and disbursements. The sector stood at an outstanding portfolio of INR 3.75 lakh Cr, serving 78 mn borrowers as of March 2025. After witnessing a further contraction during the initial months of the year, it closed March 2026 with an outstanding portfolio of INR 3.25 lakh Cr, covering 64 mn borrowers. The first green shoots of recovery was noticed in September 2025 with the slippages moderating and disbursements picking up. This inflection was supported by a combination of factors, including GST rationalisation measures announced by the Union Government, a favourable harvest season, festive demand-led economic activity and the disciplined implementation of Self-Regulatory Organisation (SRO) guardrails across the industry. Encouragingly, these early green shoots strengthened through Q3 and Q4 of the financial year, translating into improved collection efficiencies, healthier portfolio performance, and a steady revival in disbursement activity across the sector. Against the backdrop of a challenging operating environment, our Business team remained steadfast in its focus on portfolio quality throughout the year, particularly during the difficult first half. As market conditions gradually improved, both our growth engines - Organic and Inorganic - gained significant momentum in the second half of the year. This resurgence culminated in our highest-ever monthly disbursement of INR 1,126 Cr in March 2026, helping us achieve a record net portfolio outstanding of INR 7,426 Cr as of year-end. A key contributor to this growth was our continued focus on deepening relationships with existing customers. Close to 40% of our borrowers continue to bank exclusively with us, and tailored offerings such as Arohan Khaas have played an important role in both strengthening customer engagement and expanding our portfolio while helping protect these customers from overleveraging. Customer discipline and engagement also improved through our sustained emphasis on centre attendance. Supported by Sahbhaagi, our customer loyalty programme, centre attendance levels reached 60% at the Company level by March 2026, with top performing locations reaching over 90%. Our strategy of serving customers across different stages of their financial journey continued to deliver results. Focused efforts on ArohanPrivilege (AP) for seasoned microfinance borrowers and Micro Enterprise Loans (MEL) for emerging entrepreneurs enabled us to tap new customer segments and diversify our portfolio. As of March 2026, AP and MEL portfolios stood close to INR 200 Cr and INR 300 Cr respectively. The Inorganic Business vertical also recorded a strong year, scaling to an outstanding portfolio of nearly INR 1,000 Cr with business written across term loans, Sourcing & collection and also Direct Assignment purchases, given our finer understanding of the business metrics as a lender ourselves. Our focus on strengthening and future-proofing our technology platform continues. Today, all our branches are enabled for Aadhaar-based e-KYC, providing a secure and reliable borrower authentication process. Artificial Intelligence (AI) is fast becoming a key theme in most businesses and we are happy to have started early – our Recovery vertical has been using AI for better coverage for results and our Customer Grievance Redressal Centre is now working to implement an AI solution which will help address the calls we receive from borrowers outside office hours even on holidays and also automate surveys with Arohi, our in-house bot. Our Business Analytics team has developed an AI voice-enabled bot which makes data available to business managers by voice commands. We are also piloting a new end-to-end Loan Origination System for our MEL business, strengthening our technology backbone to support the continued growth of this strategic segment. Our commitment to quality is reinforced by the strong partnership between our Risk, Credit, and Internal Audit teams. Working closely with the Business, these functions continuously analyse portfolio and operational trends, providing timely insights and actionable feedback to strengthen controls, address emerging risks, and enhance execution at the ground level. Risk is tasked with managing the risk limits set by the Risk Committee of the board which covers credit, operating, liquidity and reputational amongst others. Credit manages the underwriting policies across organic and the inorganic businesses including the credit administration process on a day to day basis. We have enlisted with NCGTC and today have CGFMU credit guarantee cover for more than 65% of our portfolio as of March 2026. Internal Audit helps us do an objective assessment of the adherence to operating policies across the field and non-field functions and also highlights control gaps to be covered. Every quarter, all our 1,050+ branches undergo risk grading, credit classification, and audit rating assessments. This comprehensive and rigorous review framework provides | 6 Annual Report | 2025-2026 Managing Director’s Address
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