Banas Finance Ltd Management Discussions

The Management Discussion and Analysis Report for the year ended 31^st March, 2026 as stipulated under Regulation 34 (2) (e) read with Schedule V of SEBI (LODR) Regulations 2015 have been included in consonance with the Code of Corporate Governance as approved by The Securities and Exchange Board of India (SEBI).

Investors are cautioned that these discussions contain certain forward-looking statements that involve risk and uncertainties including those risks which are inherent in the Companys growth and strategy. The company undertakes no obligation to publicly update or revise any of the opinions or forward-looking statements expressed in this report consequent to new information or developments, events or otherwise.

The operational performance and future outlook of the business has been reviewed by the management based on current resources and future development of the Company.

Banas Finance Ltd. is a non-deposit-taking Non-Banking Financial Company (NBFC-D) registered with the Reserve Bank of India (RBI). It is mainly engaged into business of Finance and Share Trading activity. The Company has a good lending portfolio.

The Reserve Bank has issued the Reserve Bank of India (Non-Banking Financial Companies - Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025 dated November 28, 2025 (hereinafter referred to as Directions) in exercise of the powers conferred under the provisions of the Reserve Bank of India Act, 1934, the Factoring Regulation Act, 2011 and the National Housing Bank Act, 1987. There is a need to amend the Directions based on a review of instructions pertaining to regulatory framework including registration requirement for NBFCs not availing public funds and not having customer interface.

The RBI has amended the registration requirement for NBFCs not availing public funds and not having any customer interface and having asset size of less than ^1,000 crore as per the latest audited balance sheet are exempted from the provisions of sections 45IA and 45IC of the RBI Act, 1934 in terms of paragraph 65A of these Directions with effect from July 01, 2026.

INDUSTRY OVERVIEW:

NBFCs have become important constituents of the financial sector and have been recording higher credit growth than scheduled commercial banks (SCBs) over the past few years. NBFCs are leveraging their superior understanding of regional dynamics and customized products and services to expedite financial inclusion in India. Lower transaction costs, quick decision making, customer orientation and prompt service standards have typically differentiated NBFCs from banks. Considering the reach and expanse of NBFCs, they are well-suited to bridge the financing gap in a large country like India. Systemically Important NBFCs have demonstrated agility, innovation, and frugality to provide formal financial services to millions of Indians.

The Non-Banking Financial Companies (NBFC) sector in India has witnessed significant developments in the fiscal year 2025-26 marked by growth and regulatory changes. The sector strengthened its financial soundness during the year through robust capital buffers, improved asset quality and consolidation of the balance sheet. The recently adopted changes to the finance bill withdrawing exemptions on long term capital gains to investors in debt mutual funds is estimated to have minimal impact on the NBFC sector given limited exposure of mutual fund in long term papers of NBFCs.

OUTLOOK FOR FY 2025-2026:

The India non-banking financial company (NBFC) sector outlook for 2025-26 shows moderating credit growth of 13-17% due to a high base and tighter rules. Rate cuts, retail demand, and vehicle financing offer strong support, but smaller firms face funding pressure and asset quality stress.

Credit Growth and Segments

- Moderate expansion: Credit growth targets sit at 13-17%, down from past highs.

- Vehicle loans: Assets expected to rise at a 15-17% pace.

- Unsecured credit: Slows down significantly after past surges.

- Affordable housing: Housing units see robust outperformance.

INDUSTRY STRUCTURE AND DEVELOPMENTS:

NBFCs have emerged as the crucial source of finance for a large segment of the population, including SMEs and economically unserved and underserved people. They have managed to cater to the diverse needs of the borrowers in the fastest and most efficient manner, considering their vast geographical scope, understanding of the various financial requirements of the people, and extremely fast turnaround times.

NBFCs play an important role in credit intermediation, providing last-mile credit delivery with the help of technology. They are critical to the financial inclusion process, complementing the banking system by supporting the growth of millions of MSMEs, and independently employing people. Over the years, NBFCs have seen a rising credit-to-GDP ratio ("credit intensity") and a growing role in credit provisioning vis-a-vis scheduled commercial banks

NBFCs:

Over the past few years, NBFCs have undergone a significant transformation and today they form an important component of Indias financial system. Playing a critical role in the development of infrastructure, transport and employment generation, NBFCs are changing the business loan landscape in the country. Most NBFCs, leverage alternative and tech-driven credit appraisal methodologies to assess the credit worthiness of prospective borrowers.

This difference in approach allows them to meet loan requirements of individuals and businesses left traditionally underserved by banks. With the introduction of e-KYC, making borrowing an instant and hassle-free experience, NBFCs are already offering the right financial products to consumers and small businesses in a customized manner. The use of technology to optimize business processes also keeps cost overheads to a minimum, enabling credit to be availed at highly competitive interest rates.

KEY OPPORTUNITIES:

o Increasing the penetration in the Micro, Small and Medium Enterprise (MSME) segment with new and dynamic operating models.

o Synergistic alliances with fintech companies to tap niche markets. Accessing new customers and cheaper funding sources by developing a viable co-lending business model. o Tapping into the fast-growing e-commerce segment.

o Diversifying assets by targeting new profitable segments and developing the capabilities required to serve those segments.

o Developing digital capabilities to boost sales productivity. o Increasing fee income through advisory services.

o Using digital competencies and tools to improve sales productivity - the use of advanced analytics and machine learning to build propensity models for lead generation, making real-time offers available to sales representatives by using customer data from multiple internal and external sources.

