Seema Sharma, Mr. Ajay Sharma and Mrs. Sheetal Sharma.

Associates/ Joint Ventures/ Others:

a. Capital Foundation Trust

The significant transactions (wherever it exceeds 10% of all related party transactions in that category) between
the Bank and related parties for year ended March 31, 2026 are given below:

1. Interest paid includes (a) '0.08 crores paid to Mr. Amarjit Singh Samra (b) '0.13 crores paid to
Mrs. Ruchi Jain; (c) 0.10 crores paid to Mrs. Amarpreet Kaur Hayer;

2. Interest received includes (a) '0.009 crores received from Mr. Munish Jain (b) '0.02 crores received from
Mr. Amit Sharma (c) '0.02 crores received from Mr. Aseem Mahajan;

3. Leasing includes (a) '0.51 crores paid to Mr. Amarjit Singh Samra (b) '0.51 crores paid to Mrs. Surinder Kaur
Samra (c) '0.51 crores paid to Mr. Sarvjit Singh Samra (d) '0.51 crores paid to Mr. Amardeep Singh Samra (e)
'0.25 crores paid to Mrs. Navneet Kaur Samra;

4. Salary paid includes (a) '1.77 crores paid to Mr. Munish Jain (b) '1.84 crores paid to Mr. Sarvjit Singh Samra;

and

5. CSR Expense/Contribution includes '1.49 crores paid to Capital Foundation Trust.

The significant transactions (wherever it exceeds 10% of all related party transactions in that category) between
the Bank and related parties for year ended March 31, 2025 are given below:

1. Interest paid includes (a) '0.11 crores paid to Mr. Amarjit Singh Samra (b) '0.11 crores paid to Mr. Munish
Jain (c) '0.11 crores paid to Mrs. Ruchi Jain; (d) 0.08 crores paid to Mrs. Amarpreet Kaur Hayer;

2. Interest received includes (a) '0.02 crores received from Mr. Amit Sharma; (b) '0.02 crores received from
Mr. Aseem Mahajan;

3. Leasing includes (a) '0.51 crores paid to Mr. Amarjit Singh Samra (b) '0.51 crores paid to Mrs. Surinder Kaur
Samra (c) '0.51 crores paid to Mr. Sarvjit Singh Samra (d) '0.51 crores paid to Mr. Amardeep Singh Samra (e)
'0.26 crores paid to Mrs. Navneet Kaur Samra;

4. Salary paid includes (a) '1.65 crores paid to Mr. Munish Jain (b) '1.55 crores paid to Mr. Sarvjit Singh Samra;

and

5. CSR Expense/Contribution includes '2.38 crores paid to Capital Foundation Trust.

16 DISCLOSURE OF PENALTIES IMPOSED BY THE RBI

There has been no penalty imposed by the Reserve Bank of India on the Bank except (i) '0.01 crores during the year
ended March 31, 2026 ('0.02 crores during the year ended March 31, 2025) for non-replenishment of ATMs in terms
of RBI circular no. RBI/2021-22/84 DCM (RMMT) No. S153/11.01.01/2021-22 on Monitoring of Availability of Cash in
ATMs dated August 10, 2021, and (ii) Nil during the year ended March 31, 2026 ('0.001 crores during the year ended
March 31, 2025) for not extending the facility of exchange of soiled notes to non-customers by the branch in terms of
RBI circular no. DCM (CC) G-1/03.44.01/2024-25 on Master Direction - Scheme of Penalties for bank branches and
Currency Chests for deficiency in rendering customer service to the members of public dated April 01, 2024.

17 REMUNERATION

17.1 Qualitative Information with reference to Whole Time Directors / Managing Director & Chief Executive Officer & Material
Risk Takers (MRT)

i) Nomination and Remuneration Committee

The Bank has constituted Nomination and Remuneration Committee (NRC) for overseeing and governing
the compensation polices of the Bank. The committee oversees the framing, review and implementation of
compensation policy of the Bank on behalf of the Board for Managing Director & Chief Executive Officer, Whole
Time Directors & Material Risk Takers.

