53 | Annual Report | 2025-2026 & robust spending during the festivals have largely led to a smart recovery of the microfinance sector, especially reflected in the performance of portfolio sourced in FY 2026. Industry data indicates that Regular bucket retention rates of major players are in excess of 99.5% in Q4 of FY 2026. The only dampener came in the form of the middle-East crisis which has driven up oil prices, which in turn will likely have an impact on the sector through inflations & moderate the growth of India’s GDP in the medium term. Risk Analytics & Practices Arohan continued the strengthening its incisive Risk Analytics, enhancing capabilities using various statistical tools, large data processing software, and visual analytic tools such as Python, R, and Tableau. This reinforces the position of Arohan’s risk management unit to provide sector-leading, critical, rationale-driven business intelligence inputs to the management and the stakeholders. Such inputs and insights enhance the Company’s strategic planning capabilities and provide key actionable for the Management. Arohan has acquired the license of a machine learning based modelling platform, Knowledge Studio, which strengthens Arohan’s existing inhouse capabilities and deep domain knowledge of statistical modelling, predictive and forecasting expertise. These meticulously acquired skillsets and expertise has been widely appreciated and commended by various stakeholders including investors and regulators. a) Credit Risk Management Arohan’s proprietary microfinance specific acquisition scorecard ‘NIRNAY’, has been upgraded with the renewal & data refresh through “NIRNAY 2.0”. Modelling NIRNAY along with Arohan’s expertise in forecasting science ensured that Arohan was able to fully satisfy various auditors’ and most importantly the RBI’s risk pricing audits & scrutiny throughout the year with zero comments or observations. Building on these strengths, NIRNAY 2.0 has been built using Knowledge Studio which will ensure that Arohan continues to optimise Risk based pricing strategies & provision planning of the future. b) Operational Risk Management Arohan’s proprietary Branch Risk (BRisk) assessment algorithm refreshed during the year, continued to proactively provide visibility of operational risks to the business team for effectively assessing operational risk all the way to the frontlines’ operating unit, the branches. The BRisk Grading of the entire Company at all levels up from the Branches provided the Business team, the Management and the Board of Directors with an impartial assessment of the operational health of Arohan’s active branches while indicating potential emerging risks. The overall BRisk grade trends of the Company has positively demonstrated a higher than normal risk environment in the first half of FY 2026. The second half ratings reflected a steady improvement of the operational risk profile of Arohan. Operational Risk Management is expected to come under enhanced focus in RBI’s Operational Risk regulations & guidelines in FY 2026 with revised, updated & consolidated guidelines of November 28, 2025. c) Enterprise Risk Management Arohan has been proactively working on the microfinance sector-specific ERM structure for a while now. That foresight started bearing fruits in FY 2026, with the Reserve Bank of India actively encouraging systemically important NBFCs, during their regular audits for the deployment of Enterprise Risk Management (ERM) systems. ERM is a globally wellestablished framework for effectively optimising Risk vis-à-vis Return, and providing accurate and insightful visibility on all inherent risks inherent during the functioning of an organisation. As a mandate for the Risk unit, Arohan initiated the implementation of the Enterprise Risk Management (ERM) project using the COSO framework. Christened SANDESH, the project has made significant progress with the platform that was completely developed inhouse. The platform is already operational with the respective Risk Owners approving the risk registers along with their controls and thresholds. Arohan is again the first in the sector for the development of ERM in true letter and spirit. Business Continuity Policy (BCP) Arohan’s deployment and practice of Business Continuity Plan (BCP) was led and anchored by the Risk unit, which was also audited by the Reserve Bank of India and was found to be satisfactory. The implementation of the Business Continuity Policy and Plan of the Company has led to a well-established BCP process backed by well-trained BCP committees and stakeholders. The company continues to be ‘Business as Usual’ with the least disruptions during events of calamities and other disruptions during the year. The Risk unit will continue to strengthen and anchor this important regulatory requirement for the Company. Appointment & Reporting of CISO In 2024, Reserve Bank of India through its circular titled Master Direction on Information Technology Governance, Risk, Controls and Assurance Practices had directed
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