We have audited the accompanying Ind AS Financial
Statements of Can Fin Homes Limited ("the Company")
which comprise of Balance Sheet as at March 31, 2026, the
Statement of Profit & Loss (Including Other comprehensive
Income), Statement of Changes in Equity and the Statement
of Cash Flows for the year then ended, notes to Ind AS
financial statements including a summary of material
accounting policies and other explanatory information
(hereinafter referred to as the 'Ind AS financial statements').
In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid Ind
AS financial statements give the information required by the
Companies Act, 2013 ("the Act") in the manner so required
and give a true and fair view in conformity with the Indian
Accounting Standards prescribed under section 133 of the
Act read with the Companies (Indian Accounting Standards)
Rules, 2015 as amended ("Ind AS") and other accounting
principles generally accepted in India, of the state of affairs
of the Company as at March 31, 2026, its Profits including
Other Comprehensive Income, Changes in Equity and its
Cash Flows for the year ended on that date.
Basis of Opinion:
We conducted our audit in accordance with the Standards on
Auditing (SAs) specified under section 143(10) of the Act. Our
responsibilities under those Standards are further described
in the Auditors' Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the
Company in accordance with the Code of Ethics issued by the
Institute of Chartered Accountants of India together with the
ethical requirements that are relevant to our audit of the Ind
AS financial statements under the provisions of the Act and
the Rules thereunder, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and
the Code of Ethics. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key Audit Matters:
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the
Ind AS financial statements for the period ended March 31,
2026. These matters were addressed in the context of our
audit of the Ind AS financial statements as a whole, and
in forming our opinion thereon, and we do not provide a
separate opinion on these matters. For each matter below,
our description of how our audit addressed the matter is
provided in that context.
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Sr. No. Key audit matters
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How our audit addressed the key audit matter
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1. Expected Credit Loss - Impairment of carrying value
of loans and advances:
IND AS 109 requires the Company to provide for
impairment of its Loans and Advances using the Expected
Credit Losses (“ECL") approach.
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Our Audit Approach:
Our audit approach was a combination of test of internal controls and
substantive procedures which included the following:
A. Obtained an understanding for estimating the probability of
default on loans receivable through Markov chain model by:
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This Approach involves an estimation of probability of
weighted loss on Financial Instruments over their life,
considering reasonable and supportable information
about past events, current conditions, and forecasts of
future economic conditions which could impact the credit
quality of the Company's loans and advances.
As at March 31, 2026, the carrying value of loan
assets measured at amortized cost, aggregated to
'42,20,914.65 lakhs and ECL provision amounting to
'39,126.36 Lakhs
The major elements of estimating ECL are the following:
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Analysis of Loan portfolio
The loan portfolio for the past several months is analysed with the
transition matrix prepared by the management from 30th April 2017
moving through 6 stages Standard, SMA-0, SMA-1, SMA-2, NPA and >
120 days. based on this, the default probability arrived is verified by
multiplying the monthly matrix by the appropriate number of times
that represent the maturity period of the loan.
Value of Collateral property
The property value for those loans which are over 90 days past due
are verified whether the current market value is updated or not and
further a haircut of 25% is done on the value of property.
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a) Application of ECL model requires several data
inputs.
b) Judgmental models used to estimate ECL which
involves determining Probability of Default (“PD"),
Loss Given Default (“LGD"), and Exposures at Default
(“EAD"). The PD and the LGD are the key drivers of
estimation complexity in the ECL and as a result are
considered the most significant judgmental aspect of
the Company's modelling approach.
c) Qualitative and quantitative factors used in staging of
loan assets.
d) Ind AS 109 requires the Company to measure
ECL on an unbiased forward-looking basis reflecting
a range of future economic conditions. Significant
management judgement is applied in determining
the economic scenarios used and the probability
weights applied to them.
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Loss Given Default
<90 days:
Recovery rate (RR) calculated by dividing value of collateral of each
loan, which is arrived by the transition matrix through analysis of loan
mentioned above arrived with EAD then
LGD is calculated by (1- RR%) and a minimum threshold is checked for
10% as company policy
>90 days:
Difference between the total loan value > 90 days and value of
collateral of each loan is considered as LGD
Verification of other factors:
Considering macro-economic factors such as GDP growth rate,
Inflation and 1 year risk free rate. Probability of LGD is verified.
