Arohan Financial Services Limited | Annual Report 2021-22

Risk (PAR >30) improved from a high of 15.46% as of June 30, 2021 to 8.1% as of December 31, 2021(source: MFINMicrometer), which is even lower than PAR figures of March 31, 2021. Technological interventions during pandemic period The pandemic period has also paved the way for more technological interventions in the microfinance industry. Most of the microfinance companies have either rolled out or are on the path of rolling out digital repayment facilities for the customers such as Bharat Bill Payment System (BBPS), digital wallet, Aadhar Enabled Payment System (AEPS), QR code based payment etc. for its borrowers. This also involved making the customers aware about digital finance through various financial literacy initiatives. Through its circular on September 13, 2021, the Reserve Bank of India had requested the NBFCs to submit an application seeking permission from the government to use eKYC facility provided by the Unique Identification Authority of India (UIDAI) in order to carry out authentication of Customer’s identity using Aadhaar. A total of 38 NBFCs including two NBFC-MFIs (Arohan, being oneof them) has been grantedpermission vide a Gazette Notice issued on April 8, 2022 to use this facility. This will allow the approved entities in seamless customer on-boarding and in selecting genuine customers for their loan requirement. In the current dynamic macro conditions, astrongandrobust IT infrastructure along with the flexibility to accommodate new processes and systems in a short duration are capabilities that will help organizations in better management of their businesses. Despite slower growth in the microfinance industry in the last two years, and with gradual scale of economic activities of its customers, almost reaching pre-COVID-19 levels, along with the support of the new Master Direction and technological interventions, the demand for microfinance loans is expected to see better growth in FY 2022-23. Overview of Financial year 2021-22 for Arohan The country was hit by Wave II of the COVID-19 pandemic at the start of FY2021- 22. Similar to as during the first wave, Arohan’s priority throughout the year was to ensure the health and safety of its employees, as well as its customers while continuing to supporting the existing customers by providing credit to ensure sustenance of their income generation activities. With the Government of India, launching its vaccination drive for the adult population of the country startingMay 1, 2021, Arohan focused on encouraging its employees to get vaccinated by providing reimbursement for the vaccine cost. Several communications on the same were released internally, as well as on the social media handles of the Company to ensure 100% coverage of its employee base. Arohan also tied-up with a few government approved agencies to provide vaccination support to Arohan employees present across different states. Many of the customers of Arohan were also affected during the Wave II of the pandemic, impacting their business activities during the first half of the financial year. The Reserve Bank of India released the Resolution Framework 2.0 in May 2021 allowing entities, including Arohan, to restate the existing loans of stressed customers. To this effect, Arohan introduced the Samunnati product, which helped in reducing the EMI burden of the stressed customers. Additionally, Arohan also strengthened its Recovery vertical in order to guide delinquent customers, who have moved out of normal credit repayment discipline. Through this vertical, Arohan connected and 49 Annual Report | 2021-2022 Management Discussion & Analysis