Investment Policy

INVESTMENT POLICY

R.K. Bansal Finance Pvt. ltd.

(This policy was approved by the Board of Directors in the Board Meeting held on 21^ST April 2025.)

Documents Details

Particulars	Details
Title	Investment policy
Classification	Internal
Approved Date	21^st April 2025
Last Review Date	–
Approved by	Board of Directors
Custodian	Operation

1. Background, Applicability and Regulatory Framework

R.K. Bansal Finance Private Limited (“the Company”) is a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India (RBI) under the provisions of the RBI Act, 1934. The Company is primarily engaged in lending and related financial activities and, in the ordinary course of business, generates surplus and idle funds which require prudent deployment.

This Investment Policy (“Policy”) is framed to regulate, monitor and control all investment activities of the Company and shall apply to all investments made by the Company, whether existing or proposed, unless specifically exempted by the Board of Directors (“Board”).

This Policy is formulated in compliance with the following laws, regulations and guidelines, as amended from time to time:

Reserve Bank of India Act, 1934;
Companies Act, 2013 and rules made thereunder;
Master Direction – Reserve Bank of India (Non-Banking Financial Company – Scale Based Regulation) Directions, 2023;
RBI guidelines on prudential norms, exposure limits, investments and governance for NBFCs;
Applicable provisions of FEMA, 1999, where relevant;
Indian Accounting Standards (Ind AS), particularly Ind AS 109, Ind AS 16 and other applicable standards.

In the event of any inconsistency between this Policy and any statutory or regulatory requirement, the provisions of the applicable law or RBI direction shall prevail.

2. Purpose and Objectives

The purpose of this Policy is to establish a comprehensive framework for investment of the Company’s surplus and idle funds in a manner that supports its core lending business while ensuring safety, liquidity and reasonable returns.

The key objectives of this Policy are to:

Ensure availability of adequate liquidity at all times to meet operational, lending, repayment and statutory obligations;
Preserve capital and safeguard the Company’s funds through prudent investment practices;
Earn optimal risk-adjusted returns on surplus funds;
Define permissible investment avenues, prohibited instruments and exposure limits;
Lay down governance, approval, monitoring and reporting mechanisms for investments;
Enable investments in fixed deposits and properties currently undertaken by the Company, while providing flexibility for other permissible investments in future, subject to regulatory compliance and Board approval.

3. Guiding Principles for Investments

All investment decisions of the Company shall be guided by the following fundamental principles:

3.1 Safety

Preservation of capital shall be the foremost consideration. Investments shall be made only in instruments and counterparties that demonstrate acceptable credit quality and regulatory permissibility.

3.2 Liquidity

Investments shall be structured in a manner that ensures sufficient liquidity to meet foreseeable cash flow requirements, without undue reliance on premature liquidation.

3.3 Return

Subject to safety and liquidity considerations, the Company shall seek to optimize returns on its investments.

3.4 Prudence and Diversification

Investments shall be undertaken with due care, skill and diligence expected of a prudent NBFC. Diversification across instruments, counterparties and maturities shall be adopted where appropriate to mitigate concentration risk.

3.5 Regulatory and Ethical Compliance

All investments shall strictly comply with RBI directions, applicable laws and internal policies, and shall avoid speculative or unethical activities.

4. Governance Structure and Authority

4.1 Role of the Board of Directors

The Board shall have overall responsibility and oversight over the investment function of the Company. The Board shall:

Approve this Investment Policy and any amendments thereto;
Define the risk appetite and broad exposure limits for investments;
Approve investments beyond delegated authority or involving new asset classes;
Review investment performance, compliance status and material risks on a periodic basis;
Ensure alignment of investment activities with RBI regulations and the Company’s strategic objectives.

4.2 Delegation of Authority

The Board may delegate powers for day-to-day investment decisions to the Managing Director, Whole-time Director, Chief Financial Officer and/or an Investment Committee, subject to:

Clearly defined monetary ceilings;
Investment being within the permitted instruments specified under this Policy;
Compliance with RBI exposure norms and internal limits;
Periodic reporting to the Board.

Any investment outside the scope of this Policy or beyond delegated limits shall require prior approval of the Board.

