Intimation on recent rating action by Brickwork Ratings

Ref No: 10/SE/CS/AUG/2026-27 Date: August 17, 2026 Listing Department L i s t i n g & Compliance Department BSE Limited National Stock Exchange of India Limited Phiroze Jeejeebhoy Towers, Exchange Plaza, 5th Floor Dalal Street, Mumbai – 400001 Plot No.C/1, “G” Block Bandra- Kurla Complex Bandra(E), Mumbai- 400051 BSE Scrip Code: 544020 NSE Symbol: ESAFSFB Dear Sir / Madam, Sub: Announcement under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Intimation on the recent rating action of Brickwork Ratings India Private Limited dated August 17, 2026 on Tier II Bonds Pursuant to Regulation 30 and other applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Schedule III, we wish to inform that Brickwork Ratings India Private Limited, the Credit Rating Agency, has upgraded the Credit Rating of Tier II Bonds (under Basel III) of ESAF Small Finance Bank Limited (the Bank) aggregating to ₹20 Crore from “BWR BBB+/Stable” to “BWR A-/Stable” category vide rationale released on August 17, 2026. The press release on the rating action is enclosed. Summary of the rating action is as below: Instrument Amount Rating Tier II Bonds BWR A-/ Stable; (under Basel III) (ISIN: ₹ 20 Crore Upgraded from BWR INE818W08081) BBB+/Stable Details as per BSE’s Circular No. 20230714-34 dated July 14, 2023, and NSE’s Circular No. NSE /CML/2023/57 dated July 14, 2023, are as under: Date of occurrence of event / information August 17, 2026 Time of occurrence of event / information 08:00 P.M. Requesting you to take the same into your records. Thanking you, Yours Faithfully, For ESAF Small Finance Bank Limited Ranjith Raj. P Company Secretary and Compliance Officer Rating Rationale 17 Aug 2026 ESAF Small Finance Bank Ltd. Brickwork Ratings upgrades the rating for the Tier II bonds (under Basel III) aggregating to Rs. 20.00 Crores of ESAF Small Finance Bank Ltd. Particulars: Amount Rs. Crs. Rating Instruments Tenure Previous Previous Present Present Regulator (19 Aug 2025) Tier II bonds Long BWR BBB+/ BWR A-/ Stable 20.00 20.00 SEBI (under Basel III) Term Stable/ Downgraded (Upgraded) Total 20.00 20.00 Rupees Twenty Crores Only *Please refer to the BWR website www.brickworkratings.com/ for the definition of the ratings ** Details of bonds rated are provided in Annexure-II RATING ACTION/OUTLOOK: UPGRADE/STABLE Brickwork Ratings (BWR) upgrades the long-term rating at BWR A-/ Stable for the Tier II bonds (under Basel III) of Rs 20.00 Crores of ESAF Small Finance Bank Ltd.(Bank or ESAF SFB), as tabulated above. BWR has principally relied on the Banks’ audited financials up to FY26, limited published financial results of the Bank for Q1FY27, estimates/ projections for the ensuing two years, publicly available information, and information/clarifications provided by the Bank. The rating upgrade necessarily factors in the improved asset quality over the past few quarters, after a sharp declining trend till Q2FY26. The Gross NPA ratios since then have been improving towards 5% levels, and the Net NPA ratios were already below 1% levels, as of 30 Jun 2026. The Bank had incurred a net loss of Rs. 166 Crores for FY26, due to concerns in asset quality impacting the earnings profile till H1FY26. The Bank has since then strategised and managed its asset profile, resulting in generation of net profits over the past few quarters, and it earned net profit after tax of Rs. 80 Crores for the quarter ended 30 Jun 2026. The Bank has adopted a cautious approach to its disbursements to the microfinance industry (MFI) sector and has been gradually strengthening it exposure to the non-microfinance sector. The Bank’s total capital adequacy ratio was maintained above the 20% level, and was above the minimum regulatory requirements. The Bank continues to be supported by a steady capital infusion to sustain the capitalization levels and maintain low gearing levels, with adequate liquidity to meet its near- to medium-term obligations. The Bank