Arohan Financial Services Limited | Annual Report 2021-22

Assam government announced the Assam Microfinance Incentive and Relief Scheme (AMFIRS) 2021 The Government of Assam announced a historic Assam Microfinance Incentive and Relief Scheme (AMFIRS) in June 2021 with the objective to strengthen the long-term view of ensuring the continuity of micro-finance in supporting the economic activities of low income and poor households in the state. To this effect, the State Government signed a Memorandum of Understanding (MOU) with Microfinance Institutions Network (MFIN, the Industry Self-Regulatory Organization), and 37 lenders operating in Assam (consisting of 6 Universal Banks, 2 NBFCs, 25 NBFC-MFIs and 4 SFBs). As per the MOU, in order to ensure its successful implementation, the, Assam Micro Finance Incentive and Relief Scheme (AMFIRS), 2021 will remain in force till March 31, 2023. Under this scheme, the borrowers have been divided into three categories. Category 1 (consists of customers who have been paying their EMIs regularly and were standard as of March 31, 2021): These customerswill get an incentiveof INR25,000as a reward for being regular in their repayments. Category 2 (consists of overdue (OD) Customers within the 90 Days Past Due (DPD) buckets): The government will pay the OD part of customer’s loans directly to the lender and another INR 25,000 (or the existing loan outstanding amount, whichever is lower) after the customer repays her loan continuously for a fixed period of time. Category 3 (consists of Non-Performing Asset (NPA) Customers): These customers will be evaluated by the Government after submission of their data from the lenders. The state government will repay a percentage of the loan outstanding of the customers to the lenders directly. Overall, AMFIRS 2021 is expected to benefit ~14 lakh microfinance customers of Assam while the state government is expected to expend ~ INR 7,200 Cr to incentivize the regularly paying customers and bringing back other customers into the regular payment cycle by repaying their Overdue amount or partial outstanding to the lender directly. COVID-19 and Natural Calamities With the onset of FY 2021-22, the country was hit by the second wave of COVID-19, resulting into lockdowns again. Almost all the states announced complete lockdown in view of the rising cases with restrictions in local and state movements. By June 2021, the situation improved with declining number of cases and and government restrictions getting relaxed. However, a few states also witnessed natural calamities including cyclones and floods, the worst being Cyclone Yaas impacting the of 48 Annual Report | 2021-2022 Odisha, West Bengal, Jharkhand and Bihar. Other cyclones caused heavy to very heavy rainfall leading to floods in different parts of the country, disturbing the normalcy of life. Th e pandemic and the above mentioned natural calamities affected the normal operations of microfinance industry in thefirst half of the year. Microfinance being heavily dependent upon employees and their movement in the ground, the business activities were slightly slowed down in the impacted areas. However, overall economic situations started to improve in the latter half of the year. Accordingly, portfolio at