Arohan MFI aims to enhance lending through digital mode

KOLKATA: Micro-lender Arohan Financial Services is eyeing to increase lending through the digital mode due to its better compliance in repayments and administrative convenience, an official said.

The micro-finance institution (MFI) launched its app ‘Apna Arohan’ one-and-half years ago to make a foray into digital lending, besides the traditional brick-and-mortar route, he said.

“The app was launched almost 18 months ago. So far Rs 104 crore has been disbursed through this route. We are aiming to disburse a total of Rs 160 crore this financial year through the digital route”, Arvind Murarka, chief information officer of Arohan Financial Services said.

He said it has been seen that the repayment rates are as high as 99 per cent and money can be disbursed within hours as compared to the traditional mode which normally takes a few days.

Murarka said that lending through the app was first implemented in West Bengal, and is now spread across every state where Arohan has a brick-and-mortar presence.

The MFI is now present in 18 states of the country.

According to him, digital lending is available only for individuals and not to joint liability groups (JLGs).

Interest rates charged through the digital lending route are marginally lower than the traditional route, he said, adding that the average ticket size of loans is Rs 55,000 to Rs 60,000.

On the whole, the MFI disburses around Rs 500 crore to Rs 600 crore per month.

Head of digital growth at Arohan Reema Mukherjee said “Two to three per cent of the total exposure will be through the digital route in thecoming days”.

As on September 30, 2023, the MFI had disbursed around Rs 6,023 crore. The net worth of the MFI is Rs 1,730 crore.

During the last fiscal, the MFI had raised Rs 730 crore from investors. The MFI is promoted by the Aavishkaar group.

The collection efficiency ratio of the MFI is presently around 98 per cent, which had dropped very low to 55 per cent during the COVID pandemic.