Kumbhat Financial Services Ltd Management Discussions

Lower inflation and monetary easing offer relief, but trade tensions, high debt burdens, and geopolitical risks cloud the outlook

Despite falling inflation, improving labour market conditions, and monetary easing, global growth is projected to remain below the pace seen before the pandemic, and the world economy continues to face significant uncertainties. This continues to gravely impact progress towards the Sustainable Development Goals (SDGs), especially for many developing countries that are still suffering from the accumulated impacts of successive crises. The latest World Economic Outlook reports a slowdown in global growth as downside risks intensify. While policy shifts unfold and uncertainties reach new highs, policies need to be calibrated to rebalance growth-inflation trade-offs, rebuild buffers, and reinvigorate medium-term growth, thereby reducing both internal and external imbalances. Policies that promote healthy aging, bridge gender disparities, and enhance the alignment of migrants skills with local labor market demands can play a crucial role in countering slow economic growth and fiscal pressures, especially when coupled with infrastructure investment.

India is projected to become the worlds fourth-largest economy by 2025, surpassing Japan, according to the IMF. This marks a major milestone, as the country climbs from 10th place in 2014 to 4th in just 11 years a 105% nominal GDP growth during the period, with India becoming a $4 trillion economy. This Scenario is represents two sides of the coin. It has its own advantage and risks. There are new emerging trends in Risk management.

Artificial Intelligence (AI) and Machine Learning (ML):

Cyber security:

ESG Risks Environmental, Social and Governing Risks

Trade & Traiff Risks

The challenges plaguing the NBFC sector extend well into 2025. Experts are talking of consolidation, capital raising, and profitability pressures in 2025.

RBI has prescribed Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs requiring NBFCs to Top up their Net Owned funds to not less than Rs.5 Crores by 31.03.2025 and to not less than Rs.10 Crores by 31.03.2027 putting additional strains on their operations. Your company has achieved the target.

Non-Banking Financial Companies played an important role by fulfilling the diverse financial needs of those customers that dont have access to banks and their services.

Taking into account the new emerging factors in Risk management following risk management techniques have been adopted by KFSL.

1. Identifying risk,

2. Analysing risk,

3. Creating a mitigation plan,

4. Executing the plan and

5. Continuously monitoring how changes in the external business environment influence the risks an organization faces

6. Reviewing of Artificial Intelligence, Cyber Security and ECG risks.

7. Trade & Tariff Risks

However we at KFSL being nonbanking, non- deposit taking systemically Important NBFC, have adopted Risk Management Strategies suitably.

Estimates and expectations stated in this Management Discussion and Analysis may be "forward-looking statements" within the meaning of the applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to your Companys operation include economic conditions affecting the interest rate, inflation, changes in the interest rate, changes in the Government regulations, tax laws, other statutes and incidental factors. The Company undertakes no responsibility to update or revise any forward-looking statement.