Utkarsh Small Finance Bank Ltd

Dear Shareholders, Customers, Partners, and Coreagues,

A number of events in FY2024–25 had a significant bearing on your Bank's performance given the background of adverse market conditions, coupled with a pronounced stress in the MFI segment.

During the course of the financial year, we witnessed a rapidly evolving regulatory landscape, significant shifts in the competitive and technological landscape, and heightened expectations from all stakeholders.

In this context, your Bank took steps to respond with agility, resilience, and purpose.

Amid uncertainties, India's economic fundamentals remain strong, with higher growth in consumption, resilient rural demand, and a renewed government thrust on inclusive financial services.

For Small Finance Banks like ours, this translated into challenges and opportunities. As one of the youngest categories in India's banking system, we remain uniquely positioned to support the formalisation of financial services at the grassroots through our small finance bank.

FY2024–25 brought notable regulatory changes from the Reserve Bank of India

(RBI), which significantly impacted the way we operate. The revised guidelines on differential bank ownership structures, heightened expectations around governance and risk management, and increased attention on asset quality cum provisioning norms were initiatives designed to strengthen the sector's credibility and long-term viability.

The RBI's push toward greater regulatory convergence between Small Finance Banks and Universal Banks—especially in areas of capital adequacy, digital operations, and supervisory mechanisms—reflects the maturity and potential of our category. Your Bank welcomed these measures and proactively adapted to align with the revised framework.

In particular, we enhanced our credit underwriting standards, upgraded our technology platforms for regulatory reporting, and strengthened our internalocesses and digital controls and audit practices. These steps are investments in our future resilience and demonstrate our commitment to transparency and compliance. While the Joint Liability Group (JLG) segment presented its set of challenges during the year, due to the implementation of MFIN guardrails, the overall performance of the Bank resilience, and balance. The growth in Fixed Deposits, healthy CASA levels, and a strong Capital Adequacy Ratio are testimony to our sound financial maintained comfortable liquidity buffers, ensuring operational continuity and trust among depositors. These achievements highlight our commitment to long-term value creation and our ability to adapt and grow, even amid sectoral disruptions. It is this ability to hold firm to our fundamentals that will continue to guide us.

Against this backdrop, your Bank registered a 7.5% growth in our total loan portfolio, with an expansion in our deposit base, which grew by 23.4% and reported a 23.7 Crore profit for the year.

Our Secured Loan Portfolio share increase to 43% in comparison to 34% in FY2023-24. This is in line with our expectation in making our Balance Sheet stronger each year. On the deposit side, we made notable progress in growing our retail deposit base, particularly in CASA (Current Account Savings Account), which improved our liability profile. We expanded our footprint with more than 200 new branches, enhanced our digital onboarding, and improved customer acquisition throughsimplified engagement.

Digital transformation remains central to our long-term strategy. This year, we launched several initiatives including WhatsApp Banking to deepen digital adoption, internally and externally. Our mobile banking app, internet banking platform and Unified

Payment Interface (UPI), equipped with enhanced user experience and security enables our customers to bank anywhere, anytime with ease and trust.

We believe that a hybrid approach – physical presence augmented by digital strength will continue to define success in the financial inclusion space.

People and Culture: storyofstrength,

At the core of our journey are our people.

FY2024 25 saw us invest significantly in capability building, training, and employee engagement. Our employees are our brand ambassadors who not only build a connect with customers but also build a culture of trust and empathy. We continue to focus on building a diverse and inclusive workplace that values integrity, collaboration, and customer-centricity.

Our commitment to responsible banking extends beyond numbers. This year, we advanced our Environmental, Social, and Governance (ESG) agenda by initiating policies on sustainable lending, social impact, and ethical conduct. We began reporting on key ESG metrics and set internal benchmarks for improvement. We came out with our first Sustainability Report last year and look forward to adding more value to our agenda in making our planet cleaner, greener and sustainable.

Looking forward, we continue to remain bullish on the opportunities that lie ahead. With the RBI now opening doors for SFBs to transition into Universal Banks, we are laying the foundation for our long-term aspiration.

Scale with Purpose: We aim to expand responsibly by deepening our presence in high-potential markets, especially in semi-urban and rural India.

Build a Future-Ready Bank: We will continue investing in digital capabilities, customer experience, and risk management to build a tech-enabled, resilient organisation.

I would like to extend a heartfelt appreciation to our Board of Directors for their guidance, to our regulators for their trust, and to our employees for their dedication. Most importantly, I thank our customers and shareholders for their continued faith in our Bank.

Our Bank strives not only to be financially successful but also socially significant.

Let us continue to build a bank that truly. The Bank makes a difference one relationship at a time.