ECI is verified by loan amount * IGD at each stage to arrive at total ECI
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IRAC Norms:
The total ECL arrived at the above methodology is then compared with
the provision to be recognised as per IRAC norms and observed that
ECL arrived is higher than IRAC Norms
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Testing the design and effectiveness of internal controls over the
following:
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• Key controls over the completeness and accuracy of the key
inputs, data and assumptions into the Ind AS 109 impairment
models.
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• Key controls over the application of the staging criteria consistent
with the definitions applied in accordance with the policy
approved by the Board of Directors including the appropriateness
of the qualitative factors.
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B. Discussed with the management, the approach, interpretation,
systems and controls implemented in relation to probability of
default and stage-wise bifurcation of product-wise portfolios for
timely ascertainment of stress and early warning signals.
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C. Read and assessed the disclosures included in the financial
statements in respect of expected credit losses with the
requirements of Ind AS 107 Financial Instruments: Disclosure
(“Ind AS 107") and Ind AS 109.
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2.
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Loan Portfolio and Credit Risk:
The Company's loan portfolio represents a substantial
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Our audit procedures in relation to the loan portfolio and credit
risk included, among others, the following:
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portion of its total assets and is subject to significant
credit risk arising from defaults, deterioration in
borrower credit quality, inadequate collateral coverage,
and non-compliance with internal and regulatory credit
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Our Audit Approach:
Our audit approach was a combination of test of internal controls and
substantive procedures which included the following:
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norms. The process of credit appraisal, underwriting,
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• Obtained an understanding of the Company's lending operations,
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sanctioning, monitoring of exposures, classification of
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credit risk management framework, underwriting policies, and
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loan assets, and determination of impairment provisions
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internal control systems relating to loan origination, approval,
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requires significant management judgement and involves
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disbursement, monitoring, and recovery processes.
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estimation uncertainty. Further, the Company is required
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• Evaluated and tested the design and operating effectiveness of
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to comply with applicable regulatory requirements
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key internal financial controls over credit appraisal, borrower due
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relating to customer due diligence, exposure limits, asset
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diligence, sanctioning of loans, review of repayment capacity,
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classification, provisioning norms, and collateral valuation.
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monitoring of overdue accounts, and identification of stressed
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In view of the significance of the loan portfolio, the high
degree of estimation involved in assessing recoverability
of loans, and the reliance placed on internal controls over
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assets.
• On a sample basis, examined loan files and verified customer KYC
documents, income assessment, creditworthiness evaluation,
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credit monitoring and provisioning, we considered loan
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repayment capability analysis, rate of interest validation, and
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portfolio and credit risk to be a key audit matter.
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compliance with Fair Practices Code (FPC) and Most Important
Terms and Conditions (MITC) requirements.
• Assessed whether the Company's exposure to single borrowers
and group entities was monitored in accordance with internal
policies and applicable regulatory guidelines relating to large
exposure framework and concentration risk management.
• Reviewed the process followed by management for asset
classification and staging of loan accounts and tested selected
loan accounts for compliance with applicable RBI Income
Recognition, Asset Classification and Provisioning (IRAC) norms.
• Evaluated the assumptions, judgements, and methodologies
used by management in determining impairment provisions and
assessed the adequacy of provisions maintained against non¬
performing and stressed loan assets.
• Verified, on a sample basis, the underlying data used for
provisioning calculations including overdue status, security
coverage, valuation reports, repayment history, and other
relevant borrower information.
• Examined collateral documentation, valuation reports, and
security creation records to assess whether the collateral values
considered by management were supported by appropriate
evidence and were periodically reviewed.
• Tested the controls over maintenance of security master data,
valuation dates, and Loan-to-Value (LTV) ratio monitoring within
the information system environment.
• Performed substantive analytical procedures on the loan
portfolio, including trend analysis of delinquencies, restructuring,
overdue movements, and provisioning levels to identify unusual
patterns or indicators of increased credit risk.
• Assessed the adequacy, completeness, and appropriateness
of disclosures made in the financial statements relating to loan
portfolio, credit risk management, impairment provisions, and
regulatory compliance.
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3
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Income Recognition:
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Our audit procedures in relation to income recognition included,
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Income recognition in respect of the Company's lending
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among others, the following:
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operations is a significant area of audit focus due to
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• Obtained an understanding of the Company's policies, processes,
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the volume of transactions, reliance on automated
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and internal controls relating to recognition of interest income,
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system calculations, and the application of judgement
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fee income, and accounting of income reversals in accordance
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in determining the timing and accuracy of revenue
recognition. The Company recognizes interest income
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with applicable accounting standards and RBI guidelines.
