Apollo Finvest (India) Ltd Management Discussions

1. From IPOs (Initial Public Offering) to IOUs (I Owe You)

A ROLLERCOASTER YEAR IN INDIAN LENDING

FY25 played out like a Bollywood epic: big entries, plot twists, and a cameo by the regulator.

Across India, 11 crore personal loans were disbursed digitally, totaling ^1.06 lakh crore1. But for every loan approved, at least two or three were rejected, meaning Indians submitted over 40 crore applications, seeking a collective ^3.85 lakh crore in credit. In other words, one in three Indians tried to borrow online, and most of that surge came from Indias young, tech-native population, with around 60% of personal loans going to borrowers under 35, a generation fluent in tech, for whom taking a digital loan feels as common as ordering a Swiggy delivery to their doorstep.

Company	Issue Type	Opening Date	Issue Amount (Rs. Cr.)	Issue Price (Rs.)	Listing Date	IPO/ PE Date	Close Price on Listing (Rs.)	Market Price (Rs.)
Usha Financial Services Ltd.	SME	Oct 24,2024	93. 06	168	Oct 31,2024	19.83	155.85	98. 80
Manba Finance Ltd.	Mainboard	Sep 23,2024	150.84	120	Sep 30,2024	14.39	157.45	139.55
Nothern Arc Capital Ltd.	Mainboard	Sep 16,2024	777.00	263	Sep 24,2024	11.78	323.40	267.25
Akme Fintrade (India Ltd.)	Mainboard	Jun 19,2024	132.00	120	June 26,2024		133.35	7.53
IBL Finance Ltd.	SME	Jan 09,2024	31.72	51	Jan 16,2024	48.08	58.80	63.20

India accounts for nearly 25% of Instagrams global user base with 400 million active users, driven largely by its youth. This influence is now extending to lifestyle choices, with many turning to app- based credit to fund aspirational living.

Fintechs saw this wave and hit the dance floor running. IBL Finance, MobiKwik, Akme Fintrade, Northern Arc Capital (NACL), Manba Finance, and USHA all rang the IPO bell. Some, like Slice, even became banks. It felt like every fintech had its own song-and-dance number, either listing, raising, or reinventing.

This is also reflective of the growth we have seen in the space, so before we talk about the IOUs lets understand why we are seeing so many IPOs happen. Why is this happening all of a sudden?

2. With Great Power Comes Great Responsibility

Indias digital credit market has raced from US $9 billion in 2012 to $110 billion by 2019. Its projected to hit $155.67 billion by 2025 and near $990 billion by 2032.2

3. The Story Behind the Surge

The kind of scale DLG hit in just a few years is nothing short of legendary. But this wasnt a solo play, it was very much a team sport.

NBFCs stepped in with the funding, fintechs brought the tech muscle, and even banks joined the chase. It all came together to build real momentum. Whats more exciting is that this wasnt just a one-off. Its a symbiotic setup now, and its going to shape the ecosystem for a long time to come. What fueled this rise? Not just flashy apps, but evolving partnerships:

CO-LENDING PARTNERSHIPS

Co-lending involves two regulated entities (REs) jointly funding loans, with capital typically shared in an 80:20 ratio, where 80% is contributed by the larger bank or NBFC, and 20% by the originating lender. This structure allows NBFCs and fintechs to access lower-cost capital and scale their loan books efficiently. The co-lending market has witnessed rapid growth, with players like Yubi facilitating disbursements exceeding ^25,000 crore industry.

BUSINESS CORRESPONDENT (BC) PARTNERSHIPS

FLDG structures, where fintechs or NBFCs absorb a predefined portion of loan defaults (typically up to 5%), have emerged as a key enabler for digital lending in India. By reducing lender risk, FLDG has unlocked capital efficiency, allowing fintechs to scale rapidly with limited equity. It has also facilitated deeper penetration into niche segments such as new- to-credit and sub-prime borrowers. Fintechs have been able to disburse INR 1 lakh crore, which is a 80% YoY increase. Talk about scale!

DIRECT SOURCING AGENT (DSA) PARTNERSHIPS

In this model, the fintech bears no credit risk but is responsible for sourcing borrowers as per the lending partners (REs) defined parameters. This enables fintechs to earn sourcing income, typically up to 2%, while leveraging the compliance and underwriting infrastructure of regulated entities.

