Reliance Capital Ltd Management Discussions.

Forward looking statements

Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Company assumes no responsibility to publicly amend, modify or revise forward-looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include determination of tariff and such other charges and levies by the regulatory authority, changes in government regulations, tax laws, economic developments within the country and such other factors globally.

The financial statements are prepared under historical cost convention, on accrual basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the "Act") and comply with the Accounting Standards notified under Section 133 of the Act. The management of Reliance Capital Limited ("Reliance Capital" or "RCL" or "the Company") has used estimates and judgments relating to the financial statement on a prudent and reasonable basis, in order that the financial statement reflect in a true and fair manner, the state of affairs and profit for the year.

The following discussions on our financial condition and result of operations should be read together with our audited consolidated financial statement and the notes to these statements included in the Annual Report.

Unless otherwise specified or the context otherwise requires, all references herein to "we", "us", "our", "the Company", "Reliance", "RCL" or "Reliance Capital" are to Reliance Capital Limited and its subsidiaries and associates.

Macroeconomic Overview Indian Economic Environment

The Indian economy has gone through a rough phase in recent periods. Notably, domestic economy which was already grappling with a structural slowdown led by absence of revival in capex cycle and consumption slowdown making economy to record continuous decline from FY18 and led to six-year low GDP growth of 4.2% in FY20. Then havoc caused by COVID-19 through nationwide lockdown from March 25, 2020 severely impacted economic activities in Nation in 1QFY21, which led to a contraction of 23.9% in GDP during 1QFY21. However, stimulus measures announced by the government and the RBI aided economy to witness V-shaped recovery especially in 2HFY21. As per Economic Survey FY21, real GDP is likely to contract by 7.7% in FY21.

The Government of India (GoI) has provided huge economic stimulus to revive and support the economy during the peak of COVID-19 pandemic. The GoI and the RBI announced a series of fiscal and liquidity support to the tune of whopping Rs 29.9 trillion during Mar20-Oct20, which is 14.6% of GDP. Even if we exclude the RBIs liquidity / monetary support of Rs 12.7 trillion, the governments portion of fiscal stimulus translates to ~8.4% of GDP, which is substantially higher than the fiscal stimulus of ~1.8% of GDP announced during GFC (Global Financial Crisis).

A Snapshot of Stimulus / Monetary Support Announced by the Govt. and the RBI

Particulars Liquidity Support (Rs bn) Direct Cost to Govt (Rs bn)
Tranche 1 5 945 168
Tranche 2 3 100 73
Tranche 3 1 500 1 500
Tranche 4 81 81
Tranche 5 400 400
Earlier measures including PMGKP announced in Mar20 1 928 1 479
PMGKP Anna Yojana - extension of 5 months from Jul - Nov 829 636
Additional Fiscal Package on 12th Oct20 730 250
Aatmanirbhar Bharat 3.0 2,651 1,156
RBI Liquidity Measures till Oct20 12,712
Total Stimulus 29 876 5 743
Nominal GDP- FY20 2 04 422 2 04 422
% GDP 14.6% 2.8%

Source: Industry Report

Notably, stimulus programme and various reforms undertaken by the government to stimulate economic activities started paying off, which is evident from recently published high frequency key economic data. For instances, GST collection, property registration, railway freight and manufacturing PMI etc., have witnessed significant improvement in recent times and are expected to improve further with complete opening up of economic activities post pandemic.

Having seen a sharp 23.9% contraction in 1QFY21, the economy rebounded sharply from Jun20 onwards with gradual opening- up of the economy. Undoubtedly, huge stimulus measures under "Aatmanirbhar Bharat" initiative supported the economic recovery by preventing double-digit de-growth in FY21E, which was widely anticipated in the beginning of FY21. However, recent high frequency key economic data suggest that rebound in economy has started witnessing a stronger momentum even compared to pre-COVID time in many areas. For instances, GST collection, property registration, railway freight and manufacturing PMI etc., witnessed substantial improvement in recent times and are expected to improve further with complete opening up of other industries like tours / travels, hospitality and entertainment etc. Hence, we can essentially say that the economic rebound is likely to be more structural in ensuing period.

