Arohan Annual Report FY 20-21

INTERNAL CONTROL & QUALITY The second pillar in Arohan’s focus on its Portfolio Quality is the Internal Control & Quality vertical, which is responsible for maintaining the quality of assets, ensuring compliance with policies and procedures, as well as verification of documents submitted by customers in adherence with the Company’s credit policies. The function is also responsible for improving operations at the Branch level, including strengthening the asset origination process, improving customer attendance at centre meetings, increasing the percentage of loan repayments made by customers, improving the quality of customer service, and improving overall compliance and adherence with the Company’s internal policies and procedures, as well as other statutory requirements. With this objective, Arohan’s IC&Q vertical has dedicated cadres of Zonal Quality Heads, Regional Quality Heads and last mile presence with Branch Quality Heads at the respective operating Branches. The IC&Q vertical is also responsible for monitoring and improving all internal control, fraud detection and remedial action processes, as well as communicating policies and procedures to employees, ensuring their adherence to the same, and implementing strategic initiatives across the organisation. Additional Measures during Lockdown When the Government of India, in March 2020, announced a country-wide lockdown the of operational risks continued to effectively assess and predict higher risk environments consistently for the challenging FY 2020-21. The BRisk Grading of the entire Company at all levels up to the Branches provided the Operations team, the Management and the Board of Directors with an impartial assessment of the operational health of Arohan’s active branches while indicating potential emerging risks. New Risk Initiatives Decision Tools: Development of Arohan’s credit acquisition scorecard, ‘Nirnay’, and deployment of the robust Strategy-One credit decision platform has been completed. The development required that Out of the 350 data points collected from a customer through Arohan’s loan origination system, 43 key customer variables were gleaned for development of the scorecard. This platform will help Arohan in identifying customer repayment behaviour and provide tailor made loan products. This Data Stack along with power of Big Data analytics and Machine learning will help the Company in identifying and addressing the financial needs of the customers. Arohan’s strong domain expertise facilitated seamless acquisition of this project, which harnesses the power of big data of the entire industry. Parallel testing and deployment is currently underway, coinciding with the deployment of Arohan’s new Loan Origination platform, meraArohan. Enterprise Risk Management: In order to effectively balance Risk vis-à-vis Return, and providing accurate and insightful visibility on all risks as a mandate for the Risk unit, Arohan initiated the implementation of the Enterprise Risk Management (ERM) project using the COSO framework. The project is nearing completion. Business Continuity Policy: In FY 2020-21 the Risk unit spearheaded the formulation, completion and adoption of the refreshed Business Continuity Policy and Plan of the Company. The Policy intends to capture the basic approach followed towards defining and developing the Business Continuity Management System for the organisation including the Business Continuity Plan, Incident Management Plan and Disaster Recovery Plan. This enhanced Arohan’s response preparedness against any disruption and/or crisis, especially in view of the COVID-19 waves. Annual Report | 2020-2021 56