| 1 Annual Report | 2024-2025 Annual Report 2024-25
2 | Annual Report | 2024-2025
| 3 Annual Report | 2024-2025 At Arohan Financial Services Limited, as part of the Aavishkaar Group, we believe that every success, every milestone achieved, is a reflection of the collective strength of our diverse stakeholders – our customers, employees, investors, regulators, and the broader industry. Our Annual Report this year reflects our ethos of “For the People, By the People, Of the People” encapsulating the spirit of collaboration and shared growth that defines our approach. Throughout FY 24-25, we have remained committed to enhancing every aspect of our business, from adopting cuttingedge technology to refining processes and policies, all with one goal in mind: to make doing business with us as seamless and efficient as possible. Our investments in state-of-the-art technology and continuous process improvements are designed to optimize our services, ensuring that our valued customers receive the best possible experience. Each change we make is for their ease and convenience, underpinned by our steadfast commitment to excellence and customer satisfaction. Together, we move forward, shaping a future that benefits all those we serve.
4 | Annual Report | 2024-2025 At Arohan, sustainable value creation is not just about financial success; it reflects a deep, holistic commitment to all stakeholders and the environment. At the core of this commitment are our four pillars: customers, employees, shareholders, and the environment. Our commitment to excellence has been reaffirmed through multiple accolades. We have been awarded the highest-rated MFI 1 grade by CARE Edge Analytics & Advisory (CareEdge Advisory), based on the March 2025 grading. This prestigious recognition, based on the TOSS framework of Transparency, Operational Setup, Scale of Operations, and Sustainability, demonstrates our commitment to operational excellence. Additionally, in 2024, Arohan received the coveted GOLD Standard in Client Protection Principles under the Cerise+SPTF Methodology, an honour signifying that we meet the highest standards in client protection, with an outstanding 99.1% indicator compliance in our inaugural attempt. Maximising Value for Every Stakeholder Customers Employees Arohan is dedicated to recognising, anticipating, and addressing the evolving needs of its customers, constantly striving to offer innovative solutions and best-in-class service. By building enduring relationships founded on trust and integrity, we aim to enhance customer satisfaction and loyalty, which drives mutual growth and long-term prosperity. At Arohan, our employees are our greatest asset. Our people practices are designed to nurture a culture of inclusivity, respect, and professional growth, enabling every individual to reach their full potential. Through investments in training, career development, and a supportive work environment, we empower our employees to contribute to collective success and fulfilment. Our employee-centric approach has earned Arohan recognition as one of India’s top employers. In FY 2025, we were ranked 35th among India’s Top 100 Best Companies to Work For 2024 by the Great Place to Work® Institute and named the Best Workplace in the Microfinance Industry for 2024. Additionally, we ranked among the Top 25 Best Workplaces in BFSI and received accolades for being among India’s Best Workplaces for Women and Millennials.
| 5 Annual Report | 2024-2025 Shareholders Environment Arohan is steadfast in its commitment to generating sustainable returns and maximising value for its shareholders. Through transparency, accountability, and prudent risk management, we ensure the long-term success of the company while upholding the highest standards of corporate governance. As a responsible corporate entity, Arohan recognises the vital connection between our business practices and environmental sustainability. We are committed to minimising our carbon footprint while empowering the communities we serve. Through responsible sourcing, energy-efficient measures, and eco-friendly practices, Arohan actively promotes environmental stewardship. In FY 2025, we organised several community-focused initiatives, including Health Camps, Eye Check-up Camps, Newborn Hearing Screening Camps, and Financial Literacy, all aimed at improving the well-being and knowledge of the communities we operate in. These efforts underscore our commitment to creating a positive and lasting impact on both society and the environment. Through our unwavering focus on these four pillars, Arohan ensures that we create sustainable, long-term value for every stakeholder, advancing our mission of inclusive growth and responsible business practices. In FY 2025, Arohan retained its credit ratings of ‘A- (Stable)’ by CARE and ‘A (Stable)’ by ICRA, even after facing a temporary Cease & Desist order from the Reserve Bank of India in October 2024, which was subsequently revoked in January 2025. This highlights our strong financial stability and resilience, further cementing Arohan’s position among the elite microfinance institutions in the country. These ratings assure our stakeholders of our commitment to robust financial health and our ability to serve customers better.
