Finkurve Financial Services Ltd Management Discussions

Global Economic Overview:

The global economic environment remains marked by heightened geopolitical uncertainty, volatile commodity markets and evolving financial conditions. The growth is projected at 3.1% in 2026 and 3.2% in 2027, compared with approximately 3.4% during 2024 25. The 2026 growth estimate has been revised downward by 20 basis points from the January 2026 forecast, primarily reflecting disruptions arising from the conflict in the Middle East.

Inflationary pressures are also expected to remain elevated in the near term. Global headline inflation is projected to increase from 4.1% in 2025 to 4.4% in 2026, before moderating to 3.7% in 2027. The conflict has increased risks of energy supply disruptions and higher commodity prices, which could raise transportation, food, fertilizer and other input costs, reduce purchasing power and potentially lead to tighter monetary and financial conditions.

The impact is expected to be uneven across economies. The IMF has lowered its 2026 growth forecast for emerging market and developing economies by 30 basis points, while its outlook for advanced economies remains broadly unchanged. Commodity-importing emerging economies with existing macroeconomic vulnerabilities are expected to be relatively more exposed to higher energy prices and tighter global financial conditions.

Downside risks remain significant. Under the IMF s adverse scenario, global growth could moderate to

2.5% in 2026, with inflation rising to 5.4%. Under a more severe scenario involving prolonged disruptions to energy infrastructure, global growth could fall to around 2.0%, while headline inflation could rise to above 6% by 2027. The impact on emerging market and developing economies could be almost twice as large as that on advanced economies.

Against this backdrop, interest rates, liquidity conditions, inflation and financial-market volatility are expected to remain important factors for the financial services sector. The evolving macroeconomic environment reinforces the importance of prudent liquidity and capital management, disciplined risk practices and continued monitoring of household and business credit conditions. For lending institutions, including gold loan NBFCs, maintaining financial flexibility and resilience will remain important as global economic and financial conditions evolve.

Source: International Monetary Fund World Economic Outlook (April 2026)

Indian Economic Overview:

Indias economy remains resilient, although growth is expected to moderate in FY2026-27 amid higher energy costs, renewed inflationary pressures and softer global demand. Real GDP grew 7.8% year-on-year in Q3 FY2025-26, after 8.4% in the preceding quarter. The OECD projects growth of 6.3% in FY2026-27 and 6.4% in FY2027-28. Private consumption is projected to grow by 6.8% and 7.2%, respectively, and gross fixed capital formation by 6.0% and 7.2%. Exports are expected to moderate to 3.0% in FY2026-27 before improving to 4.0% in FY2027-28.

Inflation is projected to rise from 2.1% in FY2025-26 to 4.8% in FY2026-27, driven by higher food, energy and fertiliser costs and currency depreciation, before easing to 4.0% in FY2027-28. The rupee depreciated by around 7% against the US dollar from the beginning of 2026, adding to imported costs. Exposure to external energy shocks remains significant, with the Middle East accounting for approximately 46% of crude oil imports and 57% of natural gas imports in 2024. Higher energy costs could weaken household purchasing power and widen the current account deficit to 2.1% of GDP in FY2026-27, before it narrows to 1.2% in FY2027-28.

The Reserve Bank of India reduced the policy rate from 6.5% in January 2025 to 5.25% in February 2026. However, the OECD expects a temporary increase of around 25 basis points by the end of Q1 FY2026-27 to contain inflation, followed by easing in FY2027-28. Fiscal support is expected to cushion households from higher energy prices, but could widen the deficit by around 0.4% of GDP relative to the budgeted path. Labour-market conditions have softened, with the employment rate declining from 40.5% in December to 39.5% in April, while non-food bank credit grew 15.9% year-on-year in March 2026.

For gold loan NBFCs, resilient domestic demand and the need for quick, secured liquidity among households and small businesses provide a relevant operating backdrop. Pressure on real incomes and softer employment may increase short-term liquidity requirements, supporting demand for small-ticket secured credit. At the same time, higher borrowing costs, household cash-flow pressures and volatility in energy, currency and collateral values require prudent underwriting and disciplined risk management. Maintaining appropriate loan-to-value ratios, monitoring asset quality and collections, diversifying funding sources and preserving adequate liquidity buffers will remain important.