Union Budget Offered Much-needed Impetus

The Union Budget 2021-2022 clearly focuses on growth momentum and job creation. The government tried to ensure all necessary measures in place to support developmental activities by sharp 26% increase in capital expenditure for FY22E along with higher allocation for infrastructure projects. Despite fiscal constraints, the government has hit the right cord by focusing on infrastructure development, which should essentially aid several ancillary industries and lead to job creation. Further, proposal to set up a bad bank to address bad loan issues and Development Financial Institution (DFI) can be considered as bold moves, which should essentially aid credit growth and infrastructure development. Undoubtedly, the Budget succeeded in offering clarity about the sustainability of rebound in economic activities, going forward.

Additionally, it was heartening to see the governments strong intent to revive economic growth and giving the least importance to global rating agencies by opting growth over sovereign rating. Notably, expected fiscal deficit of 9.5% for FY21E seems to be on higher side leading to higher government borrowing of Rs 18.5 trillion and Rs 12 trillion in FY22E.

About Reliance Capital

The Companys standalone performance has been provided under the head Financial Performance in the Directors report. The consolidated performance of the Company is as follows: RCLs consolidated total income for the financial year ended March 31, 2021 was at Rs 1 9 308 crore (US$ 2.6 billion) as against Rs 18 359 crore (US$ 2.5 billion). Staff costs for the year were Rs 1 372 crore (US$ 188 million) as against Rs 1 507 crore (US$ 206 million) in the previous year, a decrease of per cent. Selling, administrative and other expenses in the year were Rs 23 440 crore (US$ 3.2 billion) as against Rs 18 889 crore (US$ 2.6 billion) in the previous year, an increase of 24 per cent. Interest & finance charges for the year were Rs 2 741 crore (US$ 375 million) as against Rs 3 969 crore (US$ 529 million) in the previous year, a decrease of 30.9 per cent. Depreciation for the year stood flat at Rs 105 crore (uS$ 14 million). Tax expenses for the year was Rs 1 73 crore (US$ 24 million) as against Rs 24 crore (US$ 3 million) in the previous year. Total comprehensive income attributable to owners and excluding non-controlling interest for the year was (Rs 9 404 crore) (US$ (1,288 million)) as against (Rs 1 075 crore) (US$ (147 million)) in the previous year.

Earlier, RCL in its communication dated September 21, 2019 stated that, in a completely biased, unwarranted and unjustified rating action on September 20, 201 9, CARE Ratings (CARE) had downgraded the Companys entire outstanding debt to default "CARE D" rating. This rating downgrade was made, even though there were no over dues on principal or interest payment to any lender. The cascading effect of the unwarranted and unjustified rating downgrade led to acceleration etc. of various facilities by certain lenders and consequential demands for immediate payment of amounts that were otherwise due and payable in a phased manner over the next 8 years till April 2028, as per original terms of lending.

Asset Monetization

1. First, informal meeting of debenture holders was convened and held by the Company on December 6, 2019.

2. Pursuant to approval by the Debenture Holders at their meeting held on January 30, 2020, a Committee of Debenture Holders (CoDH) was constituted.

3. On March 3, 2020 a 10 Member Steering Committee of Debenture Holders (SteerCo) was constituted by the CoDH - comprising of LIC, EPFO, Yes Bank, Axis Bank and other debenture holders, representing 54% majority of outstanding Debentures.

4. On September 9, 2020 SteerCo finalised appointments of Process Advisor and Investment Banker to run an independent and transparent asset monetization process.

5. The CoDH and the Debenture Trustee, Vistra ITCL (India) Limited (Vistra) issued an Expression of Interest (EOI) for 9 key assets of the Company on "As is where is and As is what is" basis, on October 31, 2020. The last date for submission of EOI was December 1, 2020, which was extended till December 17, 2020.

Basis the enhancement of FDI cap on Insurance Companies to 74% from 49%, the last date for submission of EOI for RCAPs three insurance companies was further extended to May 15, 2021.

6. Over 90 EOIs were received in response to the EOI process for the 9 key assets of the Company on "As is where is and As is what is" basis.

7. EOI applicants would commence the due diligence for the respective assets and submit binding bids for the same.

8. Debenture Holders of the Company at their meeting held on January 5, 2021 with 100% majority approved Asset Monetization plan of the Company.

9. The Steering Committee of Debenture Holders and debenture trustee appointed Duff & Phelps India Advisory Services and RBSA Valuation Advisors LLP, valuation firms to undertake the valuation of the assets under monetization.