6 | Annual Report | 2024-2025 Key Performance Indicators SOLVENCY & LIQUIDITY EFFICIENCY RATIOS NETWORTH INR 2,025 Cr CAPITAL ADEQUACY RATIO 34.09% CARE A- (Stable Outlook) ICRA A (Stable Outlook) FEE INCOME (as a % age of total income): 6% OPEX 8.00% CASH AND CASH EQUIVALENT (including Bank Balance) INR 673 Cr FUNDS DRAWN INR 2889 Cr
| 7 Annual Report | 2024-2025 AROHAN PRIVILEGE DIGITAL LENDING Borrower’s Demography NUMBER OF CUSTOMERS 29,481 STATES: 18 GROSS LOAN PORTFOLIO: INR 6,003 Cr NO. OF BRANCHES: 1102 RURAL BRANCH PERCENTAGE: 64% SEMI URBAN BRANCH PERCENTAGE: 16% DISBURSEMENT: INR 4,636 Cr DISTRICTS: 323 CUSTOMER STRENGTH: 21,39,098 NO. OF EMPLOYEES 10,252 FIELD EMPLOYEE PERCENTAGE 92.48% RURAL 72% SEMI URBAN 11% URBAN 17% WOMEN 99.02% IMPACT NUMBERS Branch Employees PORTFOLIO INR 103 Cr
8 | Annual Report | 2024-2025 Key Highlights AWARDS & RECOGNITIONS
| 9 Annual Report | 2024-2025
10 | Annual Report | 2024-2025
| 11 Annual Report | 2024-2025 Index Chairman’s Address 01 Vice Chairman’s Address 03 Managing Director’s Address 05 Corporate Information 09 d. ESG 17 e. Geographic Footprints 19 i. Board of Director’s Profile 21 ii. Management’s Profile 25 iii. Investor’s Profile 29 Board of Director’s Report 81 - 89 Annexures to DR 90 - 128 Auditor’s Report 129 - 144 Financials 145 - 244 Sustainability in the core of our practices a. Mission, Vision, Values 11 b. Business Verticals 13 c. Our Product Offerings 15 Management Discussion & Analysis a. Of the People 31 - 38 b. For the People 39 - 66 c. By the People 67 - 80
Dear Stakeholders, It gives me great pleasure to welcome you to the Annual Report of Arohan Financial Services for the financial year 2024-25. As we reflect on the past year, I would like to begin by expressing my gratitude for your continued support and belief in Arohan. Your trust has been the cornerstone of our journey, especially as we navigated a dynamic and evolving fiscal. The global economy in FY25 presented a mixed picture given the geo political situation. While several developed economies grappled with inflationary pressures, tightening monetary conditions, and geopolitical uncertainties, emerging markets showed resilience. Despite the challenges, the global financial ecosystem remained largely stable, supported by prudent policy decisions and a focus on inclusive growth. However, it is evident that the world is transitioning through a phase where adaptability, innovation, and social responsibility are more important than ever. In this global context, India has stood out as a beacon of growth and optimism. The country continued to chart a robust economic path, with GDP growth for Q4 FY 2025 estimated at around 7.4%, driven by strong domestic consumption, digital innovation, and infrastructure investments. India’s macroeconomic stability, coupled with visionary governance, has fortified its position as one of the most promising major economies globally. The Government’s mission of Viksit Bharat@2047 continues to inspire institutions across sectors. This vision of transforming India into a developed nation by its centenary of independence emphasizes inclusive development, sustainability, and economic empowerment for all – goals that align closely with our own at Arohan. The Reserve Bank of India’s latest Financial Stability Report and the Financial Inclusion Index both reflect encouraging progress in deepening credit penetration and expanding financial access across the country. This momentum, particularly in underserved and unbanked regions, is vital. It is here that institutions like Arohan have a pivotal role to play. Microfinance remains a powerful instrument of Chairman’s Address Dinesh Kumar Mittal Chairman Board of Directors 1 | Annual Report | 2024-2025
economic transformation. At Arohan, we believe in the transformative power of small, responsible credit delivered with care and purpose. Through our offerings, we have empowered millions of underserved women and families with the financial tools to uplift their livelihoods, achieve stability, and pursue their dreams. In FY 2025, Arohan expanded its reach while maintaining our strong commitment to asset quality, customer protection, and risk management. Our approach to microfinance is not just about access to capital - it is about creating a relationship of trust, responsibility, and long-term impact. We were hit by an unfortunate Cease & Desist order served on us by the RBI in October 2024, but the rigorous interaction with them across levels helped us clarify the key points specific to the business, and the Company. I am happy that Arohan was the second fastest out of the Cease & Desist order in just 2.5 months. I am happy to state that in a deregulated environment; the Board has self-imposed a cap of 12% margin on cost of funds on microfinance loan pricing – a first and unique in the sector. Arohan’s unique positioning in the sector is built upon our steadfast focus on customercentricity, responsible lending, and technologyled operational excellence. But beyond financial metrics, what truly sets us apart is our deeprooted culture of integrity and strong corporate governance. We are proud of the robust frameworks we have established to ensure transparency, compliance, and ethical conduct at all levels of the organisation. These foundations not only build stakeholder confidence but also ensure that we remain resilient and adaptive in a changing environment. This year, we also witnessed key changes in our Board. We welcomed new members to the Board - Mr. Kummamuri Narasimha Murthy as the new Head of Audit Committee, Mr. Ulhas Sharad Deshpande as the new Head of Nomination and Remuneration Committee and Mr. Jose Joseph Kattoor as the new Head of Risk Management Committee, bringing with them a wealth of experience and insight to further strengthen our Board. We are certain that the diverse expertise and fresh perspectives of the new members will help steer Arohan into its next phase of growth. At the same time, we bade farewell to esteemed colleagues, Mr. Rajat Nag who stepped down upon completion of his second term as Independent Director overseeing Audit & Risk Committee, Ms. Matangi Gowrishankar who stepped down as Independent Director overseeing Nomination & Remuneration Committee and Mr. Sumantra Banerjee having contributed immensely to the institution’s journey. On behalf of the Board and the entire Arohan family, I extend my heartfelt gratitude to them for their service and stewardship. As we move forward, I would like to take this opportunity to thank our investors, regulators, lenders, customers, and employees. Your continued confidence and commitment have enabled us to sustain and grow our mission in times of both challenge and opportunity. To my fellow Board members and the management team - thank you for your unwavering dedication and strategic foresight. Together, we are not just building a financial institution; we are nurturing a movement that empowers lives and strengthens communities. In the coming years, Arohan will continue to evolve - innovating responsibly, scaling sustainably, and staying true to the purpose that defines us. We remain committed to making a meaningful difference in the lives we touch, in line with the broader aspirations of a Viksit Bharat. Thank you once again for your enduring support. Dinesh Kumar Mittal Chairman Board of Directors Chairman’s Address | 2 Annual Report | 2024-2025
