(1) The Company has allotted 2,000 (Two thousand only) Secured, Rated, Listed, Senior, Redeemable, Transferable Non-Convertible Redeemable Debentures (“NCD’s”) to Northern Arc Capital Limited on a private placement basis on 19th October ,2023 , having face value of Rs. 1,00,000 (Indian Rupees One Lakh Only) each aggregating up to 20,00,00,000/- (Indian Rupees Twenty Cores Only) was secured by way of first and exclusive charge on specified pool of receivables on respective NCDs. The Asset Cover is 1.10 times.
(2) The Company has allotted 1,100 (One thousand hundred only) Secured, Rated, Listed, Senior, Redeemable, Transferable Non-Convertible Redeemable Debentures (“NCD’s”) to A K Securitization and Credit Opportunities Funds II on a private placement basis on 12th March ,2024 , having face value of Rs. 1,00,000 (Indian Rupees One Lakh Only) each aggregating up to 11,00,00,000/- (Indian Rupees Eleven Cores Only) was secured by way of first and exclusive charge on specified pool of receivables on respective NCDs. The Asset Cover is 1.10 times.
28. SEGMENT REPORTING_
An operating segment is a component of the company that emerges in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the company's other components, and for which discrete financial information is available. All operating segments' operating results are reviewed regularly by the company's management to make decisions about resources to be allocated to the segments and assess their performance. The MD is considered to be the chief operating decision maker (‘CODM') within the purview of Ind AS 108 operating segments.
The CODM considers the entire business of the company on a holistic basis to making operating decisions and thus there are no segregated operating segments. The company is engaged into the business of providing housing loans and property loans. The CODM of the company reviews the operating results of the company as a whole and therefore not more than one reportable segment is required to be disclosed by the company as envisaged by Ind AS 108 operating segments. Accordingly, amounts appearing in these financial statements relates to the business of providing housing loans and property loans.
The company does not have any separate geographic segment other than India. As such there are no separate reportable segments as per IND AS 108 operating segments.
29. CONTINGENT LIABILITIES AND COMMITMENTS_
A) CONTINGENT LIABILITIES-
1) There is no contingent liability as at March 31, 2024 (31-03- 2023: Nil).
2) The Company's pending litigations comprise of Proceedings by the company against its customers for recovery of loans, pending with various authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in the financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.
B) CONTINGENT COMMITMENTS-
1) Undisbursed Amount- Loans sanctioned but undisbursed or partially disbursed amount is Rs. 1,468.07 Lakh as on March 31, 2024 (31.03.2023 - Rs. 948.48 Lakh).
30. RETIREMENT BENEFITS_
A) DEFINED CONTRIBUTION PLANS:
The company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards provident and other fund, which is defined contribution plan. The company has no obligation other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognized as an expense towards contribution to provident and other fund for the year aggregated to Rs. 13.57 Lakh (Previous Year: Rs. 11.95 Lakh).
(B) DEFINED BENEFIT PLAN:
The Company has a defined benefit plan i.e., Gratuity, for its employees. Under the gratuity plan every employee who has completed at least five years of services gets a gratuity on departure at 15 days of salary for each year service.
Contribution to gratuity fund
In accordance with Indian Accounting Standard 19 ‘Employee benefits', actuarial valuation was done in respect of the aforesaid defined benefit plan of gratuity based on the following assumption:
A. ACTUARIAL RISK:
It is the risk that benefits will cost more than expected. This can arise due to one of the following reasons:
Adverse Salary Growth Experience: Salary hikes that are higher than the assumed salary escalation will result into an increase in Obligation at a rate that is higher than expected.
Variability in mortality rates: If actual mortality rates are higher than assumed mortality rate assumption than the Gratuity Benefits will be paid earlier than expected. Since there is no condition of vesting on the death benefit, the acceleration of cash flow will lead to an actuarial loss or gain depending on the relative values of the assumed salary growth and discount rate.
Variability in withdrawal rates: If actual withdrawal rates are higher than assumed withdrawal rate assumption than the Gratuity Benefits will be paid earlier than expected. The impact of this will depend on whether the benefits are vested as at the resignation date.
