Mahindra & Mahindra Financial Services Ltd Management Discussions

About Mahindra & Mahindra Financial Services

Limited

Mahindra & Mahindra Financial Services Limited (Mahindra Finance/MMFSL) is a subsidiary of the Mahindra Groups flagship company Mahindra & Mahindra Ltd. (M&M) (market capitalisation: 3.79 trillion as of 23 rd April 2026), one of Indias leading business conglomerates.

MMFSL is a leading upper-layer deposit-taking non-banking finance company (NBFC) with a strong presence in rural and semi-urban markets (RuSu), providing a wide range of financial products and services. We have had the opportunity to serve over 12 million customers since inception, relying on our extensive network spread across 1,348 offices covering 27 states and seven union territories in India. Our debt instruments carry AAA credit rating which indicates highest degree of safety regarding timely servicing of financial obligations and lowest credit risk.

MMFSL is a formidable player in the financing of new and pre-owned automotive vehicles, including tractors and commercial vehicles. Diversification remains a key strategic priority, with a growing focus on MSME financing, leasing through Quiklyz, and cross-selling of insurance and investment products, underpinned by continued investments in technology, analytics, and partnerships. Guided by its vision to be the “Most Trusted Financial Services Partner for Bharat”, MMFSL continues to strengthen its position in the evolving financial services landscape.

Economy Overview Global Economy

The global economy in FY2026 operated in an environment marked by elevated geopolitical uncertainties, persistent trade fragmentation and relatively tight financial conditions, which continued to weigh on economic activity across regions. Global output was mainly supported by continued expansion in technology-related investment, and the growing contribution of services trade to global growth. Inflationary pressures generally moderated across major economies as the effects of earlier monetary tightening continued to take hold, enabling several central banks to gradually shift toward a more accommodative policy stance.

However, the global environment remained fragile amid escalating geopolitical tensions. The outbreak of war in the Middle East disrupted energy supplies and trade flows, temporarily elevating fuel and food prices. Investment patterns continued to evolve, driven by rapid advancements in artificial intelligence, digital infrastructure, and strategic supply chains. Financial markets remained volatile, yet capital flows adapted to shifting conditions, underscoring the systems flexibility. Concerns around energy security and commodity market volatility continued to affect business confidence, even as innovation-led industries and sustainable technologies offered new opportunities to strengthen productivity and support long-term growth.

Global Growth Forecast (%)

	2025	2026	2027
		(P)	(P)
World Output	3.4	3.1	3.2
Advanced Economies	1.9	1.8	1.7
• United States	2.1	2.3	2.1
• Euro Area	1.4	1.1	1.2
• Emerging	4.4	3.9	4.2
Market and Dev.
Economies
• China	5.0	4.4	4.0
• India	7.6	6.5	6.5

Source: IMF World Economic Outlook Report April 2026

Outlook:

The global economic outlook remains challenging amid heightened uncertainty arising from evolving trade policies, geopolitical tensions, and rising global trade fragmentation. Growth is expected to moderate as economies adjust to a less favourable external environment characterized by weaker trade momentum, policy unpredictability, and persistent structural constraints. Rising trade barriers and shifts in global supply chains are likely to weigh on investment sentiment and economic activity, while fiscal pressures and elevated public debt levels continue to limit policy flexibility in several economies.

The global economy is expected to be supported by sustained policy coordination and the rapid pace of technological adoption. While risks remain, opportunities in digital transformation, energy transition initiatives and supply-chain diversification efforts continue to underpin long-term growth prospects.

Indian Economy

The Indian economy continued to demonstrate resilience during FY2026, maintaining its position among the fastest-growing major economies despite escalating geopolitical tensions, global trade disruptions and volatility in commodity markets. Economic activity remained well-supported by domestic drivers, with real GDP growth of 7.6% underpinned by healthy consumption trends, sustained government expenditure on infrastructure and steady momentum across industrial and service sectors. Rural demand remained strong, riding on a good monsoon and robust agricultural activity, while urban consumption showed gradual improvement during the year.

Industrial growth was aided by ongoing infrastructure investments and policy-led initiatives, while services activity remained broad-based, driven by financial services, trade, logistics and digital-led segments. Inflationary pressures eased over the course of the year, with headline CPI inflation moderating to 3.4% in March 2026, supported by improved food supply conditions and relative stability in key input costs. However, persistent global commodity volatility and supply chain disruptions continued to pose upside risks. Liquidity conditions were actively managed by the Reserve Bank of India (RBI) to ensure sufficient system liquidity, supporting credit flows without creating financial instability.

Indias external position remained stable, supported by strong services exports, steady remittance inflows and comfortable foreign exchange reserves of over USD 700 billion, which provided resilience against global uncertainties. Fiscal indicators remained robust, with GST collections growing 8.3% to 22.3 lakh crores in FY2026, reflecting sustained economic activity, improved compliance and ongoing formalisation. Overall, the macroeconomic environment remained stable, anchored by strong domestic fundamentals, prudent policy measures and continued economic momentum.

Macro-Economic Snapshot – India

	FY2019	FY2020	FY2021	FY2022	FY2023	FY2024	FY2025	FY2026
Real GDP growth (%)	6.5	3.9	(5.8)	9.7	7.0	7.6	6.5	7.6
Average CPI Inflation (%)	3.4	4.8	6.2	5.5	6.7	5.4	4.6	2.1
Average WPI Inflation (%)	4.3	1.7	1.3	13.0	9.6	(0.7)	2.3	0.7
Merchandise exports (Y-o-Y % Growth)	9.1	(5.0)	(7.5)	44.8	6.9	(3.1)	0.1	0.9
Merchandise imports (Y-o-Y % Growth)	10.3	(7.6)	(16.6)	55.3	16.8	(5.9)	6.9	7.6
Current account balance (% of GDP)	(2.1)	(0.9)	0.9	(1.2)	(2.0)	(0.7)	(0.6)	(0.6)
Exchange Rate (Rs. /$ - avg)	69.9	70.9	74.2	74.5	80.4	82.8	84.6	88.3
10-year Yield	7.5	6.9	6.3	6.8	7.3	7.1	6.6	7.0

Source: Department of Economic Affairs (DEA), Ministry of Statistics and Programme Implementation (MoSPI), RBI

Outlook:

Indias growth prospects remain strong, anchored by its demographic dividend, rapid digital adoption, and a reform driven policy environment. The agriculture sector is expected to benefit from continued investment in irrigation, technology, and crop diversification. Industrial activity is likely to accelerate further, supported by rising manufacturing capacity utilisation, private sector investment, and government initiatives such as the Production Linked Incentive (PLI) scheme, alongside a growing focus on green and sustainable manufacturing.

The services sector will continue to be Indias growth engine, driven by technology exports, and the expansion of global capability centres. is expected to remain within manageable levels, aided by proactive monetary policy, though global energy prices and currency movements could pose challenges. With supply chain realignments and strong investor confidence, role as a global economic powerhouse committed to inclusive and sustainable progress.

