k. Provisions and contingencies related to claims, litigation,
etc.
Provisions are recognised when the Company has a legal
and constructive obligation as a result of a past event, for
which it is probable that cash outflow will be required
and a reliable estimate can be made of the amount of the
obligation. Provisions are measured at the present value
of management’s best estimate of the expenditure required
to settle the present obligation at the end of the reporting
period. The discount rate used to determine the present
value is a pre-tax rate that reflects current market
assessments of the time value of money and the risks
specific to the liability.
l. Contingent liabilities and contingent assets
A contingent liability exists when there is a possible but
not probable obligation, or a present obligation that may,
but probably will not, require an outflow of resources, or
a present obligation whose amount cannot be estimated
reliably. Contingent liabilities do not warrant provisions,
but are disclosed unless the possibility of outflow of
resources is remote.
Contingent assets are disclosed in the financial statements
where an inflow of economic benefits is probable.
m. Cash and cash equivalent
Cash and cash equivalents include balance with banks
in current accounts and term deposits, cash & cheques in
hand and money lent on collateralized lending &
borrowing obligations transactions.
n. Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the Chief Operating
Decision Maker (CODM) of the company. The CODM is
responsible for allocating resources and assessing
performance of the operating segments of the Company.
o. Assets held for sale
Assets are classified as held for sale if it is highly probable
that they will be recovered primarily through sale rather
than through continuing use.
Such assets measured at the lower of their carrying
amount and fair value less cost to sell with gains and
losses on remeasurement recognised in profit or loss.
Once classified as held for sale, assets are no longer
amortised, depreciated or impaired.
Measurement of fair values
i. Fair value hierarchy
The fair value of investment property has been determined by external, independent property valuers, having appropriate
recognised professional qualifications and recent experience in the location and category of the property being valued.
The fair value measurement for all of the investment property has been categorised as a Level 3 fair value based on the inputs
to the valuation technique used.
ii. Valuation technique
The Company follows direct sale comparison technique. The valuation model considers the value of the subject property by
comparing recent sales / listing of similar interest in the properties located in the surrounding area. By analysing sales which
qualify as ‘arms-length’ transactions, between willing buyers and sellers, adjustments would be made for size, location, time,
amenities and other relevant factors when comparing such sales price against the subject property. This approach is commonly
used to value standard properties when realisable sales evidence is available.
Reserve u/s 45-IC of RBI Act
Every year, the Company transfers a sum not less than twenty percent of its net profit, as disclosed in the Statement of Profit and
Loss, to the Statutory Reserve in accordance with Section 45-IC of the RBI Act, 1934, where the Company has earned profits during
the year. Since the Company has earned net profit during the current year, the requisite transfer has accordingly been made to the
Statutory Reserve under Section 45-IC of the RBI Act, 1934, along with transfer for the Financial Years 2023-24 and 2024-25.
Special Reserve under Section 36(1)(viii) of the Income Tax Act, 1961
Section 36(1)(viii) of the Income Tax Act allows financial institutions to transfer 20% of profit from eligible business i.e. net income
from long-term industrial financing, to this Reserve and the same is allowed as a deduction while computing taxable income. The
Income Tax Act, by an amendment in Finance Act, 1998, has put a condition on maintaining the Reserve created w.e.f FY 1997-98.
Any withdrawal would attract tax liability.
Capital Reserve
Capital Reserve represents proceeds of forfeited shares.
Securities Premium Reserve
Securities premium is used to record the premium received on issue of shares. It is utilised in accordance with the provisions of the
Companies Act, 2013.
Capital Redemption Reserve
Capital Redemption Reserve represents amount transferred from surplus in statement of profit and loss towards redemption of
preference shares without fresh issue of capital, as was required under section 55 of the Companies Act, 2013.
Debenture Redemption Reserve
Debenture Redemption Reserve ("DRR") was created in accordance with Rule 18(7) of the Companies (Share Capital and Debentures)
Rules, 2014 in respect of Non-Convertible Debentures issued by IFCI Ltd. through public issue, Subsequently, pursuant to Notification
No. G.S.R. 574(E) dated 16 August 2019, the Ministry of Corporate Affairs (MCA) amended the said Rules, whereby no further DRR
is required to be created for public issue of bonds or private placement of debentures in respect of existing bonds and debentures.