3 | Annual Report | 2024-2025 Vice Chairman’s Address Dear Shareholders, We find ourselves navigating a world that is increasingly defined by Volatility, Uncertainty, Complexity, and Ambiguity (VUCA). It is a landscape shaped by rapidly evolving global dynamics—where each day presents new challenges that test the very foundations of institutions and societies. The past year has been particularly tumultuous. Geopolitical conflicts have intensified across continents, with wars threatening to spill over borders and destabilise entire regions. Simultaneously, the escalating impact of climate change is no longer a distant concern but a lived reality. Extreme weather events, floods, droughts, and forest fires are occurring with alarming frequency, displacing communities and disrupting livelihoods. These crises are not isolated—they are deeply interconnected, with ripple effects felt across supply chains, markets, and economies worldwide. In this backdrop, Arohan Financial Services has had to confront its own share of challenges. FY 2025 was a year that brought the abstract notion of global volatility into very tangible focus for us. We were tested—not only in terms of commercial performance, but in our core values, our institutional integrity, and our ability to stay true to our mission under pressure. Throughout this period, we faced intense regulatory scrutiny and navigated complex operational hurdles. These challenges demanded from us not just technical resilience, but also a deep reservoir of moral courage, conviction, and clarity of thought. We had to consistently lean on our ethical compass, making difficult decisions that balanced regulatory expectations with the long-term interests of our customers and stakeholders. Amidst this turbulence, our vision—to serve the underserved and bring meaningful financial inclusion to the last mile—remained our North Star. We doubled down on listening to our Vineet Chandra Rai Vice Chairman, Arohan Financial Services Limited Founder, Aavishkaar Group
| 4 Annual Report | 2024-2025 customers, understanding their anxieties, and adapting our services to meet their needs. It is this closeness to the ground that enabled us to respond with empathy, flexibility, and speed, even as larger external forces seemed overwhelming. From our earliest days, Arohan has been built on a foundation of robust corporate governance, transparency, and deep concern for the wellbeing of our customers. These are not just guiding principles—they are operational imperatives that shape every decision we take. This year, they were our armor. In the face of scrutiny and skepticism, we responded with integrity. In the face of adversity, we stood firm in our commitment to do what is right—never allowing the pressure of the moment to cloud our long-term vision. I would like to express our sincere gratitude to the Reserve Bank of India, whose oversight and guidance during this difficult time were invaluable. We also acknowledge, with deep appreciation, the continued trust of our 2.1 mn borrowers—a remarkable 40% of whom are served exclusively by Arohan. This enduring relationship is a powerful testament to the trust our customers place in us. To our shareholders, we are thankful for your steady support and belief in our long-term mission. To our Chairperson and Independent Directors, your wisdom, encouragement, and strategic counsel were vital in keeping us grounded in reality and focused on the future. Your leadership helped us not only weather the storm but emerge from it with greater clarity and confidence. Despite the challenges, we concluded FY 2025 with strong financial performance, underpinned by a healthy capital adequacy ratio and prudent risk management. These fundamentals position us well for the journey ahead, as we continue to scale our impact while maintaining a sharp focus on sustainability, compliance, and customer well-being. We take great pride in the resilience of our people—over 10,000 dedicated employees— who worked tirelessly to support our customers and communities. And we remain inspired by the spirit of our borrowers, whose determination and hope remind us every day why Arohan exists. As we look to the future, we do so with quiet confidence. We are prepared not only to navigate the risks ahead, but to seize the opportunities that will emerge in their wake. We reaffirm our commitment to building an organisation that is resilient, responsible, and relentlessly focused on creating meaningful, lasting impact. Thank you for your continued trust and partnership. Warm Regards, Vineet Chandra Rai Vice Chairman, Arohan Financial Services Limited Founder, Aavishkaar Group Promoter’s Address
5 | Annual Report | 2024-2025 Managing Director’s Address Greetings, I am delighted to connect with all of you through the Annual report FY 2025 of Arohan Financial Services Limited, as we enter the 20th year of our operations having started the microfinance business in April, 2006. As of March 2025, Arohan operates through 1102 branches in 17 states with a workforce of over 10,200 employees serving 2.1 mn end borrowers with a credit portfolio outstanding of over INR 6,000 Cr. In a very difficult year, we have been one of the few entities in the Top 10 NBFC MFIs to report a profit with best-in-class GNPA at 2.85% and an NNPA of just 0.53%. India’s microfinance sector, which plays a vital role in promoting financial inclusion and currently serves nearly 80 mn borrowers, is facing a complex mix of long-standing and emerging challenges. Issues such as KYC verification— particularly the reliance on Voter ID following the 2017 Supreme Court restriction on Aadhaar— have raised concerns around data accuracy and borrower duplication. Inconsistencies in credit bureau data updates, ranging from daily to monthly, affect lending decisions in a sector where real-time information is crucial. High employee attrition post-pandemic, often exceeding 40%, has impacted borrower relationships and portfolio quality. At the borrower level, there’s a shift toward overborrowing, driven by demand for larger loans irrespective of repayment capacity, while some institutions are compounding the risk through irresponsible over-lending with relaxed underwriting and faceless fintech lending. Governance lapses in certain entities—such as inadequate board oversight on growth, pricing, policies and management incentives—have further undermined stakeholder trust. There is also a prevalent misconception about interest rates, where a 24% reducing balance rate is misinterpreted as interest burden of Rs 24 for a loan of Rs 100 for a year when it is actually just Rs 13.47! In the absence of formal credit, the borrowers have to depend on informal lenders charging up to 240% - 10 times the average formal rate. Adding to the strain are external disruptions like inflation, wage Manoj Kumar Narayan Nambiar Managing Director