B. INVESTMENT RISK:
For funded plans that rely on insurers for managing the assets, the value of assets certified by the insurer may not be the fair value of instruments backing the liability. In such cases, the present value of the assets is independent of the future discount rate. This can result in wide fluctuations in the net liability or the funded status if there are significant changes in the discount rate during the inter-valuation period.
C. LIQUIDITY RISK:
Employees with high salaries and long durations or those higher in hierarchy, accumulate significant level of benefits. If some of such employees resign/retire from the company there can be strain on the cash flows.
D. MARKET RISK:
Market risk is a collective term for risks that are related to the changes and fluctuations of the financial markets. One actuarial assumption that has a material effect is the discount rate. The discount rate reflects the time value of money. An increase in discount rate leads to decrease in Defined Benefit Obligation of the plan benefits & vice versa. This assumption depends on the yields on the corporate/government bonds and hence the valuation of liability is exposed to fluctuations in the yields as at the valuation date.
E. LEGISLATIVE RISK:
Legislative risk is the risk of increase in the plan liabilities or reduction in the plan assets due to change in the legislation/ regulation. The government may amend the Payment of Gratuity Act thus requiring the companies to pay higher benefits to the employees. This will directly affect the present value of the Defined Benefit Obligation and the same will have to be recognized immediately in the year when any such amendment is effective.
AKME ESOP SCHEME 2021 (EMPLOYEE STOCK OPTION SCHEME I)
i. The Company has an Employee Share based payment scheme, under which stock options were granted to employees as per details provided below:
During the year ended 31 March 2024, the employees has exercise the second tranche of ESOP i.e. 25% second vesting of share option from the date of grant out of approved 15,67,350 of Employee Stock options under the AKME ESOP Scheme 2021 (pre-split and bonus) via board resolution dated 7th April 2021 and shareholders' special resolution dated 30th April 2021. The Board has granted 15,57,000 options under ESOP 2021, which is in accordance with the provisions of the law and/or guidelines issued by relevant authority applicable at the date of the grant.
ii. Vesting Conditions:
Vesting of options will be over a period of three years from the effective date in following manner:-
a) 25% on completion of one year from the date of grant
b) 25% on completion of second year from the date of grant
c) 50% on completion of third year from the date of grant
iii. Contractual Life:
The contractual life (Vesting period plus exercise period) ranges from 1.6 years to 3.6 years i.e. vesting period ranging from 1 to 3 years and exercise period of 6 months from the date of vesting of options. In case of resignation of, employee may exercise all options vested on the date of submission of resignation. Similarly in case of termination, employee may exercise all options vested before vacating the office.
iv. Method of Settlement: AKME ESOP Scheme 2021 will be settled through issue of Equity shares.
v. Method used to account for ESOP: The Company used Intrinsic Value Method for accounting of the ESOP Option.
vi. Option movement during the year 2023-24
STAR HOUSING FINANCE LIMITED EMPLOYEE STOCK OPTION SCHEME II 2023
As per the outcome of the Board Meeting held on 17th January, 2024, 6807500 no. of ESOPs granted to eligible employees under Star Housing Finance Ltd Employee Stock Option Scheme II, 2023 are being surrendered by the employees in the wake of fall in price of the equity shares of the company. Currently no options are outstanding under this scheme.
31. DUES TO MICRO, SMALL AND MEDIUM ENTERPRISES AS PER MSMED ACT 2006_
There is no overdue amount that need to be disclosed in accordance with the Micro Small and Medium Enterprises Development Act, 2006 (the MSMED) pertaining to Micro or Small enterprises.
32. MATURITY ANALYSIS OF ASSETS AND LIABILITIES_
The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled. With regards to the loans and advances to customers, the company uses the same basis of expected repayment behaviour as used for estimating the EIR.
B) MEASUREMENT OF FAIR VALUE
VALUATION METHODOLOGIES OF FINANCIAL INSTRUMENTS NOT MEASURED AT FAIR VALUE:
Below are the methodologies and assumptions used to determine fair values for the above financial instruments which are not recorded and measured at fair value in the financial statements, these fair values were calculated for disclosure purpose only:
SHORT TERM FINANCIAL ASSETS AND LIABILITIES
For financial assets and financial liabilities that have a short term maturity(less than twelve months), the carrying amounts, which are net of impairment, area reasonable approximation of their fair value.
