### **Overview** Paisalo Digital Limited (Paisalo) is a **non-deposit-taking, systemically important Middle Layer NBFC** registered with the Reserve Bank of India (RBI) and listed on both the BSE and NSE. Since its inception in 1992, the company has evolved into a **leading fintech-driven financial inclusion platform**, delivering scalable, low-risk, income-generating financial solutions to India’s unbanked and underserved populations, particularly in rural and semi-urban areas. Leveraging a **“High Tech: High Touch”** business model, Paisalo combines **proprietary digital infrastructure, AI/ML-powered underwriting, and a vast physical distribution network** to offer last-mile credit and banking services. The company’s strategic identity is rooted in the "Triple A" framework — **Accessibility, Affordability, and Awareness** — aiming to democratize credit and financial services at the bottom of India’s economic pyramid. --- ### **Core Business Model & Strategic Focus** Paisalo’s operations are centered around three key engines: 1. **Co-Lending Model (Capital-Light, Scalable Lending)** - Leading player in RBI’s **co-lending framework**, with partnerships with **five major public sector banks**: State Bank of India (SBI), Bank of Baroda, UCO Bank, Punjab National Bank, and Bank of India. - **Risk-sharing structure**: Paisalo contributes 20% of each loan; banks provide 80%, enabling shared risk, lower funding costs, and higher returns. - As of Q2 FY’26, **77% of co-lending AUM is directed toward MSMEs and SMEs**, addressing a credit gap of over ₹1.03 lakh crore in underserved segments. - Co-lending has driven **operational efficiencies, reduced asset-liability mismatch, and improved ROA and ROE**. 2. **Business Correspondent (BC) Network (Banking-as-a-Service – BaaS)** - Operates as a **National Business Correspondent (Code: 1A99) for SBI**, with an additional strategic agreement with Bank of India. - Network of **1,393–1,398 active Customer Service Points (CSPs)** across **22 states** as of Q2 FY’26. - Provides services including **account opening, deposits, remittances, micro pensions (APY), micro insurance (PMJJBY, PMSBY), AEPS transactions, and loan processing**. - In FY24–25, the BC division facilitated: - ₹52.32 billion in loans - 112,697 new savings accounts - Over 5 million customer-initiated transactions - Generated GMV of ₹30,054 million in FY25. - Recognized by government for participation in **Jan Samriddhi and Jan Sanchay financial inclusion campaigns**. - Achieved **95.7% in compliance audit (Aug 2025)**—demonstrating strong governance. 3. **Product & Geographic Diversification** - Evolved from a regionally focused northern India lender into a **pan-India player** with presence in **22 states**. - Maharashtra and Rajasthan now contribute **18% and 14% of business**, respectively. - Added **383 net new touchpoints in Q2 FY’26**, bringing the total to **4,380 touchpoints** (402 branches, 2,585 distribution points, 1,393+ CSPs). - Expansion driven by **geo-spatial analytics** focusing on **economic potential, infrastructure, competition, and historical performance**. - Uses **cluster-based penetration model**: deepening presence in high-potential districts before expanding to adjacent areas. --- ### **Financial & Operational Highlights as of Q2 FY’26 (Nov 2025)** - **Assets Under Management (AUM)**: ₹54,494 crore - **20% YoY growth**, 25% 3-year CAGR - **Quarterly Loan Disbursements**: ₹11,025 crore (Q2 FY26) - **Customer Base**: **Over 13 million** (up from 11 million in Q1), with **1.8 million net additions in Q2 alone** - **Loan Portfolio Characteristics**: - Average loan size: ~₹2.62 lakhs - 90% of loans are secured - **Strong Asset Quality**: - GNPA: 0.85% - NNPA: 0.68% - Target: NNPA under 2% long-term - **Collection Efficiency**: 99.8% - **Capital Adequacy Ratio (CAR)**: 39.5% (well above regulatory minimum) - **Net Interest Margin (NIM)**: 6.5% - **Return on Equity (ROE)**: 11.9% - **Profitability**: 36% PAT CAGR over past three years --- ### **Growth Levers & Strategic Initiatives** #### **1. Product Innovation** Paisalo