231 | Annual Report | 2024-2025 Arohan Financial Services Limited Notes to financial statements for the year ended March 31, 2025 (Contd.) (All amounts in ` lakhs unless otherwise stated) Note 51: Disclosures pursuant to Scale Based Regulation as per circular RBI/DoR/2023-24/106 DoR.FIN. REC. No.45/03.10.119/2023-24 (cont'd) (d) Breach of financial covenant: (cont'd) (***) Due to the cease and desist order issued on issued an order on October 17, 2024 by the Reserve Bank of India ('RBI'), the Company was unable to disburse new loans from October 22, 2024, until January 03, 2025. This restriction led to a reduction in the company’s outstanding portfolio. Additionally, the company experienced a slight increase in delinquency levels during half year ended March 31, 2025, primarily driven by a deterioration in the overall quality of the microfinance industry’s portfolio. As a result, the company had to consider additional provision and write offs due to which there is net loss during the quarter ended March 31, 2025. However, there is a cure period of 60 days from the date of breach. (ii) Borrowings (other than debt securities) Lender Sanction date Description of financial covenants Limit required Actual 1. Indusind Bank (*) December 12, 2023 PAR 31-90 as a percentage of gross loan portfolio (refer note 1 & 4). less than equal 1.50% 1.85% 2. Northern Arc June 01, 2023 (PAR 90 + net write-off of 12 months)/ Gross loan portfolio (refer note 2 & 4). less than 5.00% 8.59% 3. Bank of Baroda September 02, 2024 Return on equity (refer note 3 & 4). Greater than 10% 6.17% (*) However the Company has obtained a financial covenant relaxation on maintaining portfolio overdue for more than 30 days percentage till March 31, 2025. Note: (1) Portfolio overdue for more than 30 days but less than 90 days as a percentage of gross loan portfolio as on March 31, 2025. (2) Aggregate of gross loan portfolio overdue for more than 90 days and net write-off of 12 months as a percentage of gross loan portfolio as on March 31, 2025. (3) Return on equity is computed on profit after tax as a percentage on two point yearly average networth (equity share capital and other equity excluding statutory reserves and esop outstanding). (4) Gross loan portfolio represents assets under management (AUM) There are no breach of financial covenant for debt securities and borrowings (other than debt securities) as on as on March 31, 2024. (e) Divergence in asset classification and provisioning There has been no instance of additional provisioning requirement assessed by Reserve Bank of India (RBI) exceeding five percent of the reported profit before tax and impairment loss on financial instruments, neither there has been any instance of additional gross NPAs identified by RBI exceeding five percent of the reported gross NPAs for the previous financial year. Note 52: Disclosures on loans to Directors, senior officers and relatives of Directors pursuant to the RBI Master direction circular RBI/DoR/2023-24/106 DoR.FIN.REC.No.45/03.10.119/2023-24 Loans to Directors, senior officers and relatives of Directors As at March 31, 2025 As at March 31, 2024 Directors and their relatives Nil Nil Entities associated with directors and their relatives Nil Nil Senior officers and their relatives (*) 1.85 8.51 (*) The loan to the senior officer is as per the staff loan policy of the Company
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