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as required to comply with applicable RBI guidelines
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• Evaluated and tested the design and operating effectiveness
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relating to recognition of income on loan assets, including
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of key internal financial controls over system-based interest
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reversal of unrealized income on Non-Performing Assets
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computation, recognition of fee income, NPA tagging, and
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(''NPAs"). Further, processing fees, DSA commission
adjustments, and other ancillary charges form part
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reversal of unrealized interest income.
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of Income and require appropriate amortization over
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• Assessed whether the accounting policies relating to revenue
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the tenure of the loans on straight line method basis.
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recognition are in compliance with the applicable financial
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The process also involves system-generated calculations
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reporting framework and regulatory requirements.
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and certain manual adjustments, thereby increasing
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• On a sample basis, verified loan agreements and tested the
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the risk of error or inappropriate recognition of income.
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accuracy of interest rates, repayment schedules, processing fees,
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In view of the significance of interest income to the
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DSA commission adjustments, and amortization of fees using the
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financial statements, the complexity involved in EIR
computation, compliance with regulatory requirements
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EIR methodology.
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relating to NPA income recognition, and reliance on IT
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• Reviewed the Company's process for identification and
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systems and manual interventions, we considered income
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classification of NPAs and tested selected loan accounts to assess
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recognition to be a key audit matter.
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whether interest income on such accounts was suspended or
reversed in accordance with applicable RBI prudential norms.
• Verified, on a sample basis, the reversal of unrealized income and
examined whether such reversals were appropriately accounted
for in the period in which the accounts were classified as non¬
performing.
• Tested automated system-generated reports and reconciled
interest income recognized during the year with underlying loan
master data, repayment records, and general ledger balances.
• Evaluated manual journal entries and adjustment entries relating
to income recognition and reversals, including adjustments
relating to valuation reports, PSVR (Pre-Sanction Verification
Report), loans converted from composite to site loans and other
operational data inputs, to assess their appropriateness and
supporting documentation.
• Performed substantive analytical procedures on interest income,
fee income, overdue interest, and income reversals by comparing
current year trends with prior periods and business growth
patterns to identify unusual movements or inconsistencies.
• Involved information technology specialists, where considered
necessary, to assess relevant application controls and system
configurations relating to automated interest computation and
income recognition processes.
• Assessed the adequacy and appropriateness of disclosures made
in the financial statements in relation to revenue recognition
policies, interest income, fee income, and NPA-related income
reversals.
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Other Information:
The Company's Board of Directors is responsible for
the preparation of the other information. The other
information comprises the information included in the
Report of Directors including Annexures to Directors Report,
Corporate Governance, Information to Shareholders and
Management Discussion and Analysis but does not include
the financial statements and our auditors' report thereon,
which are expected to be made available to us after the date
of this report.
Our opinion on the financial statements does not cover
the other information and we do not express any form of
assurance conclusion thereon. In connection with our audit
of the financial statements, our responsibility is to read
the other information identified above when it becomes
available and, in doing so, consider whether the other
information is materially inconsistent with the financial
statements or our knowledge obtained during the course of
our audit or otherwise appears to be materially misstated.
When we read the reports which we are expected to be
made available to us after the date of this auditor's report, if
we conclude that there is a material misstatement therein,
we are required to communicate the matter to those
charged with governance. In case of uncorrected material
misstatements, we are required to communicate to other
stakeholders as appropriate as well as to take action under
the applicable laws and regulations, if any
Management's Responsibility for Ind AS
Financial Statements:
The Company's Board of Directors is responsible for the
matters stated in section 134(5) of the Act, with respect to
the preparation of these Ind AS financial statements that
give a true and fair view of the financial position, financial
performance, changes in equity and cash flows of the
Company in accordance with the accounting principles
generally accepted in India, including the accounting
standards specified under section 133 of the Act read with
the Companies (Indian Accounting Standards) Rules, 2015,
as amended. This responsibility also includes maintenance
of adequate accounting records in accordance with the
provisions of the Act for safeguarding of the assets of the
Company and for preventing and detecting frauds and
other irregularities; selection and application of appropriate
implementation and maintenance of accounting policies;
making judgements and estimates that are reasonable and
prudent; and design, implementation and maintenance of
adequate internal financial controls, that were operating
effectively for ensuring the accuracy and completeness of
the accounting records, relevant to the preparation and
presentation of the financial statement that give a true and
fair view and are free from material misstatement, whether
due to fraud or error.