General Reserve
General reserve was created through an annual transfer of net income at a specified percentage in accordance with applicable
regulations.
Deemed equity contribution
Deemed equity contribution on account of preferential rate borrowings from shareholders.
Retained Earnings
Represents as at date accumulated surplus/(deficit) of the profits earned by the Company.
Debt instruments through Other Comprehensive Income
This comprises changes in the fair value of debt instruments recognised in other comprehensive income and accumulated within
equity. The Company transfers amounts from such component of equity to retained earnings when the relevant debt instruments
are derecognised.
Equity instruments through Other Comprehensive Income
This comprises changes in the fair value of certain identified equity instruments recognised in other comprehensive income and
accumulated within equity.
Remeasurements of the defined benefit plans
Remeasurements of defined benefit liability (asset) comprises actuarial gains and losses and return on plan assets (excluding
interest income).
34. Certain balances appearing under trade receivables and payables are subject to confirmation.
35. As on March 31, 2026, provisioning required under RBI Prudential (IRACP) Norms (including standard assets provisioning) is
higher than impairment allowance under Ind AS 109 by ' 25.42 crore. However, since the existing balance in the impairment
reserve stands at ' 104.67 crores, no further Impairment Reserve has been created, as per the requirements of RBI notification no.
RBI/DOR/2025-26/356 - DOR.STR.REC.No.275/21.04.048/2025-26 dated November 28, 2025. Also, existing impairment reserve of
' 104.67 crores has not been reversed in accordance with the RBI notification.
36. In terms of the communication received by IFCI Limited from Department of Financial Services (DFS), Ministry of Finance, vide
letter FNo.2/22/2016 IF-1 dated November 22, 2024, In-principle approval has been accorded to consider ‘Consolidation of IFCI
Group’ which entails Merger / Amalgamation of certain group companies at the holding company level and subsidiary company
level. DFS has advised to take further necessary action and to commence the process in accordance with the applicable laws, rules,
regulations etc. In this regard, the Board of IFCI at its Meeting held on November 22,2024 has considered and accorded In-principle
approval to consider aforesaid ‘Consolidation of IFCI Group’, and to commence the process for the same, in accordance with the
regulatory/ statutory/applicable laws, rules, regulations, guidelines, framework and standards, etc. The detailed disclosure has been
reported to stock exchanges on November 22,2024 and updated on July 14, 2025.
37. The valuation of Investments in subsidiary companies has been considered on the basis of financial statements of the subsidiaries
for the period ended 31st December 2025, instead of 31st March 2026.
38. The Company has recognised interest income of ' 93.01 crores on stage 3 assets (except on assets which are standard under IRAC
norms) for the FY 2025-26. Since, there was no expectation of recovery, the same has been written off as bad debts in the same year.
Hence, there is no impact on net profit or loss for the year.
39. Capital Risk Adequacy Ratio (CRAR) stands at (-)18.78% as on 31st March, 2026, below the RBI minimum permitted threshold of
15%, vide notification no. RBI/DOR/2025-26/345 - DOR.CAP.REC.264/21-01-002/2025-26 dated November 28, 2025.
40. IFCI is carrying investment in subsidiary companies at cost net of impairment loss (if any) and opted for one time exemption under
Ind AS 101 for deemed cost being the carrying value of investment as at transition date i.e. April 1, 2017. As on March 31, 2026, the
Company had investment in 27,91,54,700 no. of Equity shares in its subsidiary, IFCI Factors Ltd. (IFL) and 3,93,63,809 no. of Equity
shares in its subsidiary, IFCI Financial Services Ltd. (IFIN). The company got the shares of IFL & IFIN fair valued internally, as per
which, the fair value of investments in shares of IFL was determined at ' 17.58 crore and in shares of IFIN was determined at ' 58.14
crore, and accordingly, the resultant impairment loss has been charged in the Profit & Loss Account.
