Arohan Annual Report FY 20-21

Arohan Financial Services Limited Summary of significant accounting policies and other explanatory information for the year ended 31 March 2021 (Contd.) Note 62: The Hon’ble Supreme Court of India through an interim order dated 3 September 2020 (Public Interest Litigation (PIL) by Gajendra Sharma Vs Union of India & ANR), had directed that accounts which were not declared non-performing assets (NPA) till 31 August 2020 shall not be declared as NPA till further orders. Basis the said interim order, the Company had not classified any account as non-performing assets (NPA), as per Reserve Bank of India (RBI) or other regulatory prescribed norms, after 31 August 2020 which was not NPA as of 31 August 2020. The interim order granted to not declare accounts as NPA stood vacated on 23 March 2021. In accordance with the instructions in paragraph 5 of the RBI circular dated 07 April 2021 issued in this regards, the Company has complied with the asset classification of borrower accounts as per extant RBI instructions/ IRAC norms. Note 63: The Government of India, Ministry of Finance, vide its notification dated 23 October 2020, had announced COVID-19 Relief Scheme (“the Scheme”) for grant of exgratia payment being difference between compounded interest and simple interest for six months period from 1 March 2020 to 31 August 2020 to eligible borrowers as per the Scheme. The management has credited the differential interest in the borrower accounts in line with the requirement of the Scheme and does not have any impact on the financial results. The Company have received the entire amount from Government of India on 31 March 2021. Note 64: In accordance with the instructions vide RBI circular dated 7 April 2021, and the Indian Banks’ Association (‘IBA’) advisory letter dated 19 April 2021, the Company has put in place a Board approved policy to refund/ adjust the ‘interest on interest’ charged to borrowers during the moratorium period i.e., 1 March 2020 to 31 August 2020. The Company has estimated the said amount and made an adequate provision in the financial statements for the year ended 31 March 2021. Note 65: In connection with the proposed initial public offering of its equity shares, the Company has filed the Draft Red Herring Prospectus with the Securities and Exchange Board of India, in February 2021. For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No. 001076N/N500013 Manish Gujral Partner Membership No. 105117 Place: Mumbai Date: 4 June 2021 Manoj Kumar Nambiar Managing Director (DIN: 03172919) Place: Mumbai Milind R Nare Chief Financial Officer Place : Mumbai Anurag Agrawal Director (DIN: 02385780) Place : Mumbai Anirudh Singh G Thakur Company Secretary Place: Mumbai Date: 4 June 2021 For and on behalf of Board of Directors of Arohan Financial Services Limited This is the summary of significant accounting policies and other explanatory information referred in our report of even dates. including, among other things, any new information concerning the severity of the COVID-19 pandemic and any action to contain its spread or mitigate its impact whether government-mandated or elected by us. The Company has recognized provisions as on 31 March 2021 towards its loan assets, based on the information available at this point of time, in accordance with the expected credit loss method. The Company believes that it has considered all the possible impact of the known events arising out of COVID-19 pandemic in the preparation of financial results. However, the impact assessment of COVID-19 is a continuing process given its nature and duration. The Company will continue to monitor any material changes to future economic condition. The Company’s capital and liquidity position remains sufficient and would continue to be the focus area for the Company; accordingly, the Company does not expect a stress on its liquidity situation in the immediate future. Annual Report | 2020-2021 188