India-based micro-lender Arohan Financial Services is reportedly planning to expand its digital lending operations as part of its overall goal of revolutionizing microfinance with digital push.
Arohan said it will leverage its ‘Apna Arohan’ app for more efficient loan disbursements and improved repayment compliance. Launched 18 months ago, the app represents a strategic move towards digitalization in addition to the traditional brick-and-mortar approach.
Arvind Murarka, the Chief Information Officer of Arohan Financial Services, announced the company’s intention to increase its digital lending footprint.
“So far, we have disbursed Rs 104 crore through our digital platform, and we aim to reach a total of Rs 160 crore in disbursements through this route in the current financial year,” he told reporters.
The initiative has shown promising results, with digital lending boasting a remarkable 99% repayment rate, a significant improvement over traditional methods.
The app is also capable of disbursing funds within hours compared to the days typically required in the conventional process.
Originally launched in West Bengal, the digital lending service via the ‘Apna Arohan’ app has now been extended across all states where Arohan maintains a physical presence. The micro-finance institution (MFI) currently operates in 18 states across India.
Murarka also highlighted the cost benefits of digital lending. “Interest rates for digital loans are marginally lower than those for traditional loans, with the average loan size ranging between Rs 55,000 and Rs 60,000,” he added.
Reema Mukherjee, Head of Digital Growth at Arohan, projected that digital lending would account for two to three percent of the MFI’s total exposure in the near future. As of September 30, 2023, Arohan had disbursed approximately Rs 6,023 crore, with a net worth of Rs 1,730 crore.
Last fiscal year, Arohan raised Rs 730 crore from investors and is part of the Aavishkaar group.
This shift towards digital lending underscores the evolving landscape of microfinance in India, highlighting a trend towards technology-driven solutions for greater efficiency and customer satisfaction, analysts said.