Overall, Indias medium-term outlook remains constructive, supported by consumption and investment, while energy-supply disruptions, trade uncertainty, weaker global demand and persistent inflation remain key downside risks.

Source: OECD Economic Outlook - Volume 2026

Indian Financial Services Industry Overview:

India s financial services industry has expanded significantly over the past two decades, supported by economic growth, improving asset quality, rising credit demand and the increasing financialisation of household savings. The market capitalisation of listed Banking, Financial Services and Insurance (BFSI) companies increased nearly 50-fold from approximately Rs. 1.8 lakh crore in 2005 to Rs. 90.7 lakh crore in 2025, representing a CAGR of around 22%. Consequently, the sector s market capitalisation rose from nearly 6% of GDP to about 27% over the same period. While banks remain central to the financial system, the combined share of NBFCs, fintech companies, insurers and asset managers in BFSI market capitalisation increased from 15% in 2005 to 43% in 2025, reflecting the emergence of a broader and more diverse financial ecosystem.

Financial inclusion has also improved, with the RBI s Financial Inclusion Index increasing from 53.9 in FY2021 to 67 in FY2025. Around 89% of adults now hold a financial account, while the Pradhan Mantri Jan Dhan Yojana had more than 582.6 million beneficiaries as of May 2026. UPI processes over

18 billion transactions each month and accounts for approximately 85% of India s digital retail payment volume. However, inclusion remains uneven: around 16% of bank accounts are inactive, only 15% of adults access formal credit compared with a global average of 24%, and only 14% of MSMEs have formal credit access. Addressing KYC friction, credit gaps, limited account usage and uneven rural digital adoption will therefore remain important for sustainable sector growth.

Source: Deloitte State of Financial Services in India (June 2026)

NBFC Sector Overview:

India s NBFC sector has strengthened its position within the financial system, supported by sustained credit growth, improving asset quality and wider penetration across retail and MSME segments. NBFC loan books increased from approximately Rs. 25 lakh crore to Rs. 48 lakh crore at a CAGR of around 15% and now represent nearly 21% of total system credit. Over the same period, gross non-performing assets declined from 6.6% to 2.9%, reflecting improved portfolio quality and risk management.

The composition of lending is gradually shifting towards secured retail and MSME credit, as lenders prioritise portfolio quality and risk-adjusted returns over volume-led growth in unsecured loans. Secured retail lending has emerged as a durable growth driver, while unsecured portfolios have moderated following the RBI s increase in risk weights in November 2023. This rebalancing is relevant as unsecured loans accounted for 53.1% of retail slippages. At the same time, tighter system liquidity, the decline in gross household financial savings from 11.3% in FY2019 to 10.8% in FY2025 and the rise in household financial liabilities from 4.1% to 4.7% require careful funding, pricing and credit-risk management. Digital Public Infrastructure, including the Account Aggregator ecosystem, which expanded from 479 participants in FY2024 to 705 in FY2025, can improve underwriting for thin-file and first-time borrowers.

Gold loans represent an important opportunity within secured retail lending. Gold loans within bank credit doubled during FY2025, while the organised gold-loan market expanded to approximately Rs. 3.38 lakh crore. Despite this growth, informal lenders continue to account for 60-65% of the market and typically charge annual interest rates of 25-50%, compared with 8.2-27% in the formal sector, often with weaker valuation practices and limited customer protection. This creates significant scope for banks and NBFCs to increase formal-market penetration through transparent valuation, competitive pricing, same-day processing and technology-enabled servicing. Sustainable growth will also require continued focus on portfolio quality, risk-adjusted pricing, collections, operational resilience, cybersecurity and targeted use of AI, embedded finance and bank-grade digital infrastructure across customer service, underwriting, fraud management and compliance.

Source: Deloitte State of Financial Services in India (June 2026)

Gold Loan Industry Overview:

India s gold-loan market continued to expand strongly in FY2026, supported by higher gold prices, formalisation of credit, improving access to secured finance and increased use of gold loans for income-generating purposes. The product emerged as the second-largest retail lending category after home loans. Portfolio outstanding rose from 12.4 lakh crore in March 2025 to 18.6 lakh crore in March

2026, translating into year-on-year growth of 50.4% and sequential growth of 15.0%. Over the same period, active loans increased by 3.1% to 899.2 lakh, indicating that portfolio expansion was driven predominantly by higher average ticket sizes rather than a commensurate increase in account volumes. Priority-sector gold loans reached 6.3 lakh crore and represented approximately 30% of the market.

