Arohan Financial Services Limited | Annual Report 2022-23

Ma n a g i n g Di r e c t o r ’s Ad d r e ss Dear Shareholders, I am delighted to connect with all of you through our Annual Report for the FY 2023. The year started on a significant note for the microfinance sector with two key changes: harmonisation of credit guidelines across banks and non-banks and the pricing deregulation for NBFCMFI’s. This is a paradigm shift and I believe this will ensure two things – discipline on credit underwriting leading to lower delinquency, provisions and write offs and also a viable and sustainable business model for NBFC MFIs. It also places a huge responsibility in the hands of the entities and the discipline on implementing the credit guidelines, and also right pricing of credit in this underserved and vulnerable segment of the population.TheroleofourSelf-RegulatoryOrganisation (SRO) – Micro Finance Institutions Network (MFIN) also becomes even more critical to ensure implementation in the right spirit across entities. Arohan was able to implement both from April 1, 2022 itself due to the advance preparation, guidance from the board and work done in the last quarter of the previous year. After over 12 years of litigation, the honorable High Court of Andhra Pradesh clarified that NBFCs and Banks are to be regulated by the RBI alone under an Act of Indian Parliament. Hence the state government laws, if any on lending would apply only to the ones licensed and regulated by them. This, coupled with the Supreme Court ruling in the FIDC case about State & NBFCs, clearly now lays the ground rules on this matter. This is very positive as it clarifies the ambiguity in relation to the State Money Lending Laws under which the States used to cover NBFC’s and Banks as well. This will pave the way for investors’ comfort on the matter and also open up the states of Telangana & Andhra Pradesh for BoP segment borrowers to access formal finance by the RBI regulated banks and NBFCs. In September 2023, we completed 10 glorious years of being a part of the Aavishkaar Group, our institutional promoter as we invested in and took a controlling stake in September 2012. The Group focus on impact as a measure of progress apart from being commercially viable is a key theme imbibed in our thinking, as well as at Arohan as a Group operating company. Capital raise is key for any growing organisation andwe announced the closure of one of the largest fund raises in the sector in April 2023, of INR 730 Cr plus with 4 new 5 | Annual Report 2022-23