ESAF Small Finance Bank Ltd IPO

Its business is significantly dependent on Micro Loans and any adverse developments in the microfinance sector could adversely affect its business, financial condition, results of operations and cash flows.

A majority of the Bank advances are unsecured. If its unable to recover such advances in a timely manner or at all, the financial condition, results of operations and cash flows may be adversely affected.

The Bank incur significant operating expenses and any increase in these operating expenses without a corresponding increase in its Net Interest Income and other income combined will adversely affect the Bank financial condition, results of operations and cash flows.

The Bank could be subject to various sanctions and penalties by the RBI for failing to comply with the requirement to list the Equity Shares on a stock exchange in India before July 31, 2021.

Its business correspondents (which includes ESMACO, a Promoter Group and Group Entity, and Lahanti, a Group Entity) have sourced the majority of its advances. All of the Bank Business correspondents work for it on a nonexclusive basis. If any of its business correspondents and in particular ESMACO prefer to promote the competitors' loans over the Bank loans or the agreements between us and them are terminated or not renewed, it would adversely affect its business, financial condition, results of operations and cash flows.

The Bank is in non-compliance with certain Risk Based Supervision ("RBS") Tranche III requirements and if the RBI imposes penalties on it for this non-compliance, it could adversely affect its reputation, business, financial condition, results of operations and cash flows.

The Bank is subject to inspections by various regulatory authorities, including by the RBI, PFRDA, IRDA and National Pension System Trust. Inspection by the RBI is a regular exercise for all banks and financial institutions. Regulators and external auditors appointed by a regulator have observed various non-compliances by it in the past and have required it to, among other things, take corrective actions and pay compensation. Non-compliance with the observations of such regulators could adversely affect its business, financial condition, results of operations and cash flows.

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

If the Bank is unable to control the level of gross NPAs in its portfolio effectively or if its unable to improve the Bank Provisioning Coverage Ratio, its business, financial condition, results of operations and cash flows could be adversely affected.

The Bank non-convertible debentures are listed on the BSE and its subject to rules and regulations with respect to such listed non-convertible debentures. If the Bank fail to comply with such rules and regulations, its may be subject to certain penal actions, which may have an adverse effect on the business, results of operations, financial condition and cash flows.