Such instruments include: cash and cash equivalent, other financial assets (excluding security deposit), trade payables and other financial liability.
LOANS AND ADVANCES TO CUSTOMERS
In case of retail loans and term loans with floating rates, the interest rate represents the market rate. Consequently the carrying amount represents the fair value.
Term Loan with fixed rate: - The fair values estimated by discounted cash flow model that incorporates assumptions for
credit risk, probability of default and loss given default estimates. As per management assumptions, the fair value of the loans & advances has been at par with the carrying value of the portfolio considering the fact that the competitive interest rates in the operational area of the company and the portfolio in which the company has exposure are more or less as per prevailing market rates.
INVESTMENTS
Investment in mutual funds has been taken as Level 2 and value has been considered based on mutual fund statement. Investments in unlisted equity instruments has been taken as Level 2 and value has been considered based on latest available fair value of the Instruments.
BORROWINGS
In case of borrowings with floating rates, the interest rate represents the market rate. Consequently the carrying amount represents the fair value.
TRANSFER BETWEEN LEVEL I AND LEVEL II
There has been no transfer in between level l and level ll.
C) CAPITAL
The company maintains an activity managed capital base to cover risks inherit in the business and is meeting the capital adequacy of the local regulatory body, National Housing Bank (NHB). The adequacy of the Company's capital is monitored using, among other measures the regulation issued by NHB.
The Company has complied in full with all its externally imposed capital requirements over the reported period. Equity share capital and other equity are considered for the purpose of Company's capital management.
CAPITAL MANAGEMENT
The Primary objectives of the company's capital management policy are to ensure that the Company complies with externally imposed capital requirement and maintains strong credit ratings and healthy capital ratios in order to support its business and to maximize shareholder value.
The company manages its capital structure and makes adjustments to it according to changes in economic conditions and the risk characteristics of its activities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend payment of shareholders, return capital to shareholder or issue capital securities. No changes have been made to the objectives, policies and processes from the previous years. However, they are under constant review by the board.
The Company's policy is to keep the gearing ratio at reasonable level of 5-6 times in imminent year while Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 dated February 17, 2021 currently permits HFCs to borrow up to 12 times of their net owned funds (“NOF”). The Company includes with in debt, it's all interest bearing loans and borrowings.
In order to achieve this overall objective, the Company's capital management, amongst other things, aims to ensure that it meets financial covenants attached to the interest-bearing loans and borrowings that define capital structure requirements.
Internal capital adequacy assessment process (ICAAP): The Company is in the process of devising suitable ICAAP, looking to the size of scale and operation of the company. Nevertheless, the company has been maintaining the CRAR of 54.65% as against prescribed minimum level of 15%. Thus the company not only covering the regular risk i.e., credit, market and operation but also the residual risk (Litigation, reputation, strategic risks etc).
34. FINANCIAL RISK MANGEMENT OBJECTIVES AND POLICIES_
The Company‘s Principal financial liabilities comprise borrowings. The main purpose of these financial liabilities is to finance the Company's operations and to support its operations. The Company's financial assets include loans, cash, and cash equivalents, investments and other financial assets and that derives directly from its operations.
(I) CREDIT RISK
Credit Risk is the risk of financial loss to the company if a customer or counter party to financial instruments fails to meet its contractual obligations and arises primarily from the company's loan and investments.
The carrying amounts of financial assets represent the maximum credit risk exposure.
A. LOANS AND ADVANCES
The Company has a comprehensive framework for monitoring credit quality of its retail and other loans primarily based on number of days past due. The Company manage credit risks by using a set of credit procedures and guidelines, laid down in our credit risk policy, to ensure effective credit risk management and health of our portfolio. The adherence to the policy and various process is monitored and appraised in credit committee meetings on a quarterly basis. The policy is amended periodically to ensure compliance with the guidelines of the RBI as well as other regulatory bodies. We have implemented a structured credit approval process, established a process by which separate set of verifications are conducted by a customer relationship manager and service officer to ensure the quality of customers acquired as well as eliminate misuse of borrowing practices and comprehensive credit risk assessment, which encompasses analysis of relevant quantitative and qualitative information to ascertain the credit worthiness of a potential customer. Portfolio quality, credit limits, collateral quality and credit exposure limits are regularly monitored at various levels.
