1. The microfinance industry in India faces certain risks due to the category of customers that it services, which are not generally associated with other forms of lending. As a result, the company may experience increased levels of non-performing assets and related provisions and write-offs that may adversely affect its business, financial condition and results of operations.
2. The company's business is vulnerable to interest rate risk, and volatility in interest rates could have an adverse effect on its net interest income and net interest margin, thereby affecting the company results of operations.
3. An increase in the level of its non-performing assets or provisions may adversely affect the company financial condition and results of operations.
4. As a non-banking financial company - microfinance institution, the company is subject to periodic inspections by the Reserve Bank of India. Non-compliance with observations made by the Reserve Bank of India during these inspections could expose it to penalties and restrictions.
5. The company is subject to certain conditions under its financing arrangements, which could restrict the company ability to conduct its business and operations in the manner the company desire.
6. The company depends on the recognition of the "Muthoot" brand, and failure to use, maintain and enhance awareness of the brand would adversely affect its ability to retain and expand the company base of customers.
7. There are several outstanding legal proceedings against the Company, Directors, Promoters and Group Companies. An adverse outcome in any of these proceedings may adversely affect its reputation, business, financial condition, results of operations and cash flows.
8. The company face the threat of cyber-fraud and cyber-attacks, such as hacking, phishing and theft of sensitive internal data or customer information. The company also face the threat of a system breakdown, network outage and system failure. These may damage its reputation and adversely affect the company business and results of operations.
9. The company Corporate Promoter, MFL, is involved in other financial services related businesses and is subject to extensive regulation. Any non- compliance or perceived non-compliance by its Promoters or Directors may adversely affect the company reputation, business, results of operations and prospects.
10. The Directorate of Enforcement, Ministry of Finance, Government of India ("ED") has issued summons to its Managing Director directing him to provide certain information in relation to himself and the Company. There is no assurance that the ED will not take any action against it or the company Managing Director, which may adversely impact its business and operations, financial condition and reputation.