Aye Finance is a lender that brings formal business credit to India’s invisible small-shop owners - the kirana storekeeper, the tailor, the brassware artisan - who have always been locked out of bank loans because they lack the paperwork that organised finance demands. Founded in 2014 on the conviction that cash-flow logic could replace document-checking, the company built a proprietary “cluster-based” underwriting method that studies the real economics of over 70 specific micro-business types, from power looms to leather goods, rather than asking for GST returns or income-tax filings. That single idea - understand the business, not the file - recurs in everything from its in-house origination to its AI-driven collections, and it is what lets the company serve more than six lakh borrowers across 571 branches while keeping credit risk legible. # Business segments A single engine - lending to unorganised micro-enterprises - delivered through four product types that share one underwriting backbone, one branch network and one collection machinery. ## 1. Micro-enterprise lending: formal credit for India’s informal businesses **The company makes small-ticket business loans to shopkeepers, traders and manufacturers who have no financial documents, using a cluster-based underwriting method that reads cash flows instead of files - and it originates, underwrites and collects every loan in-house.** - **Loans built for business, not consumption** - every loan is a business loan, used for working capital, expansion or asset purchases, and the average ticket size across the portfolio is INR 1.8 lakhs. The customer is a micro-entrepreneur running a manufacturing, trading, service or allied-agriculture unit with annual turnover between INR 20 lakhs and INR 1 crore, almost always owning their home or shop (95%+ do), and operating from a Tier-2 or Tier-3 city. - **Four product types, one underwriting brain** - the portfolio splits into secured hypothecation loans (40% of assets, backed by machines and inventory), unsecured hypothecation loans (37%, partial asset cover), mortgage loans (22%, secured by self-occupied property with an average loan-to-value of just 26%) and a small sliver of ‘Saral’ property loans. All of them run on the same cluster-based credit engine, which studies the cash flows and profit margins of specific business types - grocery, brass work, auto parts - rather than relying on collateral or receivables. - **The cluster method is the moat** - the company has mapped over 70 business clusters, each with its own operating economics, and this knowledge cannot be replicated by a lender that only reviews documents. In FY26, 68% of underwriting still used the cluster methodology directly, while 32% used AI and machine-learning scores built on top of that proprietary data. A recent pilot even uses a generative-AI tool that estimates a garment store’s monthly sales from a photograph of the premises, trained on the company’s own extensive dataset. - **Origination and collections are entirely in-house** - there are no third-party agents or direct-selling associates; every loan is sourced, underwritten and disbursed by the company’s own staff through a paperless, cashless process, with a maker-checker system and a field vigilance team that visits the borrower within 45 days to confirm the money was used for the stated purpose. Collections run on a three-tier model: digital nudges and voice bots first, then feet-on-street from the branch network, and finally a dedicated legal unit for recoveries. - **Repeat customers drive efficiency** - more than half of hypothecation-loan assets came from repeat borrowers in the last quarter of FY26, and the repeat programme uses machine-learning models and tele-calling rather than field sales, so each tele-caller generates INR 1.85 crores of loans per month. Branches themselves mature like compounding assets: a branch older than four years holds roughly three times the loan book of one under two years old, which is why 71% of asset growth in FY26 came from existing branches. # Group structure and partners **A publicly listed NBFC with a post-IPO capital base that is unusually strong for its segment, backed by long-tenure global institutional shareholders and a board that blends microfinance, banking and regulatory experience.** - **Institutional shareholder base** - the major shareholders include Elevation Capital (12.6%), LGT Capital Invest (10.1%), Alpha Wave India (7.8%), CapitalG / Google Capital (7.7%), British International Investment (7.4%), A91 Emerging Fund (7.2%) and Temasek Trust Asset Management (5.5%), with foreign institutional investors collectively holding 70%. Google Capital’s 2018 investment made Aye the first Indian NBFC to receive equity from that investor. - **Board with regulatory and operational depth** - the board is chaired by the former Chairman of NABARD, Govinda Rajulu Chintala, and includes a former Chief General Manager of the RBI, a former MD of PNB Housing Finance, a former GM of State Bank of India, and an IIT Delhi professor, alongside the founder and MD Sanjay Sharma. The senior management team has an average tenure that spans multiple business cycles, with the heads of credit, collections, risk and strategy each having served between six and ten years at the company.