Financial Risk Management Framework
As a Non-Deposit taking Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India, Instant Holdings Limited is exposed to various financial risks associated with financial products such as credit or default risk, market risk, interest rate risk, liquidity risk, and inflationary risk.
The Company has a robust financial risk management system in place to identify, evaluate, manage, and mitigate these risks. Our senior management is responsible for establishing and monitoring the risk management framework, setting appropriate risk limits and controls, and periodically reviewing changes in market conditions.
Key Risk Categories
Credit Risk
Credit risk is common to investors in bonds and debt instruments. Risk concentration is minimized by investing in highly rated, investment-grade bonds and debt instruments, particularly Government and PSU Bonds, which have the least risk of default.
Market & Price Risk
Market risk involves day-to-day fluctuations in the market prices of shares and securities. The Company is exposed to price risk arising mainly from investments carried at fair value through FVTPL or FVOCI, managed through diversified asset allocation.
Liquidity Risk
Liquidity refers to the readiness of the Company to sell and realize its financial assets. We maintain a well-diversified portfolio of investments in shares and securities which are saleable at any given point of time. A dedicated team of market experts advises the management to ensure financial obligations are satisfied in a timely manner.
Inflationary Risk
Inflationary or purchasing power risk refers to the variation in investor returns caused by inflation. The Company closely monitors inflation data and avoids inflationary risk by investing in securities and debt instruments that provide higher returns compared to long-term inflation.