Gurugram-based digital lending company Aye Finance has raised $2.78 Mn (INR 20 Cr) in non-convertible debentures to grow its loan book and offer affordable and customised credit solutions to the credit-starved micro enterprises in India.
The deal was syndicated by Northern Arc. At the same time, Accion Venture Lab, an early investor in the company, has also made an exit from the company by selling its stake in the company.
A non-convertible debenture or NCD does not have the option of conversion into shares and on maturity, the principal amount along with accumulated interest is paid to the holder of the instrument.
In 2014, Sanjay Sharma and Vikram Jetley founded Aye Finance to provide customer-focused financial services to the small and micro enterprises across India. The company has expanded its reach to 104 cities in 11 Indian states and has a team size of more than 1600.
Aye now serves over 70,000 clients and has loaned roughly $100 Mn (INR 718.3 Cr) to under-served Micro, Small and Medium Enterprises (MSME).
Aye Finance currently works on a Cluster-Based Credit Assessment methodology that uses insights of each industry cluster to underwrite the risk of lending to micro businesses. Aye also gains debt facility from institutions such as SBI, HDFC Bank, BlueOrchard, Triodos Investment, and Symbiotics.
The company uses various data science tools – psychometric profile tools, behaviour based statistical credit scores and constantly improving cluster insights to decide to lend to the small-scale enterprises.
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Some of the major competitors for the company include ZestMoney, i2iFunding, LendingKart, and LoanTap. A Nasscom report forecasted the Indian fintech software market to touch $2.4 Bn by 2020 (INR 17,241 Cr), from the current $1.2 Bn (INR 8,621 Cr).