Arohan Annual Report 2023-2024

Management Discussion & Analysis Safekeeping the Trust, Ensuring Quality and Process Adherence for Operational Excellence Arohan’s steadfast dedication to prioritizing quality over quantity lies at the heart of its operational ethos. Embodied in its distinguished quality trinity of Credit Underwriting, Risk Management, and Internal Audit, these pillars serve as the Company’s guardians of excellence. They not only navigate the challenges presented by an ever-evolving macro and micro-industry environment but also ensure that Arohan achieves unparalleled operational prowess Arohan’s sincere commitment to maintaining quality of the built-up business portfolios developed through its diversified products and delivery models rendered satisfactory financial markers in FY 2024. The three-pronged approach to ensuring Quality through CreditUnderwriting, Risk Management, and Internal Audit allows a safe and robust playground for the business to grow in a steady and stable manner. CREDIT UNDERWRITING Arohan’s Independent Credit function stands as a bulwark, fortifying underwriting processes with an unwavering commitment to quality, right down to the last mile. Tasked with managing the credit quality of a diversified business model encompassing both Organic and Inorganic verticals, the Credit function of the Company ensures robust risk management and sustainable growth. Organic Credit The Organic Credit function at Arohan operates with the objective to reduce probability of default by developing suitable Credit Underwriting Policies, Processes and Strategic Interventions, categorised under Credit Policy Formulation and Credit Administration. 1. Credit Policy Formulation: Credit Policies are the core guiding principles that balances the aspirational goal of business growth and the risk appetite of the Company. The Credit Policies are applicable in three layers – I) Customer Level, II) Market or Branch Level, and III) Product Level. I. Customer Level: At the Customer Level, Arohan meticulously evaluates a borrower’s repayment capacity by scrutinizing household income, expenses, existing loan obligations, credit history, and past repayment behaviour. Loan decisions adhere primarily to RBI guidelines, supplemented by internal benchmarks subject to periodic review. II. Market or Branch Level: At the Market or Branch Level, strategic expansion decisions into new territories or consolidation efforts in existing ones are informed by comprehensive secondary data analysis, including industry-specific insights down to pin code levels. Concurrently, Arohan Annual Report 2023-24 | 56

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