Origination momentum remained robust, with FY2026 origination value rising 74.4% year on year to

30.47 lakh crore, while origination volumes grew 24.0% to 1,647.8 lakh. In Q4 FY2026, origination value increased 17.9% quarter on quarter, whereas volumes were broadly stable, further reflecting the impact of higher collateral values and larger loan sizes. The ticket-size mix consequently shifted upwards: loans below 1 lakh declined from 22.9% to 9.9% of value and from 63.9% to 45.8% of volume between Q4 FY2024 and Q4 FY2026, while the volume share of loans above 2.5 lakh increased from 11.1% to 26.3%.

NBFCs strengthened their position during this period. Their share of origination value rose from 20.7% in Q4 FY2024 to 31.6% in Q4 FY2026, while their volume share increased from 38.7% to 48.8%, reflecting continued reach in lower-ticket, customer-intensive segments. Asset quality also improved materially: NBFC PAR (Portfolio at Risk) 31 90 declined from 2.15% in March 2025 to 0.56% in March 2026, and PAR 91 180 reduced from 0.43% to 0.20%.

The combination of deeper formalisation, evolving credit assessment, favourable loan-to-value norms for smaller loans and substantial untapped household gold supports the industry s medium-term potential. Nevertheless, disciplined underwriting, collateral valuation, collections and liquidity management will remain important as ticket sizes increase and gold prices evolve.

Source: CRIF How India Lends (FY26)

Business Overview:

Finkurve Financial Services Limited is a technology-enabled, RBI-registered NBFC operating through the Arvog brand. Incorporated in 1984 and acquired by the Kothari family in 2010, the Company has evolved from a legacy leasing and corporate lending business into a retail-focused financial institution, with gold loans at the core of its lending franchise. During FY26, Finkurve transitioned to the Middle Layer NBFC framework, reflecting the expansion in the scale and maturity of its operations.

The Company s business model is anchored in accessible, asset-backed credit for underserved and underbanked customers. Gold loans are originated through a direct, branch-led network, enabling operational control, faster disbursement and disciplined collateral management. Loan amounts are determined with reference to the value of pledged gold and RBI-prescribed loan-to-value norms. The Company has an unsecured retail lending portfolio, originated through partnership-led channels and supported by cash-flow, bureau and affordability assessments. This dual approach allows Finkurve to combine the security and velocity of collateral-backed lending while enabling the Company to selectively expand into adjacent retail lending products.

Finkurve s platform is supported by proprietary loan origination and management systems, centralised monitoring, digital workflows and embedded compliance controls. Its maker-checker framework, dual-authorisation vault access, video surveillance and technology enabled monitoring strengthen gold appraisal, fraud prevention and operational oversight. The model has been designed to support rapid and standardised branch expansion, particularly across Tier-2 and Tier-3 markets with high household gold ownership and limited access to formal credit.

The Company also benefits from the Augmont Group s deep experience across the gold value chain, including refining, digital gold, bullion distribution and retail platforms. This domain expertise strengthens Finkurve s understanding of gold, customer behaviour and collateral risk, while supporting its technology-led lending strategy.

Partnerships with financial institutions, including co-lending arrangements, complement its diversified funding base and support scalable growth. Going forward, Finkurve intends to deepen its presence in underbanked markets while maintaining a focus on risk governance, technology, portfolio quality and customer service.

Business Performance

FY26 marked a significant scale-up in Finkurve Financial Services Limited s operations, supported by the expansion of its branch-led gold loan franchise. Total Assets Under Management (AUM), including off-book AUM, increased by 149% to 1,096.1 crore as at March 31, 2026, compared with 439.5 crore a year earlier. Gold loans remained the principal growth driver, accounting for approximately 95% of the total portfolio, with gold loan AUM reaching 1,043 crore. Gold under management increased by 54% to 1,076.2 kg.

The Company expanded its gold loan network to 105 branches from 73 branches in FY25, strengthening its presence across key markets in southern India. Active gold loan customers increased by 66% to 28,506, while average gold loan AUM per branch rose to 9.9 crore from 5.3 crore, reflecting improving branch productivity and customer reach. The portfolio maintained healthy collection and asset-quality indicators, with collection efficiency reaching 98% in Q4 FY26. Gross NPA and Net NPA declined to approximately 0.1% each at year-end, compared with 0.9% and 0.7%, respectively, in Q4 FY25.

