Fincare Small Finance Bank Limited IPO

As a result of its limited operating history, the Bank may not be able to compete successfully in its newer product categories and it may be difficult to evaluate the Bank business and future operating results on the basis of its past performance.

25% of The total banking outlets are required to be located in unbanked rural areas. If its unable to effectively manage the growth associated with the Bank expansion, its financial, accounting, administrative and technology infrastructure, as well as its business and reputation could be adversely affected.

The Bank has in the past received observations from the RBI pursuant to their on-site inspections.

The Bank Gross Loan Portfolio consists primarily of microloans, comprising 60.99% of its Gross Loan Portfolio as of March 31, 2023. These loans are generally unsecured, without support from collaterals and contribute to the Bank Gross NPAs. Its significantly depend on the Bank microloan business, which has its own unique risks and, as a result, The Bank may experience increased levels of non- performing loans and related provisions and write-offs that materially adversely affect its business, financial condition, results of operations, cash flows and prospects.

The Bank business is highly competitive, which creates significant pricing pressures for it to retain existing customers and solicit new business.

56.70% of the banking outlets, contributing 61.19% of its gross loan portfolio, as of March 31, 2023, are located in and a significant portion of the Bank advances originated from five states, making it vulnerable to risks associated with having geographically concentrated operations.

A significant portion of the Bank loan portfolio was originated in rural areas, exposing it to risks associated with rural economies.

The Bank business is vulnerable to interest rate and investment-related risks. Volatility in interest rates, value of investments and other market conditions could adversely affect its net interest margin, the value of the Bank fixed income portfolio, its income from treasury operations, the quality of the Bank loan portfolio and its financial performance.

The Bank may face risks associated with its banking outlets network as 30.30% of the Bank total banking outlets are operated by third-party business correspondents, which contributed 5.53% of its total income in Fiscal 2023. The Bank reliance on third-party service providers, including business correspondents operating banking outlets, may materially adversely affect its business, financial condition, results of operations, cash flows and prospects.

An increase in the Bank portfolio of non- performing assets may materially and adversely affect its business, financial condition, results of operations, cash flows and prospects.