TCFC Finance Ltd Management Discussions

1. Global Economic Overview

• Growth Trends & Forecasts

The global economy continued to face a challenging and uncertain environment during FY 2025-26, marked by slower growth momentum, persistent geopolitical tensions, evolving trade policies, and inflationary pressures. According to the International Monetary Fund (IMF), global GDP growth is projected at approximately 2.9%-3.3% for 2026, reflecting moderation from earlier post-pandemic recovery trends.

The IMFs April 2026 World Economic Outlook highlighted that global growth remains uneven across regions, with advanced economies witnessing subdued expansion while emerging economies continue to demonstrate relative resilience. India continues to remain among the fastest-growing major economies, supported by strong domestic demand, public infrastructure investment, digital adoption, and financial sector expansion.

• Risks: Trade Tensions, Geopolitical Uncertainty & Energy Volatility

Global economic conditions remained vulnerable to several downside risks during FY 2025-26. Escalating geopolitical conflicts, trade fragmentation, tariff-related uncertainties, and energy supply disruptions continued to impact global trade and investment flows. The IMF and various global agencies have cautioned that renewed protectionist measures and geopolitical instability may adversely affect business confidence, investment activity, and cross-border capital flows.

Additionally, volatility in global energy prices and supply chain disruptions contributed to inflationary pressures across several economies, increasing uncertainty in financial markets and impacting emerging economies dependent on external financing and commodity imports.

• Inflation & Monetary Policy Outlook

Global inflation showed signs of gradual moderation during FY 2025-26, although it remained above historical averages in many economies. The IMF projects global headline inflation to moderate from around 4.2% in 2025 toward lower levels over the medium term, supported by easing supply chain constraints and calibrated monetary tightening by central banks.

Major central banks across advanced economies have adopted a cautious monetary policy stance, balancing inflation control with the need to support economic growth. While some economies have initiated gradual policy easing, interest rates continue to remain elevated relative to pre-pandemic levels, thereby impacting borrowing costs and capital flows globally.

2. Implications for NBFCs: Risks & Opportunities

• External Headwinds

The moderation in global economic growth, coupled with continued geopolitical uncertainties and trade disruptions, may lead to tighter liquidity conditions, increased market volatility, and cautious investor sentiment. NBFCs may face challenges related to higher funding costs, volatility in foreign capital inflows, and changing credit market dynamics.

• Interest Rate & Funding Dynamics

Although inflationary pressures have begun to ease globally, interest rate movements remain uncertain across jurisdictions. Any prolonged tight monetary stance in major economies may impact liquidity availability and borrowing costs for financial institutions, including NBFCs. Accordingly, prudent asset-liability management, liquidity planning, and diversified funding strategies remain critical.

• Strategic Opportunities

Despite global uncertainties, India continues to present strong structural growth opportunities supported by stable macroeconomic fundamentals, rising financial inclusion, digital transformation, and government-led economic reforms. The domestic financial services sector, particularly NBFCs, remains well-positioned to support credit expansion in underserved and emerging segments.

NBFCs focusing on sectors such as MSME financing, affordable housing, vehicle finance, green financing, infrastructure- linked lending, and digital financial services are expected to benefit from sustained domestic demand and policy support. Further, increased adoption of technology-driven underwriting, analytics, and digital customer acquisition models continues to create operational efficiencies and enhance scalability.

3. Disclosure & Strategic Priorities Global Economic Sensitivities

• Continuous monitoring of global macroeconomic developments, including geopolitical events, trade policy changes, inflation trends, and central bank actions.

• Assessment of external risks through scenario analysis and stress-testing frameworks to evaluate potential impacts on liquidity, funding, and asset quality.

• Close tracking of global commodity prices, exchange rate volatility, and financial market developments.

Risk Management Framework

• Maintaining prudent liquidity buffers and diversified borrowing sources to mitigate funding concentration risks.

• Strengthening asset-liability management practices to manage interest rate volatility and market uncertainties.

• Continuous monitoring of portfolio quality with emphasis on early warning systems, collection efficiencies, and sector- specific risk assessments.

• Periodic stress testing of credit portfolios under varying macroeconomic scenarios.

Strategic Positioning

• Continued focus on expanding presence in growth-oriented sectors such as MSME lending, affordable housing finance, and digital financial solutions.

• Leveraging technology and digital platforms to enhance operational efficiency, customer experience, underwriting quality, and risk management capabilities.

• Strengthening governance, compliance, cybersecurity, and ESG-aligned business practices to support long-term sustainable growth.

• Exploring opportunities arising from Indias increasing formalization of the economy and rising financial inclusion.

4. Conclusion

The global economic environment during FY 2025-26 remained characterized by moderate growth, evolving geopolitical dynamics, inflationary pressures, and financial market volatility. While these developments present certain challenges for the financial services sector, Indias resilient economic fundamentals continue to provide a favorable growth environment for NBFCs.

With prudent risk management practices, disciplined liquidity management, technology-driven transformation, and focus on emerging growth sectors, the Company remains well-positioned to navigate external uncertainties and capitalize on long-term growth opportunities in the Indian financial sector.

Acknowledgement

The Board of Directors expresses its sincere gratitude to all stakeholders, including shareholders, investors, customers, financial institutions, regulators, and business associates, for their continued confidence and support. The Board also places on record its appreciation for the dedication, commitment, and valuable contribution made by the employees of the Company toward achieving sustainable growth and operational excellence.