Press Release April 16, 2026 RAJASTHAN FINANCIAL CORPORATION Rating Reaffirmed

Product	Quantum (Rs. Cr) (SEBI)	Quantum (Rs. Cr) (Other FSR)	Long Term Rating	Short Term Rating	Regulated By
Bank Loan Ratings	0.00	100.00	ACUITE BBB+ | Stable | Reaffirmed	-	RBI
Total Outstanding	0.00	100.00	-	-	-
Total Withdrawn	0.00	0.00	-	-	-

Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.

Rating Rationale

­Acuité has reaffirmed the long-term rating of ‘ACUITE BBB+' (read as ACUITE triple B plus) on the Rs. 100.00 Cr. bank facilities of Rajasthan Financial Corporation (RFC). The outlook is "Stable". Rationale for rating reaffirmation The rating reaffirmation continues to factor in the ownership of Government of Rajasthan and the corporation’s strategic importance for financing of MSME’s for the state. The profit after tax of the corporation stood at Rs.18.82 crore for FY25 as against Rs. 1.08 crore for FY24. The rating however remains constrained by the decline in the corporation’s scale of operations and asset quality. The AUM of the company deteriorated to Rs.551.27 crore as on March 31,2025 as against Rs.563.97 crore as on March 31,2024 and Rs. 636.32 crore as on March 31, 2023  respectively. The asset quality of the company also remains weak marked by subdued GNPA at 40.88 percent and NNPA at 14.04 percent as on March 31, 2024.However for FY25, there have been slight improvements in asset quality with the GNPA at 34.90 percent and NNPA at 8.01 percent. Going forward the ability of the corporation to scale up its operations while improving its asset quality and maintain profitability will remain a key rating monitorable.

About the company

­RFC was established in 1955 under the SFCs Act 1951 with an objective of promoting economic growth and rapid industrial development in the state of Rajasthan by extending financial assistance to Micro, Small and Medium Enterprises in manufacturing and service sector. RFC also acts as an agency for disbursal of state and Central Government incentives and subsidies. Government of Rajasthan is the majority stakeholder with 79.83 percent holding as on March 31, 2024 and the balance is held by Small Industries Development Bank of India (SIDBI) and other domestic banks and institutions. The corporation operates wholly in Rajasthan with a network of 14 branches as on March 31, 2024.

Unsupported Rating

­Acuite BB+/Stable

Analytical Approach

­Acuite has taken a standalone approach to arrive at rating of RFC and has factored in the operational and managerial support it receives from Government of Rajasthan (GOR) by virtue of being subsidiary of the GoR.

Key Rating Drivers

Strength

­Ownership and support from the Government of Rajasthan RFC is a state finance corporation established under the SFC Act, 1951. Government of Rajasthan (GoR) is a 79.83 percent stakeholder in the corporation and is also expected to support the corporation given its systemic importance to the state. The corporation was established with the objective of promoting economic growth and regional industrial development in the state of Rajasthan. RFC also serves as disbursal agency of various State/Central government subsidies and incentives. The board of directors comprise three directors appointed by the Government of Rajasthan (GoR) and others representing SIDBI, LIC and publicly appointed directors. This indicates a strong level of managerial support from both prominent public sector enterprises and the Government of Rajasthan. RFC’s funding mix comprises equity contribution from GoR. The ownership and the guarantee by the GoR enable RFC to borrow at fine pricing from various banks and institutions.  RFC’s capitalisation levels remained adequate at 90.74 percent as on March 31, 2025. Given the linkages with the Rajasthan State Government and RFC’s role in facilitating funding for MSMEs, the corporation plays an important role in the state economy. RFC is a Nodal Agency for several policy initiatives by the State Government of Rajasthan and is responsible to implement the state's policy initiatives announced in the annual state budget. The corporation promotes Yuva Udyamita Protsahan Yojana (YUPY) scheme to support young entrepreneurs to put up their industries in the state where GoR provides interest subvention of 6 percent on loans up to Rs.2.0 Cr. The corporation has a new scheme Vishwakarma Yuva Udyami Protsahan Yojana (VYUPY)  expected to start in FY27. Since the support from GoR is critical to the rating, the credit profile of Rajasthan state is of key importance. Movement in the state’s key fiscal metrics i.e. fiscal deficit to GSDP and Debt to GSDP will remain key monitorable. The corporation as a part of the proposed plan has received Rs 10.00 Cr. equity share capital from the government of Rajasthan and another Rs 10.00 Cr expected from Rajasthan State Industrial Development & Investment Corporation Ltd in FY26. Acuité believes that the corporation will continue to benefit from continued financial and business support from the State Government on an ongoing basis over the medium term.