Industry Overview

Indian Financial Services Industry

FY2026 marked a year of steady progress for Indias financial services sector, supported by policy initiatives, strengthening banking fundamentals, resilient capital markets, and continued advancement in financial inclusion. RBIs monetary and liquidity measures supported financial conditions during the year, while continued initiatives to strengthen credit delivery, expand digital payments and deepen financial inclusion broadened the sectors reach. Together, these factors innovation, Inflation reinforced the strength and stability of Indias financial services ecosystem, enhancing its ability to support credit growth, widen formal financial access and respond effectively to changing macroeconomic and regulatory conditions.

- Supportive Monetary Environment:

Ind ias monetary environment turned supportive during the year, with the RBI reducing the repo rate by 100 basis points and cutting the CRR to improve liquidity and support growth-oriented credit conditions.

- Stronger Banking Fundamentals:

S cheduled commercial banks continued strengthen their balance sheets, supported by improved asset quality, healthy capital buffers and robust profitability, reflecting the overall resilience of the banking system.

- Healthy Credit Momentum:

B ank credit grew by 14.1% YoY as at end-2026, compared to 11.1% a year ago, reflecting sustained credit demand across the economy.

- V ibrant Capital Markets:

Indias capital markets remained supported by strong investor participation, healthy primary market activity and continued retail deepening. Resource mobilization at 10.7 lakh crores (upto Dec 2025) through primary markets remained robust during the year.

- Rising Financialization of Savings:

T he share of equities and mutual funds household financial savings increased to 15.2% from ~2% over the past decade, highlighting the growing shift estment avenues.

Outlook

Indias financial services industry enters the next phase of growth from a position of resilience, supported by strong macroeconomic fundamentals, healthy balance sheets and continued regulatory focus on financial stability. Going forward, the sectors growth is likely to positioned to consolidate its be shaped by deeper digital adoption, wider participation in capital markets and further development of non-bank and market-based financing channels.

At the same time, the evolving financial ecosystem will require continued emphasis on consumer protection, cyber resilience, trust in digital payments and responsible innovation, including the prudent adoption of artificial intelligence (AI). As the sector becomes more diversified, digital and innovation-led, balanced growth, robust governance and proactive regulatory oversight will remain critical to sustaining stability and strengthening Indias financial services ecosystem.

Indian NBFC Industry

The Non-Banking Financial Company (NBFC) sector in India continued to demonstrate resilience in FY2026, maintaining its role as a critical pillar of credit delivery. The industry expanded steadily, supported by strong demand across retail and commercial segments.

Overall growth remained healthy, with NBFCs AUM more (excluding government-owned NBFCs) estimated to grow at 18-19% and cross 50 lakhs crores in FY2027. Credit demand remained broad-based across retail and commercial lending segments. Vehicle finance and housing finance continued to be key contributors, with each accounting for nearly 22% of industry AUM. Loan Against Property (LAP) and secured MSME financing constituted nearly 15% of industry AUM. Growth to in certain unsecured lending segments moderated as NBFCs adopted a more cautious stance towards credit origination and portfolio expansion, reflecting the gradual shift towards calibrated growth, portfolio quality and prudent risk management practices. The sector also witnessed an increasing emphasis on secured lending.

Asset quality remained a key area of focus across the sector. NBFCs continued to strengthen underwriting frameworks, collection mechanisms and portfolio monitoring practices, resulting in improved credit discipline and enhanced resilience of loan books.

From a financial perspective, the sector demonstrated steady operating performance during FY2026. NBFCs continued to access diversified funding sources and maintained adequate liquidity buffers. The focus on operational efficiency, disciplined cost management and portfolio quality enabled lenders to navigate funding pressures and sustain earnings performance. in Capitalization levels across the sector remained comfortable, supporting business growth and balance sheet strength. towards market-linked inv Digital adoption continued to gain momentum, with NBFCs leveraging technology, analytics and digital platforms to enhance customer acquisition, improve service delivery and strengthen credit assessment processes. Investments in digital capabilities also contributed to greater operational efficiency and improved customer experience. Artificial intelligence and super app ecosystems are increasingly integrated into operations, improving efficiency and expanding access to financial services. The rapid growth of mobile based repayment channels illustrates how technology is reshaping customer behaviour and strengthening business models.

Overall, FY2026 was characterized by balanced growth, stronger risk management practices, increasing digitalization and a continued focus on portfolio quality, reinforcing the NBFC sectors importance within Indias financial system.

Growth Drivers for the Indian NBFC Industry Robust Retail Credit Demand:

The retail lending sector remains a key driver of growth, with strong demand for gold loans, vehicle financing, and personal loans. Rising incomes, increasing urbanisation, growing consumer aspirations and expanding entrepreneurial activity continue to drive demand for retail and business financing, supporting long-term growth opportunities for the sector.

Financial Inclusion and Underserved Markets:

Indias credit penetration remains below that of many developed economies, creating a large and long-term opportunity for NBFCs to expand access to formal credit across customer segments. NBFCs continue to play a critical role in serving customers who have limited access to traditional banking channels, particularly in rural and semi-urban markets, supporting the expansion of the formal credit ecosystem.

Digital Transformation:

Investments in digital onboarding, analytics-driven underwriting, alternative data sources and automated servicing processes are enhancing customer acquisition, improving operational efficiency and enabling scalable growth. Adoption of AI-driven tools and super-app ecosystems, which improved efficiency and broadened access to financial services, especially for underserved borrowers.

Improved Risk Discipline:

The sector has increasingly shifted its focus from growth-led expansion to risk-adjusted growth, supported by stronger underwriting standards, technology-enabled credit evaluation and proactive portfolio monitoring. This disciplined approach has enhanced the industrys ability to manage asset quality while maintaining sustainable growth.

Key Regulatory and Operating Developments

1) Monetary Easing and Liquidity Support: The operating environment turned more supportive during FY2026. RBI reduced CRR by 100-bps to 3% of Net Demand & Time Liabilities (NDTL), implemented in phases up to November 2025 and cumulative policy (Repo) rate cuts of 100 bps which helped ease funding conditions across the lending ecosystem and improved system liquidity and credit transmission.

2) Improved Funding Access for NBFCs: Liability-side conditions strengthened with the 25-percentage point reduction in risk weights on bank lending to NBFCs and MFI loans, reversing part of the earlier tightening cycle. Given the sectors dependence on bank lines and market borrowings, this was an important measure to improve credit flow, lower funding friction and support balance-sheet flexibility.

3) Strengthening of Co-lending Framework: RBI issued comprehensive Co-Lending Arrangements Directions, 2025, superseding the 2020 framework. The revised framework broadens the scope of co-lending to all loan categories and extends applicability to all NBFCs (including HFCs), mandates a minimum 10% loan retention by each partner, cap Default Loss Guarantees at 5% of the co-lending portfolio, and require synchronised NPA classification between co-lending partners thereby strengthening risk alignment, transparency and regulatory oversight.

4) Strengthening of Internal Grievance Redress

Mechanism: During the year, RBI introduced a revised Internal Ombudsman framework to strengthen the internal grievance redressal mechanism. The framework requires that all complaints partly or wholly rejected must be reviewed by an Internal Ombudsman before closure, ensuring enhanced transparency and customer protection.