| 6 Annual Report | 2024-2025 stagnation, and climate shocks, fin-influencers or aggregators along with rising incidents of financial vandalism—populist loan waiver campaign promises that disrupt repayment culture and fuel wide spread defaults. Together, these challenges call for urgent, systemic intervention to preserve the sector’s integrity and unleash its full potential. To overcome the structural and operational challenges facing India’s microfinance sector— and to enable it to become a pillar of Viksit Bharat—the following ten actionables are strongly recommended: 1. Reliable and Authenticated KYC: The foundation of responsible lending is knowing your customer. In the wake of the Supreme Court’s Aadhaar ruling (2017), most MFIs have moved to Voter ID—which lacks uniqueness as of today. The government should help reinstate e-KYC via Aadhaar for regulated financial entities or mandate the use of C-KYC to ensure a unified, tamper-proof system. This will reduce duplication, fraud, and improve authentic KYC checks. 2. Real-Time Credit Bureau Reporting: Given the unsecured nature of microfinance loans, credit underwriting must rely on up-to-the-minute borrower data. The RBI should mandate daily credit bureau updates from all lenders on the microfinance portfolio, along with the integration of KYC-linked deduplication to prevent multiple simultaneous borrowings. This is crucial for risk mitigation and portfolio quality. 3. Sustainable and Transparent Pricing: Delivering doorstep, unsecured loans to remote communities involves real costs. A healthy microfinance ecosystem needs to attract long-term capital, which requires the potential for ~ 15%+ equity returns. The sector to double its outreach to make formal credit available widely will need an estimated over $4 bn in fresh equity investment. This will also help the entities to leverage through debt from the banking sector and/or the capital markets to grow. The industry also needs to shift to risk-based pricing —a real necessity for differentiation and reward for credit discipline. 4. Legal Protection Against Financial Vandalism: The proposed Ban on Unlawful Lending Activities (BULA) Bill from GoI is a welcome move to curb predatory & unregulated lending. But an equally important requirement is an Anti-Financial Vandalism (AFV) Bill, aimed at deterring individuals or groups who disrupt legitimate repayment through misinformation or populist promises of potential loan waivers. This will deter opportunistic interference and protect credit behaviour with institutional lending frameworks. 5. Climate Risk Protection for Borrowers: As climate shocks intensify, the livelihoods of microfinance borrowers—especially in agriculture and informal sectors—are increasingly vulnerable. The sector needs a climate-linked borrower protection product that covers interest costs during short-term repayment deferrals due to natural disasters, complementing existing credit life insurance schemes. 6. Workforce Development with Accountability: Microfinance can generate large-scale rural employment. A national program for certified financial inclusion professionals can prepare youth for roles across lending, insurance, pensions, and investments. Simultaneously, a sector-wide employee bureau must track misconduct, ensuring that fraud or negligence does not go unchecked across institutions as all this leads to higher credit costs. 7. Strengthening Corporate Governance: Lending to financially vulnerable populations is a responsibility-heavy activity, and boards must demonstrate active oversight. Institutions must adopt strong governance practices around growth strategy, provisioning norms, pricing models, and executive compensation & incentives, aligning them with long-term sustainability and regulatory expectations. 8. Reforming Collections and Recovery Frameworks: Collection is integral to lending. The sector must transition toward digital, cashless collections to reduce costs and increase efficiency. For recovery, enforcement mechanisms—within the RBI’s Code of Conduct—should be allowed. Credit bureau reporting, Lok Adalats, co applicant’s and cross check of credit discipline for government benefit programs can instil a significant seriousness on repayment discipline. Not paying after taking a loan should not be an option – very critical to build Managing Director’s Address
7 | Annual Report | 2024-2025 a deep and robust credit market. Having said this, a distressed borrower programme is also required to address genuine stress possible in this segment 9. Empowered and Accountable SROs: RBIrecognised Self-Regulatory Organisations (SROs) should be empowered to enforce stricter operational norms beyond regulatory minimums. These include caps on number of lenders per borrower, overall indebtedness, no lending to 30+ DPD borrowers, and borrower education standards. In cases where lenders violate norms, SROs must have the authority to intervene, suspend collections, or recommend penalties. 10. Financial Literacy as a National Mission: Households earning under INR 3 Lakh annually require targeted, structured financial education. While MFIs often provide this during loan onboarding, broader & ongoing efforts from RBI, NABARD, state governments, and the Ministry of Finance are needed to build a culture of responsible borrowing and credit awareness across India’s base-of-the-pyramid population I was honoured to be the Chairman of the Governing board at Micro Finance Industry Network (MFIN), our industry Self Regulatory Organisation (SRO) for the year 2024-25. This is my third stint on the board and feel humbled by the support and confidence reposed by the members and fellow directors. Building consensus on the need to do, we moved ahead and launched the MFIN Guard Rails 1.0 in early July 2024 building on the broad RBI norms of Household Income Assessment and Fixed Obligations to Income ratio. MFIN Guard Rails 1.0 essentially prescribes what good underwriting entities like us had put in place: cap on number of lenders to a borrower, an indebtedness ceiling, no additional credit to a delinquent borrower amongst others. We tightened the Guard Rails further in January and then again in April 2025. The tracking from the credit bureau data and then escalation from the management to the board and finally to the RBI ensures seriousness and adherence. I am happy to inform you that Arohan has consistently been in the Top 3 on adherence with less than 2/3% deviations from the norms. For a company which prides itself on a high level of governance and transparency, the RBI Cease & Desist order served on us late October 2024 was a shock across levels – company, board, employees and the external world including the lenders and investors. Clearly our growth in NIM’s since FY 2023, the outstanding & profits in in FY 2024 v/s the previous year stood out and was picked up. We engaged with RBI at all levels and with the interactions, data submitted and clarifications given had the second fastest exit of our Cease & Desist in just 2.5 months. It was a difficult period especially for our employees & borrowers, but a learning experience which will keep us in good stead in the future. Arohan has always pushed the envelope to be ahead of the sector on new initiatives: operating on a Core Banking System (CBS), our own scoring
| 8 Annual Report | 2024-2025 Managing Director’s Address model “Nirnay”, digital lending with a privilege experience “Arohan Privilege” and “Sahbhaagi” - the loyalty programme to name a few. Last year we did a pilot on “Sarathi”, the first Balance Transfer product in the microfinance space. The learnings are now being incorporated into the final launch to gain market share across the geographies in which we operate. The various departments in the Company lead by Business played a key role last year – our control & quality functions: Risk, Credit & Internal Audit kept vigil alerting the management while Information Technology worked to ensure continuous development & also launched e-KYC with Aadhaar as a key initiative. Accounts & Treasury did well to manage liquidity while reducing landed cost of debt and worked with a statutory auditor change. HR, Administration & Training focused on improving the employee retention and bring in higher efficiencies. Our foresight in building management bandwidth kept us in good stead – as we reassigned Shailesh Kumar as Chief Business Officer, Amit Sugandhi as Head of Information Technology and welcomed Deblina Bhattacharjee as our new Head of Human Resources, Administration & Training. We also streamlined the Micro Enterprise Loan & the Arohan Privilege verticals with the regular field structure to leverage on the entire field force. Last year we were ranked 