Legal matters

The Company is prohibited from making any payment to secured or unsecured creditors and to dispose off, alienate, encumber either directly or indirectly or otherwise part with the possession, of any assets except in the ordinary course of business such as payment of salary and statutory dues, vide Orders dated December 3, 2019 and December 5, 2019 passed by the Honble Debts Recovery Tribunal, Orders dated November 20, 2019 and March 1 5, 2021 passed by the Honble Delhi High Court, and Orders dated November 28, 2019, November 4, 2020, and March 5, 2021 passed by the Honble Bombay High Court.

The Company is constantly and constructively engaged and working with the Debenture Trustees and SteerCo to resolve the legal issues and seek removal of the restraint placed on the Company by various courts / DRT to enable monetization of assets. The Company is engaged with debenture holders to arrive at a resolution by monetization of its assets and unlock the value of its underlying businesses and thereby significantly reduce its overall leverage, subject to approvals from courts, creditors and regulatory authorities.

Resources and Liquidity

As of March 31, 2021, the consolidated total assets stood at Rs 64,878 crore (US$ 8.9 billion).

Reliance General Insurance

Reliance General Insurance (RGI) offers insurance solutions for auto, health, home, property, travel, marine, commercial and other specialty products. RGI is amongst the leading private sector general insurance players in India with a private sector market share of 8.5 per cent. During 2020-21, gross direct premium of the total general insurance industry increased by 5.2 per cent to Rs 1 98 735 crore (US$ 27.2 billion). During 2020-21, gross direct premium of the private Indian general insurance industry increased by 5.1 per cent to Rs 98 014 crore (US$ 13.4 billion) (Source: IRDAI website). RGIs gross written premium for the year ended March 31, 2021 was Rs 8 405 crore (US$ 1.2 billion), an increase of 12 per cent over the previous year.

Sectorwise Premium Contribution

Profit before tax for the year ended March 31, 2021, stood at Rs 323 crore (US$ 44 million) as against Rs 299 crore (US$ 41 million) in the corresponding period of the previous year, an increase of 8 per cent over the previous year. The distribution network comprised of 129 branches and approx. 50 700 agents and point of sales person (POSP) at the end of March 31, 2021. At the end of March 31, 2021, the investment book increased by 20 per cent to Rs 13 033 crore (US$ 1.8 billion).

Reliance Nippon Life Insurance (RNLI)

Reliance Nippon Life Insurance currently offers a total of 24 products that fulfill the savings and protection needs of customers. Of these, 21 are targeted at individuals and 3 at group businesses. RNLI is committed to emerging as a transnational Life Insurer of global scale and standard and attaining leadership rankings in the industry within the next few years. During the year, the Indian life insurance industry recorded new business premium of Rs 2 78 278 crore (US$ 38.1 billion) as against Rs 2 58 896 crore (US$ 35.5 billion) in the previous year, an increase of 7.5 per cent. During the year, the Indian private sector life insurance industry recorded new business premium of Rs 94 103 crore (US$ 12.9 billion) as against Rs 80 91 9 crore (US$ 11.1 billion) in the previous year, an increase of 16.3 per cent (Source: Financial Year 2020-21 data, Life Insurance Council website). RNLI is amongst the leading private sector life insurers with a private sector market share of 1.2 per cent, in terms of new business premium. (Source: Financial Year 2020-21 data, Life Insurance Council website). The total net premium for the year stood at Rs 4 712 crore (US$ 645 million) as against 4 418 crore (US$ 605 million). The new business premium income for the year ended March 31, 2021, was Rs 1,135 crore (US$ 155 million) as against Rs 1 006 crore (US$ 138 million) for the previous year. For the year ended March 31, 2021, the renewal premium was Rs 3,601 crore (US$ 493 million) as against Rs 3,435 crore (US$ 471 million). The new business achieved profit for the year ended March 31, 2021 was Rs 356 crore (US$ million) as against Rs 352 crore (US$ million) in the previous year.

The total funds under management were at Rs 24 383 crore (US$ 3.3 billion) as on March 31, 2021, as against Rs 19 837 crore (US$ 2.7 billion) as on March 31, 2020. The number of policies sold during the year was approximately 1.9 lakh. The distribution network stood at 713 branches and over 42,500 active advisors at the end of March 2021.

Reliance Asset Reconstruction

Reliance Asset Reconstruction Company Limited (Reliance ARC) is in the business of acquisition, management and resolution of distressed debt / assets. The focus of this business continues to be on the distressed assets in the SME and retail segments. The Assets Under Management as on March 31, 2021, rose to Rs 2 213 crore (US$ 303 million) as against Rs 2 020 crore (US$ 277 million) as on March 31, 2020. Its own investment in NPAs stood at Rs 340 crore (US$ 47 million) as on March 31, 2021 as against Rs 305 crore (US$ 42 million) as on March 31, 2020.

