On SmallCap Spotlight, Akash Jain, CEO of Akme Fintrade India Ltd, reflects on building a three-decade-old NBFC rooted in rural financial inclusion. From secured lending to tech-enabled underwriting, he shares how trust, discipline, and on-ground presence continue to drive sustainable growth.
Sheryll D’Souza: Hi there and welcome to this another edition of Small Cap Spotlight. Today, I have the management of Akme Fintrade with me. We have Mr. Akash Jain, who is the CEO of the company.
Thank you so much for joining us. Let’s talk about your company. It’s been in the business for almost three decades.
If you take us back to the early years, what were the problems that you were solving in 1995 that the banks were not able to?
Akash Jain: First of all, thank you for inviting me on this podcast. This company, Akme Fintrade India Ltd was promoted by its promoters in the year 1995 with the blessings of the Jain saint, Jain Muni. So in his name, basically this group was named.
So A stands for Acharya, K stands for Kuntu, Sagar and M stands for Maharaj and E stands for their followers. So this company was established with the premises, with the motivation of the Jain saint that he asked the promoters, majorly Mr. Nirmal Jain, who is the promoter of the company to come back to his roots and start working for the people who are of this region. Basically, if you recall that, that was the time when lots of tree plantation companies were there who were taking money from the small village people and investing with the promise to multi-fold their money.
So at that time, there were no regulations by the RBI, which were majorly in play during that period. So by the motivation of the Maharaj, this company was started to help the people, to bring those people in the proper financial channel to include for their financial inclusion and to give a way where they can get easy finance with lesser documentation. And since this company was started as a deposit taking company to ensure that their money is safe.
So the money that is being deposited in the company, in a proper deposit taking finance company, through that, this company has ensured that their money remains safe and simultaneously they get easy finance with lesser documentation at a proper interest rate as compared to what money lenders are charging at that time. Since that was the period when banking channel was not available to a great extent in the rural sector. So this has helped the people who are from the rural background to get the finance through which they can increase their livelihood, they can open their new businesses, they can bring their produces to the city market and get better income through the sales that they are doing directly in the city as compared to what they were doing to the intermediaries in the rural sector.
So this was the objective of the company that financial inclusion should be of the rural masses and give them a way to raise funds for their livelihoods.
Sheryll D’Souza: So over time, your borrower profile has largely remained with the small businesses and self-employed entrepreneurs. So what has actually changed more over the years, the customers or the way that you lend to them?
Akash Jain: So our motto was always that our funding should help in borrowing, increasing their income or generating new avenues of livelihood.
So over the period of time, I would say that a complete paradigm change has been there in this lending space. Changes have been there in terms of technology enablement as well as more penetration of BFSI in rural space in terms of higher financial inclusion of rural masses. Earlier, not so many players were there in the finance space in rural market, but now you can see that a lot of companies are funding in this space.
This has changed drastically the way MBFC space is funding now. Since customers are more aware, there has been enablement of technology, which has led to easier finance and stricter credit worthiness check and easy access to the finance to the rural masses. Definitely, the way we have lent has also grown multifold in terms of the way that was more paper driven thing that was in the 30 years back as compared to what it is now.
We are using a lot of technology in terms of the documentation, in terms of the credit worthiness, credit underwriting, in terms of disbursement, in terms of collection. So all these have changed a lot. Similarly, customers have also been educated more now.
They know how the companies work. They are more aware about the finances. So this has all changed the complete MBC space market.
Sheryll D’Souza: So talking about your business, you’re operating across five states with a strong physical branch network. If you could help us understand how critical is the on ground presence to your underwriting as well as collections today?
Akash Jain: I just give you a brief that we are working majorly in two type of products. One is Becker Loan.
And first, I would like to say that we are doing 100 percent complete secured finance. We are not doing any unsecured finance. So we are majorly doing two types of product that one is vehicle finance and another is SME finance.
So if you look at all these products, the products that we are working, they are largely, you can say, the human involvement is very high in these kind of products. So that’s why we are a branch driven network, branch driven physical presence business that we are doing rather than a technology, 100 percent technology driven business, which FinTech companies are doing where customers can come on their digital lending platform and take a loan. That is largely working majorly on in the space of unsecured loan.
But here in this case, since the customer is like I give an example of two wheeler loans. So customer comes to the dealer place and ask that and I want to purchase a two wheeler and I want finance option. Now, the dealer directly directs that customer to us that he wants a finance.
You just explain the scheme and arrange a finance. Now, this can be only this is majorly driven to physical network because the customer is there at the dealer network. So looking at the situation and his credit worthiness, the underwriting that is done there, that is where the physical network plays very big role there.
