A person sitting firmly over a rotating stool has his arms stretched. If he folds his arms, his angular momentum about the axis of rotation
Moment of inertia
So, when the guy folds his arms, Ibody remains the same; but Ihand changes due to decrease in Rj. So the moment of inertia of the whole body decreases.
As per the question the guy is sitting on a rotating stool, ω is taken to be unchanged. This means
Hence angular momentum L decreases.