The expansion in the lending portfolio translated into strong financial growth. Total income increased by 48.8% to 209.9 crore, while Profit Before Tax grew by 46.3% to 34.6 crore. Profit After Tax increased by 49.3% to 26.0 crore. The Company s net worth rose by 68% to 346.0 crore, supported by the preferential equity issuance undertaken during the year.

Finkurve closed FY26 with a capital adequacy ratio of 31.0%. Its funding base comprised term loans, non-convertible debentures and other borrowing facilities, with the average cost of borrowing moderating to 11.2% from 11.5% in FY25. Institutional and co-lending partnerships further supported portfolio expansion and efficient capital deployment.

Risk Management Framework

As a gold loan-focused NBFC, Finkurve Financial Services Limited operates within a regulated environment where effective risk management is essential for protecting customer assets, maintaining financial stability and supporting responsible growth. The Company s framework integrates risk identification, monitoring and mitigation into lending, treasury, branch operations and strategic decision-making.

Credit and Collateral Risk: Although lending is secured by gold jewellery, repayment delays may lead to credit losses or recovery challenges. The Company mitigates this risk through customer due diligence, ownership verification, assessment of repayment capacity and disciplined loan-to-value (LTV) limits. Collateral purity, net weight and valuation are assessed at origination, while overdue accounts and collateral coverage are monitored to enable timely recovery action and auctions, where required.

Gold Price Risk: A sharp correction in gold prices may reduce collateral cover and affect auction realisations. Finkurve monitors benchmark gold prices and portfolio-level LTVs, maintains adequate collateral margins and uses trigger-based alerts to identify accounts requiring closer follow-up. Periodic stress testing supports preparedness across different gold-price scenarios.

Liquidity and Interest Rate Risk: Maturity mismatches, constrained funding availability or higher borrowing costs may affect liquidity and margins. The Company manages these exposures through asset-liability monitoring, cash-flow forecasting, liquidity buffers and efforts to diversify funding across banks, debt instruments and institutional sources. Interest-rate movements and maturity gaps are reviewed periodically to support appropriate pricing and funding decisions.

Operational, Custody and Fraud Risk: Gold appraisal, storage, movement and release involve operational and fraud-related risks. These are addressed through standard operating procedures, maker-checker controls, secure vault arrangements, surveillance, insurance coverage, periodic audits, collateral reconciliation and employee training. Exceptions and incidents are escalated for timely corrective action.

Technology and Cybersecurity Risk: Increasing use of digital systems exposes the Company to service disruptions, data breaches and cyber threats. Access controls, data protection measures, system monitoring, vendor oversight, backups, disaster recovery arrangements and periodic vulnerability assessments support technology resilience and business continuity.

Regulatory and Conduct Risk: Finkurve monitors compliance with applicable RBI directions and requirements relating to KYC, customer communication, collateral valuation, LTV, storage, auctions and grievance redressal. Policies and processes are reviewed as regulations evolve, supported by compliance oversight, employee awareness and internal assurance mechanisms.

Reputational, Strategic and People Risk: Transparent customer dealings, prompt complaint resolution and responsible branch expansion help protect stakeholder trust. Strategic initiatives are evaluated for execution readiness, while structured recruitment, training, performance management and succession planning support operating discipline and service quality.

Opportunities & Threats

Opportunities

India s gold loan market offers substantial headroom for organised lenders. The sector stood at approximately 18.6 trillion in FY26, representing around 11% of retail credit, after recording a CAGR of nearly 34% between FY21 and FY26. Despite this growth, penetration against eligible household gold holdings remains about 10%, indicating a sizeable addressable market. The gradual shift from moneylenders and pawn brokers to regulated lenders, greater acceptance of gold loans for consumption and income-generating purposes, and expansion beyond the traditionally dominant southern markets create opportunities for Finkurve.

The Company can leverage its expanding branch network, technology-enabled processes, quick turnaround time and access to the Augmont ecosystem to deepen customer acquisition and improve servicing. Revised regulatory norms allowing differentiated LTV treatment based on loan purpose may support growth in smaller-ticket consumption loans and income-generating credit. Co-lending partnerships may also improve reach and funding efficiency.

