Real Touch Finance Ltd. Management Discussions

Business Overview

Real Touch Finance Limited (RTFL or the Company) is a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India (RBI). The Company primarily focuses on secured lending, including Loan Against Property (LAP), Real Estate Finance and MSME lending , while selectively extending funding to other NBFCs engaged in impact-oriented lending.

During the financial year 2025-26, the Company continued to strengthen its secured lending franchise and maintained a calibrated approach towards unsecured exposures, in line with evolving industry dynamics and applicable regulatory expectations.

Headquartered in Kolkata , the Company has an operational presence across West Bengal and Tamil Nadu , catering to the financing requirements of individuals, businesses and other eligible borrowers.

Business Environment Economic Overview

FY 2025-26 was marked by a resilient domestic economy despite continued geopolitical uncertainties and global trade disruptions. India remained one of the fastest-growing major economies, supported by robust domestic consumption, sustained public capital expenditure, moderating inflation and a supportive monetary policy environment. During the year, the Reserve Bank of India reduced policy rates by 100 basis points, improving liquidity conditions and supporting credit demand across the financial sector.

The easing interest rate environment, coupled with stable macroeconomic fundamentals, created opportunities for lenders while intensifying competition, particularly in retail lending. Financial institutions increasingly focused on maintaining asset quality, prudent capital allocation and sustainable growth.

Industry Overview

The NBFC sector continued to strengthen its role in providing credit to underserved customer segments and complementing the banking system. During FY2025-26, the industry witnessed a clear shift towards secured lending as lenders recalibrated their portfolios amidst moderation in unsecured retail and microfinance credit growth.

The microfinance sector experienced elevated delinquencies in several regions due to borrower overleveraging and collection challenges, resulting in tighter credit assessment and slower portfolio expansion. Similarly, unsecured personal lending moderated following regulatory measures and increased focus on portfolio quality.

Conversely, secured lending segments including Loan Against Property (LAP) and real estate financing remained relatively resilient, supported by better collateral coverage, stable credit quality and sustained demand from businesses and self-employed borrowers. Funding conditions for well-capitalized NBFCs improved during the latter half of the year, aided by easing liquidity and continued support from banks and capital markets.

Consequently, the company has recalibrated its FI Lending portfolio, reducing exposure to unsecured loans and strengthening risk management frameworks. The share of unsecured lending is expected to stabilise in near terms (25-30%) with gradual expansion supported by industry initiatives, borrower discipline and economic recovery.

The long-term outlook for the NBFC sector remains positive, driven by increasing financial inclusion, digital adoption, formalization of credit and continued economic growth.

During FY2025-26, many NBFCs adopted a strategic shift towards secured asset classes in response to elevated stress in unsecured retail and microfinance portfolios. Consequently, Loan Against Property, SME finance and mortgage-backed lending emerged as preferred growth segments owing to their superior collateral coverage, lower credit losses and favourable risk-adjusted returns.

Regulatory Environment

The Reserve Bank of India continued to strengthen the regulatory framework for NBFCs with emphasis on governance, customer protection, prudent underwriting and risk management. During the year, the RBI continued the consolidation of regulatory instructions into Master Directions and implemented revised guidelines relating to project finance and lending practices.

These initiatives are expected to improve transparency, strengthen risk management standards and promote sustainable growth across the financial sector.

Companys Performance

Particulars (Amount in Rs Lakhs)	FY 2025-26	FY 2024-25
Revenue from Operations	3,917.39	2,866.68
Total Income	4,044.85	2,887.27
Finance Cost	1,991.39	1,420.08
Total Expenses	3,276.74	2,320.79
Profit Before Tax (PBT)	768.11	566.48
Profit After Tax (PAT)	519.26	461.02
Net Worth	5,226.83	4,705.34
AUM	19,207.36	22,648.77

The Company delivered another year of profitable growth during FY2025-26. Total Income increased by 40.10% to ^4,044.85 lakh , while Profit Before Tax increased by 35.59% to ^768.11 lakh . Profit After Tax increased by 12.63% to ^519.26 lakh , reflecting sustained operating performance despite higher borrowing costs and tax expenses.