Broking and Distribution business

Reliance Capitals broking business is carried out by its subsidiary viz. Reliance Securities Limited, one of the leading retail broking houses in India that provides customers with access to equities, equity options and wealth management solutions. The focus is on the key business verticals of equity broking and wealth management. As of March 31, 2021, the business had over 9 93 800 equity broking accounts and achieved average daily turnover of Rs 3 751 crore (US$ 514 million) for the year. In wealth management business, the client needs are assessed to create customized financial investment opportunities. The customized individual portfolios are based on their diverse investment needs and risk profiles. In wealth management, the AUM stood at Rs 1 160 crore (US$ 1 59 million) as on March 31, 2021. Reliance Commodities, the commodity broking arm of Reliance Capital, is one of the leading retailbroking houses in India, providing customers with access to commodities market. As of March 31, 2021, the business had over 1 15 400 commodity broking accounts and recorded average daily commodities broking turnover of Rs 166 crore (US$ 23 million). The distribution business is a comprehensive financial services and solutions provider, providing customers with access to mutual funds, life and general insurance products, and other financial products having a distribution network of 11 2 branches and over 1 510 customer touch points across India. The business achieved revenues of Rs 288 crore (US$ 39 million) for the year ended March 31, 2021. Broking & Distribution business reported a profit after tax of Rs 13 crore (US$ 2 million) for the year ended March 31, 2021.

Reliance Commercial Finance (RCF) and Reliance Home Finance (RHF)

As of March 31, 2021, Reliance Commercial Finance Limited (RCF), a wholly owned subsidiary of RCL had Assets Under Management (including securitized portfolio) was Rs 10 934 crore (US$ 1.5 billion) as against Rs 1 1 398 crore (US$ 1.6 billion) as on March 31, 2020. During the year, the Company has not securitized loans as against Rs 241 crore (US$ 33 million) securitized in the previous year. As on March 31, 2021, the outstanding loan book was Rs 10 021 crore (US$ 1.4 billion) as against Rs 10 441 crore (US$ 1.4 billion) at the end of March 31, 2020. RCF reported a loss of Rs 2 665 crore (US$ 365 million) for the year ended March 31, 2021 as against a loss 1 441 crore (US$ 197 million) in the previous year.

As of March 31, 2021, Reliance Home Finance Limited (RHF) had Assets Under Management (including securitised portfolio) was Rs 1 3 275 crore (US$ 1.8 billion) as against Rs 14 713 crore (US$ 2.0 billion) as on March 31, 2020. The Total Income for the year ended March 31, 2021, was at Rs 840 crore (US$ 115 million), as against Rs 1 603 crore (US$ 220 million) for the previous year. As on March 31, 2021, the outstanding loan book was Rs 13 325 crore (US$ 1.8 billion) as against Rs 1 3 961 crore (US$ 1.9 billion). The business reported a loss of Rs 2 303 crore (US$ 315 million) for the year ended March 31, 2021 as against loss of Rs 567 crore (US$ 78 million) in the previous year.

Since FY2019, all categories of lenders in India have put near complete freeze on additional lending to Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) and have been insisting for reducing the existing level of borrowings which has severely impacted the financial flexibility of majority of NBFCs & HFCs.

These developments have adversely impacted both RCF and RHF resulting into liquidity mismatch RCF and RHF and leading to default.

Certain lenders (herein referred to as the "ICA Lenders") of RCF and RHF have separately entered into an Inter-Creditor Agreement (ICA) for the resolution of debt in accordance with the circular dated June 7, 2019 issued by the Reserve Bank of India on Prudential Framework for Resolution of Stressed Assets ("RBI Directions"), and have approved Resolution Plans in terms of RBI Directions.

ICA Lenders of RHF have selected Authum Investment and Infrastructure Limiteds (Authum) resolution plans as successful resolutions plan to acquire RHF and / or all its assets through a competitive bidding process after several rounds of negotiations between the bidders and the Lenders.

ICA Lenders of RCF have selected Authum Investment and Infrastructure Limiteds (Authum) resolution plans as successful resolutions plan to acquire RCF and / or all its assets through a competitive bidding process after several rounds of negotiations between the bidders and the Lenders.