In preparing the financial statements, management is
responsible for assessing the Company's ability to continue
as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of
accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic
alternative but to do so.
The Board of Directors are also responsible for overseeing
the Company's financial reporting process.
Auditors' Responsibilities for the Audit of the
Financial Statements:
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is
not a guarantee that an audit conducted in accordance
with SAs will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with SAs, we exercise
professional judgement and maintain professional
scepticism through the audit. We also:
• Identify and assess the risks of material misstatement
of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive
to those risks and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances. Under section 143(3)
(i) of the Act, we are also responsible for expressing our
opinion on whether the company has adequate internal
financial controls system in place and the operating
effectiveness of such controls.
• Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of management's use
of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions
that may cast significant doubt on the ability of the
Company to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to
draw attention in our auditor's report to the related
disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained
up to the date of our auditor's report. However, future
events or conditions may cause the Company to cease
to continue as a going concern.
• Evaluate the overall presentation, structure and content
of the financial statements, including the disclosures, and
whether the financial statements represent the underlying
transactions and events in a manner that achieves fair
presentation. We communicate with those charged with
governance regarding, among other matters, the planned
scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal
control that we identify during our audit.
Materiality is the magnitude of misstatements in the
Financial Statements that, individually or in aggregate,
makes it probable that the economic decisions of a
reasonably knowledgeable user of the Financial Statements
may be influenced. We consider quantitative materiality and
qualitative factors in (i) planning the scope of our audit work
and in evaluating the results of our work; and (ii) to evaluate
the effect of any identified misstatements in the Financial
Statements.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and to communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements for the
financial year ended 31st March 2026 and are therefore the
key audit matters. We describe these matters in our auditors'
report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated
in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public
interest benefits of such communication.
Emphasis of Matter
We draw attention to Note No. 5.1 of the Annual financial
statements for the period ended March 31, 2026, which
states "The company has amortised Direct expenses &
Direct income related DSA Commission Expenses and Loan
initiation fees. As a result, both Income & expenses are lower
in comparison to Previous year. However, the overall impact
of increase in Profit for the full year due to amortisation is
'501 lakhs"
Our opinion on the statement is not modified in respect of
the above matters.
Other Matters
We have relied on the Branch Audit Report issued by the
Statutory Branch Auditors of 172 branches included in
the Financial Statements of the company whose financial
statements / financial information reflect total advances
of '16,71,930 Lakhs as at March 31, 2026 as considered in
the Financial Statements. These branches and processing
centres cover 39.61% of advances, 40.27% of deposits and
35.98% of non-performing assets. The financial statements
/ information of these branches has been audited by
the Statutory Branch Auditors whose reports have been
furnished to us and in our opinion in so far as it relates to the
amounts and disclosures included in respect of branches, is
based solely on the reports of such Branch auditors.
Further to this, the financial information mentioned for
the year ended 31st March 2025 was audited by us and the
amounts of the previous periods have been regrouped/
reclassified wherever necessary to confirm with the current
period's classification.
Our opinion is not modified with respect of above matters.
Report on Other Legal and Regulatory
Requirements:
1. As required by the Companies (Auditor's Report) Order,
2020 ("the Order"), issued by the Central Government
of India in terms of sub-section (11) of section 143 of
the Act, we give in the Annexure - A, a statement on the
matters specified in paragraphs 3 and 4 of the Order, to
the extent applicable.
2. As required by Section 143(3) of the Act, we report that:
a. We have sought and obtained all the information
and explanations which to the best of our
knowledge and belief were necessary for the
purposes of our audit.
b. In our opinion, proper books of account as required
by law have been kept by the Company so far as it
appears from our examination of those books.
c. The reports on the audit of accounts of 249
branches, 172 branches by statutory branch
auditors and 77 branches by us as appointed by
the Company in accordance with the guidelines
prescribed by the Board of Directors have been
considered by us in terms of section 143(8) of the
Act and have been dealt in the manner considered
appropriate, while preparing this report.
d. The Balance Sheet, the Statement of Profit and Loss
including Other Comprehensive Income, Statement
of Changes in Equity and the Statement of Cash
flows dealt with by this Report are in agreement
with the books of account.
e. In our opinion, the aforesaid Ind AS financial
statements comply with the Accounting Standards
specified under Section 133 of the Act, read with
Companies (Indian Accounting Standards) rules,
2015, as amended from time to time.
