Shriram City Union Finance Limited - Karvy

and enforcement authorities. Moreover, these laws and regulations can be amended, supplemented orchanged at any time such that we may be required to restructure our activities and incur additional expensesto comply with such laws and regulations, which could materially and adversely affect our business and ourfinancial performance. For instance, RBI has vide recent circular dated May 3, 2011 clarified that bankfinance to NBFCs would not be classified as priority sector lending, which has affected profitability ofNBFCs engaged in money lending activities.Compliance with many of the regulations applicable to our operations in India and/or outside India,including any restrictions on investments, lending and other activities currently being carried out by ourCompany, involves a number of risks, particularly in areas where applicable regulations may be subject tovarying interpretations. If the interpretation of the regulators and authorities varies from our interpretation,we may be subject to penalties and our business could be adversely affected. We are also subject to changesin Indian laws, regulations and accounting principles and practices. There can be no assurance that the lawsgoverning the Indian financial services sector will not change in the future or that such changes or theinterpretation or enforcement of existing and future laws and rules by governmental and regulatoryauthorities will not adversely affect our business and future financial performance.34. Our insurance coverage may not adequately protect us against losses.We maintain such insurance coverage that we believe is adequate for our operations. Our insurancepolicies, however, may not provide adequate coverage in certain circumstances and are subject to certaindeductibles, exclusions and limits on coverage. We maintain general liability insurance coverage includingcoverage for errors or omissions. We cannot, however, assure you that the terms of our insurance policieswill be adequate to cover any damage or loss suffered by us or that such coverage will continue to beavailable on reasonable terms or will be available in sufficient amounts to cover one or more large claimsor that the insurer will not disclaim coverage as to any future claim.A successful assertion of one or more large claims against us that exceeds our available insurance coverageor changes in our insurance policies including premium increases or the imposition of a larger deductible orco-insurance requirement could adversely affect our business, financial condition and results of operations.35. There is ambiguity on whether or not NBFCs are required to comply with the provisions of state moneylending laws, which if interpreted unfavorably by statutory/regulatory authorities or courts of law couldadversely affect our operations and profitability.There is ambiguity on whether or not NBFCs are required to comply with the provisions of state moneylending laws that establish ceilings on interest rates. We also carry out operations in several states such asAndhra Pradesh, Tamil Nadu, Madhya Pradesh, and Maharashtra, where there are money lending statutesin operation. The relevant state money lending statutes provide penalties for non-compliance with suchstatutes, including civil and criminal consequences. In the event that the government of any state in Indiarequires us to comply with the provisions of their respective state money lending laws or imposes anypenalty against us, our Directors or our officers, including for prior non-compliance, our business, results ofoperations and financial condition may be adversely affected.36. We do not own most of our branch offices and our registered office. Any failure on our part to executeand/or renew leave and license agreements and/or lease deeds in connection with such offices or failureto locate alternative offices in case of termination of the leases and/or leave and license arrangements inconnection with any branch could adversely affect our operations and profitability.Our Registered Office and most of our branches are located on leased and/or licensed premises. If any ofthe owners of these premises does not renew an agreement under which we occupy the premises or if anyof the owners seeks to renew an agreement on terms and conditions unfavorable to us, we may suffer adisruption in our operations or increased costs, or both, which may adversely affect our business and resultsof operations.14