41. In the context of reporting business/geographical segment as required by Ind AS 108 - “Operating Segments”, the Company operations
comprise of only one business segment of financing. Hence, there is no reportable segment as per Ind AS 108.
42. On all the secured bonds and debentures issued by the Company and outstanding as on 31st March 2026, 100% security cover has
been maintained against principal and interest, by way of floating charge on receivables of the Company and/or Govt. Securities
owned by the Company.
43. These financial statements have been prepared as per Schedule III Division III of the Companies Act, 2013 which has been notified
by the Ministry of Corporate Affairs and published in the official Gazette on 11th October 2018. Any application guidance/
clarifications/ directions issued by RBI or other regulators will be implemented as and when they are issued/ applicable.
44. Uses of Funds
No funds are borrowed from banks and financial institutions during the year.
44.1 Change due to revaluation
During the year the company has not revalued its Property Plant and Equipment (PPE) and intangible assets.
44.2 Other additional regulatory disclosures as required under Schedule III
a) Loans and advances
The company has not granted any loans and advances in the nature of loans to promoters, directors, Key Managerial
Personnel (KMPs) and the related parties, repayable on demand and where terms or period of repayment are not defined.
b) Ageing Analysis of Capital Work in Progress
There is no Capital work in progress in the current year as well as preceding financial year.
c) Ageing Analysis of Intangible Assets under Development
There is no Intangible Assets under Development in the current year as well as preceding financial year.
d) Benami Property:
No proceedings have been initiated or pending against the company for holding any Benami property under the Benami
Transaction (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder.
e) Borrowing against security of Current Assets
The company has no borrowings from bank or financial institutions against security of current assets.
f) Wilful Defaulter:
The company has not been declared as wilful defaulter by any bank or financial institution or any other lender during the
year.
g) Relationship with Struck off company:
The company has no transaction with companies struck off under section 248 of the Companies Act, 2013 or section 560
of Companies Act, 1956.
h) Registration of Charges or satisfaction with Registrar of Companies (ROC)
There is no charge or satisfaction which is yet to be registered with ROC beyond the Statutory period.
i) Companies with number of Layer of Companies:
Company being an NBFC, clause (87) of section 2 of the Act is not applicable.
j) Scheme of arrangement
During the year no Scheme of Arrangements has been approved by the Competent Authority in terms of sections 230 to
237 of the Companies Act, 2013.
k) Utilization of borrowed funds:
(i) The company has not advanced or loaned or invested any funds to any other person(s) or entity(ies), with the
understanding that the intermediary shall 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 to or on behalf of the Ultimate Beneficiaries.
(ii) The company has not received any funds from any other person(s) or entity(ies) including foreign entities, with the
understanding that the intermediary shall 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 to or on behalf of the Ultimate Beneficiaries.
l) Undisclosed Income:
During the year the Company has not disclosed any income in terms of any transaction not recorded in the books of
accounts that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax
Act, 1961 (such as, search or survey or any other relevant provisions of the Income Tax Act, 1961), unless there is immunity
for disclosure under any scheme.
m) Details of Crypto Currency or Virtual Currency:
The company has not traded in Crypto Currency or Virtual Currency during the financial year.
45. EMPLOYEE BENEFITS
The Company operates the following post-employment plans -
i. Defined contribution plan
The Company makes monthly contribution towards pension which is a defined contribution plan. The Company has no
obligations other than to make the specified contributions. The contributions are charged to the Statement of Profit and Loss as
they accrue. The amount recognised as expense towards such contribution are as follows:
ii. Defined benefit plan
A. Gratuity
The Company has a defined benefit gratuity plan in India, governed by the IFCI Gratuity Regulations, 1968. The scheme
is fully funded with Life Insurance Corporation of India (LIC). This defined benefit plan expose the Company to actuarial
risks, such as longevity risk, currency risk, interest rate risk and market (investment) risk.
