Religare Enterprises Ltd Management Discussions

Economic Outlook Global Economy

In 2024, the global economy experienced moderate growth amid persistent inflationary pressures, geopolitical instability and tightening financial conditions. The year was marked by significant elections in advanced and emerging economies, introducing policy uncertainty and shaping market sentiments.

Monetary policy remained a focal point, with central banks in key economies, particularly the U.S. Federal Reserve and the European Central Bank, maintaining cautious interest rate strategies in response to stubborn core inflation and mixed labour market signals. Meanwhile, global trade continued to face headwinds from ongoing supply chain disruptions, rising protectionism and unresolved trade tensions, particularly between major economies like the U.S. and China.

Despite a globally tighter monetary environment, corporate liquidity conditions remained stable. Financial institutions continued to maintain healthy balance sheets, and businesses, particularly in advanced economies, benefited from strong cash positions, improved working capital cycles and access to alternative financing channels such as private credit and capital markets.

Additionally, proactive communication from central banks and gradual policy normalisation helped maintain investor confidence and ensured credit flows to productive sectors remained largely uninterrupted. The stability in funding conditions proved crucial for sustaining business continuity and investment activity through a complex macroeconomic environment.

Meanwhile, technological innovations remained a key driver of productivity. Looking ahead, the global economy in 2025 is projected to expand at a modest but stable rate of approximately 2.8%, according to estimates by the IMF and the World Bank. While inflation is expected to ease further, marking a continuation of the downward trend from its peak, the pace of decline may vary.

Indian Economy

Indias economy achieved a real GDP growth of 6.5% in FY25, maintaining its position as the worlds fastest-growing major economy despite global geopolitical tensions and trade uncertainties, driven primarily by domestic demand.

Private consumption expenditure expanded 7.3% at constant prices, boosted by a significant rural consumption rebound. Improved agricultural incomes and enhanced rural purchasing power created a broad-based recovery, with steady urban spending patterns supporting overall economic activity throughout the year.

The industrial sector grew an estimated 6.2% for FY25, building on 6.0% growth in the first half. Manufacturing remained stable despite weakened export demand and competitive trade policies from major partners. Production-Linked Incentive (PLI) schemes enhanced industrial competitiveness and facilitated integration into global value chains. Services remained the primary growth engine, driven by robust IT and financial services exports alongside a meaningful recovery in tourism and hospitality.

Meanwhile, agriculture emerged as a stabilising force, contributing to GDP growth while maintaining food security and price stability. The sectors resilience provided a foundation for rural consumption recovery and sustained domestic demand during external uncertainty.

Furthermore, successful inflation management through coordinated monetary policy and supply-side measures marked the year, with the Reserve Bank of Indias (RBI) strategic approach enabling headline inflation to align with the 4% medium-term target, creating conducive conditions for sustained growth. In FY25, the Reserve Bank of India reported varied outcomes for the banking sector. Credit growth stayed strong, but deposit growth lagged, while the RBIs balance sheet saw substantial expansion. Public sector banks reported a record cumulative profit of Rs. 1.78 Lakh Crore for FY25, marking a 26% increase from Rs. 1.41 Lakh Crore in the previous fiscal year. In contrast, private-sector banks experienced a sharper decline in loan growth, with overall growth slowing to 11.1% from 15.3% the year before.

Non-Banking Finance Companies (NBFCs) outperformed commercial banks in credit growth during FY25, achieving a robust 20% increase compared to the banking sectors 12%. The total net advances for NBFCs also rose by 20% year-on- year to Rs. 24.5 Lakh Crore, expanding the overall balance sheet size of the NBFC industry to Rs. 28.2 Lakh Crore, a 20% rise from the previous fiscal year. Total borrowings by NBFCs surged by 22% to Rs. 19.9 Lakh Crore, indicating heightened funding activity to support their growing operations.

Additionally, the financial inclusion index showed positive growth across all segments for FY25, reaching 67% compared to 64.2% in FY24, reflecting ongoing improvements in financial accessibility and economic participation across India, underscoring the resilience and dynamism of the Indian economy amid evolving financial landscape.

Industry Overview

Indias Financial Services Sector Undergoing Rapid Growth

Non-Banking Financial Companies (NBFCs) have become integral to Indias financial services sector. Serving sectors from retail to infrastructure, they are increasingly competing with banks in the retail consumer segment by offering faster loan approvals, efficient disbursements, diversified products, and strengthening their position through technology adoption and user-friendly digital platforms.

NBFCs posted strong credit growth during the year, outpacing the banking sector (12%) with a growth rate of 20%. Lending, particularly to MSMEs, is gaining traction as the formalisation of the sector and rising credit demand open new frontiers for growth. It is widely acknowledged that MSME lending, reinforced with advanced analytics and risk management strategies, could be a long-term profit engine. However, volatilities like rising costs are likely to persist, reinforcing the need for financial institutions to revisit their operating models. The broader outlook for the financial services sector is marked by the strongest levels of profitability, capital adequacy, and asset quality in over a decade.