35th all India across all sectors in the Great Places to Work listings apart from Best place for Women and Millennials; we also won the coveted SKOCH Award for our “High Potential and Leadership Development” programme; SKOCH Order-of-Merit for our scoring model Nirnay and also got recognised by CRIF HighMark for Data Excellence. Our key priorities for the FY 2026 would be to optimise our operating expense ratio by a judicious mix of growth and right sizing; work on improving productivity and efficiency and look at secondary exits for our long-standing investors. I wish to thank the Government of India for its focus on Financial Inclusion, the state governments for their understanding, our regulator RBI for its progressive policies, our esteemed board for its guidance, our promoter group for their belief in the business, our employees for their hard work on the ground, our lenders for their continuous support, our investors for their strong confidence in us, the sector SRO MFIN for its untiring efforts and last but certainly not the least, the millions of end borrowers who have given us the privilege to serve them. I have no doubt that Microfinance can and will play a key role at the BoP – in our journey to Viksit Bharat by 2047. Jai Hind, Manoj Kumar Narayan Nambiar Managing Director
9 | Annual Report | 2024-2025 Corporate Information MANAGEMENT REPRESENTATIVES * Mr. Jose Joseph Kattoor was appointed as an Additional Director under category Non-Executive Independent Director w.e.f September 28, 2024 and was regularised by the shareholders at the Extra-Ordinary General Meeting held on October 21, 2024. * Mr. Narasimha Kummamuri Murthy was appointed as an Additional Director under category Non-Executive Independent Director w.e.f February 12, 2025 and thereafter was regularised by the shareholders at the Extra-Ordinary General Meeting held on April 22, 2025. * Mr. Sri Radha Ramana Saripalli was appointed as a Nominee Director on the Board of Directors of the Company with effect from May 23, 2025. Note: Mr. Dinesh Kumar Mittal Chairman of the Board & Independent Director Mr. John Arunkumar Diaz Independent Director Mr. Ulhas Sharadkumar Deshpande Independent Director Mr. Jose Joseph Kattoor* Independent Director Mr. Narasimha Kummamuri Murthy* Independent Director Mr. Vineet Chandra Rai Vice Chairman & Promoter Nominee Director Mr. Anurag Agrawal Promoter Nominee Director Mr. Wilhelmus Marthinus Maria Van Der Beek Nominee Director Mr. Stephen Dongwon Lee Nominee Director Mr. Sri Radha Ramana Saripalli* Nominee Director Mr. Nitish Chawla Nominee Director Ms. Karina Isabel Alva Alfaro Nominee Director Ms. Rupa Rajul Vora Nominee Director Mr. Manoj Kumar Narayan Nambiar Managing Director BOARD OF DIRECTORS Mr. Manoj Kumar Narayan Nambiar Managing Director Mr. Milind Nare Chief Financial Officer Mr. Shailesh Kumar Chief Business Officer Mr. Anirudh Singh G. Thakur Company Secretary & Chief Compliance Officer Mr. Ranjan Das Chief Risk Officer Mr. Abin Mukhopadhyay Head of Internal Audit Ms. Deblina Bhattacharjee Head of HR, Training & Development and Administration Ms. Sharoni Pal Head of Credit & Process Control Mr. Amit Sugandhi Head of Information Technology Mr. Ketan Agrawal Head of Accounts Mr. Vinod Pandey Head of Central Operations Mr. Joyanta Bakali Deputy Business Head Mr. Manish Kumar Deputy Business Head Mr. Aman Arora Deputy Business Head Mr. Pradip Kumar Nath Head of Microfinance Audit Mr. Debarshi Chaudhuri Assistant Vice President, Accounts & Taxation
| 10 Annual Report | 2024-2025 REGISTERED AND CORPORATE OFFICE SECRETARIAL AUDITOR CORPORATE IDENTIFICATION NUMBER REGISTRAR AND TRANSFER AGENT STATUTORY AUDITOR MUFG Intime India Private Limited C-101, 1st Floor, 247 Park, L.B.S Marg, Vikhroli (West) Mumbai – 400083, Maharashtra, India B S R & Co. LLP Chartered Accountants (Registration No-101248W/W-100022) 14th Floor, Central B Wing and North C Wing, Nesco IT Park 4, Nesco Center, Western Express Highway, Goregaon (East), Mumbai - 400063 U74140WB1991PLC053189 S Basu & Associates Company Secretaries Registration No: S2017WB456500 Alapan Apartment, 3rd Floor, 10/6/2 Raja Rammohan Roy Road, Kolkata -700008, West Bengal, India PTI Building, 4th Floor, Block DP, DP-9, Sector V, Salt Lake, Kolkata – 700091, West Bengal, India Tele: + 91-33-4015-6000 E-mail: compliance@arohan.in Website: www.arohan.in Corporate Information
11 | Annual Report | 2024-2025 What Drives Us? Our Mission, Vision and Values The heartbeat of an organisation resonates from the collective mindset and actions of its people, adapting to the ever-evolving ecosystem. At Arohan, our culture is steeped in the essence of our core values, fueling responsible lending and fostering growth. Guided by these principles, our leaders and managers chart the course towards fulfilling our Mission and Vision with unwavering commitment. To empower the under-served households by offering a range of financial services, in a manner sustainable for all stakeholders. To impact over 20 million lives by 2030. To be among the Top 3 MFI players, serving nearly 5 mn households and being a preferred place to work for our employees. MISSION VISION
| 12 Annual Report | 2024-2025 Employee Engagement: Arohan treats its employees as a major stakeholder and hence its processes and systems are designed to ensure employee satisfaction, development and high morale. Transparency: Arohan’s products and processes are transparent to its clients such that the information communicated to them is clear, sufficient and timely in a manner and language clients can understand so that clients can make informed decisions. It is also transparent in its communication to, and transactions with all other stakeholders, and employees. Honesty and Integrity: Led by exemplary governance, Arohan maintains high integrity in its delivery, products and processes. Arohan has zero tolerance for unethical practices. It strives to behave with honesty and integrity in all its internal and external communication, and dealings with all stakeholders. Innovation: Arohan strives to maintain a creative culture in the organisation, where employees are encouraged to learn and innovate in their day to day work, while adhering to Arohan’s standards of business and conduct. Also, product, process and business model innovation are integral to Arohan. Customer Centricity: Since customers are considered important stakeholders, Arohan’s products and processes are designed keeping customer needs and realities in mind. Arohan strives to serve customer needs in an effective and efficient manner and behave in a dignified and respectful manner with its customers at all times. Shareholder Value Focus: Arohan recognises its shareholders to be an important stakeholder whose interests it strives to protect, and to whom it seeks to deliver value by focusing on sustainability, profitability and growth of the business. CORE VALUES (ETHICS) Growth through the lens of Sustainability
13 | Annual Report | 2024-2025 Our Business Verticals Credit Solutions for Every Business Need As the economic landscape rapidly evolves, Arohan is committed to identifying and seizing opportunities to better serve our customers and protect their interest at all cost. By enhancing our processes and operations through a sustainable lending model and business diversification, we are ensuring that we meet the varying credit needs of our customers. Guided by a clear roadmap, structured around four key business verticals, Arohan is advancing toward its Vision 2030. Our goal is to positively impact the lives of 20 mn individuals by creating innovative credit solutions that meet the diverse needs of our customers.
