Capital Small Finance Bank Ltd IPO

Its business is concentrated in North India, with approximately 87% of its total branches located in the state of Punjab. Any adverse change in the economy of North India could have an adverse effect on its financial condition, results of operations and cash flows.

The Bank is subject to strict regulatory requirements and prudential norms. If its unable to comply with such laws, regulations and norms it may have an adverse effect on its business, financial condition, results of operations and cash flows.

The bank is subject to certain prudential norms. If its unable to comply with these norms it may have an adverse effect on its business, financial condition, results of operations and cash flows.

As at three months ended June 30, 2023 and June 30, 2022 and Fiscals ended March 31, 2023, 2022 and 2021, our gross NPAs to gross advances were 2.81%, 2.93%, 2.77%, 2.50% and 2.08% and its provision coverage ratio was 51.90%, 42.50%, 51.48% 46.02% and 46.14%, respectively. If the bank is unable to control the level of NPAs in its portfolio effectively or if its unable to improve or maintain the bank provisioning coverage as a percentage of gross NPAs, its business, financial condition, results of operations and cash flows could be adversely affected.

Its may be impacted by volatility in interest rates, which could cause its Net Interest Margin to decline and adversely affect its results of operations and cash flows.

The bank id involved in certain legal proceedings, any adverse developments related to which could adversely affect its reputation, business and cash flows.

Its Cost to Income Ratio was 58.58%, 64.38%, 59.97%, 63.42% and 70.76% for the three months ended June 30, 2023 and June 30, 2022 and the Fiscals ended March 31, 2023, 2022 and 2021 respectively. An increase in the Cost to Income Ratio will adversely affect its financial condition, results of operations and cash flows.

Its business is currently significantly dependent on banking operations in rural and semi-urban areas and any adverse developments in the banking and finance sector in these areas could adversely affect its business, financial condition, results of operations and cash flows.

As of August 31, 2023, the bank had total indebtedness of Rs. 6,205.10 million. If its unable to service its debt obligations in a timely manner or to comply with various financial and other covenants and other terms and conditions of its financing agreements, it may adversely affect the company business, credit rating, reputation, prospects, results of operations, cash flows and financial condition.

If its unable to secure funding on acceptable terms and at competitive rates when needed, it could have a material adverse effect on its business, financial condition, results of operations and cash flows.