The above exposures are entirely concentrated in India. There is no overseas exposure.
An impairment analysis is performed at each reporting date based on the facts and circumstances existing on that date to identify expected losses on account of time value of money and credit risk. For the purpose of this analysis, the loan receivables are categorized into groups based on days past due. Each group is then assessed for impairment using the Expected Credit Loss (ECL) model as per the provisions of Ind AS 109- Financial instruments.
STAGING
As per the provisions of Ind AS 109 general approach all financial instruments are allocated to stage 1 on initial recognition. However, if a significant increase to credit risk is identified at the reporting date as compared with the initial recognition, then an instrument is transferred to stage 2. If there is objective evidence of impairment, then the asset is credit impaired and transferred to stage 3.
The Company considers a financial instruments defaulted and therefore stage 3 (credit- impaired) for ECL calculations in all cases when the borrower becomes 90 days past due on its contractual payments.
For Financial assets in stage 1, the impairment calculated based on defaults that are possible in next twelve months, whereas for financial instruments in stage 2 and 3 the ECL calculation considers default event for the lifespan of the instrument.
As per Ind AS 109, Company assesses whether there is a significant increase in credit risk at the reporting date from the initial recognition. Company has staged the assets based on the day past dues criteria and other market factors which significantly impacts the portfolio.
GROUPING
As per Ind AS 109, Company is required to group the portfolio based on the shared risk characteristics. Company has assessed the risk and its impact on the various portfolios and has divided the portfolio into following groups:
- Retail Loans (Housing and non-housing loans)
- Other Loan & Advances
- Builder and Developer loans, and are further sub grouped as a. Geography wise (State wise) and b. Salaried and Nonsalaried wise
IMPAIRMENT-EXPECTED CREDIT LOSS (ECL):
The accounting standard, Ind AS 109 does not specifically prescribe any methodology for computing ECL. However, entities are required to adopt sound and market acceptable methodologies which are in line with the size, complexity and risk profile of the financial entity for computing the ECL. The Company uses following three main components to measure ECL:
a. Probability of default. (PD)
b. Loss given default (LGD).
c. Exposure at default (EAD).
PROBABILITY OF DEFAULT (PD):
PD is defined as the probability of whether borrowers will default their obligations in an ensuring period of 12 months. Historical PD is derived from the HFC's internal data calibrated with forward looking macro-economic factors.
For computation of probability of default company has considered three years Historical data and the current Macroeconomic conditions along with probable Impacts of COVID-19. Based on these factors PD has been worked out.
LOSS GIVEN DEFAULT (LGD):
LGD is an estimate of the loss from a transaction given that a default occurs. Under Ind AS 109, Lifetime LGD's are defined as collection of LGD's estimates applicable to different future periods.
Various approaches are available to compute the LGD. Company has considered workout LGD approach.
The following steps are performed to calculate the LGD.
1. ) Haircut was applied on the value of the collateral (asset cost) as of reporting date.
2. ) The outstanding amount was adjusted with the haircut adjusted collateral value.
3. ) LGD has been computed using the outstanding amount in step 2.
Over and above the LGD has been floored using regulatory guidelines.
EXPOSURE AT DEFAULT (EAD)
As per Ind AS 109, EAD is estimation of the extent to which the financial entity may be exposed to counterparty in the event of default and at the time of counterparty's default. Company has modelled EAD based on the contractual and behavioural cash flows till the lifetime of the loan and considering the expected prepayments.
Company has considered expected cash flows for all loans at DPD bucket level for each of the segments which were used for computation for ECL. Moreover, the EAD comprised of principal component, accrued interest on the outstanding exposure for the ensuring 12 months. So discounting was done for computation of expected credit loss.
The loss rates are based on actual credit loss experience over past years. These loss rates are then adjusted approximately to reflect differences between current and historical economic conditions and the Company's view of prevailing economic conditions over the expected lives of the loan receivable.
Movement in provision of expected credit loss has been provided in below note.
B COLLATERAL AND OTHER CREDIT ENHANCEMENTS
The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are in place covering the acceptability and valuation of each type of collateral. The main types of collateral obtained are mortgaged properties based on the nature of loans. Management monitors the market value of collateral in accordance with underlying agreement. The Company advances loan to maximum extent of 80% of the value of the mortgaged properties.