Threats

Gold loan growth remains sensitive to gold-price cycles. A sharp correction may reduce collateral cover, increase portfolio LTVs and auctions, and moderate loan-book growth. Stable gold prices could also normalise industry growth from the elevated levels recorded recently.

Competition is intensifying as banks, established gold loan companies and diversified NBFCs expand their distribution networks. Banks lower funding costs and competitive lending rates may pressure yields, customer retention and branch profitability. Given the branch-led nature of gold lending, rapid expansion may result in longer break-even periods and higher overheads if productivity does not scale adequately.

The business also remains exposed to fraud, spurious gold, theft, custody and auction-related risks. Evolving regulations covering LTV, renewals, borrower disclosures, collateral practices, credit assessment and pricing may increase compliance requirements and affect product economics. Disciplined underwriting, robust controls, prudent liquidity management and calibrated expansion will remain critical for Finkurve.

Source: HDFC Securities Gold Loan: Sector Thematic Report

Internal Control Systems & Adequacy

Finkurve has established internal controls commensurate with the scale and nature of its gold-loan operations. The framework covers customer onboarding, gold appraisal, loan sanctioning, collateral custody, cash management, data security and branch-level processes. Maker-checker controls defined authority limits, system-based validations, periodic reconciliations, surveillance and exception monitoring support transaction accuracy and asset protection. Internal audits and branch reviews assess compliance with approved policies and regulatory requirements, with identified observations tracked through corrective actions. The findings are periodically reviewed by Senior Management and the Audit Committee to strengthen controls as the Company expands its network.

Human Resources

Finkurve recognises its employees as central to delivering reliable customer service and executing its growth plans. As the branch network expands, the Company focuses on attracting and developing talent across gold appraisal, branch operations, risk, compliance, technology and support functions. Structured onboarding and periodic training strengthen product knowledge, regulatory awareness, ethical conduct, fraud prevention and customer engagement. The Company also promotes performance accountability, internal development and employee engagement while periodically reviewing its people practices to support retention, leadership continuity and a safe, inclusive and productive workplace.

Outlook

India s gold loan sector retains favourable long-term prospects, supported by substantial household gold holdings, low organised-market penetration, growing demand for convenient secured credit and the gradual migration of borrowers from informal channels to regulated lenders. However, the pace of industry growth is expected to remain influenced by movements in gold prices, competitive intensity, funding conditions and evolving regulatory requirements.

Against this backdrop, Finkurve will focus on building a scalable and resilient gold loan franchise through calibrated branch expansion, higher productivity across existing locations and deeper customer engagement. The Company intends to leverage its technology-enabled operating model and the wider Augmont ecosystem to improve customer acquisition, turnaround time and service quality. Strengthening funding relationships and maintaining adequate liquidity will remain important as the loan portfolio expands.

Growth will be pursued alongside disciplined underwriting, prudent loan-to-value management and close monitoring of asset quality and collateral coverage. The Company will also continue to strengthen gold appraisal, custody, fraud prevention, cybersecurity, compliance and internal-control processes. While near-term challenges may arise from gold-price volatility, competitive pricing and higher borrowing costs, Finkurve remains focused on sustainable growth, operational efficiency and creating long-term value for its stakeholders.

Cautionary Statement

This Management Discussion and Analysis includes certain statements relating to Finkurve Financial Services Limited s plans, strategies, outlook and anticipated business performance. Such statements are based on the Management s current assumptions and assessment of available information and should not be regarded as guarantees of future performance.

The Company s actual results may vary from those expressed or implied due to factors beyond its control, including movements in gold prices, changes in loan demand and customer repayment behaviour, interest-rate fluctuations, availability and cost of borrowings, liquidity conditions, competitive intensity and broader economic developments. Changes in laws, regulatory requirements governing gold-backed lending, loan-to-value norms, collateral valuation and auction procedures may also influence business outcomes. Operational, technology, cybersecurity and execution-related risks could further affect performance.

Readers are advised to evaluate these statements in conjunction with the risks and uncertainties disclosed elsewhere in this Annual Report. The Company assumes no obligation to update such statements except where required under applicable laws or regulations.

For and on behalf of the Board of Directors

Sd/-
Ketan Kothari
Chairman
DIN: 00230725

Place: Mumbai
Date: 1 st September, 2026