Similarly, when we talk about the post disbursement life cycle of the borrower, so collection, since there is a direct connection of that that borrower with the dealer and the salesperson that is there at the dealer location. So that gives additional input, additional advantage in terms of the collection. You can say collection efficiency is in the efficiency.
So I would say in the products that where we are dealing physical network is required as compared to completely 100 percent digitalisation.
Sheryll D’Souza: So many of your customers actually they struggle with the collateral or formal documentations. So how do you assess the credit worthiness, especially in such cases without actually going ahead and compromising on the risk?
Akash Jain: As I pointed out that our major customer base is in the rural and semi-urban areas where you know that majority of the customers are not filing their ITR or they don’t have a proper documented income details of their individual borrower as well as for their households.
So our philosophy has always been that we don’t rely on documented income, rather we rely on the actual cash flows that that person is generating as well as their family generating. On document, since you know that now up to 12 lakh of income is exempted but actually he may not be, he may file a 12 lakh ITR but he may not be actually earning that income. So we rely majorly on the field people that we have deployed to assess his cash flows, his income, what he is earning and what his family members are earning.
A labourer who earns around 15,000 per month and if there are four members in the family they collectively earn around 60,000 per month but this income is not documented anywhere. But when we assess, when our credit people assess that income we know that if it’s an average income of more than 50,000 plus for that customer in a month including all his family members, so we can give him a loan according to this income. But he cannot show any documented income which can justify this earning.
So we have a complete credit underwriting process where starting from the initiation of the file, when the lead comes, our sales executive undertakes the physical, the field investigation of that particular borrower. He looks at his income profile, he looks at his way of living, how he is earning, how much he is earning, how much his family is earning. Then he recommends that case to his branch manager and then branch manager again verifies this thing and then recommends it.
If he feels that then he recommends it to the credit manager. So after getting all the documents and again visits the customer and look and do the complete PD of that customer where he assesses his income on the basis of the cash flows like in case of a grocery shop owner. He visits him, he stays there for 2-3 hours, he checks the average collection that he is getting over the period of time, he checks his UPI receipts.
In this way he assesses overall cash flows and based on that we approve the case and underwrite the case and disburse the case. So this is how we are more relying on the assessed base income rather than any formal documentation that is there in case of salaried class people. Since we are majorly working in the case of SME people, so they don’t have any formal income documentation that has to be assessed.
Sheryll D’Souza: So let’s talk some more about your business Mr. Jain. So what percentage of your business today comes from repeated customers or referrals?
Akash Jain: We are basically working in three products, two wheeler, commercial vehicle and SME loans. So as you know that a person starts his financial journey in terms of borrowing from a small ticket size loan, which is normally in case of rural sector it is a two wheeler loan.
So that is the entry point that is available for a customer. So once he enters through this two wheeler loans, if he is satisfied with our services, he refers us to his acquaintances, his family members and he again approaches us to for the next loan in terms of you can say that commercial vehicle loan or an SME loan. So I would say we don’t have the exact numbers in the sense that since there are many referral customers directly, indirectly, so I cannot give you a ballpark figure.
But I would say that more than around 25% of our customers are through referral and or you can say a repeat business, repeat customers. So if you talk about your AUM, that’s about 767 crore rupees. This I’m talking as per the first half of FY26.
Sheryll D’Souza: If you would tell us what has been the key growth driver over the last few years for AKME FinTrade?
Akash Jain: I would say that prior to COVID, we were growing at a very steady pace. We have built our book to around 500 crores with a leverage of around more than 4. So during this COVID period, we stopped new disbursement and largely focused on the collection side. So we again restarted our disbursement strongly from the year post September 22.
So after that period, our management have decided that we will keep an eye on, we will keep our liquidity risk under control and we will be majorly focussing on the short-term loans since we are getting loans of short-term nature only. So to keep our liquidities under control, we decided that we will be more focussing on the vehicle loan. So during past these two years, our major driver has been the vehicle loan segment, which has grown multi-fold.
Last year we have a growth of around 200% in case of vehicle loan. This year also as compared to last September half year, we have grown around 200% in case of vehicle loan segment. So going forward also, this will be the major growth factor in terms of our product.
Apart from that, we have taken initiative in the terms of, we have raised the capital in the year June 24. And post that, we have expanded geographically as well and we are expanding further. So this is another growth driver that is there through which we are achieving our growth targets.