Weakness

­­Deteriorating scale of operations and asset quality  RFC was set up with the objective of promoting economic growth and industrial development in the state of Rajasthan. The corporation’s AUM has seen a sequential decline since 2021. The AUM of the corporation stood at Rs. 551.27 crore as on March 31, 2025 as against Rs. 563.97 crore as on March 31, 2025 respectively. Such deterioration in its AUM is on account of decline in the corporation’s disbursement levels. However, for FY25 the disbursements made by the corporation improved and stood at Rs.142.32 crore as against Rs. 83.65 crore in FY24 respectively. The asset quality of the company also continues to remain subdued on account of significant hit from the legacy portfolio (portfolio prior to FY 2000). The corporation does not plan to write-off the legacy NPAs since the portfolio prior to FY 2000 was unsecured; instead RFC plans to continue to recover from these accounts in a phased manner. The GNPA stood at 34.90 percent as on March 31, 2025 as against 40.88 percent as on March 31, 2024. The corporation has made provisions against the non-performing assets at Rs.161.17 Cr. for FY25 translating to a provision cover of 83.77% as on March 31, 2025 as against 76.38% as on March 31, 2024. The corporation’s scale of operations witnessed a decline and its profitability metrics have seen a decline led by increased provisioning for sub-standard assets together with declining interest expenses on account of repayment of existing debt obligations. However, part of the sub-standard assets has been settled and recovered by the corporation and the provision reversal in FY25 has seen improvement in profitability. Accordingly, the profit after tax of the company improved to Rs.18.82 crore for FY25 as against Rs.1.08 crore for FY24. Subsequently, the RoAA of the corporation has improved to 2.99 percent for FY25 from 0.17 percent for FY24. Going forward, the ability of the corporation to scale up its operations while containing asset quality pressures will remain a key rating sensitivity.

Assessment of Adequacy of Credit Enhancement under various scenarios including stress scenarios (applicable for ratings factoring specified support considerations with or without the “CE” suffix)

­RFC is supported by Government of Rajasthan (GOR) through 79.83 percent holding and financial support in the form of capital infusions. GoR's capital infusion would help augment cash flows and would aid its role in driving the state’s industrial growth, while it also serves as the disbursal agency for various State and Central government subsidies and incentives.

Rating Sensitivity

Potential triggers (individual or collective) for an upward rating action:

­ Significant growth in AUM and disbursements Significant improvement in profitability metrics Credit profile of Rajasthan State Government and financial support to RFC

Potential triggers (individual or collective) for a downward rating action:

­ Gearing exceeding 5 times Movement in asset quality indicators

Liquidity Position

Adequate

­RFC had adequately matched asset liability profile as on March 31, 2025 with cumulative surplus in all maturity buckets. The Corporation has maintained cash and bank balances & Public Deposit of Rs. 141.19 Cr. with GoR as on March 31, 2025.

Outlook: Stable

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Other Factors affecting Rating

­None

Key Financials - Standalone / Originator

­ Particulars Unit FY25 (Actual)  FY24 (Actual)  Total Assets Rs. Cr. 611.98 645.94 Total Income* Rs. Cr. 48.79 55.22 PAT Rs. Cr. 18.82 1.08 Net Worth Rs. Cr. 404.55 374.75 Return on Average Assets (RoAA) (%) 2.99 0.17 Return on Average Net Worth (RoNW) (%) 4.65 0.29 Debt/Equity Times 0.00 0.00 Gross NPA (%) 34.90 40.88 Net NPA (%) 8.01 14.04 *Total income equals to Net interest income plus other income

Status of non-cooperation with previous CRA (if applicable):

