Garbi Finvest Ltd Management Discussions

Annexure V

ECONOMIC REVIEW Global Economy

he global economy was tested afresh in FY 2025-26, with growth losing momentum as an escalation of conflict in the Middle East compounded the lingering effects of trade tensions and elevated policy uncertainty. Global GDP growth for 2026 is projected at around 3.0 3.1%, a step down from roughly 3.3% in 2025, as a war-driven spike in energy prices and renewed supply disruptions weighed on activity. Advanced economies continued to expand only modestly, while emerging markets and developing economies particularly commodity importers bore the brunt of higher energy and food costs. After several years of steady disinflation, global headline inflation is now expected to tick up to about 4.4% in 2026 before resuming its decline in 2027, prompting major central banks to stay cautious even as some had begun to ease. Crude oil, which averaged close to USD 68 a barrel in 2025, is assumed to trade materially higher in 2026 amid supply concerns. Downside risks clearly dominate the outlook a prolonged or wider conflict, deeper geopolitical fragmentation, a re-pricing of expectations around AI-driven productivity, and fresh trade and tariff frictions could all weaken growth, while high public debt and eroded policy buffers limit the room to respond. Even so, resilient technology investment and steady consumer spending in key economies have helped the world economy absorb these shocks better than initially feared.

Indian Economy

Indias economic performance in FY 2025-26 was once again a global standout, cementing its status as the fastest-growing major economy for the fourth consecutive year. Real GDP is estimated to have grown by around 7.6 7.7% for the year, an acceleration from 6.5% in the previous fiscal and comfortably ahead of the governments initial 6.3 6.8% projection. Growth was broad-based: the services sector expanded by over 9%, manufacturing and construction grew by about 7%, and agriculture held steady. This momentum was powered by the twin engines of robust private consumption and sustained public and private investment, even as global headwinds and elevated US tariffs tested external demand. International agencies have consistently affirmed Indias leadership the Reserve Bank of India raised its FY 2025-26 growth forecast to 7.3%, while the IMF, World Bank, OECD and others continue to recognise India as a key anchor of global economic momentum. Crucially, inflation fell to exceptionally benign levels during the year, providing an unusually supportive macroeconomic backdrop. Retail (CPI) inflation averaged well below the RBIs 4% medium-term target easing to multi-year lows and touching a record of about 0.25% in October 2025 as food prices corrected sharply and the September 2025 rationalisation of Goods and Services Tax (GST) rates fed through to consumers. This price stability allowed the Reserve Bank of India to pivot decisively towards supporting growth: the RBI cut the policy repo rate by a cumulative 125 basis points from February 2025 and injected durable liquidity, with the reductions transmitting quickly into lower lending rates a direct positive for home-loan borrowers. An above-normal monsoon in 2025 lifted agricultural output and rural incomes, further easing food inflation after earlier volatility. The broader macro picture was equally reassuring: foreign exchange reserves crossed USD 700 billion, banking-sector gross non-performing assets fell to multi-decade lows of around 2.2%, and the current account deficit remained modest a combination that leaves the economy well cushioned against external shocks.

Indian Financial Services Industry

The Indian financial services sector continues to play a vital role in supporting economic growth by facilitating savings, investment, credit and financial inclusion. The sector comprises banks, non-banking financial companies, insurance companies, mutual funds, capital-market intermediaries and other financial institutions. The NBFC segment continues to complement the banking sector by catering to specialised credit requirements and serving segments where traditional banking channels may have limited reach. At the same time, the sector remains subject to heightened regulatory oversight relating to governance, risk management, asset quality, liquidity and customer protection. Technology continues to transform financial services. Digital platforms, data analytics, electronic payments, automated processes and technology-enabled monitoring are increasingly being adopted to improve efficiency and strengthen customer servicing. The operating environment for NBFCs, however, remains sensitive to interest rates, liquidity conditions, credit quality, funding costs and regulatory changes. Accordingly, prudent financial management and effective risk-management systems remain essential for sustainable operations.

Industry Structure and Development

The financial services industry continued to undergo structural changes during FY 2025-26. Regulatory reforms and increasing compliance requirements have placed greater emphasis on transparency, governance, risk management and financial discipline. NBFCs are required to maintain appropriate systems for monitoring credit exposures, liquidity, financial reporting and regulatory compliance. The adoption of technology and improved data-driven processes is also becoming increasingly important for operational efficiency and risk mitigation. The Company continues to monitor developments in the financial services industry and applicable regulatory requirements and remains committed to conducting its operations in a responsible and compliant manner.

Sector Overview

The sectors funding environment improved meaningfully during the year, in contrast to the tight conditions that followed the 2018 NBFC (Non-Banking Financial Company) liquidity crisis. The Reserve Banks cumulative 125 basis-point reduction in the repo rate since February 2025, coupled with ample banking-sector liquidity and record institutional investment real estate attracted well over USD 8 billion of institutional capital in 2025 has widened access to funding.

Opportunities

The Company believes that the long-term development of the Indian economy presents opportunities for the financial services sector.

The continued formalisation of financial activity, increasing financial awareness, expansion of digital financial services, growing demand for organised credit and broader financial inclusion provide opportunities for NBFCs and other financial-services businesses. The increasing adoption of technology can further improve operational efficiency, documentation, monitoring, customer servicing and risk-management processes.

The Company intends to evaluate available business opportunities prudently and in accordance with its financial capacity, risk appetite and applicable regulatory framework.

Opportunities, Threats, Risks and Concerns

The NBFC sector benefits from demographic trends, large untapped rural and semi-urban markets, and the growing adoption of digital platforms for credit and collections. At the same time, it faces challenges including rising NPAs, intense competition from banks and fintechs, high cost of funds, and regulatory restrictions on deposit-taking.

The Company recognizes that operational risk, credit risk, and competition risk are most significant to its business. A comprehensive Risk Management Policy has been put in place to identify, monitor, and mitigate such risks effectively.

Internal Control Systems and Adequacy

The Company has established robust internal control systems commensurate with its size and operations. These systems ensure compliance with statutory and regulatory requirements and strengthen governance, accountability, and transparency. The Audit Committee regularly reviews the internal control framework and closely monitors statutory auditors observations.

Financial Performance

A detailed discussion on the Companys financial performance is provided in the Directors Report and the Cash

Flow Statement forming part of the Annual Accounts.

Human Resources

The Company continues to prioritize employee development through structured appraisal systems and training initiatives. It remains committed to attracting, retaining, and nurturing top talent, building on its inherent strengths and positive work culture. Employee relations have remained cordial throughout the year.

Cautionary Statement

Statements in this report describing the Companys objectives, expectations, or projections may be forward-looking in nature within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied.

	For and on behalf of the Board
	Sd/-	Sd/-
Date: 29.05.2026	Kripa Shankar Mahawar	Ritu Mahawar
Place: Mumbai	Managing Director	Director
	DIN: 01158668	DIN: 08075381