Outlook

The outlook for the Indian NBFC sector remains optimistic, supported by sustained demand for retail and MSME credit, increasing formalisation of the economy and deeper penetration of financial services across customer segments. The industrys assets under management are expected to continue expanding at a healthy pace, driven by opportunities in vehicle finance, housing finance, secured business lending and other retail lending categories.

The sector is expected to benefit from favourable demographic trends, rising consumer aspirations and the growing adoption of formal credit channels. Increasing digitalisation across the lending value chain is likely to further enhance customer acquisition, underwriting capabilities and operational efficiency, enabling scalable and efficient growth. With strong distribution networks, deep customer reach and specialised product offerings, NBFCs are well positioned to address the diverse financing requirements of individuals, small businesses and rural communities, reinforcing their role in supporting Indias credit ecosystem.

Vehicle Financing Industry

Indias vehicle financing from broad-based momentum across urban and rural markets. Total vehicle retail sales reached a record 29.7 million units, up 13.3% year-on-year, driven by improved affordability, wider mobility demand, and healthier traction across categories. This created a favourable backdrop for asset-backed credit, particularly in mass-market segments with deeper semi-urban and rural penetration.

Two-wheelers remained the largest category at 21.4 million units, rising 13.4%, supported by rural cash flows and affordability. Passenger vehicles 4.7 million units for the first time, growing 13.0%, aided by strong model pipelines and preference for utility vehicles and alternative fuels. Commercial vehicles returned above 1 million units, up 11.7%, while tractors surged to 1.05 million units, an 18.9% increase, reflecting healthy farm economics. Three-wheelers grew 11.7% to 1.36 million units, driven by last-mile mobility demand.

Rural markets played a pivotal role, often outpacing urban demand. Passenger vehicle sales in rural areas grew 17.1%, compared to 10.4% in urban markets. Tractors remained predominantly rural, while rural demand contributed materially to commercial vehicle and two-wheeler volumes. This underscores the advantage of financiers with stronger rural reach.

Fuel mix and technology shifts also shaped financing opportunities. Electric vehicle penetration rose sharply, with EV share at 60.95% in three-wheelers, 6.54% in two-wheelers, 4.25% in passenger vehicles, and 1.83% in commercial vehicles. CNG adoption strengthened, particularly in passenger and commercial segments. These transitions broadened financing scope beyond conventional ICE vehicles, creating new opportunities across retail, fleet, and last-mile mobility financing.

Domestic Sales (in million units)

Category	FY2023	FY2024	FY2025	FY2026
Passenger Vehicles	3.64	3.94	4.16	4.71
Commercial Vehicles	0.96	1.00	1.03*	1.13*
Three-Wheelers	0.78	1.17	1.22	1.36
Two-Wheelers	16.03	17.52	18.89	21.42
Tractors	0.83	0.89	0.88	1.05
Grand Total	22.24	24.53	26.19	29.67

*includes construction equipment

Source: Federation of Automobile Dealers Associations (FADA)

Outlook

The vehicle financing industry is expected to on a positive trajectory, supported by strong retail fundamentals, deeper rural penetration and continued demand across personal, commercial and farm-linked mobility segments. Stable financing conditions, improving model availability and the growing share of EV and alternate-fuel vehicles are likely to support financing opportunities across categories. While fuel price volatility, supply-side disruptions and shifts consumer sentiment may create near-term variability, industry in FY2026 benefited the medium-term outlook remains constructive, with growth likely to be led by lenders combining distribution reach with prudent underwriting and portfolio discipline.

Housing Finance Industry Overview The industry also benefited The Indian housing finance industry continued demonstrate steady growth during FY2026, supported by sustained demand for home ownership, increasing finance. urbanisation and the continued expansion of formal credit channels. The sector remained a key enabler of housing affordability, particularly for first-homebuyers, self-employed borrowers and customers in semi-urban and emerging markets.

Housing finance companies (HFCs) strengthened their presence in underserved markets through extensive branch networks, specialised underwriting capabilities and customer-centric product offerings. The sector maintained a strong focus on prudent credit assessment, portfolio quality and operational efficiency, enabling sustainable growth amid an evolving regulatory environment.

Demand in the affordable and mid-income housing segments remained resilient, supported by favourable demographics, rising household incomes and government initiatives aimed at promoting home ownership. The share of Affordable Housing Finance Companies (AHFCs) has increased from ~10% of HFCs total loan portfolio in FY21 to ~18% over the last fiveyears. increasing financialization of the housing market, with outstanding tohousing loan balances in India rising to over 44.4 lakh crore in FY2026, reflecting the growing role of institutionalcreditinhousing

Technology adoption continued to transform the sector, with digital sourcing, analytics-driven underwriting and enhanced customer servicing capabilities improving operational efficiency and customer experience.

Overall, the housing finance industry has demonstrated resilience and adaptability, with affordable housing emerging as the cornerstone of expansion. By combining innovation, governance, and customer centricity, housing finance companies are strengthening financial inclusion and contributing meaningfully to Indias economic development.

Outlook

The housing finance industry is expected to build on its current momentum and enter a phase of sustained expansion. Demand for affordable housing will continue to be the central driver, supported by rising aspirations in semi urban and rural markets and ongoing government initiatives that encourage home ownership. Housing finance companies are likely to deepen their reach into underserved customer segments, leveraging technology to streamline processes and reduce costs.

Competition from banks and funding pressures may intensify, but housing finance companies are anticipated to respond with diversified funding strategies and stronger governance frameworks. Asset quality is expected to remain resilient, underpinned by disciplined underwriting and improved borrower awareness. As digital adoption accelerates and customer centric models evolve, the industry is positioned to play a larger role in financial inclusion. Going forward, housing finance companies are set to reinforce their importance in Indias economic development by enabling broader access to housing credit and supporting the nations growth ambitions.

Micro, Small and Medium Enterprise (MSME)

Financing Industry

Micro, Small and Medium Enterprises (MSMEs) form a cornerstone of Indias economic landscape, serving as key drivers of entrepreneurship, employment generation and inclusive growth. With over 7.47 crore enterprises employing more than 32.8 crore individuals, the sector is the second-largest source of employment after agriculture. MSMEs contribute approximately 31.1% to Indias GDP, 35.4% of manufacturing output and 48.6% of total exports, underscoring their critical role in the countrys industrial and trade ecosystem.

The sector continues to benefit from a supportive framework aimed at fostering enterprise creation, improving access to finance and accelerating business growth. Grassroots entrepreneurship received a significant boost through the Prime Ministers Employment Generation Programme (PMEGP), which supported over 10 lakh micro enterprises and generated employment for over 87 lakh persons. In addition, measures such as the 10,000 crore SME Growth Fund, a 2,000 crore enhancement to the Self-Reliant India (SRI) Fund and wider adoption of the Trade Receivables Discounting System (TReDS) are expected to strengthen capital access and improve liquidity across the MSME ecosystem.

The sector has also witnessed increasing formalisation, supported by digital initiatives such as the Udyam Registration Portal and the Udyam Assist Platform. More than 7.30 crore enterprises have been registered across these platforms, enabling greater access to government schemes, formal credit channels and Priority Sector Lending benefits. Combined with ongoing efforts to streamline MSME support schemes and enhance ease of doing business, these developments are strengthening the foundation for sustainable growth and expanding opportunities for SME financing in India.

