33 | Annual Report | 2024-2025 to moderate disbursement growth during FY 2025 and FY 2026, are critical for ensuring the longterm health and sustainability of the sector. Central to these efforts is the introduction of comprehensive underwriting guidelines, which have begun to gain traction across industry participants. The key provisions of the MFIN guidelines include: 1. Lender Cap: A maximum of four microfinance lenders per borrower, aimed at limiting crossborrowing and reducing borrower stress. 2. Debt Ceiling and Tenure Norms: A total microfinance debt cap of INR 2 Lakh per borrower. 3. No Lending to an NPA account: Restriction on lending to customers with existing NonPerforming Assets (NPAs) above INR 3,000, as specified in the Code of Conduct (CoC). Further strengthening the regulatory framework, on July 26, 2024, SaDhan—another prominent industry association—unveiled a separate set of sectoral commitments titled the “Seven Sankalps”. These guidelines emphasized responsible lending practices, such as: • Prohibiting loans to households whose total microfinance exposure exceeds INR 2 Lakh, reinforcing the borrower indebtedness cap. • Prioritising adherence to the RBI-mandated 50% fixed obligations to income ratio (FOIR), ensuring that borrowers are not overburdened with repayment obligations relative to their income. • Mandating comprehensive credit assessments at the household level, to gain a clearer understanding of borrowers’ financial situations. • Introducing caps on processing fees for microfinance loans, promoting cost transparency and borrower protection. Subsequently, MFIN proposed further tightening of these norms. Effective April 2025, it further: • Reduced the maximum number of microfinance lenders allowed per borrower from four to three. • Expanded the INR 2 Lakh indebtedness cap to include unsecured retail loans, bringing a broader range of credit products under regulatory scrutiny to better assess and control borrowers’ overall debt burdens. These regulatory enhancements underscore the sector’s unified commitment to responsible lending and the financial well-being of borrowers. By reinforcing the principles of self-regulation, they aim to preserve financial discipline, strengthen customer trust, and promote sectoral stability. These measures are a vital part of the broader, industry-wide effort to foster sustainable lending practices—minimising borrower distress while ensuring the long-term financial health and inclusion of low-income households. AROHAN – FY 2025: YEAR IN A SNAPSHOT FY 2025 was a year of significant learning, transformation, and resilience for Arohan. The company successfully navigated several challenges while achieving meaningful progress on multiple strategic fronts. One of the major events of the year was the imposition of a Cease & Desist (C&D) order by the RBI, related to our pricing, new director approvals, and renewal loan processes. This was a critical period of reflection, dialogue, and mutual learning with our regulator. We are proud to share that Arohan secured the second-fastest revocation of such an order in the industry—a testament to our proactive compliance and transparent engagement. Today, Arohan stands strong with: • The second-lowest MFI pricing in the sector, • A non-net-off renewal loan policy, and • All board directors fully approved by the RBI. This experience underlines a broader shift in the operating environment—one that demands introspection, agility, and continuous evolution. As a sector, and as an organisation, we must adapt. Arohan is already taking decisive steps, as seen in the leadership transitions across Business, IT, and HR functions—two of which were seamlessly managed through internal talent realignment, reflecting the strength of our leadership bench. With a pan-India presence spanning 1,000+ branches, 18 states, 21 Lakh borrowers, 30+ partnerships, ~50 lenders, multiple product lines, and over 10,000 employees, the scale and complexity of our operations call for deliberate recalibration and future-ready strategies. Despite the headwinds, Arohan has delivered several noteworthy accomplishments during the year, including:
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