Arohan Financial Services Limited | Annual Report 2022-23

investors reposing confidence in the management and the business model. This has improved our Capital Adequacy ratio to over 32% - good enough for the next phase of growth that we are entering into. We plan to cover theWest and also look at possible alliances in the South to spread our presence across the country. With the pandemic firmly behind, the microfinance sector grew in 2022/23 to almost INR 3.5 lakh Cr in credit outstanding serving 66 million borrowers across India. With the building blocks of the infrastructure in place as we traverse through the “Amrit Kaal” of our independence, one can visualise a strong & robust growth of microfinance and increased access to formal finance at the BoP. Arohan also got back to growth with new states of Rajasthan, Haryana and Uttarakhand, and registering over 30% growth from the previous year - I amparticularly pleased with the 2.8%GNPA and a 0.21% NNPA that we reported in March 2023, closer to the Net NPA zero position we would like to move to soon. We launched a first in the sector digital lending vertical now called ArohanPrivilege which seeks to provide special status and low touch services to the Top 1% of our MFI borrowers. With our IT platform, this is done through ApnaArohan the customer application and seeks to give the borrowers a “privilege” feel – applying at the comfort of her home/shop, getting approved online, e-signing of documents, credit into her bank account within minutes, cashback/loyalty points, special pricing and cashless repayments amongst others. Our focus on Quality continues: Credit Department played a key role in implementing the new RBI guidelines on Household Income assessment, updated underwriting norms and also the focus on early delinquency with a close field interaction especially on the exception ones. The Risk Management Department has launched a first-in-the-sector, fully in-house developed Enterprise Risk Management platform called ‘Sandesh’ to track and manage risks across the business. It also led the work on our Credit Scoring model, and I am happy to inform you -that we are the first-in-the-sector to have a risk-based pricing model starting with the lowest decile on applications being processed. Credit & Risk also led the work on relooking at concentration limits – we now have a district-based approach which soon will move to a very granular pincode-based one. Internal Audit has always been the overseer of process & policy adherence on the field and continues to push the envelope on a risk-based audit approach keeping in mind the changing reality and scale and size. The ISO 9001 recertification, the in- housing of the platform, the online FraudManagement System are examples of Internal Audit moving to the next level. The 3 quality and control functions do a formal Portfolio Quality Review (PQR) every month with the business team as a best practice. With millions of borrowers and millions of transactions on a daily basis, it is but inevitable to have a strong and robust IT platform for growth. Our investments and efforts on this aspect have led us to have one of the best IT platforms in the microfinance industry – the Core Banking System, the Credit Scoring model, the ‘Sanjaya’ field management tracker, ‘meraArohan’ field officer application, ‘apnaArohan’ customer application amongst others are clear examples of this. We acquired the ISO/IEC 27001:2013 certification on Arohan’s Information Security and Management Systems last year apart from the regular IT audits from a specialised external expert. ”Vishleshan” our in-house dashboard continuously adds new data and analysis to empower our field management with deep insights for action. Our Central Operations unit which manages our product, process & Customer Insights teams have added value by the right interventions to ensure a right balance between Quality & Quantity. Times have changed post the pandemic and we undertook a full Business Process Review (BPR) of all the field related process and procedures to update it for the current reality and prepare for the future. Our Cross Sell team crossed a milestone on the initiative last year as we seek to strengthen our relationship with our borrowers with product and services. Given the ground reality, we probably are one of the few to have a clear Business & Collections and a Debt Receivable Department seeking to optimise the outcomes on both new business productivity and collections/recovery efficiency. The results on this have been very encouraging with door to door follow ups, extraordinary centre meetings, legal notices, Lok Managing Director’s Address Annual Report 2022-23 | 6