Outlook

The outlook for Indias MSME sector remains on a strong trajectory, supported by continued policy focus on improving access to finance, strengthening digital infrastructure and enhancing ease of doing business. Measures announced under the Union Budget 2026 27, including the SME Growth Fund, enhanced support through the Self-Reliant India Fund and wider adoption of digital receivables financing platforms, are expected to improve capital availability, liquidity and credit access across the sector.

Increasing formalisation, rapid digital adoption and deeper integration with domestic and global value chains are expected to strengthen the competitiveness of Indian MSMEs. Growing penetration of e-commerce, expansion of export opportunities and continued efforts to improve the business environment are likely to further support enterprise growth and productivity. With improving access to capital, stronger institutional support and a favourable policy ecosystem, MSMEs are well positioned to drive manufacturing growth, employment generation and export expansion, creating sustained opportunities for the SME financing industry in the years ahead.

Mutual Funds Industry Overview

The Indian mutual fund industry continues to witness broad-based expansion, with growth increasingly supported by diversified investor participation across equity, debt, hybrid and passive products. Assets under management stood at 73.73 lakh crore in March 2026, reflecting 12.2% year-on-year growth.

Investor participation remained broad-based, with total folios rising to 27.39 crore, while equity funds recorded positive inflows for the 61^st consecutive month, amounting to 40,450 crore in March 2026. The industry also witnessed continued diversification across product categories, with equity, debt, hybrid and passive funds together contributing to the scale and depth of the mutual fund ecosystem.

Systematic Investment Plans (SIP) continued to remain a key driver of retail participation and disciplined investing. Monthly SIP contributions stood at 32,087 crore in March 2026, while SIP assets were 15.11 lakh crore, representing 20.5% of the industrys total AUM.

The industry continued to broaden participation through investor awareness product innovation across passive and goal-oriented solutions, thereby deepening mutual fund adoption beyond traditional investor segments. Hybrid funds remained relevant, with multi-asset allocation funds continuing to attract investor interest amid market volatility. Passive funds also witnessed strong participation, supported by healthy inflows into ETFs, indicating a growing preference for diversified investment solutions alongside traditional active strategies.

Outlook:

The Indian mutual fund industry is entering its next phase of evolution, with growth increasingly linked to deeper household participation, wider investor awareness and the industrys ability to make investing simpler, accessible and trusted. As India progresses towards Viksit Bharat 2047, future growth is likely to be driven by financial literacy, simplified onboarding, digital access and greater penetration beyond traditional investor segments. The industrys roadmap is expected to focus on trust-building, technological integration, process simplification, innovation, accessibility and inclusivity, ensuring that mutual funds become a more seamless part of financial planning for Indian households. Product innovation across passive, hybrid and multi-asset solutions, along with sustained investor education, is expected to broaden participation and support the industrys transition from financial inclusion towards wider financial well-being.

Insurance Industry Overview

Indias insurance industry continues to expand on the back of rising awareness, stronger economic activity, favourable demographics and a progressively more enabling regulatory framework. Over the past two decades, the domestic insurance market has expanded at a CAGR of 17%, reflecting the growing role of insurance in household financial protection and long-term savings. The sectors growth is being further supported by digitalisation, wider private-sector participation and policy measures aimed at deepening insurance penetration. In FY2026, life insurers witnessed a healthy expansion in new business premiums, which grew 15.7% y-o-y (vs 5.1% in FY2025) reaching 4.60 lakh crores, led by broad-based growth. Annual premium equivalent (APE) increased 14.5% y-o-y in FY2026, with private insurers (14.9%) marginally outpacing Life Insurance Corporation (13.9%), reflecting steady momentum across the industry. The general insurance industry reported gross written premiums (GWP) of 3.36 lakh crore in FY2026, reflecting a healthy 9% year on year growth driven by strong health and motor segments.

The sector is also seeing stronger institutional and strategic activity. In addition, the increase in the FDI limit in insurance companies from 74% to 100% is expected to improve capital availability, encourage greater foreign participation and support long-term balance-sheet capacity in this capital-intensive sector. The industry is also expected to benefit from wider adoption of technology, AI and data-led underwriting which can improve operational efficiency, claims handling and customer engagement.

Outlook

The outlook for Indias insurance industry remains optimistic, with the sector expected to remain among the fastest-growing insurance markets globally supported by rising risk awareness, product innovation, stronger digital distribution and favourable regulatory policies. Life insurance is expected to sustained demand for protection and long-term savings products, while non-life insurance should continue to draw strength from health, motor and broader risk-cover requirements across retail and commercial segments.

The growth trajectory is also likely to be shaped by reforms aimed at improving access, customer experience and capital formation. Higher foreign investment limits, stronger technology adoption, widening use of analytics and automation, and continued government-backed social security and health-protection schemes are expected to support deeper market development. Overall, the sector appears well placed for sustained expansion, with stronger scale, broader participation and improving digital capability expected to support long-term growth.

Business Review

The business environment witnessed steady improvement during the year, supported by resilient rural demand, improving macro conditions and strong execution across our core segments. We achieved record disbursements of 61,118 crore, growth of 6% over the previous year. This milestone enabled our loan book to cross 1,34,000 crores, underscoring our ability to scale operations while maintaining strong asset quality. Growth was aided by strong demand in tractor financing, in passenger vehicle loans and used vehicle financing.

We continued to maintain our leadership position within the Mahindra ecosystem (UVs, Pick ups and Tractors) and recorded further improvement in disbursements and market share across several major OEM partners. We also strengthened our presence in the used vehicle finance segment through active engagement with auto aggregators to enhance lead generation.

Non-wheels business verticals like SME lending (including loans against property), mortgages and leasing are also being scaled up and are showing encouraging traction.

Asset quality improved meaningfully during the year, with Gross Stage-3 (GS-3) assets declining to 3.4% and GS-2 + GS-3 reaching the lowest levels in recent years. This reflects disciplined underwriting, strong risk management practices and improved collection efficiency.

During the year, we made significant progress in our ongoing digital transformation initiatives, with increased adoption of digital platforms across sourcing, underwriting and collections. These initiatives have contributed to improved operational efficiency, faster turnaround times and enhanced customer experience.

Our Company is rated AAA across all major credit rating agencies, reflecting our credit strength and consistent performance. The ratings help us to have a diversified funding profile and to borrow funds at the from competitive cost.

Overall, we continue to focus on sustained momentum in disbursements, improving asset quality, and robust collection efficiency, with a continued focus on talent retention and technology initiatives.