Health Insurance

The insurance sector, alongside banking and mutual funds, has been expanding rapidly, emerging as a key pillar of the financial ecosystem. Broking services, driven by rising digital adoption and strong regulatory support, are also witnessing strong momentum. Indias insurance sector, comprising 57 insurers (24 life and 33 non-life), has grown at a 17% CAGR over the past two decades and is projected to reach $ 222 Billion by FY26, driven by rising awareness, regulatory reforms, and increased private sector participation. Technological advancements, particularly in AI and Robotic Process Automation (RPA), are transforming the sector, with bots streamlining policy servicing and claims management to deliver faster, more personalised customer experiences.

Furthermore, the IRDAI continues to push its "Insurance for All by 2047" agenda, addressing systemic challenges and enabling growth. In FY25, while overall premium growth moderated, nonlife insurance premiums crossed Rs. 3 Lakh Crore, supported by regulatory thrust, Insurtech adoption, and rapid digitalisation.

Overall, Indias health insurance sector is undergoing a structural transformation. It remains the largest contributor within the non-life segment. Health insurance premiums surpassed Rs. 1 Lakh Crore in the first 10 months of FY25, reflecting a 10% increase over Rs. 90,785 Crore collected during the same period last year. However, this growth rate is slower than the 20% rise seen in FY24. Despite deceleration following the implementation of the 1/n rule, standalone health insurers (SAHIs) continued to outperform the broader health insurance market.

Retail Broking

Indias capital markets witnessed a notable increase in retail participation in FY25, with the addition of over 84 Lakh new active demat accounts on the National Stock Exchange (NSE), an annual growth of 20.5%. The total number of active demat accounts peaked at 5.02 Crore in January 2025, before experiencing a marginal decline over the subsequent two months amid heightened market volatility.

The surge in investor activity reflects key structural trends, with more young, digitally native investors emerging from Tier II, III, and IV cities, supported by greater financial literacy, seamless onboarding, and user-friendly digital platforms. The BSEs StAR MF platform processed 50.6 Million monthly transactions in H1 FY25, up from 30 Million a year earlier. Another notable shift is the rising participation of women, with one in every four new investors in FY25 being female, underscoring greater financial inclusion and broader demographic engagement.

Retail investor participation post-COVID-19 accelerated due to simplified digital onboarding, favourable market sentiment, and reduced trading costs. In addition, investors are increasingly accessing the markets through indirect avenues such as mutual funds, Portfolio Management Services (PMS), and Alternative Investment Funds (AIFs).

Furthermore, regulatory bodies such as the Securities and Exchange Board of India (SEBI), along with stock exchanges, clearing corporations, brokers, and registrars, have played a critical role in enhancing market accessibility and transparency. SEBIs collaborative policymaking and sustained focus on market stability and investor protection have further strengthened investor confidence.

MSME Lending

MSME lending in India has gained strong momentum, with NBFCs leading the growth by outperforming banks. Their funding profile is shifting as some rely more on bank borrowings while larger players tap public deposits and alternative funding sources, alongside expanding loan portfolios in personal loans and vehicle financing.

According to the Reserve Bank of Indias Financial Stability Report (FSR), the share of stressed assets in the microfinance portfolio of NBFCs (including NBFC-MFIs) rose to 5.9% in March 2025 from 3.9% in September 2024. The NBFC sector continues to exhibit resilience, supplemented by improving asset quality, robust capital adequacy levels maintained above 22%, and sustained profitability. For NBFCs focused on Micro-LAP (Loan Against Property), the outlook remains promising, with expanding branch networks, accelerating digital transformation, co-lending partnerships, and sustained access to equity capital.

The Indian MSME sector, with 63 Million enterprises, is emerging as a key growth engine of the economy through its significant GDP and export contribution. Formalisation is accelerating with the Udyam Assist Platform and the rising Udyam registrations, which jumped to 6.2 Crore in March 2025 from 2.5 Crore a year earlier. Lending trends show a shift towards higher-ticket loans amid stress in the small-ticket segment.

The sector is also witnessing growth in women-led enterprises and sustainability initiatives, while continued formalisation and digital lending adoption are expected to help bridge the credit gap. Credit to the MSME sector crossed Rs. 40 Trillion as of March 2025, marking a strong 20% year-on-year growth, primarily attributed to strengthened priority sector lending norms, focused government initiatives, and greater digital adoption. Since its launch in April 2015, the Pradhan Mantri Mudra Yojana (PMMY) has sanctioned over 52 Crore loans worth Rs. 32.61 Lakh Crore, playing a key role in promoting entrepreneurship across the country.

Housing Finance

Indias housing finance market is expected to grow at a CAGR of 15-16%, driven by improved affordability, increasing urbanisation, a rise in nuclear families, premiumisation in housing demand, and supportive government programmes like "Housing for All." The retail housing segment remains the primary growth driver, while wholesale lending has expanded cautiously. Housing Finance Companies (HFCs) improved asset quality with gross NPAs declining to 2.2% in March 2024 from 4.3% in March 2022, supported by retail loan growth, successful capital raising, and a strong capital structure.

The RBI defines affordable housing as properties priced up to Rs. 65 Lakh in metros and Rs. 40 Lakh in non-metros, with size limits of 60 sq. m and 90 sq. m, respectively. With urbanisation projected to reach 40% by 2030, affordable housing will be crucial in bridging the urban-rural divide and supporting migration to Tier-II and Tier-III cities. According to the Elara report, titled "Past its Prime", the affordable housing finance companies (AHFCs) market projected a robust 35-45% AUM growth during FY15-24. The current market size is at Rs. 13 Lakh Crore, with the first quarter displaying an uptick in credit cost. This is attributed to seasonality and slow growth during the quarter. As per the report, the AUM growth of AHFCs is likely to settle at 20-25% during FY25-28.