­Not Applicable

Any other information

­None

Applicable Criteria

• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Banks And Financial Institutions: https://www.acuite.in/view-rating-criteria-45.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.htm • State Government Ratings : https://www.acuite.in/view-rating-criteria-26.htm

Note on complexity levels of the rated instrument

­In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 16 Jan 2025 Secured Overdraft Long Term 100.00 ACUITE BBB+ | Stable (Reaffirmed) 19 Oct 2023 Secured Overdraft Long Term 100.00 ACUITE BBB+ | Stable (Reaffirmed)

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*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support)

­ Sr. No.  Company name 1 Rajasthan Financial Corporation 2 Government of Rajasthan

Contacts

Mohit Jain Chief Analytical Officer - Rating Operations Nattasha Venkatesh Analyst - Rating Operations	Contact details exclusively for investors and lenders Mob: +91 8591310146 Email ID: analyticalsupport@acuite.in

List of instruments and names of regulators of the instruments

As required by SEBI Circular (SEBI/HO/DDHS/DDHS-PoD-2/I/4685/2026) dated February 10, 2026, a list of activities or instruments falling under the purview of various Financial Sector Regulators (FSRs), along with the names of respective FSRs, is being disclosed below: A. Rating Activity:   Sr. No. Instrument / activity Name Regulator of the instrument 1 Listed/Proposed to be listed Bonds/Debentures/Preference Shares (all securities) SEBI 2 Unlisted/Proposed to be unlisted Bonds/Debentures/ Preference share (all securities) MCA 3 Listed PTCs / Securitisation Notes (originated by entities regulated by RBI)1 SEBI 4 Listed PTCs / Securitisation Notes (originated by entities not regulated by RBI)1 SEBI 5 Unlisted PTCs / Securitisation Notes (originated by entities regulated by RBI)1 RBI 6 Listed Commercial Paper and NCDs with original maturity less than 1 year RBI 7 Unlisted Commercial Paper and NCDs with original maturity less than 1 year RBI 8 Loan Facilities (Fund/Non-Fund Based) from Bank / NBFCs/ NHB/ FIs 2 RBI 9 External Commercial Borrowings and other similar borrowings RBI 10 Certificates of Deposit RBI 11 Fixed Deposits raised by NBFCs, Banks, HFCs, FIs RBI 12 Fixed Deposits raised by corporates other than NBFCs, Banks, HFCs, FIs MCA 13 Inter Corporate Deposits/Loans extended by Corporates MCA 14 Borrowing programme 3 - 15 Issuer Ratings 4 - 16 Credit Ratings for Capital Protection Oriented Schemes (by Mutal Funds and AIFs) SEBI 17 Credit quality ratings (CQRs) for Mutual Fund Schemes and Schemes of AIFs SEBI 18 Listed Security Receipts SEBI 19 Unlisted Security Receipts RBI 20 Independent Credit Evaluation (ICE) RBI 21 Expected Loss Ratings (For Loan Facilities [Fund/Non-Fund based] from Banks/NBFCs/NHB/FIs) RBI 22 Expected Loss Ratings (Listed / Proposed to be listed Bonds / Debentures / Preference Shares (all securities)) SEBI 23 Expected Loss Ratings (Unlisted / Proposed to be unlisted Bonds/ Debentures / Preference Shares (all securities)) MCA 24 Unlisted PTCs / Securitisation Notes (originated by entities not regulated by RBI) 1 Investor-side Regulator such as IRDAI, PFRDA 5   1 Includes securitisation transactions involving assignee payout, acquirer's payout. 2 Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. 3 There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. 4 The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In Press Release(s) subsequent to issuance(s), Acuite shall separately capture the rated quantum details along with names of respective regulators. 5 These ratings were assigned during regulatory regime prior to the introduction of SEBI CRA Circular dated Feb 10, 2026 and accordingly, investor side regulators have been included.   B. Other activities:   Sr. No. Activity Name Regulator of the activity 1 Monitoring Agency SEBI 2 Research activities, incidental to rating, such as research for Economy, Industries and Companies 6 Not applicable 6 permitted by SEBI vide SEBI Master Circular for CRAs. 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