Operational Overview

The key operational highlights for FY2026 are as follows:

Total income increased by 15% to 18,500 crores compared to 16,075 crores in FY2025, driven by asset growth, higher insurance and dividend income

Disbursements grew by 6% year-on-year, reaching 61,118 crores

Business assets rose by 12% to 1,34,096 crores from 1,19,673 crores in FY2025

Capital adequacy stood at 18.8%, with a debt-to-equity ratio of 4.86 and a liquidity buffer of over 9,150 crores a

GS-3 stood at 3.4% and the Provision Coverage Ratio (PCR) for GS-3 was maintained at 58.6% as of March 2026 steady expansion

The customer base surpassed 12 million

The employee count stood at 22,637 as of 31^st March 2026

SCOT Analysis Strengths

L eadership position in vehicle finance with leadership in tractor financing and strong scale PV and CV segments

Deep rural and semi urban franchise supported by strong customer insights into livelihood needs and an extensive pan India network of 1,348 branches and 6,000+ channel outlets

Strong, long-standing relationships with OEMs, dealers and ecosystem partners

Empowered frontline workforce enabling effective customer engagement and reach

Diverse product range tailored to customer requirements

Strong brand equity, customer trust and improving digital reputation

Strong risk, compliance and control framework with enhanced underwriting discipline and analytics driven collections

Comfortable capital adequacy and liquidity position

Streamlined and robust processes to manage volatility and credit costs

Customer servicing via multiple channels for customer convenience and quicker resolution

Challenges

M argin pressure amid competitive intensity increasing cost of funds

Limited exposure beyond vehicle financing

Execution complexity from parallel diversification and technology transformation

Opportunities

O pportunities to enhance revenue through collaborations in non-lending financial services and co-lending ventures

Scaling SME and mortgage franchises leveraging branch network and data capabilities

Structural tailwinds from formalisation, government capex and RuSu consumption

Use of analytics, AI and digital platforms to improve productivity, credit quality and customer experience

Threats

G eopolitical and macroeconomic uncertainty and affecting rural income, MSME cash flows and asset quality

Intensifying competition from banks and NBFCs

Cyclicality in automotive and agri sectors impacting disbursements

Increasing fraud, cyber and regulatory risks requiring sustained governance focus

Financial Overview

The table below provides the Companys standalone financial summary for FY2026, covering revenues, expenses and profits:

Particulars	For the year ended 31st March 2026 ( crore)	For the year ended 31st March, 2025 ( crore)	Change (%)
Revenue from operations	18,445.59	16,018.95	15.1%
Other income	54.69	55.74	-1.9%
Total revenue	18,500.28	16,074.69	15.1%
Expenses
a. Employee benefits expenses	2,054.17	1,903.13	7.9%
b. Finance costs	8,392.05	7,898.30	6.3%
c. Depreciation, amortisation and impairment	342.68	273.42	25.3%
d. Impairment on financial instruments	2,441.22	1,617.86	50.9%
e. Other expenses	1,480.20	1,234.71	19.9%
Total expenses	14,710.32	12,927.42	13.8%
Profit before exceptional items and taxes	3,789.96	3,147.27	20.4%
Exceptional items (net) - income/(expense)	-117.33	0
Profit before tax	3,672.63	3,147.27	16.7%
Tax expense	890.40	802.23	11.0%
Profit for the year	2,782.23	2,345.04	18.6%

Discussion on financial performance

Revenue from operations grew by 15.1% in FY2026 compared to the previous year, driven by an increase in the average loan book, along with higher insurance and dividend income. Disbursements increased by 5.6% year-on-year, supporting a 12.1% growth in the closing loan book over FY2025.

Net Interest Income (including other income) registered 24% year on year growth, demonstrating the Companys strong operating performance.

Net Interest Margin (including other income) improved to 7.1% in FY2026, compared to 6.5% in FY2025, driven by higher insurance and dividend income as well as a notable reduction in cost of funds following the RBIs rate cuts. This dual impact enhanced overall spreads and strengthened profitability.

Cost to income ratio declined to 38.4% in FY2026 from 41.7% in FY2025, primarily reflecting improved operating efficiency. This reduction was driven by tighter control over operating expenditure, and investments in IT infrastructure and process automation.

Profit before tax (post exceptional item) increased by 16.7% to 3,673 crore from contributed by higher Net Interest Margins.

Profit After Tax (PAT) stood at 2,782 crore, 18.6% higher than 2,345 crore in FY2025. Return on Equity (RoE) was 12.5%, compared to 12.4% in FY2025, while Return on Assets (RoA) stood at 2.0%, up from 1.9% in the previous year.

Companys credit rating remained stable at ‘AAA, across all major credit rating agencies.

Segment-wise disbursement performance (in crores)

Asset Class	Year ended 31st March, 2026	Year ended 31st March, 2025	Change (%)
Passenger vehicles	24,614 (40%)	23,527 (41%)	5%
Commercial vehicles and construction equipment	10,665 (17%)	12,290 (21%)	-13%
Pre-owned vehicles	10,151 (17%)	9,468 (17%)	7%
Tractors	8,732 (14%)	5,871 (10%)	49%
3 Wheelers	1,976 (3%)	2,445 (4%)	-19%
SME	3,057 (5%)	3,010 (5%)	2%
Others*	1,922 (3%)	1,288 (2%)	49%
Total	61,118 (100%)	57,900 (100%)	6%

*Others include Farm Implements, Gensets and Personal Loans- Figures in bracket indicates share of overall disbursement

The passenger vehicle market witnessed a steady growth on the back of robust SUV sales, strong rural demand, government incentives for EVs and consumer preference increasingly shifting to higher-priced SUVs and premium cars. Consequently, our growth in passenger vehicle disbursements was at 5% YoY.

Our tractor disbursements delivered a remarkable 49% YoY growth and emerged as our key growth driver, supported by favorable rural and regulatory tailwinds such as GST cuts, MSP hikes, and favorable monsoon.

Growth in our pre-owned vehicle disbursements was driven by favourable affordability dynamics, enhanced financing access and increasing penetration of organized sales channels, which improved transparency and strengthened consumer trust in pre-owned vehicle purchases.

Key Ratios
Particulars	For the year ended 31st March, 2026	For the year ended 31st March, 2025
Debt/Equity ratio	4.86:1	5.70:1
Net Profit Margins (%)	15.0%	14.6%
RONW (Avg. net worth)	12.5%	12.4%
Capital adequacy	18.8%	18.3%
Tier I capital	16.7%	15.2%
Tier II capital	2.2%	3.1%
gainsfrom Gross Stage 3%	3.4%	3.7%
Net Stage 3%	1.4%	1.8%
FY2025, Provision Coverage Ratio for Stage - 3 assets	58.6%	51.2%
Liquidity Coverage Ratio	224%	277%

During the financial year, none of the key financial ratios, except tier II capital ratio, experienced a variation greater than 25% compared to the previous year. Tier II capital decreased by 29.2% during the financial year, primarily attributable to the regulatory amortisation of subordinated debt instruments as they moved closer to maturity, resulting in a lower eligible capital base.

Business Outlook

MMFSL aims to expand its presence in Bharat by strengthening its distribution network, investing in digital ecosystems, and enhancing customer engagement through data driven insights. MMFSL continues to advance its risk management framework with digital due diligence and analytics driven portfolio monitoring to ensure resilience and scale. With rural incomes rising and consumer aspirations evolving, MMFSL remains committed to financial inclusion, innovation, and disciplined growth, creating long term stakeholder value and ensuring that the companys expansion is underpinned by rigorous risk management and margin discipline.