The most recent actuarial valuation of plan assets and the present value of the defined benefit obligation for gratuity were
carried out as at 31 March 2026. The present value of the defined benefit obligations and the related current service cost
and past service cost, were measured using the Projected Unit Credit Method.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the gratuity plan and the
amounts recognised in the Company’s financial statements as at balance sheet date:
(a) Funding
The scheme is fully funded with Life Insurance Corporation of India (LIC). The funding requirements are based on
the gratuity fund’s actuarial measurement framework set out in the funding policies of the plan. Expected contributions
to gratuity plan for the year ending 31 March 2026 is ' 1.14 crore.
Salary Increases: Actual salary increases will increase the Plan’s liability. Increase in salary increase rate assumption
in future valuations will also increase the liability.
Investment Risk: If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than
the discount rate assumed at the last valuation date can impact the liability.
Discount Rate: Reduction in discount rate in subsequent valuations can increase the plan’s liability.
Mortality & disability: Actual deaths & disability cases proving lower or higher than assumed in the valuation can
impact the liabilities.
Withdrawals: Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal
rates at subsequent valuations can impact Plan’s liability.
Medical Cost Increase: Increase in actual medical cost per retiree will increase the Plan’s liability. Increase in medical
Cost per Retiree rate assumption will also increase the liability.
Investment Risk: If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than
the discount rate assumed at the last valuation date can impact the liability.
Discount Rate: Reduction in discount rate in subsequent valuations can increase the plan’s liability.
Mortality & disability: Actual deaths & disability cases proving lower or higher than assumed in the valuation can
impact the liabilities.
Withdrawals: Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal
rates at subsequent valuations can impact Plan’s liability.
C. Provident Fund
The Company has a defined benefit provident fund, governed by the IFCI Employees’ Provident Fund Regulations. Monthly
contributions to the Provident Fund is being charged against revenue. IFCI has been paying interest on the provident fund
balance at the rate notified by the Employees’ Provident Fund Organization (EPFO) for the relevant year. The Provident
Fund is administered through duly constituted and approved administrators. The investments have been earmarked
towards PF liability in line with the notification issued by Ministry of Labour & Employment notifying the pattern of
investment for EPFO and EPF exempted establishments.
Based on the actuarial valuation obtained in this respect, the following table sets out the status of the provident fund plan
and the amounts recognised in the Company’s financial statements as at balance sheet date:
Investment Risk: If Plan is funded then assets liabilities mismatch & actual investment return on assets lower than
the discount rate assumed at the last valuation date can impact the liability.
Discount Rate: Reduction in discount rate in subsequent valuations can increase the plan’s liability.
Mortality & disability: Actual deaths & disability cases proving lower or higher than assumed in the valuation can
impact the liabilities.
Withdrawals: Actual withdrawals proving higher or lower than assumed withdrawals and change of withdrawal
rates at subsequent valuations can impact Plan’s liability.
50. OPERATING SEGMENTS
The Board of the Company has been identified as the Chief Operating Decision Maker (CODM) as defined by Ind AS 108,
“Operating Segments.” The Company’s operating segments are established in the manner consistent with the components of the
Company that are evaluated regularly by the Chief Operating Decision Maker as defined in ‘Ind AS 108 - Operating Segments.’
The Company is engaged primarily in the business of financing and there are no separate reportable segments as per Ind AS 108.
a. Information about products and services:
The company deals in only one product i.e. granted loans to corporate customers. Hence, no separate disclosure is required.
b. Information about geographical areas:
The entire sales of the Company are made to customers which are domiciled in India. Also, all the assets of the Company are
located in India.
c. Information about major customers (from external customers):
The Company does not earn revenues from the customers which amount to 10 per cent or more of Company’s revenues.
51. TRANSFERS OF FINANCIAL ASSETS
In the ordinary course of business, the Company enters into transactions that result in the transfer of loans and advances given
to customers. In accordance with the accounting policy set out in Note 2, the transferred financial assets continue to be recognised
in their entirety or to the extent of the Company’s continuing involvement, or are derecognised in their entirety. The Company
transfers financial assets that are not derecognised in their entirety are primarily through the sale of NPA loans to asset reconstruction
companies (ARCs).