5. Permissible Investment Avenues

The Company may invest its surplus and idle funds in the following permissible avenues, subject to RBI regulations and Board approvals:

5.1 Fixed Income and Low-Risk Instruments (Primary Investment Category)

These instruments shall form the core investment portfolio of the Company:

Fixed Deposits with Scheduled Commercial Banks;
Fixed Deposits placed as margin or security against sanctioned credit facilities;
Certificates of Deposit issued by scheduled commercial banks;
Government securities, treasury bills and other instruments issued or guaranteed by Central or State Governments;
Money market instruments permitted to NBFCs under RBI guidelines;
Liquid funds and debt mutual funds investing predominantly in government securities or high-quality debt instruments.

All such investments shall be made only with regulated entities and institutions of sound financial standing.

5.2 Investment in Property (Real Estate)

The Company may invest in land and buildings strictly for the following purposes:

Own use, including offices, branches, operational infrastructure and staff facilities;
Strategic requirements incidental to the Company’s business operations.

Such investments shall be subject to:

Prior approval of the Board of Directors;
Independent valuation by a qualified valuer;
Proper legal due diligence of title and ownership;
Compliance with RBI directions, which prohibit speculative or trading activities in real estate.

The Company shall not undertake real estate development, trading or speculative investments in property.

5.3 Other Permissible Investments

With a view to future business requirements, and subject to RBI regulations and specific Board approval, the Company may invest in:

Bonds, debentures and debt instruments issued by corporates, banks and financial institutions;
Investments in subsidiaries, associates or group companies, within regulatory limits;
Units of mutual funds other than equity-oriented schemes;
Any other instruments expressly permitted for NBFCs by RBI from time to time.

Direct investment in equity shares shall be undertaken only if expressly permitted by RBI and approved by the Board.

6. Prohibited Investments

Unless specifically permitted by RBI and approved by the Board, the Company shall not:

Invest in equity shares for trading or speculative purposes;
Invest in equity-oriented mutual funds;
Invest in commodities, derivatives or complex structured products;
Undertake investments prohibited under FEMA or other applicable laws;
Engage in speculative real estate activities.

7. Exposure Norms and Investment Limits

All investments shall strictly comply with RBI-prescribed exposure norms applicable to NBFCs, including:

Limits on exposure to a single counterparty and group;
Restrictions on investments in group companies and related parties;
Any additional internal prudential limits approved by the Board.

Where RBI guidelines prescribe stricter limits than those approved internally, the RBI limits shall prevail. Any actual or potential breach shall be promptly reported to the Board with corrective action.

8. Classification of Investments

Investments shall be classified as follows:

Current Investments: Investments intended to be held for a period not exceeding twelve months, primarily for liquidity management;
Long-Term Investments: Investments intended to be held for more than twelve months, including property and strategic investments.

Inter-class transfer of investments shall be undertaken only in accordance with RBI guidelines and applicable accounting standards, with appropriate approvals.

9. Valuation and Accounting Treatment

Investments shall be recognised, measured and disclosed in accordance with applicable Ind AS and RBI guidelines;
Fixed deposits and debt instruments shall generally be carried at amortised cost;
Investments measured at fair value shall follow prescribed valuation methodologies;
Property investments shall be recorded at cost and depreciated as per Ind AS 16;
Any impairment, depreciation or diminution in value shall be recognised promptly.

10. Risk Management and Internal Controls

The Company shall identify, assess and manage risks arising from investments, including:

Liquidity risk;
Credit and counterparty risk;
Interest rate risk;
Concentration risk;
Legal, operational and compliance risks, particularly in property investments.

Adequate internal controls, maker-checker mechanisms and audit trails shall be maintained. All investment activities shall be subject to internal audit and statutory audit.

11. Reporting, Monitoring and Disclosure

A detailed statement of investments shall be placed before the Board on a quarterly basis;
Significant changes, impairments or deviations shall be reported immediately;
Investment performance and compliance with this Policy shall be periodically reviewed;
Disclosures shall be made in financial statements as per Ind AS and RBI requirements.

12. Policy Review and Amendments

This Policy shall be reviewed at least annually or earlier, if warranted by changes in regulatory requirements, business strategy or risk profile of the Company.

Any amendment to this Policy shall require approval of the Board of Directors. In case of any conflict between this Policy and RBI directions, the latter shall prevail.

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