Arohan Annual Report FY 20-21

immediate challenge for Arohan was to manage the proper closure of its huge network of 700+ branches whilemaking sure that cash and account books were managed without any issues. This was made possible by the Internal Control & Quality function within a span of few days, ensuring that accounting closures at all branches correctly reflect disbursements and collections status till the last operational day before the lockdown. The IC&Q Department also put in place mechanisms to track and report adverse incidents at closed branches during the lockdown period. Four branches reported burglary in this period without any significant loss to the Company since the IC&Q department ensured there was no cash available at Branches. The function put in place a robust plan to ensure high rigour of control and quality when branches started opening, with focus on employee safety, management of probable ad-hoc collections, monitoring of possible fraud instances, connecting with customers given the continuing travel restrictions. When the phase-wise unlocking was initiated, the function played a crucial role in managing the Branch teams and supervising the entire activities at branch, regional and zonal levels to ensure a fine balance of quality and quantity. In order to ensure transparency and quality in communication to the last mile employee, the function adopted measures of creating video tutorials in vernacular languages. Most importantly, the Internal Control & Quality department aligned itself completely to the Company’s mandate of restoring repayment collection performance to pre-COVID levels and extended all possible assistance to the Business Operations team in this pursuit. This entailed Branch based IC&Q resources going out in the field and meeting customers, routine as well as stressed. Enhanced Monitoring Recognising the need to strengthen fraud identification, the Internal Control & Quality function, under the able guidance of Arohan’s Apex Committee introduced reporting, investigation and punitive measures as an effective deterrent to fraud instances. The function also undertook structured and periodic Virtual Monitoring of branches over video-conference starting in May- June 2020 and supplementing it with strong on- ground presence starting August 2020. Towards the end of the Financial Year 2020- 21, the Internal Control & Quality function was further mainstreamed and merged with Business Operations to leverage the function to better drive the Company’s overall Quality and Quantity agenda. INTERNAL AUDIT MANAGEMENT The third pillar in Arohan’s Quality Control agenda is an independent Internal Audit function, which reports directly to the Audit Committee of the Board. The Company’s Internal Audit Department monitors adherence to internal controls and regulatory requirements and provides input and recommendations to strengthen governance, control and risk management frameworks. The function also undertakes an independent review to establish whether the business is operating in accordance with the Company’s internal policies and standards for managing operational risk, as well as statutory requirements. The function is guided by a comprehensive audit charter and policy, which is reviewed and approved by the Audit Committee of the Board, led by a non- executive independent director. In addition, in order to strengthen collection performance and especially the outreach to stressed borrowers, the department took the additional responsibility of reaching customers telephonically with the objective to motivate them to reconnect with their centers and the Company’s Branch staff. Management Discussion & Analysis 57