A. Transferred financial assets that are not derecognised in their entirety
Sale of NPA loans to asset reconstruction companies (ARCs)
Sale of NPA loans to asset reconstruction companies (ARCs)’ are transactions in which the Company sells loan and advances
to an unconsolidated special vehicle and simultaneously purchases the majority portion of security receipts issued by said
vehicle. The security receipts are collateralised by the loans purchased by the vehicle and hence the cash flow of the
security receipts is dependent on the recovery of purchased loans. The Company continues to recognise that part of the
loans in their entirety against which security receipts have been subscribed by the Company because it retains substantially
all of the risks and rewards of ownership w.r.t that part of the transferred loan. The part of loan transferred against which
cash consideration is received is derecognised.
B. Transferred financial assets that are derecognised in their entirety
Sale of NPA loans to asset reconstruction companies (ARCs)
The Company has taken derecognition exemption at the time of adoption of IndAS and de-recognise the loans in their
entirety against which security receipts have been subscribed by the Company. The Company has classified said investment
in security receipts subsequently measured at fair value through profit and loss. The fair value gain/(loss) on the security
receipts as on 31 March 2026 is ' (-)23.27 crore 31 March 2025 - ' (-)22.93 crore.
B. Valuation Framework
The respective operational department performs the valuation of financial assets and liabilities required for financial reporting
purposes, either externally or internally for every quarterly reporting period. Specific Controls for valuation includes
verification of observation pricing, review of significant unobservable inputs and valuation adjustment.
The Company measures fair values using the following fair value hierarchy, which reflects the significance of the inputs
used in making the measurements.
Level 1: Inputs that are quoted market prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in active markets is determined using valuation techniques
which maximize the use of observable market data either directly or indirectly, such as quoted prices for similar assets and
liabilities in active markets, for substantially the full term of the financial instrument but do not qualify as Level 1 inputs. If
all significant inputs required to fair value an instrument are observable the instrument is included in level 2.
Level 3: If one or more of the significant inputs is not based in observable market data, the instruments is included in level
3. That is, Level 3 inputs incorporate market participants’ assumptions about risk and the risk premium required by market
participants in order to bear that risk. It develops Level 3 inputs based on the best information available in the circumstances.
The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received
to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement
date.
In case of 12 investments, carrying values was based on fair valuation of previous dates and not as of 31st March 2026.
53. FINANCIAL RISK MANAGEMENT
With regards to its lending activity, the company has established various limits and restrictions to manage the risks. There are
various reports which are prepared and presented to senior management by the risk management committee at regular intervals
and on ad-hoc basis which helps in risk monitoring. The company has also set-up procedures to mitigate the risks in case of any
breach.
A. Risk management framework
The Company’s Board of Directors have overall responsibility for the establishment and oversight of the risk management
framework. The board of directors have established the Risk Management and Asset Liability Management Committee of the
Directors (RALMCD) which is responsible for developing and monitoring the Company’s integrated risk management policies.
The RALMCD is assisted in its oversight role by the Risk and Asset Liability Management Committee of Executives (RALMCE).
The Integrated Risk Management Department undertakes regular reviews of risk management controls and procedures, the
results of which are reported to the RALMCE on Regular basis.
B. Credit risk
Credit risk arises from loans and advances, cash and cash equivalents, investment in debt securities and deposits with banks
and financial institutions and any other financial assets.
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Company’s loans and advances to customers, trade receivables from
customers; loans and investments in debt securities.
a. Credit risk management
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer/obligor.
However, management also considers the factors that may influence the credit risk of its customer base, including the
default risk associated with the industry, business specific risk, management risk, transition specific risk and project
related risks.