So as you scale, how do you actually balance growth with asset quality, especially given the fact that we are in a very volatile credit environment? It’s a very nice question. And this is the real pain point for any NBFC to keep their asset quality good so that they can survive the market risk that is there. So definitely, that is also has been our management key focus that we have to maintain our asset quality very well.
And this is evident from the fact that continuously our GNP ratios have gone down as compared to what they were during the last few years. So we are balancing our growth targets with the asset quality through various initiatives that we have taken. We are now majorly focussing on our risk management aspects where before opening any new location or new branch, we are assessing the customer profiles there.
And if we find that this is not the right place to expand, we don’t expand there. Secondly, we are again, we are expanding our geographical presence to reduce the concentration risk that may be there in case if we concentrate majorly on in a particular area, like we are currently 62% of our own businesses in the Rajasthan, which was earlier concentrated only in 2, 3 and 4 to 5 districts. Now, in Rajasthan also, we have expanded to newer regions, thereby reducing the concentration risk of the only 4-5 districts.
Similarly, we are expanding in other states also. So thereby reducing our overall portfolio share of Rajasthan from what it is right now, which is already reduced from more than 70% to now around 62%. Similarly, our underwriting has been more strict here than it was earlier.
We are using technology to underwrite the cases. We have implemented lots of APIs, which give the added advantage in the whole underwriting process. We have implemented lots of new technology in our LOS and LMS that gives us additional information about the customers.
Similarly, on the collection initiatives, we have taken several initiatives, which are helping us in the financial education of the borrowers as well as the whole collection process, whereby we implemented a full-blown call centre, which guides customers also. If any customer defaults his EMI, we try to educate him that what is the importance of paying the EMIs on time. This will help them to increase their civil score, which can help him getting new loans in the future.
So this is how we are balancing our growth with the asset quality. We are majorly focused on that. We will keep our asset quality under control.
We don’t increase our GNPA. So this is what our management is more focused on right now. So let’s talk a bit more about you and your business, Mr. Jain, because you have seen multiple credit cycles.
Sheryll D’Souza: What is one lesson from the past downturn that has actively guided the decisions that you are actually making today?
Akash Jain: The major credit, you can say, a difficult period that any NBFC faced was the COVID. This is, I would say, that was a once-in-a-lifetime period that has been faced during that time. So the lessons that we have learned that time is to keep our leverage under control.
So post that, management has decided that we will keep our leverage under three at any point of time. We don’t exceed three so that if any such incidence happens, then our collection efficiency, if that goes down, in spite of that, we will be able to survive that period and the collection can be managed as well as our liabilities can be managed at that time. So that is the major learning that we have taken and we are working on that direction only.
Sheryll D’Souza: From management perspective, what actually keeps you most alert right now? Would it be a risk? Would it be liquidity? Or would it be competition?
Akash Jain: Competition will always be there. And a healthy competition always motivates you to work harder and work more vigorously to achieve your targets. So competition will always be there.
So that is not an area of concern for me because we will make our space in this competitive market and we will keep on growing. So that is not. But what concerns more as a management perspective is the risk and the liquidity.
So risk definitely as this industry is growing, credit risk is keep on coming and credit is continuously increasing. So we are definitely managing that is through better underwriting and stricter underwriting process that we have developed. Similarly, liquidity is the major concern for NBFC for its repayments as well as for the doing new business.
So that is one aspect that we are majorly focused on to keep our ALM in such a way that we don’t have any mismatches in any of the brackets of the ALM. So because of this reason only we have now been majorly focused on the vehicle loan segment because their life cycle is normally between two to three years and that is that completely aligns with our borrowing requirement, the borrowing that we are getting right now for the period of three to five years. So that way we are aligning our liquidity risk and the credit risk.
Sheryll D’Souza: And finally, when investors look at your company that is Akme Fintrade five years from now, what should stand out for most for them? Is it about a trust or scale?
Akash Jain: So I would say that trust is always have been and will be a most important factor for any company that until unless investor doesn’t trust that company, that company cannot, not only investor, even our customers. So that company cannot grow. So trust is the important factor that will be there and trust can only be earned when we perform what we have, what we have promised.
So definitely what we have promised that we will grow this company to a pan-India NBFC and we will grow this company to an ALM of around 5000 crores in the next five years. That is what we are, we are working hard towards achieving that target. We have promised that we will give, we will be giving a very good return on our asset as well on the equity.
And for that, we are working. So we consider, we hope that we will meet our targets and that’s how we will earn the trust of our investors.
Sheryll D’Souza: All right.
With that, we leave it there. Thank you so much, Mr. Jain for joining us on this very special edition of Small Cap Spotlight, talking about your business, the growth prospects, as well as talking about what investors should look out for.