10 March 2026
IPO Plans Unveiled
Arohan Financial Services, an Aavishkaar Group-backed micro-finance institution, is targeting an early March filing of its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for a ₹1,500 crore initial public offering (IPO).
The planned offering will be a mix of primary issuance, accounting for roughly half the total size, and secondary sale by legacy investors. Promoters are not expected to sell shares, signaling sustained confidence in the company's growth prospects.
MFI Sector Faces Regulatory Crosswinds
Managing Director Manoj Nambiar pointed to significant developments in the micro-finance sector, noting a near doubling of the industry's loan book from ₹2.25 lakh crore in March 2020 to ₹4.3 lakh crore by March 2024. He expressed that regulatory guardrails, such as caps on lending to individual borrowers and household indebtedness, should have been implemented earlier.
Nambiar suggested that the absence of such measures post-March 2022, coupled with the removal of margin caps, led some players to relax underwriting standards in pursuit of loan book expansion. This rapid, sometimes unchecked, growth has contributed to stress within the sector.
Arohan's Resilience and Growth Trajectory
Despite external environmental challenges, Arohan Financial Services has maintained profitability across credit cycles, with the exception of FY21. This resilience is attributed to strong underwriting standards and effective board strategies. The company reported gross Non-Performing Asset (NPA) ratios below 2% and net NPA below 1%, demonstrating sound asset quality management.
Looking ahead, Arohan projects its loan portfolio to reach ₹7,000 crore by the end of FY26, with a long-term vision to impact 20 million lives and manage a portfolio of ₹20,000 crore by FY30. The company expects to return to FY24 levels of profitability by the next fiscal year.
Technology and Future Vision
Arohan has invested substantially in technology, integrating Artificial Intelligence (AI) across its lending operations, from customer sourcing and risk-based pricing to account management and recovery processes. The company has also established a dedicated recovery vertical and utilizes Lok Adalats effectively to manage distressed assets.
Conversion to a Small Finance Bank is not an immediate priority, with the company focused on expanding its scale in line with its Vision 2030 plan.
IPO Plans Unveiled
Arohan Financial Services, an Aavishkaar Group-backed micro-finance institution, is targeting an early March filing of its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for a ₹1,500 crore initial public offering (IPO).
The planned offering will be a mix of primary issuance, accounting for roughly half the total size, and secondary sale by legacy investors. Promoters are not expected to sell shares, signaling sustained confidence in the company's growth prospects.
MFI Sector Faces Regulatory Crosswinds
Managing Director Manoj Nambiar pointed to significant developments in the micro-finance sector, noting a near doubling of the industry's loan book from ₹2.25 lakh crore in March 2020 to ₹4.3 lakh crore by March 2024. He expressed that regulatory guardrails, such as caps on lending to individual borrowers and household indebtedness, should have been implemented earlier.
Nambiar suggested that the absence of such measures post-March 2022, coupled with the removal of margin caps, led some players to relax underwriting standards in pursuit of loan book expansion. This rapid, sometimes unchecked, growth has contributed to stress within the sector.
Arohan's Resilience and Growth Trajectory
Despite external environmental challenges, Arohan Financial Services has maintained profitability across credit cycles, with the exception of FY21. This resilience is attributed to strong underwriting standards and effective board strategies. The company reported gross Non-Performing Asset (NPA) ratios below 2% and net NPA below 1%, demonstrating sound asset quality management.
Looking ahead, Arohan projects its loan portfolio to reach ₹7,000 crore by the end of FY26, with a long-term vision to impact 20 million lives and manage a portfolio of ₹20,000 crore by FY30. The company expects to return to FY24 levels of profitability by the next fiscal year.
Technology and Future Vision
Arohan has invested substantially in technology, integrating Artificial Intelligence (AI) across its lending operations, from customer sourcing and risk-based pricing to account management and recovery processes. The company has also established a dedicated recovery vertical and utilizes Lok Adalats effectively to manage distressed assets.
Conversion to a Small Finance Bank is not an immediate priority, with the company focused on expanding its scale in line with its Vision 2030 plan.
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