Risk Management

The Company recognises that a dynamic and uncertain operating environment presents material challenges for organisations. To address these, it has established a forward-looking risk management framework focused on proactively identifying and managing potential risks. The Risk Management Committee supports the Board by identifying, monitoring, and assessing the Companys risk exposures. It periodically reviews the effectiveness of risk mitigation initiatives and submits its observations and recommendations to the Board for consideration. The adequacy of these measures is also assessed and where gaps are identified, appropriate corrective actions and process improvements are implemented.

Risk Management Process

The Companys risk management framework is embedded across all critical functions and follows a disciplined, structured methodology. Key components of the process include:

Clearly articulated roles and responsibilities for effective risk governance

A robust strategic framework anchored in clearly defined objectives and guiding principles

A balanced risk identification and assessment approach that integrates both ‘top-down and ‘bottom-up perspectives

A framework for systematic risk identification, evaluation, mitigation, monitoring, and reporting

Integration of risk appetite with strategic planning, supported by continuous monitoring and reporting processes

A comprehensive risk monitoring programme detailing review protocols, challenge processes, and oversight mechanisms

An ‘outside-in reporting approach to ensure timely identification, management, and communication of risk-related information across the organisation

The Companys risk management framework emphasises a thorough evaluation of risks by carefully analysing potential exposures before decisions are made regarding transactions, operational changes, or system enhancements. The framework is further reinforced through periodic reviews, implementation of appropriate controls, self-assessment exercises, and ongoing monitoring of key risk indicators.

Credit Risk:

Credit risk refers to the potential for arising from a decline in the creditworthiness of borrowers or counterparties. Such losses may occur if a customer or counterparty fails to meet their financial obligations, or if there is a deterioration perceived or actual in the credit quality of the portfolio.

Approach to Credit Risk Management

Effective credit risk the Companys long-term sustainability. encompasses the identification, measurement, monitoring, and control of credit risk exposures through the following measures:

Implementation of a comprehensive borrower credit scoring framework that avoids overly simplistic loan classifications. High-risk proposals are subject to enhanced scrutiny and are reviewed by senior credit approvers, with appropriate risk mitigants in place. The company has product level scorecard to identify the borrower risk segment at the time of onboarding.

Maintenance of asset quality through a rigorous credit appraisal system, complemented by continuous post-disbursement monitoring, thereby ensuring a low probability of default.

Adoption of proactive risk mitigation strategies, supported by comprehensive early warning indicators. These include key risk metrics such as overall portfolio performance, early delinquency trends, non-starter accounts, and quick mortality rates, enabling timely intervention.

Liquidity Risk

Liquidity risk refers to the potential inability to meet financial obligations as they fall due, including debt servicing requirements, or the inability to obtain external funding at reasonable costs.

Approach to Liquidity Risk Management

The Company has established a comprehensive Liquidity Risk Management (LRM) framework, governed by a Board-approved Liquidity Risk Management Policy. The implementation and oversight of this framework are entrusted to the Asset Liability Committee (ALCO) and the Asset Liability Management Committee (ALMCO), which ensure compliance with defined risk tolerance levels and regulatory limits.

In alignment with the Treasury Chest Policy, the Company maintains an adequate liquidity buffer, which is periodically reviewed to provide resilience against external financial shocks. Furthermore, the Company sustains a well-diversified lender base, deliberately avoiding overdependence on any single funding source. Borrowing concentration is actively monitored to maintain a balanced and sustainable funding mix.

Interest Rate Risk

Interest rate risk arises from fluctuations in market loss interest rates, which may adversely affect borrowing costs, interest income, and net interest margins, particularly within the financial sector.

Approach to Interest Rate Risk Management

The Company actively monitors and manages interest rate risk through regular sensitivity analyses management is fundamentalto conducted by the Asset Liability Committee (ALCO) and the Asset Liability Management Committee process (ALMCO). These assessments evaluate the Companys exposure to interest rate movements and inform strategic decision-making.

The Liquidity Risk Management (LRM) framework outlines an optimal borrowing structure aimed at minimising interest costs, alongside an investment strategy designed to maximise returns. Prudential limits on both borrowings and investments are established to ensure effective risk containment. These policies, supported by periodic reviews, enable timely adjustments to lending and funding strategies, thereby mitigating the impact of interest rate volatility.

Operational Risk

Operational risk refers to the potential for financial loss resulting from internal process failures, human errors, system deficiencies, or external events, including legal and reputational challenges.

Approach to Operational Risk Management

The organization maintains a robust Operational Risk Management Framework designed to proactively identify, assess, monitor, and mitigate risks across all business activities. This framework is anchored in the effective implementation of the Three Lines of Defence (3LOD) model, wherein the first line assumes ownership of risk within business operations, the second line provides independent oversight and policy guidance, and the third line delivers objective assurance through internal audit. Complementing this structure is a comprehensive Key Risk Indicator (KRI) framework, which enables continuous monitoring of risk exposures through defined metrics, thresholds, and escalation protocols. Together, these elements ensure timely risk identification, informed decision-making, regulatory compliance, and continuous improvement in the organizations risk management practices.

Business Risk

As a Non-Banking Financial Company (NBFC), the Company is exposed to a range of external risks that could influence its long-term viability and financial performance. These risks include sector-specific challenges, competitive pressures, and variables affecting agricultural output and climatic conditions. In addition, macroeconomic uncertainty and industry-wide stress may lead to deterioration in loan asset quality.

Approach to Business Risk Management

The Company closely monitors macroeconomic trends and industry dynamics to proactively identify and address emerging market developments. To diversify its income base and reduce reliance on vehicle financing, the Company has launched customised financial products and is actively pursuing new growth opportunities, including SME lending, digital lending platforms, and leasing solutions.

A proactive sales team, a diversified suite of financial products, and a strong focus on customer needs together position the Company to remain competitive, agile, and resilient in a rapidly changing business environment.

Compliance Risk

Compliance risk refers to the potential for legal or regulatory consequences arising from non-adherence to applicable laws, regulations, and supervisory guidelines.

Approach to Compliance Risk Management

The Company maintains strict compliance with the regulatory framework prescribed by the Reserve Bank of India (RBI) and other relevant authorities. This includes adherence to norms related to capital adequacy, fair practices, financial reporting, and asset classification. Under the revised scale-based regulatory framework introduced by the RBI in FY2021 and subsequently refined in FY2023 and FY2025, the Company has been categorised under the Upper Layer of Non-Banking Financial Companies (NBFCs).

To ensure ongoing compliance, the Company has instituted robust processes for risk assessment, capital adequacy evaluation, and stress testing. A structured Circular Management Process facilitates the timely dissemination of regulatory updates to all relevant stakeholders. Additionally, a comprehensive Compliance Testing Programme is in place to evaluate adherence to critical regulatory requirements. The findings from these assessments are reported to senior management, and corrective actions are tracked to ensure effective implementation.

Attrition Risk

The risk of losing high performing and critically skilled employees poses a significant challenge to organisational continuity and performance.

Approach to Talent Retention

The Company fosters an employee-centric culture and continuously reviews its human resource policies to enhance workforce engagement and satisfaction. Annual employee engagement surveys are conducted levels suchas to identify key concerns, with targeted interventions implemented to address them effectively.