During the year, the Company adopted a prudent capital allocation strategy by deploying ^12,500 lakh into strategic investments in Security Receipts. This resulted in a reduction in the lending portfolio from ^22,648.77 lakh to ^19,207.36 lakh . The reduction in AUM was therefore a conscious strategic decision and not reflective of any deterioration in the underlying business or credit demand.

Despite the lower loan portfolio, the Companys balance sheet strengthened considerably with Total Assets increasing by 39.46% and Net Worth increasing by 11.08% over the previous year. The strategic investment is expected to diversify earnings while preserving the Companys ability to scale its lending operations as market opportunities emerge.

The Company continued to maintain a disciplined credit underwriting framework, resulting in healthy portfolio quality while balancing profitability, liquidity and capital adequacy.

Business Update

During FY2025-26, the Company continued to strengthen its presence in secured lending with focus on Loan Against Property, Real Estate Finance and MSME lending. Considering the prevailing stress in unsecured retail and microfinance segments, the Company maintained a calibrated approach towards unsecured lending and FI exposures, thereby preserving portfolio quality.

The Companys funding profile remained diversified through bank borrowings, inter-corporate deposits and promoter support, providing adequate liquidity to meet business requirements. Borrowings increased in line with the Companys long-term funding strategy while maintaining a healthy Capital Adequacy Ratio of 23.37% , significantly above the regulatory minimum.

The Company also diversified its balance sheet through a strategic investment of ^12,500 lakh in Security Receipts. This investment reflects Managements focus on prudent deployment of capital, diversification of income streams and long-term value creation.

Asset quality remained strong with Gross NPA of 0.36% , supported by disciplined underwriting standards, proactive monitoring and effective recovery mechanisms. The Company continues to maintain adequate provisioning in accordance with applicable regulatory and accounting requirements.

Credit Rating

The company was assigned a long-term credit rating of BBB (Above investment grade) with a Stable Outlook, by Infomerics Ratings during the Financial Year 2025-26.

Risk management

Risk management remains integral to the Companys business strategy. The Company has established a comprehensive Enterprise Risk Management Framework covering credit risk, liquidity risk, market risk, operational risk, compliance risk and information security risk. The Risk Management Committee periodically reviews portfolio quality, liquidity, capital adequacy and emerging macroeconomic risks to ensure that exposures remain within the Board-approved risk appetite.

The Company continues to strengthen its underwriting standards, portfolio monitoring systems and early warning mechanisms to proactively identify and mitigate credit risks. Regular stress testing and scenario analysis are undertaken to assess the resilience of the Companys balance sheet under varying economic conditions.

Internal Audit

The Company has an adequate internal control framework commensurate with the size and nature of its operations. Internal controls are designed to ensure operational efficiency, reliability of financial reporting, safeguarding of assets and compliance with applicable laws and regulations.

The Internal Audit function operates independently and reports directly to the Audit Committee of the Board. Risk-Based Internal Audit (RBIA) continues to serve as an important governance mechanism by periodically reviewing operational, financial and compliance processes across the organization.

Human Resources

The Company believes that its employees are its most valuable asset and continues to invest in talent development, performance management and employee engagement. The Company continues to promote a culture of integrity, accountability and merit-based performance.

Outlook

The Indian economy continues to demonstrate resilient growth supported by favourable demographics, increasing formalisation of the economy, infrastructure investments and expanding credit demand. The NBFC sector is expected to continue playing a critical role in improving financial inclusion and supporting MSMEs, and retail borrowers.

The Company expects secured lending segments to continue offering attractive growth opportunities while maintaining superior risk-adjusted returns compared to unsecured lending. Going forward, the Company intends to leverage its strong capital position, healthy liquidity profile and disciplined risk management framework to expand its lending franchise in a calibrated manner.

Management remains confident that its diversified business model, prudent underwriting standards and long-term capital allocation strategy will enable the Company to deliver sustainable and profitable growth while creating long-term value for all stakeholders.

Cautionary Statement

Statement made in this MD&A describing the groups objectives, projections, estimates, general market trends, expectations etc., may constitute forward looking statements within the ambit of applicable laws and regulations. These forward looking statements involve a number of risks, uncertainties and other factors that could cause actual results differ materially from those suggested by the forward looking statement.