The implementation of the resolution plans by the successful bidder is subject to approval of non-ICA Lenders, shareholders, regulatory authorities and, vacation of existing legal injunctions on the Company.

Risks and Concerns

RCL has exposures in various line of business through its subsidiaries and associate entities. RCL, its subsidiaries and associates are exposed to specific risks that are particular to their respective businesses and the environments within which they operate, including market risk, competition risk, credit risk, liquidity and interest rate risk, human resource risk, operational risk, information security risks, regulatory risk and macro-economic risks. The level and degree of each risk varies depending upon the nature of activity undertaken by them.

Market risk

The Company has quoted investments which are exposed to fluctuations in stock prices. Similarly, the Company has also raised funds through issue of Market Linked Debentures, whose returns are linked to relevant underlying market instruments or indices. RCL monitors market exposure for both equity and debt and, in appropriate cases, also uses various derivative instruments as a hedging mechanism to limit volatility.

Competition risk

The financial sector industry is becoming increasingly competitive and the Companys growth will depend on its ability to compete effectively. The Companys main competitors are Indian NonBanking Financial Companies / Core investment Companies, commercial banks, life and non-life insurance companies, both in the public and private sector, broking houses, mortgage lenders, depository participants and other financial services providers. Further liberalization of the Indian financial sector could lead to a greater presence or entry of new foreign banks and financial services companies offering a wider range of products and services. This could significantly toughen our competitive environment. The Companys wide distribution network, diversified product offering and quality of management place it in a strong position to deal with competition effectively.

Credit risk

Credit risk is a risk arising out of default or failure on the part of borrowers or investee entities in meeting their financial obligations towards repayment of loans or investment instruments debit / credit such as debentures, commercial papers, PTCs etc. Thus, credit risk is a loss as a result of non-recovery of funds both on principal and interest counts. This risk is comprehensively addressed both at the strategic level and at the client level. Necessary standards have been stipulated for evaluation of credit proposals. Appropriate delegation and deviation grids have been put in place. Proper security, industry norms and ceilings have been prescribed to ensure diversifying risks and to avoid concentration risk. Company has put in place monitoring mechanisms commensurate with nature and volume of activities. RCL is a Core Investment Company (CIC) and obtained the Certificate of Registration as a CIC. In view of this the investments and lending of RCL have been restricted to and within the Group companies.

The Company has adopted the IND-AS since the financial year 2018-19 for identification of Expected Credit Losses (ECL) and provision thereof.

Liquidity and Interest Rate Risk

The Company along with its subsidiaries is exposed to liquidity risk principally, because of lending and investment for periods which may differ from those of its funding sources. Asset liability positions are managed in accordance with the overall guidelines laid down by various regulators in the Asset Liability Management (ALM) framework. The Company may be impacted by volatility in interest rates in India which could cause its margins to decline and profitability to shrink. The success of the Companys business depends significantly on interest income from its operations. It is exposed to interest rate risk, both as a result of lending at fixed interest rates and for reset periods which may differ from those of its funding sources. Interest rates are highly sensitive to many factors beyond the Companys control, including the monetary policies of the RBI, deregulation of the financial sector in India, domestic and international economic and political conditions and, inflation. As a result, interest rates in India have historically experienced a relatively high degree of volatility.

The Company seeks to match its interest rate positions of assets and liabilities to minimize interest rate risk. However, there can be no assurance that significant interest rate movements will not have an adverse effect on its financial position.

The credit rating of the Company was downgraded to D in September 2019, this rating downgrade has initiated acceleration, of various facilities and consequential demands for immediate payment of amounts that were otherwise due and payable in a phased manner over the next 8 years till March 2028, as per the original terms of debt, which has resulted in default in debt servicing obligations since October, 2019 As stated in Credit risk, being a CIC, all the lending and investments of Reliance Capital Limited are within group companies. Thus, the liquidity position of the company also depends upon the realisation and monetisation of its group exposures

Human resource risk

The Companys success depends largely upon the quality and competence of its management team and key personnel. Attracting and retaining talented professionals is therefore a key element of the Companys strategy and a significant source of competitive advantage. While the Company has a salary and incentive structure designed to encourage employee retention, a failure to attract and retain talented professionals, or the resignation or loss of key management personnel, may have an impact on the Companys business, its future financial performance and the results of its operations.

