Microfinance company Arohan slashes lending rates by 270 bps to 22.9%

KOLKATA: Microfinance company Arohan Financial Services lowered lending rates by 271 basis points to 22.99% a year, a move that would benefit about four lakh poor borrowers.

The new rates comes into effect from Monday, the company said.

Arohan, which was supported by Michael & Susan Dell Foundation, said the rate cut comes in the wake of a favourable funding scenario for the sector.

“We are delighted to offer one of the lowest rates in the microfinance sector to our customers. We have been able to grow at more than 100% y-o-y for the last three years leading to economies of scale and better borrowing rates from our lenders”, said Arohan Managing Director Manoj Kumar Nambiar.

Micro loans from SKS Microfinance at 22% a year is the cheapest in the market at present. SKS, the country's only listed MFI, reduced the rate from 23.55% with effect from July 1.

In order to champion the cause of financial inclusion we are steadfastly committed to reducing pricing and incorporating newer products in our offerings," Nambiar said.

A part of the Intellecap Group, Arohan operates in five states, namely West Bengal, Bihar, Assam, Jharkhand, Odisha, and plans to double reach in the next 12-18 months. The MFI has grown its outstanding loans by 76% year-on-year to Rs 479 crore at the end of September 30, surpassing the industry average of about 70% growth.

Aggregate gross loan portfolio of MFIs stood at Rs 42,106 crore at the end of June and this excludes around Rs 3,000 crore of non performing portfolio in Andhra Pradesh.