Arman Financial Services Ltd

let me give some instances where arman was kind-of ahead of the curve in some aspects.

1. doing mfi and non mfi businesses under separate entities. rbi has norms regarding how much non mfi business an mfi lender can do. by having separate entities, arman doesnt face these constraints.
2. they started individual unsecured lending much ahead of peers in 2017. that too as a completely separate business from mfi, with completely different set of borrowers as well and no overlap with their mfi borrowers. other mfi’s have only recently started individual lending that too to their higher cycle mfi borrowers. by setting up their msme business as a separate vertical, they established separate lending norms, collections processes, operations etc. which they have been replicating since then. only recently under pressure from their own mfi team, arman has started individual lending to their higher cycle mfi borrowers.
3. they have been almost always the fastest movers in switching off business (during demon and covid), biting the bullet and taking the pain early on (no mass scale deferrals/restructurings, taking provisions quickly) and this enabled to recover faster than peers.
4. piloting newer businesses such as rural 2W, gold loan (dropped; for now), micro LAP (start-stop and now started again after getting due comfort in their underwriting and other processes), exploring other businesses such as cv etc.

they were also the earliest to call out that the pre covid credit cost levels of around 1% are a thing of the past. at that time they had said they expected 2-2.5%. which did come about. and now they think it could be higher. whether it is temporary and whether it would settle back to 2-2.5% levels, only time will tell.

whether it can fall more, whether it can become cheaper? sure it can. i dont know.

how soon will dust settle down for mfi sentiments, if at all, is also tough to guess/gauge for now.

like i said it is a waiting game, and it is quite alright if anyone does not want to play it. its tough to suggest a buy in any mfi at the current juncture.