Arohan Financial Services Limited | Annual Report 2022-23

Navi g a t i n g t h e Se a Perfecting the waves of the future, surely and securely Arohan’s agenda of Quality over Quantity forms the cornerstone for its quality trinity of Credit-underwriting, Risk Management, and Internal Audit. These core quality gatekeepers allow the company to traverse the challenges of an evolving macro and micro industry environment while ensuring next-level operational excellence. CREDIT UNDERWRITING Arohan’s Independent Credit function strengthens underwriting processes with its abiding focus on quality till the last mile. The Credit function of the Company manages the credit quality of a diversified business model including Organic and Inorganic verticals. Organic Credit The Organic Credit function at Arohan operates with the vital objective of minimising the cost of credit. To this effect, it has adopted a four-pronged approach: 1. Credit Policy Formulation: Arohan’s Credit Policy is designed to standardize lending decisions in accordance with the Company’s risk appetite. Credit Policies are structured based on a calculated risk approach that takes into account individual customer behaviour such as loan absorption capacity, repayment discipline, etc, the risk associated with different customer segments, and the performance of industry portfolios in different operational geographies (PIN level data of microfinance industry). 2. Credit Administration: Credit Policies are administered at three levels: • CustomerLevel: Arohanuses data-based system validation including KYC, Credit Bureau checks, and mandates by the Reserve Bank of India. With Arohan initiating its industry-first credit scoring model, ‘NIRNAY’, policies are also determined using data on borrowers and pricing decisions. In addition to these, there are various internal credit policies that are also instrumentalized. In a few cases, exceptional approvals are taken centrally based on alternative documentary proofs. Management Discussion & Analysis Annual Report 2022-23 | 56