Operational risk

The Company may encounter operational and control difficulties when undertaking its financial activities. The rapid development and establishment of financial services businesses in new markets may raise unanticipated operational or control risks. Such risks could have a materially adverse effect on the Companys financial position and the results of its operations.

The operations of the Company have been extensively automated which minimizes the operational risk arising out of human errors and omissions. A robust system of internal controls is practiced ensuring that all its assets are safeguarded and protected against loss from unauthorised use or disposition and all its transactions are authorised, recorded and reported correctly. The respective Audit Committee of the Board periodically reviews the adequacy of our internal controls. The Company has implemented SAP systems across functions. With this initiative, along with other key systems and checks and balances established, we believe that our overall control environment has been enhanced. The Company is relentlessly focused on quality parameters and has a dedicated quality team to proactively identify and address operational issues. The mandate of the quality team is also to work closely with various business teams to bring about operational efficiencies and effectiveness through Six Sigma initiatives. It is pertinent to note that Reliance Nippon Life Insurance, Reliance General Insurance, Reliance Securities have obtained an ISO 9001:2008 certification. They are among the few companies in their respective industries to be ISO certified.

Information security risk

The Company has robust Information Security Risk monitoring systems and tools to guard and protect sensitive customer data and guard against potential hackers and viruses. The Information Security team is governed by the Information Security Risk Management Committee. Robust governance, controls and sophisticated technology is adopted across lines of business to ward off cyber threats and protect information residing within the Company. The Information Security system is in alignment with the respective regulatory requirements.

Information Security has been brought under the Enterprise Risk Management Framework to enhance data protection and ward off cyber risks effectively, thereby making our overall Risk, Control & Governance framework more robust.

Regulatory risk

As a financial conglomerate in the financial services sector, the Company and its entities are subject to regulations by Indian governmental authorities and regulators including Reserve Bank of India, Insurance Regulatory and Development Authority of India, Securities and Exchange Board of India, Pension Fund Regulatory & Development Authority and National Housing Bank. Their laws and regulations impose numerous requirements on the Company, including asset classifications and prescribed levels of capital adequacy, solvency requirements and liquid assets. There may be future changes in the regulatory system or in the enforcement of the laws and regulations that could adversely affect the Companys performance.

The Company has not complied with the regulatory requirements w.r.t. capital adequacy and leverage ratios. The Company drawn up an Asset Monetisation Plan and initiated necessary steps for implementation of the same to address this issue.

Macro-economic risk

Any slowdown in economic growth in India could cause the business of the Company to suffer. Similarly, any sustained volatility in global commodity prices, including a significant increase in the prices of oil and petroleum products, could once again spark off a new inflationary cycle, thereby curtailing the purchasing power of the consumers. RCL manages these risks by maintaining a conservative financial profile and following prudent business and risk management practices.

Internal Control

The Company maintains a system of internal controls designed to provide assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, the reliability of financial controls, and compliance with applicable laws and regulations.

The organization is well structured, and the policy guidelines are well documented with pre-defined authority. The Company has also implemented suitable controls to ensure that all resources are utilized optimally, financial transactions are reported with accuracy and in adherence to applicable laws and regulations.

The Company has put in place adequate systems to ensure that assets are safeguarded against loss from unauthorised use or disposition and that transactions are authorised, recorded and reported. The Company also has commensurate budgetary control system to monitor all expenditures against approved budgets on an ongoing basis.

The Company uses information technology adequately in its operations for ensuring effective controls besides economy. It also helps the Company in providing accurate MIS and prompt information / services to its customers and other stakeholders. The Company has implemented enhanced level of Information System Security controls with monitoring systems to address technology risks.

The Company has an independent internal audit function which continuously evaluates the adequacy of, and compliance with policies, procedures, plans, regulatory and statutory requirements. Risk based approach is adopted while carrying out the internal audits. Internal audit also evaluates and suggests improvement in effectiveness of risk management, control and governance process. The Audit Committee of the Board provides necessary oversight and directions to the internal audit function and periodically reviews the findings and ensures corrective measures are taken.

