Arohan MFI aims to boost lending via digital channels

Micro-lender Arohan Financial Services is set to increase its lending through digital channels, citing better compliance in repayments and administrative convenience, according to an official statement.

The micro-finance institution (MFI) introduced its app 'Apna Arohan' a year and a half ago to venture into digital lending, complementing its traditional brick-and-mortar approach, the official noted.

"In the past 18 months since the app's launch, we have disbursed Rs 104 crore through this platform. Our goal for this financial year is to disburse a total of Rs 160 crore through digital means," said Arvind Murarka, Chief Information Officer of Arohan Financial Services.

He highlighted that repayment rates on the digital platform are as high as 99 per cent, and funds can be disbursed within hours compared to the traditional process, which typically takes a few days.

Murarka mentioned that digital lending, initially implemented in West Bengal, is now available in every state where Arohan has a physical presence, spanning 18 states across the country.

However, digital lending is currently restricted to individuals and not extended to joint liability groups (JLGs). The interest rates for digital lending are slightly lower than the traditional route, with an average loan size ranging from Rs 55,000 to Rs 60,000.

Arohan MFI disburses approximately Rs 500 crore to Rs 600 crore per month, and Reema Mukherjee, Head of Digital Growth at Arohan, anticipates that "Two to three per cent of the total exposure will be through the digital route in the coming days."

As of September 30, 2023, the MFI had disbursed around Rs 6,023 crore, with a net worth of Rs 1,730 crore. Despite challenges during the COVID pandemic, where the collection efficiency ratio dropped to 55 per cent, it has now recovered to around 98 per cent.

In the last fiscal year, the MFI secured Rs 730 crore from investors and was promoted by the Aavishkaar group.

(With PTI inputs)