Business Overview About REL

Religare Enterprises Limited ("REL" or "the Company") is a Core Investment Company (CIC) registered with the Reserve Bank of India (RBI). It serves as the listed holding company for the Groups subsidiaries operating across diverse financial services.

Following the conclusion of the Open Offer, the Burman Group has been designated as the promoter of the Company. Renowned for its strong financial foundation, credible governance practices, and long-term strategic outlook, the Burman Group is a respected business operating in India for the last 140 years. Their association is expected to contribute significantly to the Companys stability, value creation, and future growth trajectory.

Key Subsidiaries and Their Operational Performance Care Health Insurance Limited (CHIL)

Care Health Insurance Limited (CHIL), 62.84% owned by REL, is one of Indias leading Standalone Health Insurers (SAHI). It is currently the second-largest SAHI holding a market share of 6.9%. It was the only SAHI to remain profitable even during COVID-19, attributed to its strong business metrics driving profitability. It has a network of over 21,610 healthcare providers, 269 branches, and 3,60,000+ agents.

Further, CHILs comprehensive product portfolio, comprising 44 products, includes individual, group, travel, fixed benefit and indemnity categories, catering to various customer needs. It provides differentiated services for corporate businesses, such as wellness programmes and preventive health check-ups, helping to negotiate higher premiums and enhance customer retention. Employing a multi-channel distribution strategy through agencies, brokers, corporate agents, online platforms and bancassurance, CHIL primarily focuses on retail and SME customers. The Company continues to invest in digital solutions for its customers, partners, and employees. As a SAHI, CHIL operated across three segments - personal accident insurance, health insurance, and travel insurance.

Operational Performance

During FY25, CHIL garnered a Gross Written Premium of Rs. 8,561.99 Crore, representing a 22% growth from FY24, with a combined ratio of 102.84%. CHIL reported a Profit Before Tax (PBT) of Rs. 208.20 Crore, a PAT of Rs. 155.18 Crore, and an underwriting loss of Rs. 328.00 Crore for FY25. As of March 31, 2025, CHIL had a net worth of Rs. 2,331.20 Crore. The Company continues to invest in distribution, technology, and servicing opportunities, and maintains healthy solvency margins.

Opportunities

The Indian health insurance market is growing, registering a market size of Rs. 1,27,277 Crore in FY25, an Increase of 9.1% from the previous year. Among health insurance service providers in India, public sector institutions hold a market share of 35.9%, private Insurers have a 33.9% market share, and SAHI accounts for 30.2% of the market. However, in terms of retail GDP, SAHI had the largest share at 57.6% in FY25. Having invested in people, processes, alliances, technology, and customer services, CHIL is well-positioned to serve and grow within the structural growth narrative of the insurance sector in India, particularly in the health Insurance sector.

Religare Broking Limited (RBL)

Religare Broking Limited (RBL), a wholly owned subsidiary of REL. Under retail broking, RBL has more than 1,400+ points of presence spanning 400+ towns and cities across the length and breadth of India, serving over 1.1 Million unique customers. RBLs distribution strategy entails a judicious combination of its own branches and a strong network of franchisees that help extend RBLs presence.

The Company offers a comprehensive suite of broking services, including both full-service and discount broking models, catering to a wide spectrum of investors.

RBL provides multi-platform trading options, including branch, web, mobile app and Call and trade, to enhance customer convenience and accessibility. Additionally, the retail broking business has Bancinvest partnerships with various banks, such as Bank of Maharashtra, Dhanlaxmi Bank Limited, Karur Vysya Bank Limited, Saraswat Bank, South Indian Bank Limited, Tamilnad Mercantile Bank Limited, and Union Bank of India, and continues to expand its Bancinvest partnerships.

RBL operates the following segments:

• Retail Equity Broking and Depository Services: The retail equity broking business is operated by RBL. RBL is registered as a stock and commodity broker with the Securities and Exchange Board of India (SEBI). RBL is also a member of the National Stock Exchange of India Limited (NSE), Bombay Stock Exchange Limited (BSE), Metropolitan Stock Exchange of India Limited (MSE), National Commodity & Derivatives Exchange Ltd. (NCDEX), and Multi Commodity Exchange of India Ltd. (MCX). Additionally, RBL is a depository participant with National Security Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL), ensuring smooth settlement of clients delivery-based transactions.

• Retail Commodity Broking: Commodity broking provides a platform for exchange-based trading of futures and options in various agricultural products, bullion, metals, and oil and gas to producers, end-users, and intermediaries who are exposed to price risks in these commodities, to lock in future prices and thereby hedge their exposures. RBL is a member of the National Commodity & Derivatives Exchange Ltd. (NCDEX) and Multi Commodity Exchange of India Ltd (MCX).

• Retail Currency Broking: Trading in currency futures and options allows clients to hedge the capital and trading exposures they may have in currencies other than the Indian Rupee. These products are offered by RBL as a member of the currency segment on NSE and BSE. Currently, the exchanges permit futures trading in four currency pairs: US Dollar-Indian Rupee, Euro-Indian Rupee, Pound Sterling- Indian Rupee, and Japanese Yen-Indian Rupee, and options trading in the US Dollar-Indian Rupee pair.

