Indian microfinance lender Arohan Financial Services Ltd has secured an investment commitment of up to $30 million to support the expansion of its loan portfolio and icnrease access to creadit for low-income borrowers, according to project document seen by Crowdfund Insider.
The commitment comes from Dutch development bank FMO. The proposed transaction would involve a three-year investment denominated in Indian rupees through senior, secured and listed non-convertible debentures.
The proceeds would be used to further grow Arohan’s lending portfolio, particularly in underserved rural and semi-urban markets in northern and eastern India.
Headquartered in Kolkata, Arohan is a technology-enabled non-banking financial company focused on microfinance and forms part of the impact investment-oriented Aavishkaar Group.
The company provides credit to about 1.95 million low-income clients, with a focus on women entrepreneurs.
Its lending model includes a peer-guaranteed joint liability group framework, under which borrowers form groups and share responsibility for loan repayment.
As of Dec. 31, 2025, Arohan managed an assets-under-management portfolio exceeding $660 million. It operated more than 1,000 branches across 17 Indian states and employed more than 9,000 people.
The lender is backed by development finance and investment institutions including FMO, Denmark’s Investment Fund for Developing Countries, known as IFU, and Maj Invest.
FMO said India continues to face a substantial gap in access to formal credit among low-income and rural households, particularly women running small businesses.
The development bank said Arohan’s lending model enables it to reach underserved customers in areas where access to conventional banking and formal credit remains limited.
The proposed financing is expected to support Arohan’s expansion into underpenetrated regions and broaden its outreach to borrowers in northern and eastern India.
FMO said the investment would support inclusive economic growth and contribute to the United Nations Sustainable Development Goal 10, which seeks to reduce inequalities.
Arohan is categorized by FMO as a frequent borrower, meaning the lender has an established framework in place for assessing repeat financing transactions involving the company.
FMO assigned the proposed investment a Category C environmental and social risk classification, its lowest-risk category.
The lender said microfinance investments are typically considered to have relatively limited environmental and social exposure because the underlying borrowers are generally individuals, retailers and micro-entrepreneurs rather than companies involved in large industrial or infrastructure projects.
However, FMO said microfinance lending may still involve risks such as borrower over-indebtedness, a lack of transparency around interest rates and concerns over responsible pricing.
Those risks are assessed separately through tools including FMO’s Client Protection Principles framework, which examines how lenders treat borrowers and whether their products are offered responsibly.
FMO said it may also conduct a human rights assessment where a transaction involves elevated contextual risks.
The proposed investment remains subject to FMO’s approval and completion of the lender’s review process.