The Committee has four members including three members from Risk Management Committee of the Board. The
majority of the members of the committee are independent non-executive Directors.

As on March 31, 2026 the Committee consists of the following Members:

• Mr. Kamaldeep Singh Sangha, Chairman

• Mr. Bhavdeep Sardana, Member

• Mr. Gurpreet Singh Chug, Member

• Mr. Nageswara Rao Yalamanchili, Member

ii) Philosophy and Key Objectives

The Compensation Policy ("the Policy") of the Bank aims at the Bank's philosophy to recruit, motivate, reward
and retain employees who believe in, and live by, our culture and values. The Bank endeavours to encourage
entrepreneurship by creating a working environment that motivates high performance so that all employees can
positively contribute to the strategy, vision, goals and values of the Bank. The key objectives of the Policy are:

• To support the organization's strategy by helping to build a competitive, high performance and innovative
company with an entrepreneurial culture that attracts, retains, motivates and rewards high-performing

employees;

• To promote the achievement of strategic objectives within the Company's risk appetite;

• To promote / support positive outcomes across the economic and social context in which the Company
operates and

• To promote an ethical culture and responsible corporate citizenship.

• To ensure that the remuneration of MD & CEO, Whole Time Directors & Material Risk Takers is fair and
reasonable in the context of overall Bank's remuneration.

• Adherence to principles of good corporate governance, as depicted in "best practice" and regulatory
frameworks.

• Make a clear distinction between levels of accountability and pay package.

17.1 Qualitative Information with reference to Whole Time Directors/Managing Director & Chief Executive Officer & Material
Risk Takers (MRT) (Contd.)

iii) Fixed Pay

The fixed pay is the base element of the remuneration that reflects the employee's role or position in the Bank
and is payable for doing the expected job, including but not limited to basic salary, statutory bonus, allowances,
perquisites, profit in lieu of salary and any other component paid, measured on the cost to company basis.
Guaranteed remuneration is paid on monthly basis and is normally benchmarked against the financial services
market and is aligned to the expected operational performance.

iv) Variable Pay

The variable pay is the reward element of the remuneration, focused to create a performance culture in the Bank,
is payable as a reward to individuals or teams for achieving strong results in terms of pre-determined goals.
The variable remuneration of an employee(s) can be short term or long term depending upon the category of the
employee(s): (1) Short Term Variable Remuneration is paid on not greater than yearly frequency on the basis of
performance based scorecard or individual employee rating; or/and (2) Long Term Variable Remuneration is paid
on more than annual frequency on the basis of longevity and long-term performance of the employee in the form
of ESOPs only (including Cash Linked Stock Appreciation Rights).

• The variable pay should be:

> Atleast 100% but not more than 200% of the fixed pay in case of Managing Director and CEO and Whole
Time Director or as approved by the Reserve Bank of India;

> Atleast 50% but not more than 70% of the fixed pay for executive overseeing one business line and
atleast 75% but not more than 125% of the fixed pay for executive overseeing more than one business
line in case of other MRTs.

• Out of above, 50% of the variable pay should be via non cash instruments. In case, any of the executive, is
barred by statute or regulation from grant of Share-linked Instruments, the whole amount can be paid via

cash.

• Within the said range and as per the above ceiling, the NRC decides the short term variable pay %age for the
period keeping in the view the various factors including but not limited to present and prospective capital
position, market dynamics and risk position of the Bank.

• The variable pay is linked with the performance of the executive and performance of the Bank during the
Period and accordingly the performance measurement is done basis various key performance indicators

including:

> Individual Rating;

> Profitability Achievement;

> Business Growth Achievement;

> Credit Risk (NPA position, SMA 2 position);

> Market Risk (LCR, Duration gap Analysis);

> Solvency Risk (Leverage Ratio, Capital Adequacy Ratio)

• A minimum of 60% of the total variable pay (including at least 50% of the cash component if cash component
is '25 lakhs or more), is deferred over a period of 3 years. Further, in case of various events, the deferred
compensation is subject to the malus arrangement.