Ancillary Services

Under the e-governance business, RBL provides and facilitates a variety of government services, financial inclusion services, citizen e-services, and other ancillary and allied services, including but not limited to Permanent Account Number (PAN) issuance, Tax Deduction and Collection Account Number (TAN, e-TDS returns, business correspondent for banking services, Bharat Bill Payment Systems (BBPS) and recharges, ticketing for airlines, railways, buses, and tourism through online and offline platforms, Digital Signature Certificate and Token (DSC) services, and a Central Record Keeping Agency Facilitation Centre (CRA-FC). RBLs extensive franchisee network spans across India, catering to the needs of retail customers.

Additionally, RBL is registered with the Association of Mutual Funds in India (AMFI) for mutual fund distribution, the Insurance Regulatory Authority of India (IRDAI) as a corporate agent for the sale of insurance policies, and the Pension Fund Regulatory and Development Authority (PFRDA) to act as a Point of Presence (PoP) for registering applicants under the National Pension Scheme. RBL is also registered with the Securities and Exchange Board of India (SEBI) to act as a Registrar to an Issue and Share Transfer Agent.

RBLs performance in FY25 continued to reflect steady operational progress, backed by its strong risk management architecture. The Company served 5.2 Crore customers through its PAN services, commanding a 19% market share in this segment. In the broking segment, the total customer base reached 1.1 Million, with the number of active clients rising to Rs. 2.1 Lakh in FY25 from Rs. 1.47 Lakh in the previous year, a 43% year-on-year increase.

In FY25, the broking business experienced a mixed financial performance, marked by headwinds in the broking segment and strong growth in other areas, i.e., wealth distribution business and e-governance. The first half of the year benefited from favourable market conditions. However, the second half was significantly impacted by stressed liquidity in the business, regulatory disruptions, including SEBIs circular on derivative trading, continued foreign institutional investor (FI I) outflows, and persistent negative market sentiment.

RBL Average Daily Turnover (ADTO) declined by 38% year- on-year to Rs. 9,996.24 Crore in FY25 from Rs. 16,070.35 Crore in FY24. Consequently, brokerage income decreased by 7.5%, from Rs. 202.18 Crores in FY24 to Rs. 187.09 Crore in FY25.

At the same time, amidst the slowdown in the broking business, RBL reported an exceptional growth on a consolidated basis in the wealth distribution business, where revenue surged by 86% to Rs. 30.34 Crore in FY25, up from Rs. 16.32 Crore in FY24. This performance underscores RBLs successful strategy of diversifying its business model and expanding its suite of financial products. Expansion was also evident in the e-governance business, where the number of franchisees increased by 20% year-on-year from 43,823 in FY24 to 52,669 in FY25. Broking client acquisition improved modestly, with 47,691 new customers added in FY25, compared to 45,045 in FY24, reflecting a 6% year-on-year increase.

On a consolidated level, including subsidiaries Religare Commodities Limited and Religare Digital Solutions Limited, total revenue rose by 3.6%, from Rs. 369.74 Crore in FY24 to Rs. 383.07 Crore in FY25, demonstrating steady topline growth despite a softer market backdrop. Consolidated PAT and other comprehensive income stood at Rs. 30.67 Crore in FY25, compared to Rs. 38.85 Crore in the previous year, impacted by the cyclical pressures within the broking business while maintaining a healthy profitability level.

Looking ahead, Religare Broking Limited is focused on broadening its product suite, investment services, and financial inclusion. These efforts aim to build a more resilient, diversified revenue base and support long-term sustainable growth. Early results are encouraging, particularly the significant rise in distribution income, signalling positive momentum in the Companys transformation strategy.

Opportunities

1. Rising Retail Participation: Retail investor base is expanding rapidly, driven by financial awareness and access to mobile trading platforms, especially from Tier 2 and Tier 3 cities.

2. Service Diversification: Broking firms are expanding into wealth management, PMS, mutual funds, and financial advisory services to reduce reliance on pure brokerage income and deepen client relationships.

3. Regulatory Support and Formalisation: SEBIs reforms are formalising the industry, boosting transparency and investor confidence, and benefiting organised players with strong compliance and governance frameworks.

4. Technological Advancements: AI, analytics, and automation are enhancing personalised advisory, trading efficiency, and operational scalability, reducing costs and improving client engagement across digital platforms.

Threats

1. Intensifying Competition: Rising fintech entrants are compressing margins, forcing traditional players to either cut fees or significantly upgrade offerings to retain clients.

2. Overdependence on Market Cycles: The broking business remains vulnerable to market volatility; bearish trends or prolonged corrections can reduce trading volumes and client activity significantly.

3. Technology & Cybersecurity Risks: As platforms digitise, the threat of data breaches, system outages, and cyberattacks increases, potentially damaging reputation and client trust.

Optimistic Growth Prospects

While the performance of RELs broking business in FY25 was mixed, impacted by both external market conditions and internal factors, growth prospects for FY26 remain optimistic. Emerging opportunities in the wealth distribution space, coupled with improved interest earnings from the margin trade financing book and sustained expansion in the e-governance vertical, will contribute significantly to RBLs growth.