has diversified its lending portfolio beyond small income-generating loans to include: - **Loan Against Property** - **Tractor Financing** - **Medical Equipment Finance** - **Equipment & EV Financing** (678 electric vehicles financed so far) - **Pre-owned Car Finance** ("Ready Steady Go Loan") - **Two-wheeler Finance** ("Do Ka Dum Loan") - **Auto Rickshaw Financing** ("Gati Loan") - **Personalized Loans**: "Vikas" (financial development), "Umeed" (credit for new-to-credit), "Raftaar" (fast vehicle financing) These products are **pilot-tested and rolled out in phases**, with teams strengthened in Delhi-NCR, UP, Rajasthan, MP, Haryana, and agricultural hubs. #### **2. OEM Partnerships** Strategic alliances with major OEMs to drive secured lending: - **Mahindra, Tata, Honda, Hero, TVS, Piaggio, Adani, Waaree** - Recent wins: **Tata GenSet, Loom Solar, Eka Mobility, Sema Mart Health** - **Pipeline**: Partnerships expected with **Eicher, Kubota, Ather, Spinny, Cars24, Sterling & Wilson** (Q3–Q4 FY26) These partnerships **enhance asset quality, streamline sourcing, and open new customer segments**. #### **3. Technology & AI-Driven Transformation** - Deployed a **Gen-AI-based calling system powered by NVIDIA chips**, automating **350,000+ daily calls** for EMI reminders and recovery. - Uses **natural language processing** for human-like conversations. - Real-time dashboard for collections insights. - **On-premises data center established** (investment: ₹133.93 crore) with **45% higher efficiency** than legacy systems. - Transition from cloud to in-house computing enhances **data privacy, control, and alignment with India’s digital sovereignty goals**. - **Predictive AI models** for fraud detection, early credit stress signals, and underwriting accuracy. - **Business Intelligence Unit (BIU)** reports directly to leadership, integrating data into strategic decisions on pricing, risk, and expansion. #### **4. Cross-Selling & Fee-Based Income** - Cross-selling **insurance, investment products, pension, and micro-credit**, generating **fee-based income**. - **43,020 cross-sold financial product accounts** in Q2 FY26. - Expanding **non-fund income** via transaction fees, documentation services, and financial advisory. - Reduces reliance on interest income and enhances **customer lifetime value**. #### **5. Inclusive Growth & Social Impact** - Focus on **women entrepreneurs, micro-entrepreneurs, small farmers, and MSMEs**. - Over **450,000 women borrowers** served since inception. - Runs **Work Skills Development programs** in regions like Jalgaon, Siwan, Etawah. - **BC model creates local employment** — CSP agents are recruited from communities, fostering entrepreneurship. - Facilitated **3,926 new savings accounts** in Q2 FY26. --- ### **Risk Management & Governance** - **Early Warning System (EWS)**: Multi-dimensional framework using **geopolitical, geospatial, credit bureau, and macroeconomic data** (inflation, GDP, interest rates). - **Postal Code-Level Monitoring**: For hyper-local risks like floods or economic shocks. - **Regulatory Compliance**: Maintains strict governance; BC network ranked among top performers in audits. - **Credit Cost Management**: Long-term outlook below 2% despite elevated FY25 costs. --- ### **Funding & Capital Strategy** - Raised **$50 million via 7.5% secured FCCBs (due 2029)** in FY25 to diversify funding sources. - $2 million already converted into equity. - Follows **conservative capital allocation**: prioritizes reinvestment over dividends. - Leverages **bank partners for low-cost funds**, minimizing balance sheet risk. --- ### **Leadership & Governance** - **Sunil Agarwal**, MD & Founder: 30+ years in finance, led IPO and transformation into a listed NBFC. - **Santanu Agarwal**, Deputy CEO: Instrumental in digital transformation and forging co-lending partnerships with SBI, PNB, and BoB. - **Gauri Shankar**, Independent Director: Ex-MD & CEO, Punjab National Bank; brings deep banking expertise. - Professional board, strong internal controls, and commitment to **ethical lending and inclusive growth**.