17.1 Qualitative Information with reference to Whole Time Directors/Managing Director & Chief Executive Officer & Material
Risk Takers (MRT) (Contd.)

v) Guaranteed Bonus

The Bank does not allow any guaranteed bonus except bonus payable under the Payment of Bonus Act. Further,
the Joining/Signing bonus is permissible in the context of hiring of executive in the form of ESOPs only and be
limited to the first Period. Further, the Bank will not grant severance pay other than accrued benefits (gratuity,
retiral benefits, etc.) except in case where it is mandatory by any statute.

vi) Hedging

The Bank does not provide any facility or funds or permit employees to insure or hedge their compensation
structure to offset the risk alignment effects embedded in their compensation arrangement.

19.8 The RBI vide its notification number RBI/DOR/2025-26/180 DOR.HGG.GOV.No.99/29.67.001/2025-26 "Master
Directions on Small Finance Banks-Governance Directions, 2025" dated November 28, 2025 specifies guidelines on
compensation of whole-time directors/chief executive officers/material risk takers and control function staff, advised
banks that the fair value of the share linked instruments on the date of grant should be recognized as an expense for
all instruments granted after the period ending March 31, 2021. Accordingly, the Bank measures the cost of ESOP
using the fair value method for stock options granted post March 31, 2021 including grant to the Material Risk Takers
as a part of their variable compensation and uses the intrinsic value method for stock options granted prior to the said
peiiod.

20 STAFF RETIREMENT BENEFITS

20.1 Impact of New Labour Codes

On November 21, 2025 the Government of India notified four Labour Codes- the Code on Wages, 2019, the Industrial
Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions
Code, 2020, collectively referred to as the ‘New Labour Codes' consolidating 29 existing labour laws. As per the New
Labour Codes read with FAQs, clarifications and amendments issued from time to time, the Bank has recognized a
one-time charge for past service cost of '5.13 crores under ‘Employees Cost' in the Profit and Loss Account during
the year ended March 31,2026. Any further amendments as notified from time to time shall be considered accordingly.

20.2 Reconciliation of opening and closing balance of the present value of the defined benefit obligation for the gratuity
benefit of the Bank is as below:

27 STATUS OF IND AS IMPLEMENTATION

As per RBI circular RBI/2015 -16/315 DBR.BPBC. No.76/21.07.001/2015-16 dated February 11, 2016 Implementation
of Indian Accounting Standards (Ind AS), Banks are advised that scheduled commercial banks (excluding RRBs)
shall follow the Indian Accounting Standards as notified under the Companies (Indian Accounting Standards) Rules,
2015, subject to any guideline or direction issued by the RBI in this regard. Banks in India currently prepare their
financial statements as per the guidelines issued by the RBI, the Accounting Standards notified under section 133
of the Companies Act, 2013 and generally accepted accounting principles in India (Indian GAAP). In January 2016,
the Ministry of Corporate Affairs issued the roadmap for implementation of new Indian Accounting Standards (Ind
AS), which were based on convergence with the International Financial Reporting Standards (IFRS), for scheduled
commercial banks, insurance companies and non-banking financial companies (NBFCs). In March 2019, RBI deferred
the implementation of Ind AS for banks till further notice as the recommended legislative amendments were under
consideration of Government of India. The Bank had undertaken preliminary diagnostic analysis of the GAAP differences
between Indian GAAP vis-a-vis Ind AS and shall proceed for ensuring the compliance as per applicable requirements
and directions in this regard and the Bank is submitting Proforma Ind AS Financial Statements to the RBI on regular
basis.

31 CORPORATE SOCIAL RESPONSIBILITY

Gross amount required to be spent by the Bank and as approved by the Board of Directors, during the year ended
March 31,2026 is '2.99 crores (previous year '2.38 crores)

The amount recognised as an expense in the Profit and Loss Account on CSR related activities and contributed to
implementing agencies during the year ended March 31, 2026 is '2.99 crores (previous year '2.38 crores) which
comprises of following:

36 COMPARATIVE FIGURES

Figures for the previous year have been regrouped and reclassified wherever necessary to conform to the current year's
presentation.