A financial asset is considered ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated
future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the
following observable data:
- Significant financial difficulty of the issuer or the borrower
- A breach of contract, such as default
- The lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty,
having granted to the borrower concession(s) that the lender(s) would not otherwise consider
- It is becoming probable that the borrower will enter bankruptcy or other financial reorganisation
- The disappearance of the active market for that financial asset because of financial difficulties
- Purchase or origination of a financial asset at a deep discount that reflects the incurred credit loss
The risk management committee has established a credit policy under which each new customer is analyzed individually
for credit worthiness. The Company’s review includes minimum finalised internal rating, external ratings, if they are
available, background verification, financial statements, income tax returns, credit agency information, industry
information, etc. Credit limits have been established for each customer and reviewed periodically and modifications
are done, as and when required. Any loan exceeding prescribed limits require approval from the respective competent
authority.
b. Probability of default (PD)
The Probability of Default (PD) defines the probability that the borrower will default on its obligations in the future. Ind
AS 109 requires the use of separate PD for a 12 month duration and lifetime duration based on the stage allocation of the
borrower. A PD used for Ind AS 109 should reflect the institution’s view of the future and should be unbiased (i.e. it
should not include any conservatism or optimism).
To arrive at historical probability of default, IFCI internal obligor ratings have been used.
c. Definition of default
“Default’ has not been defined under Ind AS. An entity shall apply a default definition that is consistent with the
definition used for internal credit risk management purposes and consider qualitative indicators when appropriate. A
loan is considered as defaulted and therefore Stage-3 (credit impaired) for ECL calculations in the following cases:
- On deterioration of the IFCI internal combined ratings of the borrower to CR-9 or CR-10 (Comparison to be done
between origination rating and current rating).
- On asset being classified as NPA as per RBI prudential norms
- On restructuring of assets with impairment in loan value
- On asset being more than 90 days past dues.”
d. Exposure at default (EAD)
The exposure at default (EAD) represents the gross carrying amount of the financial instruments which is subject to the
impairment calculation.
e. Loss given default (LGD)
LGD is an estimate of the loss from the transaction given that a default occurs. The LGD component of ECL is independent
of deterioration of asset quality, and is based on the expected recovery in each loan asset.
f. Significant increase in credit risk
At each reporting date, an entity shall assess whether the credit risk on a financial instrument has increased significantly
since initial recognition. To make that assessment, an entity shall compare the risk of a default occurring on the financial
instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the date of
initial recognition and consider reasonable and supportable information, that is available without undue cost or effort,
that is indicative of significant increases in credit risk since initial recognition. An entity may assume that the credit
risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is
determined to have low credit risk at the reporting date.
For the assessment of the SICR for the loans and advances, the following conditions have been considered:
- Deterioration of the IFCI internal combined ratings of the borrowers by 3 rating grades. (Comparison to be done
between origination rating and current rating).
- Deterioration of the ratings of the borrowers from the investment grade to the sub-investment grade.
- On restructuring of assets without impairment in loan value
- On asset overdue beyond 60 days past dues
g. Provision for expected credit losses
The following tables sets out information about the overdue status of loans and advances, loan commitments, financial
guarantees, trades receivables and other financial assets to customers in Stages 1, 2 and 3.
i. Collateral held and other credit enhancements
Collateral securing each individual loan may not be adequate in relation to the value of the loan. All borrowers must
meet the Company’s internal credit assessment procedures, regardless of whether the loan is secured. In addition to the
collateral stated above, the Company holds other types of collateral such as second charges and floating charges for
which specific values are generally not available. The principal collateral types for loans and advances are:
1 Mortgage of Immovable properties
2 Hypothecation of Movable property
3 Bank and Government Guarantees
4 Pledge of instruments through which promoter’s contribution is infused in the project
5 Pledge of Promoter Shareholding
6 Corporate and Personal Guarantees of Promoters
j. Governance Framework
As required by the RBI Notification no. RBI/DOR/2025-26/356 - DOR.STR.REC.No.275/21.04.048/2025-26 dated November
28, 2025, an NBFC required to comply with Indian Accounting Standards (IND AS), shall hold impairment allowance
as required by IND AS. Where the provision required under the RBI IRACP norms exceeds the impairment allowance
recognised under IND AS on aggregate basis, the excess amount is appropriated to the "Impairment Reserve" to ensure
compliance with the said RBI Direction.