(II) ANALYSIS OF RISK CONCENTRATION
The Company's concentrations of risk are managed based on Loan to value (LTV) segregation as well as geographical spread. The following tables stratify credit exposures from housing and other loans to customers by range of loan to-value (LTV) ratio .LTV is calculated as the ratio of gross amount of the loan - or the amount committed for loan commitments - to the value of the collateral.
(MI) LIQUIDITY RISK
Liquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with its financial liabilities. The Company's approach in managing liquidity is to ensure that it will have sufficient funds to meet its liabilities when due.
The company is monitoring its liquidity risk by estimating the future inflows and outflows during the start of the year and planned accordingly the funding requirement. The company manages the liquidity by unutilized cash credit facility, term loan and by issuing the NCDs. The composition of the Company's liability mix ensures healthy asset liability maturity pattern and well diverse resource mix. The total cash credit and working capital limit available to the Company is INR 27 Lakh spread across 3 banks. The utilization level is maintained in such a way that ensures sufficient liquidity on hand. Majority of the company's portfolio is individual housing loans and the company have off book asset under management. Total AUM is Rs. 42,686.39 Lakh (own book AUM is Rs. 38,290.29 Lakh and off book AUM is Rs. 4,396.10 Lakh).
(IV) MARKET RISK
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk includes interest rate risk and foreign currency risk. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.
A. Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial Instrument will fluctuate because of changes in market interest rates. The company's exposure to the risk of changes in market interest rates relates primarily to the company's investment in bank deposits and variable interest rate on borrowings and lending. Whenever there is a change in borrowing interest rate for the company, necessary change is reflected in the lending interest rates over the timeline in order to mitigate the risk of change in interest rates of borrowings.
B. Foreign Currency Risk
The company does not have any instrument denominated or traded in foreign currency. Hence such risk does not affect the company.
35. IMPACT OF COVID-19_
COVID-19 pandemic had led to a significant decrease in global & local economic activities, which may persist. The company has used the principal of prudence to provide for the impact of pandemic on the financial statements specifically while assessing the expected credit loss on financial assets by applying management overlays, approved by its Board of Directors.
36. Disclosure required under the RBI Resolution Framework 2.0 for COVID-19 related Stress” of Individuals and Small Business dated May 05, 2021 in the Format-B prescribed in the Resolution Framework -1.0 are given below:
37. The title deeds of immovable property held by the company are duly executed in favour of the company.
38. No proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (prohibition) Act 1988 and rules made thereunder, as at 31st March 2024 and 31st March 2023.
39. The company is not declared wilful defaulter by any bank or financial institution or any other lender, in accordance with the guidelines on wilful defaulters issued by the Reserve Bank of India, during the year ended 31st March 2024 and 31st March 2023.
40. The Company does not have any transactions with the companies struck off under section 248 of The Companies Act 2013 or section 560 of Companies Act, 1956 during the year ended 31st March 2024 and 31st March 2023.
41. Registration of charges or satisfaction with registrar of Companies (ROC): There has been no delay in registration of charges or satisfaction with ROC beyond the statutory date during the year ended 31st March 2024.
42. The Company has borrowings from banks and financial institutions on the basis of security of current assets and the quarterly returns filed by the company with the banks and financial institutions are in accordance with the books of accounts of the company for the respective quarters.
43. The company has taken borrowings from banks and financial institutions and utilized them for the specific purpose for which they were taken as at the balance sheet date. Unutilized funds as at 31st March 2024 are held by the company in the form of deposits till the time utilization is made subsequently.
44. There have been no transactions which have not been recorded in the books of accounts that have been surrendered or disclosed as income during the year ended 31st March 2024 and 31st March 2023. In the tax assessments under the Income Tax Act, 1961 there have been no previously unrecorded income and related assets which were to be properly recorded in the books of account during the year ended 31st March 2024 and 31st March 2023.
45. As a part of normal lending business, the company grants loans and advances on the basis of security/guarantee provided by the borrower/co-borrower. These transactions are conducted after exercising proper due diligence.
