Kolkata-based microfinance institution (MFI) Arohan Financial Services Ltd is looking to raise close to ₹500 crore through the private equity route in the next one-two months. The amount raised would help fund its growth plans over the next one- two years.

According to Manoj Kumar Nambiar, Managing Director, Arohan, the fund would be raised through a new private equity investor. “We were planning to close a deal (for fund-raising) before March this year but that got delayed due to the whole pandemic disruption. But it is still on track and we should be able to make an announcement in the next one-two months,” Nambiar told BusinessLine.

The MFI is expecting a 20 per cent growth in loan book at ₹6,000 crore this fiscal, as compared with ₹5,000 crore in FY20.

Arohan, a part of the Aavishkaar-Intellecap Group, has a presence in close to 13 States, primarily in the central, eastern and north-eastern parts of the country. This fiscal, it had planned to foray into the western and northern regions by moving into Rajasthan, Punjab and Haryana.

However, due to the current scenario, it might be difficult to add all the three States. The company is therefore looking to make a foray into Rajasthan sometime towards the end of the third quarter or in the fourth quarter of this fiscal.

“The focus currently is on existing customers and business and to ensure that we are able to bring back collections to over 99 per cent levels, which the sector has always recorded (before the crisis). We expect collections to normalise by September-October ,and once that settles and the momentum comes back then we can look at expansion into new States and addition of new customers,” he said.

Collections, which started sometime in the last week of April, have been witnessing some pick-up since mid-May, when the industry managed 30-40 per cent collections overall for the whole month. Arohan is expecting collections to the tune of 50 per cent for June.

Talking about the loan moratorium, Nambiar said, not many customers are keen on taking an extension on loan repayments because of the accrued interest that they may have to pay later.

“Most customers who have restarted their economic activity and who understand the implication of moratorium including the interest that they have to pay and the fact that the tenure will also get extended by a number of months are preferring to repay if they have the money,” he said.

Published on June 26, 2020

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