RISKS AND CONCERNS:

NEW RISK MANAGEMENT FRAMEWORK

However, another green shoot that emerged from the regulatory intervention as the RBI introduced a new liquidity risk management framework to holistically counter future risks in the sector.

This might have produced short-term pain in the industry but its an excellent long-term measure to protect the sector from externalities and improve the overall risk management frameworks across the industry. This will not only boost the confidence in the robustness of the sector, but it could also potentially lower the cost of funds for NBFCs as their risk perception goes down massively due to the new LCR reporting framework.

Moreover, the RBIs emphasis on its commitment to not let any NBFC fail came as a strong signal from the government that it firmly stands behind the sector. Due to the easier liquidity provisions, the flow of funds to NBFCs from banks improved by over 30 per cent in just a year.

As a result, the sector now stands on a firm footing with the right regulatory provisions in place along with liquidity windows which have allowed NBFCs to raise funds. Overall, the signs are encouraging as the asset quality for SME lending remains stable and lower than commercial lending non-performing asset rates in India. According to CIBIL, SME 1 segment had just 9 per cent delinquencies compared to NPAs reaching up to 14 per cent in the larger ticket size segment. Meanwhile, NBFCs looked outwards for funds to keep the credit cycles running. Many players have raised funds outside the country and these offshore borrowings are expected to continue going into 2020, at leasttill the time credit flow in the Indian economy resumes.

The crucial bit to note here is that lending by NBFCs forms the backbone of Indias economy, especially for the micro, small and medium enterprises sector.

As an NBFC, Banas is exposed to Credit, Liquidity and Interest Rate Risk. The Company takes risk management seriously and its procedures and policies in the area are well defined and considered appropriate for the assessment and management of individual risk categories. Sustained efforts to strengthen the Risk Framework have yielded consistently better outcomes for the company.

Company is well placed on the liquidity front and appropriate policies exist for underwriting credit risk. The Company endeavors to continuously learn and modifies its policies to manage the aforementioned risks.

The Audit Committee has been periodically reviewing the risk profile of the Company and evaluating the adherence by the branches / Functions of the systems and processes in place for monitoring, evaluation, assessment and mitigation of risk through a systematic and effective audit Programme. The observations of Audit Committee, if any, on the risk management are reported to the board.

The Key Risks Are:

i) Liquidity risk

ii) Interest rate risk

iii) Credit risk

iv) Business risk

v) Regulatory risk

vi) Pandemic risk.

INTERNAL CONTROL SYSTEM & ADEQUACY:

The company has adequate internal control system commensurate with its size and business. The company Com- plied with all applicable statutes, policies, procedures, listing requirements and management guidelines. It Adheres to applicable accounting standards and polices.

Banas has robust internal audit Programme, where the internal auditors, an independent firm of chartered accountants, conduct a risk-based audit with a view to not only test adherence to laid down policies and procedures but also to suggest improvements in processes and systems. Their audit program is agreed upon by the Audit Commit- tee. Internal audit observations and recommendations are reported to the Audit Committee, which monitors the implementation of such recommendations.

BUSINESS RISK:

The Company is engaged in trading in *Futures and Options (F&O)* and intends to continue this business as part of its ongoing operations. F&O trading is inherently exposed to market risks arising from fluctuations in market prices, market volatility, leverage and other economic and market-related factors. These factors may result in significant fluctuations in the Companys trading results and financial performance.

The Companys management regularly monitors market conditions, trading positions and associated risks and takes appropriate measures to manage and control the risks arising from its F&O activities. Given the nature of the business, the Company remains exposed to market-related risks, which may continue to affect its performance in the future.

HUMAN RESOURCE:

The Company has excellent combination of experienced and talented employees. The Company also undertakes on regular basis various training Programmes to keep its employees updated on new technical developments and information which directly results in optimum capacity utilization and cost effectiveness. The Companys relation with its employees continues to be cordial. The Company always reciprocates commitment to its employees in order to motivate them to perform the best.

FULFILLMENT OF RBI NORMS AND STANDARDS:

The Company continues to fulfill all applicable norms and standards laid down by the Reserve Bank of India pertaining to prudential norms, income recognition, accounting standards, asset classification as applicable to NBFCs (ND) except few, explanation pertaining to which has been provided in Boards report.

OUTLOOK:

The company is cautiously optimistic in its outlook for the year 2026-27. The outlook of the company for the year ahead is to diversify risk and stabilize its asset quality. The Corporate Finance Division will adopt a cautious approach and focus on customer relationships. This division will look to grow its supply chain, structured finance and leasing business.

CAUTIONARY STATEMENT:

Statements in foregoing paragraphs of this report describing the current industry structure, outlook, opportunities, etc., may be construed as "forward looking statements", based on certain assumptions of future events over which the Company exercises no control. Therefore, there can be no guarantee as to their accuracy. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those that may be implied by these forward-looking statements.

FOR & ON BEHALF OF THE BOARD

Sd/-	Sd/-
Tanu Agrawal	Girraj Kishor Agrawal
Executive Director & CEO	Director
DIN:00290966	DIN:00290959
Place: Mumbai
Date: 01st September, 2026