Other than the transactions described above,
a. No funds have been advanced or loaned or invested by the Company to or in any other person(s) or entity(ies) including foreign entities (“Intermediaries”) with the understanding that the intermediary shall lend or invest in a party identified by or on behalf of the company (ultimate beneficiaries):
b. No funds have been received by the Company from any party(ies) (funding party) with the understanding that the Company shall whether, directly or indirectly, lend or invest in other persons or entities identified by or on behalf of the Company (“Ultimate beneficiaries”) or provide any guarantee, security or the like on behalf of the ultimate beneficiaries.
46. The company has not traded or invested in crypto currency or virtual currency during the year ended 31st March 2024 and 31st March 2023.
47. Pursuant to the RBI circular DOR.STR.REC.68/21.04.048/2021-22 dated 12 November 2021- “Prudential norms on Income Recognition, Asset Classification and Provisioning (IRACP) pertaining to Advances - Clarification”. In this regards our company has been following the same procedure as specified in the said guidelines with regard to classify the account as NPA or SMA.
We hereby further clarify that the account is recognized as NPA or SMA from the very date it crosses the 90 days / 60 days or 30 days as applicable from its due date of repayment for respective classification. As such, NPA amount computed by the company does not have any impact of the above referred circular. Apart from this no NPA account is being upgraded unless the entire overdue amount as on date is fully recovered.
48. SUBSEQUENT EVENT_
There is no significant subsequent event that has occurred after the reporting period till the date of these financial statements.
49. CSR EXPENSES_
Other expenses include Rs. 7.51 lakh for the year ended March 31, 2024 (P.Y. Nil, as the Company does not have to comply with the requirements of CSR Committee in view of the fact that Company's net worth, or turnover or net profit does not exceed the limits as mentioned in the Section 135 of the Companies Act, 2013.) towards Corporate Social Responsibility (CSR) expenditure, in accordance with the Section 135 of the Companies Act, 2013. Gross Amount required to be spent by the Company during the year is Rs. 7.51 lakh.
50. The figures for the previous year have been regrouped and / or reclassified to conform to current year's classification.
51. SURVEY - INCOME TAX_
The survey operations were carried out by the Income Tax Department at the Office of the Company during the period from November 23, 2022, to November 27, 2022. The department has issued the notices u/s 143 (1) and 143 (3) seeking clarifications on certain points pertaining to the income and other ancillary issues related to the company. The company submitted its reply from time to time. Finally, the department has reassessed the income of the company for the A.Y. 2022-23 and found that the assessments submitted earlier was in order and closed the matter vide their letter dated 23.03.2024 with nil demand and penalty.
DISCLOSURES REQUIRED BY THE RESERVE BANK OF INDIA /NATIONAL HOUSING BANK AS PER NOTIFICATION NO. DOR.FIN.HFC. CC.NO.120/03.10.136/2020-21 DATED FEBRUARY 17. 2021-MASTER DIRECTION - NON-BANKING FINANCIAL COMPANY - HOUSING FINANCE COMPANY (RESERVE BANK) DIRECTIONS, 2021_
1. MINIMUM DISCLOSURES:
The following additional disclosures have been given in terms of Notification no. DOR.FIN.HFC.CC.No.120/03.10.136/2020-21 dated February 17. 2021- Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 issued by the RBI.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The accounting policies regarding key areas of operations are disclosed as note 1 of accounting policy to the Standalone Financial Statement for the year ended March 31, 2024.
(b) Liquidity Coverage Ratio (LCR)
The Company was not required to comply with the guidelines on Liquidity Coverage Ratio (LCR) in line with Master Direction - Non-Banking Financial Company - Housing Finance Company (Reserve Bank) Directions, 2021 as at 31 March 2024.
(II) RESERVE FUND U/S 29C OF NHB ACT, 1987 - STATUTORY RESERVE
The Company has transferred a sum of Rs. 229.42 Lakh (PY Rs.160.33 Lakh) during the year in the Special Reserve out of its profits in terms of Section 29C of the National Housing Bank Act, 1987. This amount includes a sum of Rs.158.14 Lakh (PY 106.82 Lakh) toward the reserve created under Section 36(1) (viii) of the Income Tax Act, 1961. Breakup of transfer of funds in both the reserves is as under: -
(IV) DERIVATIVES
There has been no forward rate contract/interest rate swap or any other derivative transaction carried out by the company during the year ended As at March 31st, 2024 and As at March 31st, 2023.