C. Liquidity risk
Liquidity risk is the potential inability to meet the institution’s liabilities as they become due. From IFCI’s perspective, it
basically originates from the mismatches in the maturity pattern of assets and liabilities. Analysis of liquidity risk involves
the measurement of not only the liquidity position of the institution on an ongoing basis but also examining how funding
requirements are likely to be affected under severe but plausible scenarios. Net funding requirements are determined by
analysing the institution’s future cash flows based on assumptions of the future behaviour of assets and liabilities that are
classified into specified time buckets, utilizing the maturity ladder approach and then calculating the cumulative net flows
over the time frame for liquidity assessment.
For the present, for measuring and managing net funding requirements, the use of maturity ladder and calculation of cumulative
surplus or deficit of funds at selected maturity dates is being utilized as a standard tool.
The ALM format prescribed by RBI in this regard is being utilized for measuring cash flow mismatches in different time
bands. The cash flows are placed in different time bands based on projected future behaviour of assets, liabilities and off-
balance sheet items. Apart from the above cash flows, the institution would also track the impact of prepayments of loans,
premature closure of liabilities and exercise of options built in certain instruments which offer put/call options after specified
times. Thus, cash outflows can be ranked by the date on which liabilities fall due, the earliest date a liability holder could
exercise an early repayment option or the earliest date contingencies could be crystallized.
The company has initiated an exercise to identify its High Quality Liquid Investments and compute Liquidity Coverage
Ratio.
In addition, the Company maintains the following lines of credit:
- IDBI Bank: ' 110 Crore which is secured against FD with ROI 6.51% p.a.
- HDFC Bank: ' 16 Crore which is secured against MF with ROI MCLR of the month.
D. Market risk
Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market
variables such as interest rates, foreign exchange rates and equity prices. In line with regulatory guidelines, the Company
classifies exposures to market risk into either Current or Long term portfolios and manages each of those portfolios separately.
The market risk management framework in IFCI comprises risk identification, setting up of limits & triggers, risk measurement,
risk monitoring, risk reporting and taking corrective actions where necessitated. It is pertinent to highlight that the details
pertaining to threshold investment grade rating, investment limits, approval authority, control mechanism including stop¬
loss triggers, compliances required, etc. for different treasury products including equity trading have been clearly outlined
in the extant Treasury & Investment Policy of IFCI.
(a) Market risk - trading portfolios
The Company does not have any trading portfolios.
(b) Market risk - Non-trading portfolios
i) Currency risk
The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which
borrowings are denominated and the respective functional currencies of Company. The functional currency for the
company is Rupees. As on date, foreign currency borrowings are NIL.
ii) Interest rate risk
The Company makes attempt to minimize the gap between floating rate liabilities and floating rate assets, in order
to minimize interest rate risk. This is achieved by way of borrowings at a floating rate and lending at rates linked to
IFCI benchmark rate, which in turn is linked to, among others, its cost of borrowings. Further, analysis of impact of
change in market rates of interest is carried out on a periodic basis, to undertsand impact on Net Interest Income of
IFCI and Market Value of Equity of IFCI. In line with extant regulatory guidelines, Interest rate Sensitivity statement
is prepared on a monthly basis and analysed to understand gaps in various time buckets.
Fair value sensitivity analysis for fixed rate instruments
A reasonably possible change of 100 basis points in interest rate at the reporting date would have no impact in
statement of profit and loss. This analysis assumes that all other variables, in particular foreign currency exchange
rates, remain constant.
Cash flow sensitivity analysis for variable rate instruments
A reasonably possible change of 100 basis points in interest rate at the reporting date would have increased or
decreased equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in
particular foreign currency exchange rates, remain constant.
iii) Equity price risk
Equity price risk is the risk that the fair value of equities declines as a result of changes in the level of equity indices
and market price of individual stocks. The non-trading equity price risk exposure arises from equity securities
classified at Fair Value. The equity price risk is more applicable to securities held for the purpose of trading. As the
Company focuses on long term investments and curent investments are kept low (investments held for trading
purposes), IFCI may not be exposed to significant equity price risk.
