Aye Finance Bags INR 180 Cr Funding As RBI Moratorium Hits Lending Startups

Gurugram-based financial services startup Aye Finance has raised INR 180 Cr in debt from several lenders in India and abroad. This comes at a time when the company is following RBI directive of three-month moratorium on term loans.

This debt raise is significant considering that the company isn’t able to get monthly payments and hence, this would help it stay afloat amid turbulent times. The company is looking to use this fundraise to support the MSME segment and provide business loans to the underserved business sector during the time of this crisis.

“All commercial, regional, rural, NBFCs and small finance banks are being permitted to allow a three-month moratorium on payment of instalments in respect of all term loan EMIs outstanding on March 31,” the RBI statement read.

Sanjay Sharma, managing director of Aye Finance said, “Our [Aye Finance’s] credibility in repayments and the milestones Aye has achieved has given our debt providers considerable comfort and confidence. Our ability to raise money even in these testing times is a testament to that.” To put this into perspective, India Ratings and Research had upgraded Aye Finance’s Long Term issuer rating to A- (Stable Outlook) from BBB+ on March 24.

Founded by Sanjay Sharma and Vikram Jetley in 2014, Aye Finance caters to unbanked micro-enterprises of India by offering B2B loans. The company is currently offering its services in 14 states and plans to expand into Bihar, Jharkhand, Gujarat and Maharashtra in the coming years. The company has over 173 branches and 2,900 employees.

So far, the company has disbursed 2 Lakh loans amounting to INR 2700 Cr to over 196K small scale businesses in the country. With the fresh debt funding, Aye Finance aims to “address the credit requirements of the micro-enterprises during this financial crisis.” Sharma had earlier highlighted that the company has over 95% of its loans with women as the prime applicants.

The lender is equity funded by CapitalG, SAIF Partners, Falcon Edge, LGT, A91 Partners, and MAJ Invest, and has debt lines from FMO, BlueOrchard, responsAbility, SBI, ICICI Bank, HDFC and many others.

Aye Finance’s debt raising is also significant as fintech as a whole industry is suffering due to the coronavirus pandemic spreading across India. Recently, IndiaLends and Creditmate have had to resort to salary deductions to stay afloat.

IndiaLends cofounder Gaurav Chopra told Inc42 that their business has taken a hit and the salary deduction was an important decision that had to be taken. The company has also offered leave without pay to some of its employees while deducting steep pay cuts ranging from 20% to 50% on the basis of their fixed monthly salary.

Meanwhile, Jonathan Bill, CEO and cofounder of CreditMate, highlighted that considering RBI moratorium on loans/EMIs, the company is expecting a decline in its reduction in the next few months. “We will, of course, be busy building tech, integrating new lenders and working hard to ensure borrowers are in touch with lenders.”