These formats transformed borrowing from bureaucratic file-pushing into something as fast as getting a tapri chai between two Mumbai locals - quick, predictable, and built for speed.

Today, there are 1,263 digital lending apps;

only ~12% are VC-backed, highlighting how fragmented and crowded the space is. Banks and NBFCs still move most of the credit, about 85% of total disbursements, while fintechs are racing to grab the remaining 15%, growing fast but still the challengers on this set. 3

While these partnerships definitely helped the industry scale, the real question is-where did all that money actually go?

4. Wheres the Money Going

Credit, the hero of our economic drama, has been racing through FY25. But every hero needs a purpose: is this money driving growth and stability, or just fueling side stories of glitz and gamble?

Traditionally, personal loans fuel "needs": medical expenses, weddings, debt consolidation, travel, or big-ticket gadgets. If that were all, wed see the economys usual markers: GDP, healthcare spending, inflation - jump in sync. But do the numbers back that up? Not quite.

Trend	Date & Insight Implication
GDP Growth	6-7.5% across recent quarters; stable but not extraordinary expansion.	Credit growth isnt translating into outsized macro growth.
Healthcare Spending	Government health expenditure (GHE) has risen modestly, from around 1.1% to 1.8% of GDP over the last few years, while Out-of-Pocket Expenditure (OOPE) by individuals has dropped from over 60% to below 40% of total health spending. 4	With the government covering more costs and individuals paying less directly, healthcare isnt driving loan demand.
Inflation (change in prices of everyday goods)	Prices of everyday goods & services stayed stable, averaging around 5.4% in FY24, which is within RBIs comfort zone of 2-6%. 5	No broad inflation spike despite credit expansion.

 

Trend	Date & Insight	Implication
F&O Trading Boom	Monthly turnover jumped from 5217 lakh crore (Mar 2019) to 58,740 lakh crore (Mar 2024). Many retail traders, often loan-funded, lost money. 6	Borrowed funds driving speculative trades; regulatory scrutiny rising.
Weddings & Lifestyle	40+ lakh weddings; average budget 537 lakh (+14% YoY); 56 lakh crore spent annually, 20% loan-funded. 7	Loans are funding celebrations and indulgences, not just needs.
Consumer Spending	Zomato Average Order Value rose 18.8% YoY (5541 ^ 5613). 8	Discretionary consumption rising faster than incomes.

 

OPERATING METRICS	FY23	FY24
million, unless otherwise mentioned
Orders	119	203
Average Order Vallue (INR)	541	613
Average monthly transacting customers	2.9	5.1
Average GOV per day, per store (INR *000)	470	797

Borrow, Spend, Repeat - Until the Bill Comes Due</p>

When trading activity grows at breakneck speed in a country where only 6.7% of the population files taxes9, its reasonable to infer that much of the capital isnt coming from surplus income, but from borrowed funds.

This points to a credit cycle that isnt going into businesses, homes, or assets that reliably pay back. Its funding parties, pizzas, and poker tables, expanding in an uncontrolled, consumption-driven manner. If borrowers are unable to repay, especially in speculative segments like F&O, the fragility of the system will begin to show, potentially leading to stress or even erosion in credit institutions exposed to this unsustainable leverage.

5. FY25: Disbursed and Dispersed

One bump, like collections slipping, and the thin margin vanishes overnight. Many fintechs, chasing VC-fueled growth, tried to "scale out of" bad unit economics. It didnt work. Even marquee-backed players like ZestMoney (funded by Goldman Sachs, Ribbit Capital, Omidyar, and Quona) and Eduvanz (backed by Peak XV Partners, Juvo, and Capria Ventures) eventually shut down despite their deep- pocketed investors.

Others went the opposite way, jacking up APRs to offset risk, but drew RBIs eye. Navi and DMI faced embargoes, unable to lend further. In a country where less than 10% of the population has formal credit, regulators had to step in to keep credit both flowing and safe.

This fragility became visible in the second half of FY25. With so much credit flowing into discretionary spending and speculative bets, the cracks started to show.

• NBFCs defaulting on interest.

• Banks burning in the microfinance segment.

• Fintechs shutting shop.