| 14 Annual Report | 2024-2025 At the core of Arohan’s business, is our commitment to providing accessible credit to individuals at the bottom half of the socio-economic pyramid. Through our joint liability group model, we offer a range of financial services, including loans from INR 25,000 to INR 1,00,000, designed to foster the socioeconomic growth of our customers. Our solutions are tailored to empower individuals and improve their quality of life, helping them achieve their goals. Our ArohanPrivilege platform offers a seamless digital loan experience, designed specifically for our valued customers. With this pioneering platform, individuals can easily apply for and receive loans from the comfort of their homes, with funds transferred to their accounts in minutes. This solution not only enhances service excellence but also empowers our customer service teams to focus on identifying and serving new customers who are ready to benefit from Arohan’s financial solutions. MSMEs are vital to India’s economy, and Arohan is dedicated to providing tailored credit solutions to meet the specific needs of micro enterprises. With our Micro Enterprise Loan Programme, we offer loans ranging from INR 75,000 to INR 2 Lakhs, ensuring that small businesses have access to the working capital they need to grow and thrive. By understanding the unique challenges of these enterprises, we provide flexible and personalised solutions to help them succeed. Arohan takes pride in offering a range of solutions to meet the diverse needs of microfinance customers through our MFI Alliances vertical. This includes strategic partnerships to source and collect credit for smaller microfinance entities, as well as term loan services up to INR 30 Cr. By diversifying our approach, we ensure that our customers – whether they are smallscale microfinance entities or individuals – can access the right credit solutions at the right time. Tailored Organic Credit Solutions ArohanPrivilege: Empowering through Digital Lending MFI Alliances for Broader Access Supporting Micro Enterprises with Flexible Loans Growth through the lens of Sustainability
15 | Annual Report | 2024-2025 Comprehensive Product Offerings for Every Needs Arohan is dedicated to continuously enhancing its products and processes to ensure they meet the evolving needs of our customers while fully aligning with regulatory standards. At the core of our approach is the protection of our customers’ interests, ensuring they are at the epicenter of everything we do. Arohan empowers its growing customer base with a broad range of financial solutions designed to provide flexibility, security, and financial growth. From income-generating loans to versatile household product financing options, our credit solutions are designed to support various aspects of our customers’ lives. In addition to our core credit offerings, we provide non-credit products, including comprehensive Life and Non-Life Insurance Covers, through strategic partnerships with leading Indian insurers. This ensures that our customers have access to essential protection, adding value to their financial well-being. Moreover, we build partnerships with various brands and business partners to facilitate access to our customers an assortment of lifestyle enhancement products, including but not limited to mobile phones, refrigerators, pressure cookers, televisions, mixer grinders, induction cooktops and energyefficient bulbs, among others. In line with our commitment to fostering financial inclusion and safeguarding the interests of underserved communities, Arohan supports the microfinance ecosystem by providing term loans to small Microfinance Institutions (MFIs). This enables them to expand their reach and serve more customers in need. Furthermore, we empower micro-enterprises with flexible working capital solutions, ranging from INR 75,000 to INR 2,00,000, to fuel their growth and success. At Arohan, we are driven by the belief that financial services should not only meet regulatory standards but also prioritise the well-being of our customers. We aim to be a catalyst for positive change, offering holistic financial solutions that empower individuals and enterprises alike, while ensuring that their financial interests remain protected.