f. On the basis of the written representations
received from the directors as on March 31, 2026
taken on record by the Board of Directors, none of
the directors is disqualified as on that date from
being appointed as a Director in terms of Section
164 (2) of the Act.
g. With respect to the adequacy of the Internal Financial
Controls over financial reporting of the Company and
the operating effectiveness of such controls, refer to
our separate Report in "Annexure - B".
h. With respect to the other matters to be included in
the Auditor's Report in accordance with requirement
of Section 197 (16) of the Act, as amended:
In our opinion and according to the information
and explanation given to us, the remuneration
paid during the current year by the Company is in
accordance with the provisions of Section 197 of
the Act.
i. With respect to the other matters to be included in
the Auditor's Report in accordance with Rule 11 of
the Companies (Audit and Auditors) Rules, 2014, in
our opinion and to the best of our information and
according to the explanations given to us:
i. The Company has disclosed its pending
litigations in Note No 38 of the IND AS financial
statements which would impact its financial
position.
ii. The Company did not have any long-term
contracts as required under the applicable law
or accounting standards, and also not entered
into any derivative contracts, accordingly no
provision is required to be made in respect of
material foreseeable losses.
iii. There has been no delay in transferring
amounts, required to be transferred, to the
Investor Education and Protection Fund by the
Company except for those reported in Note
No.16.1 and 16.2 of the financial statements.
iv. A. The Management has represented that,
to the best of its knowledge and belief,
no funds (which are material either
individually or in the aggregate) have
been advanced or loaned or invested
(either from borrowed funds or share
premium or any other sources or kind of
funds) by the Company to or in any other
person or entity, including foreign entity
("Intermediaries"), with the understanding,
whether recorded in writing or otherwise,
that the Intermediary shall, whether,
directly or indirectly lend or invest in
other persons or entities identified in any
manner whatsoever by or on behalf of
the Company ("Ultimate Beneficiaries") or
provide any guarantee, security or the like
on behalf of the Ultimate Beneficiaries.
B. The Management has represented, that,
to the best of its knowledge and belief,
no funds (which are material either
individually or in the aggregate) have been
received by the Company from any person
or entity, including foreign entity ("Funding
Parties"), with the understanding, whether
recorded in writing or otherwise, that
the Company shall, whether, directly or
indirectly, lend or invest in other persons
or entities identified in any manner
whatsoever by or on behalf of the Funding
Party ("Ultimate Beneficiaries") or provide
any guarantee, security or the like on
behalf of the Ultimate Beneficiaries.
C. Based on the audit procedures that
have been considered reasonable and
appropriate in the circumstances, nothing
has come to our notice that has caused us
to believe that the representations under
sub-clause (i) and (ii) of Rule 11(e), as
provided under (A) and (B) above, contain
any material misstatement
v. 1. The final dividend paid by the Company
during the year declared which was
proposed in the previous year is in
accordance with section 123 of the Act.
2. The interim dividends declared by
the Board of Directors and paid by
the Company during the year are in
accordance with section 123 of the Act.
3. As per Note No. 20.2 and 20.3 of the
financial statements, the Board of
Directors has proposed a final dividend
which is subject to approval by the
members of the Company in ensuing
annual general meeting. The amount of
dividend proposed is in accordance with
section 123 of the Act, as applicable.
vi. Based on our examination and representation
received from the Company, which included
test checks, the Company has used an
accounting software for maintaining its books
of accounts which has a feature of recording
audit trail (edit log) facility and the same has
operated throughout the year for the relevant
transactions recorded in the software. Further
during the course of our audit, we did not
come across any instance of the audit trail
feature being tampered with.
As per proviso to Rule 3(1) of the Companies
(Accounts) Rules, 2014 & reporting under Rule
11(g) of the Companies (Audit and Auditors)
Rules, 2014, based on our examination and
representation received from the Company,
which included test checks, the Company has
preserved the audit trail as per the statutory
requirements.
For Rao & Emmar For V.K. Ladha & Associates
Chartered Accountants Chartered Accountants
Firm Registration No. 003084S Firm Registration No. 002301C
Sd/- Sd/-
B J Praveen CA Rakesh Kumar
Partner Partner
Membership No. 215713 Membership No. 546723
UDIN: 26215713FTCELO2101 UDIN: 26546723MIBBMY4367
Date : April 24th, 2026
Place : Bangalore
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