(V) DISCLOSURES RELATING TO SECURITIZATION
There has been no securitization/assignment transactions carried out by the company during the year ended March 31st, 2024 and March 31st, 2023.
B. Exposure to capital market
There is no exposure to capital market during the year ended as on March 31st, 2024 and as on March 31st, 2023.
C. Details of financing of parent company products
During the year, Company has not entered into any (a) derivative transaction, (b) securitization and assignment transaction, (c) financing of Parent Company product, and (e) finance of any unsecured advances against intangible securities such as rights, licenses, authority etc. as collateral security.
D. Details of single borrower limit(SGL)/group borrower limit (GBL)
The Company has not exceeded limit prescribed by National Housing Bank for Single Borrower Limit (SGL) and Group Borrower Limit (GBL).
(VII) NET PROFIT OR LOSS FOR THE PERIOD, PRIOR PERIOD ITEMS AND CHANGES IN ACCOUNTING POLICIES
There are no prior period items that have impact on the current year's profit and loss.
(VIII) REVENUE RECOGNITION
There have been no instances in which revenue recognition has been postponed pending the resolution of significant uncertainties.
(IX) CONSOLIDATED FINANCIAL STATEMENTS (CFS)
There are no group company to be consolidated, and accordingly, is not required to prepare consolidated financial statement as per Ind AS 110- “Consolidated Financial Statements”.
VII) OVERSEAS ASSETS
The company does not have any joint ventures and subsidiaries abroad during the year ended as at March 31, 2024 and as at March 31, 2023 and hence this disclosure is not applicable.
VIII) OFF-BALANCE SHEET SPVS SPONSORED
There was no off-balance sheet SPVs sponsored by the company during the year ended as at March 31, 2024 and as at March 31, 2023.
IX) DISCLOSED PURSUANT TO NOTIFICATION NO. NHB.HFC.CG-DIR.1/2016 DATED 9TH FEBRUARY 2017 ISSUED BY NHB FOR CUSTOMER COMPLAINTS
Customer complaints*
(V) STOCK RATIO-NOT APPLICABLE
(VI) INSTITUTIONAL SET-UP FOR LIQUIDITY RISK MANAGEMENT
The company has an Asset Liability Management Committee (ALCO) to monitor asset liability mismatches to ensure that there is no imbalances or excessive concentration on the either side of the balance sheet. The company maintains a judicious mix of borrowings in the form of Term Loans, Refinance, and working capital and continues to diversify its source of borrowings with the emphasis on longer tenor borrowings. The company has diversified mix of investors/ lenders which includes Banks, National Housing Bank, Financial Institution.
The Liquidity Risk Management (LRM) of the company is governed by the LRM Policy approved by the Board. The Asset Liability Committee (ALCO) is responsible for implementing and monitoring the liquidity risk management strategy of the company in line with its risk management objectives and ensures adherence to the risk tolerance/ limits set by the Board.
Refer note no. 33 of standalone financials statement
7. LOANS AGAINST SECURITY OF SHARES- NOT APPLICABLE
8. LOANS AGAINST SECURITY OF SINGLE PRODUCT - GOLD JEWELLERY- NOT APPLICABLE
11. PRINCIPAL BUSINESS CRITERIA FOR HFCS
"Housing finance company” shall mean a company incorporated under the Companies Act, 2013 that fulfils the following conditions:
a) It is an NBFC whose financial assets, in the business of providing finance for housing, constitute at least 60% of its total assets (netted off by intangible assets).
b) Out of the total assets (netted off by intangible assets), not less than 50% should be by way of housing financing for individuals.
2) Breach of Covenants
The Company has complied with the covenants under the terms of major borrowing facilities throughout the year ended 31st March 2024 and 31st March 2023.
3) Divergence in Asset Classification and Provisioning
The last inspection of the regulator for the year ended 31.03.2022 conducted on between 12.06.2023 to 16.06.2023. The regulator has indicated no divergence in asset classification and provisioning. The regulator is yet to inspect the company for the audit of year ended 31st March 2024 and 31st March 2023.