| 16 Annual Report | 2024-2025 NAME CUSTOMER PROFILE LOAN SIZE LOAN TENURE Saral Catering to women residing in low income areas, generally involved in trade & services. INR 25,000 – 1,00,000 24 - 30 months Micro Enterprise Loans Loans to address the working capital needs of small businesses operating out of authorised market places or clusters of shops organised under a trader’s association. Includes predominantly male customers. INR 75,000 - 2,00,000 18 - 36 months CORE PRODUCTS NAME MAXIMUM AMOUNT OF LOAN / CREDIT LIMIT / INSURANCE COVERAGE LOAN TENURE Cross Sell Products Upto value of active Primary Loan Disbursement amount associated with customer, in any given cycle 03-24 months SECONDARY PRODUCTS PRODUCT CATEGORY NAME OF LOAN/PRODUCT MAXIMUM AMOUNT OF LOAN / CREDIT LIMIT / INSURANCE COVERAGE TERM (MONTHS/WEEK) Insurance (offered through tie-ups with certain Indian insurance companies) Term Life Insurance Coverage is equal to loan amount disbursed to customer Loan Term Hospicash INR 1,000/ INR 1,500 per day for normal hospitalisation up to 30 days and INR 2,000/ INR 3,000 per day for ICU hospitalisation up to 20 days in a year Riders include Personal Accident benefit of upto INR 1 Lakh / INR 2 Lakh for permanent full and permanent partial disability, Convalescence benefit of INR 2,000 / INR 3,000 and Telemedicine cover for 5 family members 24 months Shopkeeper Insurance Sum Insured: (Stock – INR 1,25,000/ INR 1,50,000; Content – INR 1,25,000; Burglary – INR 2,50,000/ INR 2,75,000) 24 months Suraksha Kavach( Mediclaim) Sum Insured – INR 50,000, Daily benefit INR 500 daily benefit per day hospitalisation with maximum limit up to 10 days in a year for Borrower & Co-Borrower (floater), Personal accident benefit INR 1 Lakh 24 months Personal Accident Insurance Sum insured INR 1,00,000/ INR 2,00,000 24 months Loans to Small MFIs Term Loans INR 30 Cr. 12 - 36 months OTHER PRODUCTS NAME CUSTOMER PROFILE LOAN SIZE LOAN TENURE ArohanPrivilege Digital Lending Gold Standard Microfinance Customers INR 5,000 - 75,000 05 - 30 months DIFFERENTIATOR SERVICE Growth through the lens of Sustainability
17 | Annual Report | 2024-2025 INPUT BUSINESS FLOW Robust Financial Strength Arohan continues to maintain a strong and profitable financial position, with a Capital Adequacy Ratio of 34.09%. This enables us to secure debt at favorable rates, allowing us to pass on the benefits of lower interest costs to our customers. Our well-capitalized balance sheet also empowers us to invest in ongoing process improvements and optimize our operational structure, ensuring that the benefits are felt all the way through to the end customer. Equity: INR 2,025 Cr Debt: INR 4,703 Cr Identifying the right pool of customers in operational geographies Nirnay, proprietary credit scoring model, completely paperless sourcing of loans through e-Signature, completely paperless Document Management System, State-of-the-art Customer App, Apna Arohan for enhanced customer delight and experience. Training and Financial Literacy of Customers. First-in-the-industry ArohanPrivilege Digital Lending platform, Aadhaar enabled eKYC Cashless Loan Disbursals, through a state-of-the-art Loan Management System Cashless Collections (various modes of digital payments for customers including AEPS, Credit. Debit Cards, digital wallets, UPI, BBPS, and cash drop points) Re-engagement with customers and the communities we serve through credit plus services and social initiatives. Transforming Access to Credit Through Technology At Arohan, we harness the power of cutting-edge technology to simplify the credit process, making it easier and more accessible for our eligible customers. Our commitment to innovation ensures that we streamline credit access while never compromising on the quality of our portfolio. By continuously advancing our technological capabilities, we are not only enhancing customer experiences but also setting new standards in the industry, earning recognition on prestigious platforms for our forward-thinking approach. Leveraging Diverse Talent and Nurturing Leadership Driven by a wealth of human capital and deep industry expertise, Arohan thrives on a strong Board and exceptional leadership team. We ensure resilient operational processes while creating meaningful livelihoods at the grassroots level and continuously driving innovation. Our commitment to inclusivity goes beyond the workplace, as we actively foster an environment where diversity thrives. With a goal of achieving a balanced gender ratio of 50:50 by 2030, we are dedicated to developing leadership that reflects the diverse perspectives and talents of our team. Total Headcount: 10,252 Upskilling platforms: Hi-Pot & Leadership Development programme for middle & senior management, Role Play Sessions, and On Job Trainings for Branch teams Awareness Platform: Pragati Knowledge Platform: Saksham, Refresher Training, E-Modules deployed through Learning Management System Committed to driving service excellence by maintaining an unwavering focus on the customer experience. Through strategic investments in building strong credit and credit-plus relationships, coupled with a strict adherence to regulatory standards, we have cultivated a culture centered around the customer. Our broad range of products and services demonstrates our dedication to excellence, ensuring that delivering a superior customer experience is always our top priority. Total Number of Households impacted: 21,39,098 Customer Retention Rate: 73.12% Languages available in Customer App: Championing ESG-Driven Value Creation Arohan is dedicated to creating value driven by ESG principles, focusing on making a positive, holistic impact on both society and the environment through a combination of social responsibility and credit initiatives. By promoting a triple bottom-line approach, our efforts benefit people, the planet, and profit, ensuring sustainable growth while making meaningful contributions to our customers and communities. ESG Focus
| 18 Annual Report | 2024-2025 OUTPUT SDG LINKAGE a. CAR: 34.09% b. Revenue: INR 1,695 Cr c. PAT: INR 110 Cr a. Branch: 1,102 b. Customers: 21,39,098 c. Recognised for our industry-leading Credit Scoring Model, ‘Nirnay’ d. ISO/IEC 27001:2013 certification by BSI for Arohan’s Information Security and Management Systems e. Digitalised, in-house processes: Employee Social Network, e-KYC, Audit Management System, Fraud Management System, Industry first Digital lending, AI-enabled Location Mapping Software for the Debt Receivable Department, Field employee incentive calculator, real time field monitoring platfiorm called Sanjaya a. Great Place to Work Certified, Ranked 35th among India’s Best Companies to Work For, 2024 b. Recognised for its industry-leading High Potential & Leadership Development Programme c. Percentage of field employees: 92.48% d. Women in leadership: 17% e. On-premise, digitalised field recruitment system: SWAGATAM a.Total lives impacted through Corporate Social Responsibility initiatives: 8,52,355 (2016-2025) b. Number of Clean Energy Product Distribution (Including Retail Distribution): 77,885 a. Percentage of customers who have availed first-time loans in their life cycle: 22.47% b. Percentage of women customers: 99% c. Grading & Rating: GOLD Standard in Client Protection Principle by the MFR Certification Committee, COCA Assessment score of C1, MFI Grading of MFI1 by CARE Edge Growth through the lens of Sustainability
19 | Annual Report | 2024-2025 Nationwide Presence, Strengthening Financial Inclusion Serving the Underserved with Unique, Customer-Centric Propositions Guided by its strategic blueprint to broaden and deepen its reach in economically marginalised regions, Arohan has consistently extended its services to some of the most remote and underserved areas of India. Through award-winning processes and impactful offerings, Arohan continues to play a pivotal role in driving financial inclusion for the bottom-of-the-pyramid segment. In FY 2025, Arohan expanded its national footprint with the opening of a new Regional Office in Trichy, Tamil Nadu. The year also saw the launch of operations in 127 new branches, bringing the total branch network to 1102. As Arohan embarks on its bold journey to impact 20 mn lives by 2030. It remains deeply committed to strengthening its presence in both new and existing geographies. By delivering tailored financial solutions and a superior customer experience, Arohan continues to empower communities across the nation throughout their lifecycle. As of March 31, 2025, Arohan operates across 18 states - Assam, Bihar, Chhattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Rajasthan, Tamil Nadu, Telangana, Tripura, Uttar Pradesh, Uttarakhand, and West Bengal - solidifying its pan-India presence.