Moreover, Indias favourable demographic profile and the ongoing trend of retail inclusion provide strong long-term visibility for the business. However, to fully capitalise on these opportunities, it is imperative that the Company continuously upgrade its infrastructure and enhance its product offerings.

RBL is committed to expanding its client base, strengthening e-governance services, growing its affiliate network, and delivering a comprehensive suite of financial products tailored to meet the evolving needs of its customers throughout their financial journey. These strategic priorities position the company well to capture the evolving market dynamics and drive sustainable growth in the years ahead.

Religare Finvest Limited (RFL)

Religare Finvest Limited (RFL), a wholly owned subsidiary of Religare Enterprises Limited (REL), is registered with the Reserve Bank of India (RBI) as a Non-Banking Financial Company Investment and Credit Company Middle Layer (NBFC-ICC-ML). RFL primarily focuses on providing debt capital to support their capacity expansion and business growth.

Established in 2008, RFL was among the first NBFCs in India to specialise in lending. By 2016, it had scaled significantly, achieving a peak loan book of over Rs. 16,000 Crore, positioning itself as one of the countrys leading SME financing platforms. It primarily serves Tier II and Tier III customers. With the removal of CAP and Fraud Tag and the achievement of a debt- free status in FY24, RFL is well-positioned to accelerate its growth journey.

The product offerings include:

• Working Capital Loans

• Secured Business Expansion Loans

• Short-Term Trade Finance

~360 Active Customers

Operational Performance

In FY25, RFL maintained its position as an MSME-focused NBFC with an AUM of approximately Rs. 1,284 Crore. The lending portfolio remained well-diversified, covering customers from over 80 industries. Asset quality improved, with Net NonPerforming Assets (NNPA) declining to 0.8% from 1.4% in FY24. The Company remained well-capitalised, reporting a CRAR of 161% and a net worth of Rs. 763.9 Crore. Collection efficiency stood at 91% in FY25, compared to 98% in FY24 and 96% in FY23. RFL continued to focus strategically on MSME clusters, with a wide presence of 12 branches across seven states.

Risks

1. Stringent Regulatory Compliance: With a tougher regulatory stance, the risk-taking capability of NBFCs is shrinking rapidly, adversely affecting the regulatory arbitrage between banks and non-banking entities. Adhering to increasingly complex regulatory requirements can be burdensome for NBFCs, and this has led to a manifold increase in compliance costs.

2. Intensified Competition: Competition from banks, fintech startups, and other financial institutions is intensifying. While larger NBFCs maintain their positions, smaller ones often struggle to compete against well-established companies due to capital constraints, resource limitations, and challenges in scaling operations effectively.

3. Credit Risk: Managing credit risk is a critical challenge for NBFCs. The ability to accurately assess the creditworthiness of new to credit borrowers is essential to prevent defaults and maintain profitability.

4. Technological Risks: The increasing reliance on technology exposes NBFCs to cybersecurity threats and operational risks. Investing in robust IT infrastructure and security measures is crucial to protect their operations and customer data at the same time scale up the operations.

5. Non-Performing Assets: High levels of NPAs can negatively impact NBFCs; profitability, strain their liquidity, and hinder their ability to extend fresh credit.

6. Liquidity Risk and Funding Constraints: Liquidity risk is the greatest challenge to NBFCs, particularly during times of economic slowdown or financial crisis. Given that funding for most NBFCs comes largely from market borrowings, any disruption in funding sources, such as tightening of credit markets, can lead to a squeeze on liquidity.

Opportunities

1. Digital Transformation: Continued investment in digital technologies and the adoption of digital tools can help NBFCs improve efficiency, reduce costs, and enhance the customer experience, making financial services more accessible and efficient.

2. Niche Markets: Focusing on niche market segments can provide NBFCs with a competitive advantage. By specialising in specific areas, such as microfinance, housing finance, NBFCs can build expertise and cater to the unique needs of their target customers.

3. Strategic Partnerships: Collaborating with other financial institutions, technology providers, and government agencies can create new opportunities for NBFCs to expand their reach and offer innovative products and services. Through partnerships with fintech companies, NBFCs can augment their service offerings and leverage modern technologies, such as blockchain, big data analytics, and AI, to further refine credit scoring, risk management, and loan disbursement processes.

4. Co-lending: Co-lending helps share risks and rewards, making funds available to the ultimate beneficiaries at competitive pricing due to the lower cost of funds from banks. At the same time, it helps reach borrowers who have hitherto not been accessed by banks due to a lack of credit history, thereby creating a win-win situation for banks and NBFCs.

Religare Housing Development Finance Corporation Limited (RHDFCL)

Religare Housing Development Finance Corporation Limited (RHDFCL) is a non-public deposit-taking Housing Finance Company (HFC) registered with the National Housing Bank (NHB) under Section 29A of the National Housing Bank Act, 1987. Presently, RFL holds 87.5% of RHDFCLs shareholding, with the remaining 12.5% owned by the Maharishi Housing Development Trust. RHDFCL provides housing finance to low- income segment customers, offering home purchase, home construction, and home improvement loans. These loans cater primarily to individuals in both the formal and informal sectors across urban and semi-urban India. The Company is committed to making affordable housing accessible to all Indians, thereby enabling them to build secure and sustainable futures.