Opportunities

• Low retail penetration of financial services / products in India

• Extensive distribution reach and strong brand recognition

• Opening of financial sector in India along with introduction of innovative products

• Opportunity to cross sell services

• Increasing per-capita GDP

• Changing demographic profile of the country in favour of the young

Threats

• Stress due to Covid -19 pandemic

• Competition from local and multinational players

• Execution risk

• Regulatory changes

• Attraction and retention of human capital

Health Safety and Pandemic Risk

In addition to serious implications for peoples health and the healthcare services, coronavirus (COVID-19) is having a significant impact on the world-wide economy including India in terms of business growth and business models. The disruption has pushed the Financial sector to adopt digital model for sustenance and growth. The company and its subsidiaries have been proactive enough to switch over to fully digital mode since the Covid-19 ensuring employees the best health safety measures and uninterrupted service to the stakeholders. However, the performance of the company and its subsidiaries may be impacted in future because of the lasting effect of this disruption on the economy.

Corporate Social Responsibility

At Reliance Capital, as a socially responsible financial services conglomerate, we strive to improve the quality of life of the under-served sections of society, by focusing on Skill Development, Education, Healthcare and Environment & Animal Welfare for the service of the nation and the greater good of the communities in which we operate.

The Company supports inclusive growth and equitable development through various training and development programmes for its employees as well as its key stakeholders. During the year, Reliance General Insurance (RGIC) has made various contributions to multiple Charitable Organizations which are inter alia working on below mentioned broad CSR objectives:

Promoting health and well-being - Helping needy people mainly in education & medical terms to fulfil their living necessities. Provide medical treatment under good and ultramodern hospital and dialysis, heart bypass, surgery, cancer, cataract operation, TB primary treatment as well as help during small based medical treatment. Activities like eye Testing and treatment, Food distribution for poor child in villages, Poor students education support etc.

Covid 19 mask distribution - To protect the health from ongoing Covid-19 pandemic, face masks were distributed to poor and needy people in the rural areas.

Education - Running and managing educational Institution and Institutions like Nursery Schools, Primary School, Secondary Schools, Higher Secondary Schools, Technical Schools, Special Schools, Night Schools, Open Schools, Vocational Schools, Physical Training Schools, Art Schools, etc. to impact education and Knowledge of both formal and informal nature to the students of all kinds of Castes, creeds religion and mother tongues, and to conduct and run necessary periods, classes, practical, tutorials, lectures, and demonstration etc. for the benefits of the students community and educational fraternity at large.

• In giving Scholarship, prizes or awards to deserving students or for providing funds for pursuing studies by any deserving students either in India or abroad and to give all other help for advancement of education.

Educating rural India and helping dis-advantaged children

- Raising the level of education and literacy in rural India and helping disadvantaged children realize their full potential. The project seeks to ensure quality education for children in rural areas, opening the door for them to participate in and benefit from Indias economic growth.

• Implementing programmes for Child Development, Rural Development, Farmer Awareness Programs. Organizing different programmes and activities mainly for women, OBC Women, Minority Women, Widow Women, youth, and other backward people.

Health and Sports - Managing high performance Olympic Training Centre launched with the vision of propelling Indias performance at the Olympic Games. Activities include training and mentoring Indias talented young and established athletes across the discipline Athletics, Boxing, Judo and Wrestling on a fully funded 100% scholarship. The Institute provides the athletes world class infrastructure, top-notch coaching, sports science, medical support, nutrition, counselling, and a tailor-made academic curriculum. With these robust systems, processes and facilities ensuring Indias sporting talent a unique platform to excel and achieve Indias Olympic dreams.

Upliftment of Eco-Socio backward society - Undertaking a Housing Project wherein it is proposed to provide affordable housing to about 1 200 members of the Trust who are Blind, Handicapped, Deaf, Widow, Divorcee, Helpless women, mentally challenged, Orphans, Cancer, Dialysis, Kidney patients, Heart disease patients, HIV patients, Homosexual and the people below poverty line (BPL) etc. As the houses are proposed to be provided to such needy people, the same shall be provided free of cost.

Provision of Education, skills, health and wellbeing of under-privileged & differently-abled people - With the aim of catering to the financial and medical needs of underprivileged and differently abled people, Reliance Asset Reconstruction Company Ltd., Reliance Securities Ltd. and Reliance Financial Ltd. have come across Omkar Trust (Omkar Andh-Apang Samajik Sanstha), which has 2,500 registered members to whom they provide monthly financial grants based on their income class and criticalness of their disability. During the COVID-19 pandemic, the trust has widened their scope of social responsibility and helped many more people affected by COVID 19 and distributed ration and medical assistance to 3500 families for amount more than Rs 10 Crores. They also supported those who had lost their jobs in the pandemic and had gone back to their villages, as survival was the utmost need of the times.