213 | Annual Report | 2023-2024 Liquidity coverage Ratio (LCR) is a tool for measuring and promoting short term resilience of the company to potential liquidity disruptions by ensuring maintenance of sufficient unencumbered high quality liquid assets (HQLA’s) to survive at severe stress scenario lasting for 30 calendar days. Reserve Bank of India (RBI) introduced the LCR requirement for all non-deposit taking NBFC’s with an asset size of `5,000 crore and above. The ratio comprises of HQLA’s as numerator and net cash outflows in next 30 calendar days as denominator. HQLA computation consist of two parts i.e. (i) assets to be included as HQLA without any haircut i.e. cash, government securities, etc. and (ii) assets to be considered for HQLA with haircuts (ranging 15% to 50%) which comprises of investments in highly rated non--financial corporate bonds and listed equity investments which are considered at prescribed haircuts. In order to determine net cash outflows, the company considers total expected cash outflow minus total expected cash inflows for the subsequent 30 calendar days. As per regulations, stressed cash flows is computed by assigning a predefined stress percentage to the overall cash inflows and cash outflows. Net cash outflow over next 30 days is computed as stressed outflows less minimum of stressed inflows or 75% of stressed outflow. accordingly, LCR would be computed by dividing company’s stock of HQLA by its total net cash outflow. The LCR requirement has been inducted in a phased manner with company required to maintain minimum LCR of 30% from December, 1, 2020 eventually increasing to 100% by December 31, 2024. the company has implemented the LCR framework and has consistently maintained LCR well above the regulatory threshold for all the quarters during the current financial year. The company has maintained an average LCR of 843% for the quarter ended March 31, 2024 (for the quarter ended March 31, 2023 : 415%) as against minimum regulatory requirement of 85% (March 31, 2023 : 60%). the company has maintained average HQLA as of `96,513.16 lakhs for the quarter ended March 31, 2024 (for the quarter ended March 31, 2023 : `60,909.66 lakhs). The company has adopted the liquidity risk framework as required under RBI regulation. The Board of Directors have delegated responsibility of balance sheet liquidity Risk management to the asset liability committee (ALCO). ALCO reviews asset liability mismatches (ALM) and ensures that there are no excessive concentration of either assets or liability side of the balance sheet. liquidity risk is managed in accordance with ALM policy. The same is reviewed periodically to incorporate regulatory changes, economic scenario and business requirements of the company. Note 54: Disclosures related to Liquidity coverage Ratio (LCR) pursuant to the RBI Master direction circular RBI/DoR/2023-24/106 DoR.FIN.REC.No.45/03.10.119/2023-24 Arohan Financial Services Limited Notes to financial statements for the year ended March 31, 2024 (Contd.) (All amounts in ` lakhs unless otherwise stated)
RkJQdWJsaXNoZXIy NTE5NzY=