To position itself as a future-ready company, RHDFCL aims to maximise digitisation in its processes and maintain an efficient workforce. RHDFCLs key focus aligns with the Governments "Housing for All" initiative. It extends credit facilities for affordable housing to the Economically Weaker Sections (EWS), Lower Income Group (LIG), and Medium Income Group (MIG) segments of the population. RHDFCL prioritises housing finance proposals that emphasise providing affordable loans to low-income earners and first-time homebuyers, particularly those who are self-employed in small, unregistered enterprises or work for small companies.

The Company employs robust credit assessment processes to make well-informed lending decisions and capitalise on opportunities. Customer-centricity is a key focus, and RHDFCL follows a "Closer to Customer" strategy to enhance its outreach. Its strong digital system, which spans from customer onboarding to collections, provides an overall advantage over traditional players. By prioritising customer needs and adopting a customer-centric approach, RHDFCL aims to deliver better services and meet the requirements of its target market.

Operational Performance

As of March 31, 2025, RHDFCL maintained a Capital Adequacy Ratio of 140.09%, indicating a well-capitalised and strong regulatory capital base. The Asset Under Management (AUM) of RHDFCL was approximately Rs. 250 Crore. The average ticket size for home loans provided by RHDFCL was Rs. 10.73 Lakh, with all loans backed by residential properties as collateral. Additionally, 100% of fresh business was directed towards retail lending.

The Gross NPA and Net NPA ratios were 3.6% and 2.7% of the Net Advances, respectively. RHDFCL reported a Total Income of Rs. 32.32 Crore and a Profit/(Loss) After Tax of Rs. (12.67) Crore for the financial year.

The challenges in resource raising, combined with run-off and portfolio sales, have led to a reduction in the loan book size. This, in turn, has caused a simultaneous decline in income. Fixed operational costs have remained at minimal level, with the expectation of resolving parent companys legacy issues and achieving future business growth. Despite the challenges in raising funds, the Company had sufficient equity and regulatory capital.

From FY18 until March 31, 2025, RHDFCL has repaid liabilities amounting to Rs. 1,108.28 Crore (principal of Rs. 831.60 Crore and interest of Rs. 276.68 Crore). Presently, RHDFCL is in active discussions with various financial institutions to mobilise additional borrowings. The Companys sales and distribution, risk management, and operations have been robust and capable of scaling up lending operations in a phased manner. As the liability lines build up in the future, the Company is business-ready to approach the market aggressively and expand the loan book.

During FY25, RHDFCL served around 3,200 customers across India and maintained ~3,500 live accounts. The Company remained well-capitalised with a CRAR of over 100% and recorded a collection efficiency of 99% for the year. RHDFCL is present in nine states through 26 branches.

Key Developments

• Credit Ratings: As of March 31, 2025, RHDFCL had a rating of CARE BB+ (Stable) assigned to long-term bank lines of Rs. 500 Crore by Care Ratings Limited, [ICRA]BB (Stable)/ [ICRA] A4 assigned to long-term/short-term bank lines of Rs. 400 Crore by ICRA Ratings, and IVR BBB- (Stable) assigned to proposed Non-Convertible Debentures of Rs. 100 Crore by Infomerics Ratings.

During the current financial year, ICRA Ratings and Care Ratings have upgraded long-term/short-term bank lines ratings to [ICRA]BBB- (Stable)/[ICRA]A3 and long-term bank lines rating to CARE BBB- (Stable), respectively. These upgrades are on account of favourable developments at Religare Group, following the classification of the Burman Group (promoter family of Dabur India Limited) as promoters of Religare Enterprises Limited (REL) - the ultimate parent of RHDFCL, and strengthening of the board composition of REL - both of which augur well for the Groups credit profile.

The ratings also factor in RHDFCLs comfortable capitalisation profile for its current scale of operations, nil gearing, adequate liquidity, and the stated intent from the Religare Group to support RHDFCL.

• Co-Lending: To augment its business, the Company has established co-lending tie-ups with reputed HFCs/NBFCs like DMI Housing Finance Pvt. Limited and Singularity Creditworld Private Limited, enabling better cost of funds, high yields, credit sharing, and reach. These partnerships aimed at enhancing access to financing for homebuyers. Under this arrangement, RHDFCL sources and co-originates the loans with the co-lender, with only a 20% share in the total sanctioned loan.

Risks

The competitive landscape is a threat, with banks and non-banking finance institutions intensifying their focus on affordable housing finance. This competition pressures interest rates and margins, necessitating innovation in products and services. Additionally, regulatory changes and market fluctuations can create uncertainty, impacting profitability and operational stability. Housing market volatility, especially in Tier 2 and Tier 3 cities, and cybersecurity risks from technological advancements also pose challenges.

Opportunities

The Indian home loan industry is poised for significant growth, driven by rapid urbanisation, increased mortgage penetration, and government initiatives promoting affordable housing. As more people move to urban areas seeking better opportunities, the demand for housing surges, while the young population in India presents a large potential customer base for home loans. Government efforts, such as substantial budget allocations for new and stalled projects, create favourable conditions for first-time homebuyers.

