Arohan Financial Services is aiming for a three-fold jump in assets under management (AUM) to Rs 20,000 crore by 2030. Managing Director Manoj Kumar Nambiar tells Narayanan V about the NBFC-MFI’s cautious growth plans, the impact of the Bihar MFI Bill, and its fundraising plans through an initial public offering (IPO). Excerpts:
Impact of Bihar MFI Bill on your business?
We are closely studying the implications of the Bihar Micro Finance Institutions Bill, 2026. We are happy that the Reserve Bank of India-regulated entities are exempt, except for collection and recovery practices. Arohan is an RBI-regulated entity and remains fully committed to complying with all applicable regulatory requirements. We have been active in Bihar since 2008, and all our employees remain committed to advancing financial inclusion in a transparent and customer-centric manner.
Do you see any slowdown in lending?
During Q3, the microfinance sector continued to show signs of stabilisation. We continued to pursue calibrated credit expansion, with our AUM reaching Rs 6,308 crore, supported by a stable borrower base of close to 2 million across the country. Our asset quality remained resilient, with gross NPA of 1.69% and net NPA of 0.39%, among the lowest in the NBFC-MFI sector. We continue to maintain a strong liquidity position of over Rs 700 crore and a comfortable capital adequacy ratio of 31.2%, providing adequate headroom to pursue calibrated growth.
Arohan’s growth has been slower than peers.
Post-Covid, the MFI industry grew from Rs 2 lakh crore to Rs 4.25 lakh crore, covering about 82 million customers. That growth has also reflected several weaknesses in the system, including KYC issues, quality of credit bureau data, corporate governance issues in individual companies, and credit underwriting policies.
We were the fifth-largest NBFC-MFI in the pre-Covid period. Now, we are ninth or tenth. While we are inching forward, and several companies that had grown to Rs 10,000–12,000 crore in portfolios have now come down to Rs 5,000–6,000 crore. A lot of these companies, including listed ones, are showing negative P&L, with provisions, write-offs and losses being declared quarter after quarter.
We did not have that sort of issue because corporate governance has been one of our core strengths. We are aspiring to close FY26 with a portfolio in excess of Rs 7,000 crore. Under our Vision 2030 plan, we aim to impact 20 million lives and build a portfolio of Rs 20,000 crore.
When will the MFI segment see a full recovery?
The sector has been seeing green shoots from September 2025. We are seeing slippages from regular to delinquent accounts improving on a month-on-month basis. Arohan is better than the market in terms of slippage retention and collection efficiency across 1–30 days, 30–60 days, 60–90 days and 90-plus-day buckets.
The industry’s underwriting is far more disciplined after the Microfinance Institutions Network guardrails 1.0 introduced in July 2024 and guardrails 2.0 from April. In the last 18 months, good companies have taken provisions, cleaned up portfolios, made changes to underwriting, and strengthened collection and recovery teams.
I think when the December 2025 numbers come out, we will probably see about Rs 3.5 lakh crore of outstanding with around 75 million customers being served, which is still lower than the peak of about Rs 4.5 lakh crore with 82 million customers.
What about your IPO plans?
We are currently working on our draft red herring prospectus. We have a proven track record in terms of profitability and growth. It will give exit opportunities to some of the existing investors and bring in new ones. As of now, our plan is to raise about Rs 1,500 crore, but the final number will come out when you get the ticket, approach investors, and assess the market demand.