Compensation structures are benchmarked against industry standards to ensure competitiveness and retain top talent. Regular and open communication between Human Resources and business leadership facilitates the proactive resolution of employee issues, thereby minimising undesired attrition. Additionally, the Company invests in continuous learning and development initiatives to support career growth and skill enhancement.

Information Technology & Cyber Security Risk

The increasing reliance on digital infrastructure necessitates robust measures to effectively manage information technology (IT) and cybersecurity risks.

Approach to IT and Cyber Risk Management

The Company continues to strengthen its defence-in-depth cybersecurity strategy through an integrated set of preventive, detective, and responsive controls. This includes enhanced control validation, regular cyber resilience exercises, and advanced AI/ ML-driven threat monitoring, supported by continuous improvements across security architecture, operations, and incident readiness. Defense-in-depth measures also encompass:

• Perimeter Security: Firewalls and proxies to safeguard network boundaries.

• Access Controls: Multi-factor authentication (MFA) and Privilege Access Management (PAM) tools to limit access to sensitive information.

• Endpoint Security: Extended detection and response (XDR) and Data Loss Prevention (DLP) tools to protect endpoint devices.

• Data Protection: Ransomware-protected backups and encryption to secure critical data.

• Regular Monitoring: AI/ML-based Security Operations Centre (SOC) tools for continuous threat detection and response to anomalies and for Database activity Monitoring tool has been implemented.

• Employee Awareness: Cybersecurity training programs and awareness flyers to reduce risks from social engineering attacks.

• Incident Management: Disaster Recovery (DR) sites with regular data replication and incident response protocols for quick recovery.

• Advanced Cyber Security Assessments: Purple teaming, red team exercises, and external penetration testing conducted to validate control effectiveness across people, process, and technology.

Emerging Risk

Emerging risks, including the recent geopolitical developments, heightened global economic stress, and large-scale public health events (such as pandemics) have the potential to disrupt business operations and adversely affect financial stability. Recent geopolitical conflicts have increased uncertainty in global markets and may influence funding conditions, customer behaviour, and overall economic activity.

Approach to Managing Emerging Risks

The Company closely monitors geopolitical developments and their potential implications for the operating and financial environment. As part of its risk response, the Company adopts a cautious and measured approach, including the issuance of internal advisories and the establishment of specific norms and controls to be followed while conducting business, thereby ensuring preparedness and compliance during periods of heightened uncertainty.

In addition, the Company maintains a prudent capital structure to ensure adequate liquidity and the ability to absorb economic shocks without impacting its credit profile or debt-servicing capability. Comprehensive business continuity and contingency plans are in place to support uninterrupted operations during crisis situations. The Company also leverages its strong customer relationships and engagement practices to navigate challenging environments with resilience, stability, and agility.

Market Risk

Market risk arises from fluctuations in interest rates, currency values, credit spreads and commodity prices, potentially impacting earnings and economic value.

Approach: The Company continuously monitors and manages market-linked securities as per internal and regulatory guidelines to mitigate market risks.

Climate Risk

Climate change presents acute and chronic risks through extreme weather events and the gradual degradation of environment and infrastructure respectively leading to impact on the quality of the lending portfolio caused by volatility in borrower cash flows including adverse impact on collaterals.

Approach to Climate Risk Management

The Company actively monitors climate-related risks and integrates them into its overarching risk management framework. . The potential impact from extreme weather events has been mapped using the Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathways (RCP). The resultant action plan to mitigate risks on MMFSL offices in high and moderate risk areas for extreme weather events has been incorporated into office

A phased climate transition plan has been implemented in MMFSL offices to shift towards energy-technologies. Community initiatives in afforestation and water stewardship are conducted through the Corporate Social Responsibility (CSR) to increase resilience of the people and planet to chronic climate-related events.

Material Development in Human Resources

During the year, our people strategy focused on attracting high quality talent, strengthening internal leadership and capability, and embedding a values led, inclusive culture. Through targeted recruitment, leadership development, performance enablement, and behavioural alignment initiatives, we continued to build a future ready workforce aligned with business priorities and long term growth.

Attracting Top Talent

In a competitive and evolving talent landscape, we strengthened our approach to attracting top talent by enhancing our Talent Acquisition priorities. Our employer brand was reinforced through focused campus and early career engagement initiatives, most notably the launch of Mahindra Finance Aspire, a structured and engagement led campus hiring framework. Leadership interactions, institutional partnerships, and flagship initiatives such as Aspire Connect 2026 enhanced brand visibility and positioned the organisation as an employer of choice.

We further continued to focus on building sustainable talent pipelines by strengthening employee referrals, leadership recruitment, and internal mobility. Value based assessments were introduced to enhance quality of hire and cultural alignment, ensuring long term performance and engagement. These interventions supported retention, leadership continuity, and the development of future ready talent across levels. Technology enabled hiring processes and improved candidate communication further enhanced candidate experience across the recruitment lifecycle.

Building Internal Talent:

Structured leadership development programs contribute towards building a strong, future ready leadership pipeline across levels, ensuring continuity of leadership and readiness for larger, more complex roles. These programmes focus on developing strategic thinking, people leadership, business acumen, and behavioural alignment, enabling leaders to drive sustainable growth in a dynamic business environment.

Furthermore, ProAct was introduced with the aim of proactively supporting employees who can benefit from focused enablement before performance gaps escalate. It emphasizes early diagnosis, clear goal setting, manager ownership, and targeted capability support to drive sustainable improvement while reinforcing a culture of accountability and development. .

Our capability building efforts focused on developing functional excellence and future ready skills. Functional and productivity led interventions enhanced execution capability across frontline, managerial, and leadership roles.

An Inclusive and PROMPT culture:

During the year, the PROMPT principles were disseminated across the organisation through leader led conversations and tailored toolkits, embedding a common language for leadership behaviours and reinforcing accountability, ethical conduct, collaboration, and performance excellence.

Diversity, Equity, and Inclusion efforts focused on improving gender representation, inclusive policies and awareness led initiatives, reinforcing a culture of belongingness and equitable opportunities across the organisation.

Transforming with Digital and AI-Driven Innovations

Udaan (our digital transformation initiative) has transitioned from implementation to steady state operations, creating a common digital backbone across lending, servicing, and collections. The platform is enabling simpler workflows, greater transparency, and more consistent outcomes across teams. As usage deepens, benefits are expected to accelerate through higher productivity, tighter process controls, and increasingly targeted analytics driven actions.

Udaan - Progressing from Adoption to Value

Realisation

Udaan is Mahindra Finances enterprise-wide digital transformation programme aimed at strengthening the technology foundation and enabling scalable, efficient operations. During the year, Udaan achieved full adoption across lending, servicing, and collections journeys, marking an important milestone in its execution lifecycle.

With rollout and adoption now complete, Udaan is delivering value through process standardisation, digitisation, and data enablement. The platform supports assisted digital lending journeys leveraging analytics, alternative data sources, account aggregators, and automated credit and fraud checks.