Additionally, the rise of women borrowers is a key trend, with their participation in the workforce boosting Indias economic growth. CIBIL projects that women borrowers will grow at a 19% CAGR over the next five years, with the convenience of instant approvals and digital loan processes making online borrowing more appealing. Furthermore, digital lending programs targeting unbanked locations enhance financial inclusion, providing access to credit for those in remote or rural areas traditionally underserved by banks.

Financial Performance

Highlights of standalone and consolidated financial performance of REL in FY25.

( Crore)

Particulars	FY24		FY25
	Standalone	Consolidated	Standalone	Consolidated
Total Income	25.24	6,299.26	41.82	7,396.88
Total Expenditure	97.11	6,081.91	82.94	7,153.57
Profit Before Tax	(71.88)	217.34	(41.12)	243.30
Exceptional Items	-	230.35	-	-
Profit/(Loss) before Tax after exceptional items	(71.88)	447.69	(41.12)	243.30
Share in Profit / (Loss) of Joint Ventures	-	-	-	-
Profit/(Loss) Before Tax	(71.88)	447.69	(41.12)	243.30
Income tax Expense/ (Credit)	(6.52)	100.27	(3.57)	59.97
Profit/(Loss) After Tax	(65.35)	347.41	(37.54)	183.32
Other Comprehensive Income	(0.47)	54.42	(0.55)	67.87
Total Comprehensive Income for the period	(65.82)	401.83	(38.09)	251.19
Less: Share of Non-Controlling Interest	-	135.14	-	84.13
Total Comprehensive Income/(Loss) (after tax & non-controlling interest)	(65.82)	266.69	(38.09)	167.06

Segment-Wise Performance (Consolidated)

The Companys income from operations comprises income from lending activities, insurance premiums, broking operations, interest from fixed deposits with banks, income from noncurrent investments, income from current investments, interest from delayed payments, profit on assignment of loans, income from advisory services, investment management and advisory fees, and income from arbitrage and trading of securities and derivatives.

( Crore)

Particulars	Amount (Rs. Crore)	% of Total Income
Income From Lending Activities	75	1.0%
Interest Income on Fixed Deposits with Banks	50	0.7%
Interest Income/Charges on Delayed Payments	53	0.7%
Income from Investments	515	6.9%
Commission Income	2	0.0%
Income From Broking Operations	273	3.7%
Net Income from Insurance Premium	6,347	85.8%
Other Business Income	39	0.5%
Total Revenue from Operations	7,354	99.4%
Other Income	43	0.6%
Total Income	7,397	100%

Key Ratios (Consolidated)

(Rs. Crore)

Particulars	FY25
Total Income	7,396.88
EBITDA	342
EBITDA Margin %	4.6%
PBT	243.30
PBT Margin %	3%
PAT	183.32
PAT Margin %	2.47%
Current Ratio	0.35
Debt-Equity Ratio	0.04
Return on Net Worth	7%

Risk Management

Risk Management & Internal Control Systems and Their Adequacy

Risk Governance is an essential aspect of the strategy of the Company intended at identification, assessment and mitigation of the potential risks that could affect the Companys operations, financial performance, sustainability, and reputation. The Board of Directors of the Company is responsible for ensuring oversight of the risk management policies and procedures, and has constituted a Group Risk Management Committee (GRMC), which is responsible for framing, implement, monitor and periodically review the effectiveness of the risk management plan and make appropriate modifications as and when necessary. GRMCs role has been aligned with the requirements of the Companies Act, 2013, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, RBI Master Directions on Core Investment Companies and other applicable regulatory requirements. A process has been laid down to periodically apprise the GRMC about prevalent risks and corrective plans adopted by the respective group entities to mitigate the identified risks.

The Company is a registered NBFC and core investment company. As an investment holding company, the management function includes oversight of risk function prevalent in the Company and its key operating subsidiaries. The Company has a comprehensive risk management framework and overarching Risk Management Policy, which have been adopted by each of the key operating subsidiaries while formulating their Risk Management Policy. The Risk Management Policy of the Company identifies the key risks, which are applicable to the Company. It is aimed at identification, assessment, mitigation, monitoring, and reporting of identifiable risks and documentation of each identified risk along with their mitigation plan. The respective functional head and/or risk management department of key operating subsidiaries is responsible for the implementation of the risk management system and the maintenance of records of risk and mitigation plan in Risk & Control Matrix (RCMs) for their respective functional areas, which are updated and tested periodically. Therefore, the risk governance and framework defines the risk management approach including risk documentation, testing and reporting on a periodical basis. The framework has different risk parameters, which help in the identification of risks and their classification as High, Medium and Low categories based on likelihood, impact and velocity in various risk types such as operational, financial, compliance and reputation risk. Qualitative and quantitative assessment is done to determine the likelihood and impact of identified risks, which are ultimately plotted on a matrix based on their severity and probability.

Reviews and reporting of the risk environment and performance is conducted on a quarterly basis. The testing and evaluation of the control environment around risk management are integrated and aligned with the quarterly internal audit process. The GRMC of the Company and the respective Risk Management Committee / Board of Directors of its key operating subsidiaries reviews the risk management policy at least on an annual basis. Further, the adequacy of the design and operating effectiveness of key processes and controls, as documented in the Risk and Control matrices, are tested and a consolidated dashboard of Risk and Control review results across the Company and its key operating subsidiaries are presented to the GRMC and Audit and Governance Committee of the Board on a quarterly basis. Further, to enable oversight of the risk management function prevalent at each of the key operating subsidiaries, the management team of each key operating subsidiaries makes presentation on key risk types, as defined in the respective Risk Management Policy, to the GRMC of the Company on a quarterly basis. Financial reporting and fraud risks are duly considered in the risk management framework. Risks are mapped with controls and the Risk management framework is revisited and revised based on prevailing practice and relevance.