continues to be supported by the promoters and an experienced board and management team. BWR shall monitor the developments in the Bank with respect to the improvement in collections and disbursements vis-à-vis the improvement in the loan book mix, and its impact on the asset quality and profitability. BWR maintains a stable outlook in view of the expectations of further improvement in the asset quality over the next few quarters, and its effect on the bank’s performance to improve upon its overall credit risk profile. KEY COVENANTS OF THE INSTRUMENT/FACILITY RATED: The distinguishing feature of Tier-II capital instruments under Basel III is the existence of the point of non-viability (PONV) trigger, and the occurrence of such a situation may result in the loss of principal to investors and, hence, default on the instrument by the issuer. According to the Basel III guidelines, the PONV trigger will be determined by the RBI. BWR believes that the PONV trigger is a remote possibility in the Indian context, given the robust regulatory and supervisory framework and the systemic importance of the banking sector. The inherent risk associated with the PONV feature is adequately factored into the rating on the instrument. The tier II bonds (under Basel III) of the Bank are partly raised for a tenor of 10 years at a competitive coupon rate to strengthen the capital structure of the Bank. Further details of the bonds, such as the coupon rate, frequency of interest payment, etc are given in Annexure - KEY RATING DRIVERS Credit Strengths:- Comfortable Capitalization level The Bank’s total CRAR stood at 23.90% as of 30 June 2026, improved from 22.20% as of 31 March 2026, and its Tier I ratio was 15.90% as of 30 June 2026 against 14.70% as of 31 March 2026, comfortably above the minimum regulatory requirement for SFBs, to support its business growth. The Bank was listed on the Stock Exchanges in November 2023, wherein it had raised capital amounting to Rs. 463 Crores through the Initial Public Offering (IPO). The Bank has raised Non-Convertible Debentures (Tier II Subordinated Bonds) on a private placement basis of Rs. 415 Crores during FY 25-26 and Rs. 85 Crores during Q1 FY27. The Bank is also planning to strengthen its capitalisation levels through further capital infusion during the next one year. Strong Board and Management Shri Karthikeyan Manickam, Chairman, has extensive exposure to corporate office and field-level banking during his professional journey of over 36 years. He was the Executive Director of Bank of India for a period of four (4) years from March 10, 2021 to March 31, 2025 and was involved in strategizing, framing enablers as policies and had supervised and handled portfolios such as Compliance, Risk Management, Inspection and Audit, Credit Monitoring, Resources Mobilization, Financial Inclusion, Retail, Agriculture and MSME Financing, Recovery, Stressed Assets Resolutions, Government Business, Publicity, Bancassurance, CSR, Marketing etc. Prior to the same, he was posted as General Manager (Corporate Development Officer) in Indian Bank, and he took over the HRM functions at a crucial phase, post amalgamation of Allahabad Bank with Indian Bank. He has also worked as the Field General Manager in Indian Bank, controlling eight zones. He has also worked as Zonal Manager of Dharmapuri, Pune and Chennai North Zones. He was also on the Board of Tamil Nadu Grama Bank, which was formed as a merged entity of two RRBs, namely Pandian Grama Bank, a subsidiary of Indian Overseas Bank, and Pallavan Grama Bank, a subsidiary of Indian Bank. Portfolio De-risking & Structural Shift (MARG Strategy) Secured advances increased to 62% of total advances in Q1FY27, up from 59% in Q1FY26. The MARG (MSME, Agriculture, Retail, Gold) portfolio expanded by 42% YoY to Rs. 12,909 Crores, accounting for 56% of total gross advances (up from 22% in March 2024). Legacy group microfinance loans dropped 58% [Showing first 8,000 characters — download PDF for full document]