Tag: Arohan Financial

Arohan Financial looks to expand its footprint in newer markets

Banking & Finance

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Arohan Financial Services Ltd, which has been witnessing a steady improvement in disbursements and collections in the second quarter of this fiscal over Q1, has firmed up expansion plans to grow its portfolio further.

The company, which is looking to expand its footprint in newer geographies and strengthen presence in some of the existing towns and cities, is waiting for its capital raising plan to fructify to push ahead with the expansion programme.

IPO plan

The NBFC-MFI, which is a part of the Aavishkaar Group, had filed draft red herring prospectus for its proposed initial public offer (IPO). It plans to raise around ₹850 crore primary through the issue apart from secondaries.

“Q 1 of 2021-22 especially May’21 was slightly difficult period with the localised lockdowns but we managed well and we will be filing an updated DRHP soon. Q2 is turning out to be much better. We are seeing an increased demand for credit with the festival season round the corner,” Manoj Nambiar, MD, Arohan Financial Services, told BusinessLine.

Arohan currently provides microcredit to borrowers with a focus on underpenetrated States including Assam, Meghalaya,Tripura, Manipur in the North East; West Bengal, Bihar, Jharkhand and Odisha in the east; Madhya Pradesh, Chhatisgarh, Uttar Pradesh & Uttarakhand in central India.

The company plans to expand its presence in three more States including Rajasthan, Punjab and Haryana once its IPO is complete. It also plans to strengthen its presence in Uttar Pradesh and Madhya Pradesh by setting up more branches.

“We had entered UP and MP markets about two years back. Both of these are very big markets and we haven’t yet covered fully. We are also looking to enter newer markets contiguous to our existing operations. Our expansion plan is ready and it will all depend on the raising of additional capital,” he said.

Talking about the overall credit demand in the industry he said, demand is high and all clients are working towards a return to “normalcy” soon as people would require additional credit to restart their business. Credit demand had witnessed a dip in May this year following the regional lockdowns announced in several parts of the country and the slowdown induced by the second wave of Covid. Starting first half of June (when opening up started) things have started showing signs of improvement and each month has been better than the previous one for the industry, he said and added that the credit demand would increase further supported by the requirements of the upcoming festive season.

The company had a total loan outstanding of close to ₹4,800 crore as on March 2021.

Digital push

Arohan has digitalised the entire customer lifecycle and the post sales support touchpoints to enhance its offerings. With a clear focus on being ‘Cashless at the front and Paperless at the back’, the company aims to serve its customers better with limited paper work and in the process also reduce operational cost for both the customers as well as the company. Client origination is paperless and 100 per cent of the disbursements are now into the bank accounts of the client.

It has launched “meraArohan”- an automated lending solution designed to completely digitise the loan lifecycle from end-to-end. It has recently also launched “apnaArohan” app for customers. The app, which is available in regional languages, uses facial recognition to validate the login and helps customers view their loan details, including a complete ledger with details of payments made, call for any service request.

Customers can also make digital payments through the payment gateway provided.

According to Nambiar, an internal study shows that close to 61 per cent of the company’s customers have access to smartphone and close to 40 per cent had done cashless transactions during the Covid pandemic.

Such digitisation initiatives will help the company by ensuring better management of portfolio, better service and reduced time as compared to manual offerings. “The cost benefit will accrue over a period with business growth and better utilisation of the field employee time” he said explaining the rationale behind ramping up its digital offerings.

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Axis Bank explores MFI stake buy to expand into rural India, BFSI News, ET BFSI

Banking & Finance

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KOLKATA/MUMBAI: Private sector lender Axis Bank is in talks with a few micro lenders including Arohan Financial Services, Satin Creditcare Network and Spandana Sphoorty Financial as it explores possible stake buy to expand into rural India, following the footsteps of IndusInd Bank and Kotak Mahindra which chose to improve their rural footprint through the acquisition route.

The talks have begun, three people familiar with the matter told ET. There’s no certainty on which of the negotiations would conclude in a transaction.

Axis Bank already has a micro lending vertical and acquisition of a microfinance company may suit well in its strategy to reach out to the deeper pockets of the market, a person familiar with the matter said. Axis already has 1.5 million microfinance borrowers under its belt.

“The bank is exploring early stage talks with a few microfinance lenders. It’s too early to talk about it as nothing has been finalised yet, but the idea is to widen the footprint in the rural and priority sector space,” said an official who was aware of the talks. “The bank also feels that such a buyout would help to increase its presence in eastern and southern India.”

Getting acquired also suits MFIs especially those without strong promoter backing. Micro lending needs regular infusion of capital to keep pace with the lending growth. Bharat Financial Inclusion, which was the largest MFI before being acquired by IndusInd, was stifled for growth as it had to promoter backing.

India’s Rs 2.48 lakh crore microfinance sector grew by 17% year-on-year even in the pandemic ravaged FY21, reflecting the opportunities available in this space. Universal banks control 44% of the market while NBFC-MFIs have 32% share. The balance is with small finance banks, other non-banking finance companies. NGO-MFIs have around 1% of the market share.

“For any possible acquisition, it’s important for Axis Bank to check whether the MFI has a robust IT system. Otherwise, it would be a tedious task for the bank to integrate the IT platforms,” said a person who was part of the IndusInd-Bharat Financial merger process.

Axis Bank did not respond to ET’s mail.

Arohan Financial Services managing director Manoj Nambiar and Satin Creditcare Network chairman HP Singh declined to comment on the matter while Spandana managing director G Padmaja Reddy did not respond to calls and text messages.

Microfinance is a way of unsecured lending to economically weaker populations, especially women, but prospects of higher returns push banks to explore such businesses. The acquisition route helps banks to get rural loan pie on a platter. IndusInd acquired Bharat Financial in 2019, three year after Kotak Mahindra Bank‘s acquisition of BSS Microfinance.



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