RBI removes supervisory curbs on Kolkata-based Arohan Financial Services

RBI removes supervisory curbs on Kolkata-based Arohan Financial Services

The Reserve Bank of India (RBI) on January 3 said it has removed supervisory restrictions on NBFC Arohan Financial Services Ltd.

On October 17, 2024, RBI directed Kolkata-based Arohan Financial Services to cease and desist from sanction and disbursal of loans with effect from October 21, 2024.

"Subsequently, the company initiated remedial action and submitted its various compliances to the Reserve Bank. Now, having satisfied itself based on company’s submissions, and in view of their adoption of revamped processes, systems, and the company’s commitment to ensure adherence to the Regulatory Guidelines on an ongoing basis, especially for ensuring fairness in the loan pricing, the Reserve Bank has decided to lift the afore-mentioned restrictions placed on Arohan Financial Services Limited, with immediate effect," said RBI in a statement.

In accordance with Section 45L(1)(b) of the Reserve Bank of India Act, 1934, RBI had also imposed similar curbs on Asirvad Micro Finance Limited, DMI Finance Private Limited, and Navi Finserv Limited. Recently, the curbs on Navi were removed.

Arohan provides loans primarily to financially underserved women. Arohan’s flagship loan is aimed at groups of three to five women and has a rate of 24.25%, according to the lender’s website. The loan ranges between Rs 25,000 and Rs 1 lakh and is for a tenure of 24-30 months.

Arohan’s investors include Teachers Insurance and Annuity Association of America and Danish asset manager Maj Invest. Arohan’s net profit was about $37 million for the financial year ended March.

In October 2024, Bloomberg had reported that Arohan has delayed its $200-million initial public offering post-RBI curbs.