The Company and its subsidiaries have an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal Controls of the Company and its subsidiaries encompasses the policies, standard operating procedure manuals, approval/authorisation matrix, circulars/ guidelines, and risk & control matrices for ensuring the orderly and efficient conduct of its business and support functions, adherence to these policies & procedures, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and timely preparation of reliable financial information during the process of financial reporting. Such detailed controls ensure productive and effective use of resources to the extent that the assets are safeguarded, transactions are duly approved, registered and adequately reported and checks and balances ensure consistency and reliability of accounting data.

The Company is a registered NBFC (CIC) and is exposed to various risks as stated in the Risk Management Policy of the Company and its key operating subsidiaries. The Company and its subsidiaries have an adequate control environment for identification, assessment, monitoring, mitigation and reporting of applicable risks on a periodical basis through an effective Risk Management Framework that has been developed encompassing all the key business and support functions. Mitigation plans and controls are documented for each identified risk in the form of policies and standard operating procedures and risk and control matrices (RCM). Risks/controls documented in the RCMs are mapped to each of the financial statement line items (FSLI) and financial assertions to ensure of internal financial controls and mitigation plans. The Company has prepared separate RCMs for Process Level Controls (PLC) and Entity Level Controls (ELC). Similarly, information technology controls relating to Information Security, Cyber Security and Other Information Technology General Controls (ITGC) have also been identified, assessed and documented, which are updated periodically.

The Company and its key operating subsidiaries have a robust mechanism to ensure an ongoing review of systems, policies, processes and procedures to contain and mitigate risk that arise from time to time. The Company and its key operating subsidiaries have a satisfactory system of periodical monitoring and reporting of internal financial controls. Key policies and procedures including the RCMs designed to provide reasonable assurance are monitored and updated on a periodical basis. Management ensures that controls as designed are operating effectively and that lapses are identified and remedied in a timely manner. The monitoring activities are carried out through a Control Self-Assessment (CSA) mechanism integrated with the internal audit function, whereby key risks and controls are reviewed on a quarterly basis and a dashboard containing results of evaluation of Test of Design (TOD) and Test of Operating Effectiveness (TOE) relating to the Company and its key operating subsidiaries are presented to the Audit and Governance Committee and Group Risk Management Committee (GRMC) of the Company.

The Company and its key operating subsidiaries have an elaborate quarterly internal audit policy and framework as approved by the respective Audit and Governance Committees of the Board. The scope, authority and structure of the Internal Audit function have been defined in the comprehensive Internal Audit Policy. The Company also conducts an Information System and Cyber Security Audit on a yearly basis and the report is presented to the Audit and Governance Committee of the Board. Information System Security controls enable the Company to keep a check on technology-related risks and also improve business efficiency and distribution capabilities.

The Internal Audit Team evaluates the efficacy and adequacy of the internal control system and internal financial controls in the Company, its compliance with operating systems, accounting procedures, policies and regulatory requirements at key locations of the Company. Based on the integrated report of the internal audit function and IFC, process owners undertake corrective action in their respective areas and thereby strengthen the internal controls. Significant internal audit observations (rated high and medium risk) and corrective actions thereon, along with the IFC dashboard, are presented to the Audit and Governance Committee of the Board on a periodical basis. The Internal Auditors also assess opportunities for improvement in business processes, systems and controls, provides recommendations, designed to add value to the organisation and follow up the implementation of corrective actions. The Audit and Governance Committee of the Board reviews and evaluates the adequacy and effectiveness of the Companys internal control environment, provides their inputs, if any, to improve the quality of audit and assurance standards and monitors the implementation of audit recommendations across the relevant functional areas to continuously strengthen the internal control framework. Therefore, the Board has laid down Internal Financial Controls to be followed by the Company and ensured that such Internal Financial Controls are adequate and were operating effectively during the financial year.

Human Resources

Employees are the backbone of the Companys success. The organisation is dedicated to creating a workplace that encourages growth, innovation, and teamwork. Its professional and highly experienced team is its most valuable asset, and the Company remains committed to helping them develop and thrive. Through the hard work and dedication of our employees, the Company has built a strong reputation and regained the trust of our stakeholders. It has navigated tough times with resilience and emerged as a leader in It has industry.

Investing in employees is key to the Companys long-term success. It prioritises employee development, engagement, and satisfaction, recognising that happy and fulfilled employees drive business results. Its approach includes mentorship and coaching by developing future leaders under the guidance of our experienced top leadership team. The Company focuses on ensuring continuity and building a robust talent pipeline for critical roles. Maintaining diversity and fostering a workplace culture that is inclusive, equitable, and reflective of the communities we serve. The Company is dedicated to ensure the employees wellbeing by prioritising the health, safety, and well-being of our employees and their families through various initiatives and programs.

The Companys goal is to create a workplace where all employees feel valued, empowered, and supported to succeed.