Explicit Finance Ltd Management Discussions

According to the Reserve Bank of India (Amendment Act) 1997, A Non-Banking Finance Company means:

(i) A Financial Institution which is a company;

(ii) A non-banking institution which is a company and which has as its principal business the receiving of deposits under any scheme or arrangement or in any other manner or lending in any manner; (iii) Such other non-banking institution or class of such institutions as the bank may with the previous approval of the Central Government specify.

(a) Industry structure and developments

Risks And Concerns

NBFC is amongst highly regulated sectors and is exposed to market risk and liquidity risk. In the present economic situation in country and globally all the financial institutions are at very heavy risk. The secondary market is also highly volatile and with unstable trends of market it is also pro risk area. For controlling inflation RBI keeps on changing norms periodically which impacts working pattern and cash flow.

(b) Opportunities and threats

Micro financing and unsecured consumer loans are emerging as new avenue and with increasing purchasing power and having direct nexus to working population the available consumer base is very huge and number of NBFC/Banks/FIS catering in the area are not sufficient to cater the demand resulting in favourable demand and supply ratio for NBFCs, inflation is at its lowest indicating poor purchasing power of common man but RBI may cut rates to boost the demand.

(C) Outlook

Micro Finance sector as a whole is poised for attractive growth and expected to see enhanced performance during the FY 2024-25. The earnings momentum is projected to remain strong through controlled credit cost and balanced interest rates towards borrowing and lending.

(d) Risks and Concerns

Your Company is exposed to the fluctuations of economy and industry cycles. The company manages these risks by remaining very conservative and following other risk management practices. The management believes that efficient business planning risk management and product diversification would help mitigate such risks.

(e) Internal Control Systems and their adequacy

The Company has an internal control system, commensurate with the size, scale and nature of its operations. Testing of such systems forms a part of review by the Internal Audit function. The Internal Audit function monitors and evaluates the efficacy and adequacy of Internal Control system in the Company to ensure that financial reports are reliable, operations are effective and efficient and activities comply with the required policies and procedures. Based on the report, the concerned officials take corrective action, if any, in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Company from time to time.

(f) Human Resource Development

The human capital today is one of the most decisive factors in the success of a company and thus we strive for excellence in the entire employee life cycle. Your Company continuously recruits skilled professionals from various streams and undertake several initiatives to retain the talent pool. Your Company also places emphasis on development and enhancement of skills and capabilities of employees to prepare them for future challenges. As in the past, the company enjoyed cordial relations with the employees at all levels. The Company focuses on improved Employee Engagement through several enterprise level initiatives. The Rewards and Recognition Programs here appreciate outstanding performers for their professionalism, dedication and outstanding contributions.