54. CAPITAL MANAGEMENT
The basic approach of capital adequacy framework is that, a financial institution should have sufficient capital to absorb shocks
on account of any unexpected losses arising from the risks in its business.
As per RBI guidelines, IFCI as a Government owned NBFC-ND-SI is required to maintain a minimum capital to risk weighted
asset ratio. Capital management entails optimal utilization of scarce capital to meet extant regulatory capital requirements. IFCI
has put in place an appropriate Risk Appetite framework and computes its capital requirements and adequacy as per extant
regulatory guidelines.
i) Regulatory capital
The Company’s regulatory capital consists of the sum of the following elements:
- Common equity Tier 1 (CET1) capital, which includes ordinary share capital, related share premiums, retained earnings
and reserves after adjustment for dividend declared and deduction for goodwill, intangible assets and other regulatory
adjustments relating to items that are not included in equity but are treated differently for capital adequacy purposes.
- Tier 2 capital, which includes preference shares, qualifying subordinated liabilities and any excess of impairment over
expected losses.
ii) Capital allocation
The amount of capital allocated to each operation or activity is undertaken with the objective to optimise of return on the
risk adjusted capital. Allocation of capital to various lines of business is undertaken basis annual business plan drawn at the
beginning of the year. Various consideration for allocating capital include synergies with existing operations and activities,
availability of management and other resources, and benefit of the activity with the company’s long term strategic objectives.
55. The following additional information is disclosed in terms of RBI Circulars applicable to Non-Banking Financial Companies. Ind
AS adjustments have not been made in these disclosures unless specifically stated :
i) The company is registered with Securities and Exchange Board of India as debenture trustee having registration code i.e.
“IND000000002”.
ii) There are no penalties imposed by RBI and other regulator during the year ended March 31, 2026. However, the Stock
Exchanges had been imposing fines for non-compliance with the provisions of the SEBI (Listing Obligations & Disclosure
Requirements) Regulations 2015, relating to composition of the Board of Directors and Committees namely Audit Committee
and Nomination and Remuneration Committee, in the absence of requisite number of Independent Directors including
woman director on the Board of IFCI. In response to the fines levied by the Stock Exchanges, the Company has requested the
Stock Exchanges, not to impose the fine and take any other subsequent actions on the Company, since the appointment of
Independent Directors on the Board of Company is done by Ministry Administratively in-charge of the Company. Accordingly,
Company has been requesting the Ministry Administratively in- charge for appointment of requisite number of Independent
Directors (including women independent director) on the Board of the Company. Considering our requests Ministry
Administratively in- charge, vide letter dated May 10, 2023 had appointed Shri Umesh Kumar Garg as Independent Director
on the Board of the Company w.e.f. May 10, 2023. Subsequently, on August 08, 2023, Shri Umesh Kumar Garg had been
inducted in the Committees of Directors. Consequently, the Composition of Stakeholders’ Relationship Committee and Risk
Management Committee have been complied with. Also, NSE being the designated exchange vide letter dated April 15, 2024
had waived the fines in respect of Stakeholders’ Relationship Committee and Risk Management Committee as composition
of these Committees were made complied with SEBI Listing Regulations after induction of one Independent Director. However,
there is still absence of requisite number of Independent Directors on the Board of the Company and the matter has been
taken up with the ministry administratively in change of the Company.
As on 31st March 2026, the total consolidated outstanding fines imposed by the Stock Exchanges is 5,29,55,140 /-(inclusive
of applicable taxes) till the quarter ended December 31, 2025.
xlii) Breach of Covnants
There were no instances of default or breaches of covenant in respect of loan availed or debt securities issued during the
financial years ended March 31, 2026.
xliii)Divergence in Asset Classification and Provisioning
The RBI has neither assessed any additional provisioning requirements in excess of 5 percent of the reported profits before
tax and impairment loss on financial instruments for the financial year ended March 31, 2026, nor identified any additional
Gross NPAs in excess of 5% of the reported Gross NPAs for the said period.
58. Previous year figures have been re-grouped/ re-arranged/ restated wherever necessary, to conform to current period’s presentation.
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