These capabilities have materially improved turnaround times, strengthened compliance, and enhanced consistency in decision making. Further, Digital KYC, e-documentation, e-signing, and e-mandates have reduced manual intervention, while enhancing transparency and adherence to regulatory compliance.

In collections, the digital platform provides an integrated customer view and supports automated reminders and digital payment options, leading to improved customer engagement and early benefits in portfolio management.

With adoption complete, the focus has shifted towards optimisation, driving behavioural change, and expanding analytics-led interventions.

Key metrics: a Digital collections 85% )

Expe cted future outcome: a Reduced TAT )

b) Higher productivity

Deploy AI and Digital to Enhance Customer

Experience (CX) and Business Efficiencies

Digital and AI remained key enablers of customer centricity and operational resilience during the year. Our Customer App and AI powered conversational channels scaled significantly, driving higher digital adoption, service efficiency, and cross sell outcomes. Advanced analytics and AI were deployed across underwriting, collections, operations, and, delivering measurable improvements in portfolio performance, cost efficiency, and turnaround times. These initiatives are underpinned by a resilient digital infrastructure and strong cyber security controls, ensuring safe and scalable digital growth.

1) C ustomerapp - Driving Digital Scale and Customer-Centric Innovation

Th e Mahindra Finance Customer App has evolved into a scalable digital platform, playing a pivotal role in strengthening customer engagement and accelerating digital adoption. With the integration of additional products and supporting platforms, customers can access loans, investments, and core servicing capabilities seamlessly across both mobile and web channels. The app continues to serve as a key pillar of the Companys digital ecosystem, supporting growth, cross-sell, and operational efficiency while enhancing overall customer experience.

Key metrics: a 14.3L+ cumulative user signups on the ) app with sustained growth momentum (10L in FY2026)

b) 1.6L+ leads from the app, with 30% hot leads

c) 10X increase in positive customer reviews, underscoring strong improvements in usability, reliability, and overall customer satisfaction

2) C ustomerbot

C ustomerbot, our AI powered conversational assistant, enables seamless and personalized customer interactions across service journeys. It is available across WhatsApp, web and mobile app channels and supports multiple Indian languages, allowing customers to resolve queries instantly, apply for loans, make payments, and raise service requests with minimal friction.

During the year, Customerbot scaled significantly in both adoption and business impact. It supported loan origination and collections use cases and contributed meaningfully to disbursements and payment flows. Built on advanced natural language processing capabilities, the platform continues to improve intent recognition and response accuracy through continuous learning from real customer interactions.

Key metrics: a 2.45 lakh unique users )

b) 1.3 crore+ messages exchanged

c) 34,000+ leads generated

3) D ata Analytics & AI

Th e organization has made significant embedding AI as a core execution engine across growth, risk, operations, collections, and leadership decision making. Built on a strong data foundation, capabilities have evolved from insights to agentic, end to end execution, delivering measurable gains in acquisition, portfolio quality, cost efficiency, compliance readiness, and productivity. AI is increasingly getting deployed at scale to support revenue generation and drive operational throughput.

I nitiatives & outcomes: a Enterprise) Data Assets and AI Ready Infrastructure

The enterprise data platform has matured into a regulatory-grade, AI-governed ecosystem. The Lakehouse, built on a future ready medallion architecture, supports core business use cases and regulatory submissions. End to end automation for audits has improved accuracy, auditability, and turnaround time while reducing manual effort. An AI enabled data catalogue and governance framework strengthens compliance, scalability, and enterprise wide discovery.

b) Underwriting Automation and Credit Risk

Retail credit decisioning is increasingly ML driven, powered by advanced scorecards across thick file, thin file, and New to Credit segments. This has contributed to improved portfolio quality, delivering reduction in early delinquency while supporting scalable growth

c) AI Driven Collections

Collections have transitioned to an AI orchestrated, multi channel decisioning framework across digital, call center, and voice automation. AI Voice Agents now handle ~10% of soft bucket interventions with performance comparable to human agents

d) Lead Generation through Voice AI

Customer acquisition has transitioned to a voice first, AI led model. AI Voice Agents now assign 50%+ of leads directly to the field, reducing reliance on branches and call centers. A fully automated, trigger based pipeline manages customer outreach end to end, escalating to humans only when required

e) AI for Operational Excellence

Samur.ai, an agentic AI solution for CPC operations, automates loan data and in document review, cutting processing time from hours to minutes with higher accuracy and consistency. It currently processes ~20% of application volumes.

f) GenAI for Leadership and Productivity

Role based GenAI assistants are embedded across the organization. MgenAI accelerates document summarization, code generation, testing, and analysis. CRO Buddy enables high frequency risk monitoring, while CXO Buddy delivers real time business and collections insights to the MD & CEOs office. Together, these tools have materially improved risk review cycles, KPI monitoring, and knowledge consumption

4) S trengthening Risk Guardrails

Th e company strengthened its digital backbone by modernising networks across India, upgrading connectivity, and expanding data centre capacity to handle higher transaction volumes. It improved resilience by deploying new security tools, strengthened its security posture through Zero Trust adoption, and redesigned disaster recovery setup to ensure business continuity. Governance was reinforced through better monitoring, stronger audits, and improved access controls, leaving no critical vulnerabilities. On cybersecurity, the organisation achieved recognised certifications and maturity standards, while also advancing compliance with new data privacy laws. Together, these steps show a stronger, more secure foundation that supports safe growth and builds confidence with regulators and stakeholders.

Internal Control System and their Adequacy

Mahindra & Mahindra Financial Services Limited has established a robust and comprehensive framework of internal financial controls to ensure the integrity, reliability, and efficiency of its operations, particularly in relation to financial reporting, regulatory compliance, and risk management. The Companys control environment is aligned with industry best practices and guided by the Internal Control Integrated Framework (COSO) and the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (ICFR). Well-defined policies, standard operating procedures, and systems ensure appropriate segregation of duties, approval mechanisms, and ongoing monitoring of key risk indicators. These controls are subject to periodic review and continuous strengthening to address evolving business and regulatory requirements.

The Companys internal audit function operates independently and adopts a risk-based approach to evaluate the effectiveness of internal controls across business and functional areas. Oversight is provided by the Board through its committees, including the Audit Committee and Risk Management Committee, which review audit findings, risk exposures, and the adequacy of mitigation measures. Regular assessments, self-evaluations, and quarterly testing of controls ensure timely identification of gaps, with corrective actions implemented as necessary. Senior management, including the CEO and CFO, provide certifications on the effectiveness of internal controls, reinforcing accountability and governance. Overall, the integrated risk and control framework supports a strong risk-aware culture and enhances operational resilience and financial discipline.

Cautionary Statement

Certain statements in the Management Discussion and Analysis describing the Companys objectives and predictions may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effects of economic and political conditions in India, volatility in interest rates, new regulations and government policies that may impact the Companys business as well as its ability to implement the strategy. The Company does not undertake to update these statements.

Sources of Information: Data in this section has been sourced from various publicly available sources such as International Monetary Fund (IMF), Reserve Bank of India (RBI), Press Information Bureau (PIB), Ministry of Finance, India Brand Equity Foundation (IBEF), AMFI, FADA, DEA, MoSPI, etc.