| 20 Annual Report | 2024-2025 Gujarat Maharashtra Haryana Uttarakhand Rajasthan Chhattisgarh Telengana Odisha Karnataka Tamil Nadu Assam Meghalaya Tripura West Bengal Jharkhand Madhya Pradesh Uttar Pradesh Bihar Growth through the lens of Sustainability
21 | Annual Report | 2024-2025 Board of Director’s Profile Dinesh Kumar Mittal is an Independent Non-Executive Chairman of Arohan’s Board. He has been a Director since May 15, 2018. He holds a Master’s degree in Physics from the University of Allahabad. He joined the Indian Administrative Services in July 1977 and has previously served with the Government of India as Secretary – Ministry of Finance, Secretary – Department of Financial Services and the Ministry of Corporate Affairs and as an Additional Secretary and Joint Secretary – Department of Commerce. He has also served as the Chief Executive Officer of IL&FS and with the Government of the state of Uttar Pradesh in various capacities including as Secretary to the Chief Minister. He has also served in the capacity of Managing Director of Uttar Pradesh Land Development Corporation, Vice Chairman of the Ghaziabad Development Authority and Special Secretary and Additional Director – Industries. He is an Independent Director on the Boards of APL Apollo Tubes Limited, Max Estates Limited, New Delhi Television Limited etc. Vineet Chandra Rai is a Non-Executive Vice Chairman and Promoter Nominee Director of the Company and has been on the Board since October 24, 2013. He holds a Post Graduate Diploma in Forestry Management from the Indian Institute of Forest Management, Bhopal and is an Honorary Member of XLRI Alumni Association. Vineet Rai is the Promoter of Aavishkaar Group. He was awarded the Outstanding Social Change Agent by TiE Mumbai in January 2020 and Inclusive Finance India Award 2021 for Individual contribution to Financial Inclusion, he also featured on the cover of Forbes India (January 2018 issue). He served on the Social Stock Exchange Advisory Committee of SEBI. He has also served as a commission member at the Global Commission on Business and Sustainable Development and is in the Executive Committee of Indian Venture Capital Association. Wilhelmus Marthinus Maria Van Der Beek is a Non- Executive Nominee Director of the Company. He was nominated to Arohan’s Board of Directors by AG II. He has been a Director since December 5, 2016. He holds a Doctoral Degree in Economics and Business Economics from Erasmus University, Rotterdam and has completed the European Leadership Course 6 from Comenius Leergangen. He is the Founder of Goodwell Investments BV, and also manages the Aavishkaar Goodwell India Microfinance Development Company I Ltd. and AG II. Manoj Kumar Narayan Nambiar is the Managing Director of Arohan. He has been a Director since October 2012, when he was appointed as the Managing Director of Arohan with effect from October 3, 2012. He holds a Bachelor’s degree in Mechanical Engineering from VJTI and a Master’s degree in Management Studies from JBIMS, University of Bombay, and has tertiary qualifications in Insurance from the Insurance Institute of India. He has also completed the ‘Strategic Leadership in Microfinance’ course from Harvard Business School, USA, “Strategy meets Leadership” course from INSEAD, Fontainebleau, France, “Leading for Impact” from IMD Lausanne, Switzerland, and “Enabling Strategic Impact in the Boardroom” at London Business School, London in February 2024. He has worked with various companies in the fields of business development, consumer banking & finance and microfinance across India and the Middle East. His previous employers include Modi Xerox India Limited, Countrywide Consumer Financial Services Limited, ANZ Grindlays Bank, ABN Amro Bank N.V., National Bank of Oman, Alhamrani Company for Investment in Trade & Ahli Bank. He is the Vice Chairperson of the Group Executive Council at Aavishkaar, and a director on the board of Intellecap & Aavishkaar, the holding company. He has served on the governing board of MFIN, the Anurag Agrawal is a Non-Executive Promoter Nominee Director of the Company. He has been a Director since October 3, 2012. He holds a Bachelor’s degree in Business Administration and a Master’s degree in Commerce from the Dinesh Kumar Mittal Vineet Chandra Rai Wilhelmus Marthinus Maria Van Der Beek Manoj Kumar Narayan Nambiar Anurag Agrawal University of Madras, Chennai, and a Post Graduate Diploma in Management from T.A. Pai Management Institute, Manipal. He is currently a Partner at Aavishkaar Capital which is the Impact investing arm of Aavishkaar Group. He has been part of the founding team of Group Company, Intellecap and last served as its CEO. Prior to that, he has worked with ICICI Bank Limited.
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