Avasara Finance Ltd Management Discussions

Macroeconomic Overview for FY 2024-25 Global Backdrop

Despite continued geopolitical tensions and trade uncertainties, a feared global recession has yet to materialize. Inflation across major economies is easing, central banks are adopting a neutral stance, and unemployment remains broadly stable.

GDP Expansion: India maintained its position as the fastest-growing major economy, with real GDP growth of approximately 6.5% in FY 2024-25. Quarterly Momentum: The economy gained strength in Q4, with annual growth reaching 7.4%, buoyed by resilient private consumption and rising investment trends.

Private Consumption: Grew robustly by 7.2%, underlining solid domestic demand. Capital Formation: Gross fixed capital formation rose 9.4% in Q4 after weaker previous quarters, signaling a revival in investment activity.

Consumer Price Inflation: Eased significantly. Retail inflation dropped to an eight-year low of 1.55% in July 2025; the RBI revised its full-year inflation projection to 3.1% from 3.7%. Monetary Measures: The RBI proactively cut the repo rate by 50 basis points (bringing it to 5.5%) and slashed the Cash Reserve Ratio by 100 bps, signaling shift to a more neutral stance to support growth. Economists now view growth, rather than price stability, as the central policy focus.

Credit Rating Upgrade: S & P Global upgraded Indias sovereign rating to BBB, praising fiscal consolidation, institutional reforms, and macroeconomic resilience. External Stability: Current account deficit remained contained (~1.3% of GDP), supported by strong services exports and remittances. Forex reserves stayed robust.

Credit Growth: The NBFC sector saw credit growth of approximately 1820% in FY 2025. However, ICRA expects growth to moderate to 1315% in FY 2025 and FY 2026. Overseas Funding: NBFCs tapped into global markets, raising $3.67 billion in overseas syndicated loans more than double 2024 levels highlighting enhanced confidence and access to cheaper financing.

Bank Credit to NBFCs: This growth area slowed significantly. Bank lending to NBFCs rose only about 5.7% in FY 2025, and even declined in April 2025, reflecting tighter credit conditions.

FinTech Lending: FinTech NBFCs sanctioned a record 10.9 crore personal loans, totaling 1,06,548 crore demonstrating strong digital penetration in formal credit delivery. Profitability Pressures: Rating agencies anticipate a moderation in NBFC profitability over the near term, owing to higher funding costs and rising capital norms particularly in unsecured lending segments.

• India sustained robust economic growth amid a challenging global environment.
• Strong domestic consumption and investment underpinned economic resilience.
• Inflation moderated sharply, providing space for accommodative monetary policy.
• Sovereign rating was upgraded, reinforcing investor confidence.
• The NBFC sector continued rapid credit expansion but faced margin pressures and tighter bank funding; FinTech players are driving broad-based financial inclusion.

employees. The Competent of Board of Directors are very well connected to the NBFC sector.

The company has followed all the relevant and applicable Accounting Standards while preparing the Financial Statements.