The carnage wasnt random. It came from fragile unit economics and a loss of credit discipline

Profit margins? Razor thin: usually 1-5%.

The table above breaks down a typical fintech loan book, showing how margins stay ~1% in the first cycle (due to high acquisition costs) and improve only when borrowers repeat.

Metric	First Loan Cycle	Second Loan Cycle (Repeat)	Total
CUSTOMERS	10	6	16
TOTAL LOAN AMOUNT	1000	600	1600
REVENUE @ 36% ROI	360	216	576
CAC	40	0	40
FLDG [5%)	50	30	80
COLLECTIONS {4%)	40	24	64
COST OF CAPITAL (18%)	180	108	288
TOTAL EXPENSES	40	24	64
NET PROFIT	350	186	536
PROFIT MARGINS	10	30	40
	1%	5%	2.5%

6. RBI Puts Everyone Under the Spotlight

Then came the twist. RBI entered like the veteran director with the red megaphone, not to cancel the film, but to change the scripts pace.

New Digital Lending Directions, co-lending norms, and sharper compliance checks slowed the soundtrack. Lenders had to pivot from high-yield, high-APR products toward more disciplined, sustainable growth. The party didnt end, but the beat shifted, and in the next scenes, well see exactly how the music changed, why the regulators grabbed the mic, and what it meant for everyone on the floor.

RBI has never been subtle about reshaping this sector. The 2022 Digital Lending rules

(and the 2023 5% FLDG cap) forced lenders to hold real "skin in the game." FY25 kept that spirit alive, with Digital Lending Directions (May 2025) and Co-lending Draft Directions (April 2025) bringing fresh guardrails.

Key Shifts:

• Every lending app must be registered on RBIs CIMS portal. No mystery operators.

• Digitally signed Key Fact Statements + cooling-off periods protect borrowers.

• No pass-through bank accounts; every rupee flows directly between borrower and regulated entity.

• Data localization: Sensitive data must stay on Indian servers.

• Algorithms must be explainable and auditable.

"Because the AI said so" no longer cuts it.

• Co-lending frameworks: Mandatory escrow accounts, blended rates, written role clarity, bureau reporting, and a firm 5% cap on any Default Loss Guarantees.

• The Navi-DMI episode underscored RBIs shift from reactive policing to proactive supervision: rolling portfolio checks, and a push toward cleaner pricing and governance across the board.

7. Apollos Script: Distribution,

Talent, and Data

While many lenders scrambled this year, juggling tighter RBI rules, wafer-thin margins, and investors demanding profitability, Apollo stayed focused on building for the long haul. From day one, weve asked ourselves: Are we building for the next year or the next decade? That question shaped every decision, and in FY25, we put those answers into action.

Step 1: Start with Proven Players

In a volatile market, we anchored ourselves by working with established names - MoneyView, TrueCredits, Snapmint, and Branch. These players are tried, tested, and scaled, allowing us to deploy capital quickly without waking up to sudden risks. It gave us a stable foundation while others were still scrambling.

Step 2: Build Distribution - Carefully

Once our base was solid, we expanded by cherry-picking promising fintechs. Not by chasing hype, but by doing the hard work:

• We visited their offices to see operations firsthand. Were their systems as strong as their pitch decks? Did the data match their story?

• We studied their "superpowers": some ran 300-person collections teams manually educating every borrower; others relied on two-person ops teams with ML models predicting repayment behavior before the first EMI.

• We even looked at founders themselves: hands-on leaders walking the floor vs.

those dialing in from another country once a month. Founders with skin in the game - their own capital on the line, consistently moved faster and steadier when things got tough.

This approach helped us match each partners strengths with ours, backing only those who could weather market shocks rather than betting on everyone.

Step 3: Data as Our Compass

Years of partner evaluations have given us datasets that are more than logs. Theyre living playbooks. They cover borrower cohorts, geographies, delinquency patterns, and partner behavior, helping us price, provision, and pivot before problems escalate.

Think of it as a GPS that not only maps the route but warns us about traffic jams, potholes, and shortcuts so every rupee we lend travels safely.

Step 4: Collections, Modernized

Collections cant look like the 90s anymore: agents on scooters, chasing borrowers door- to-door. In 2025, our approach blends:

• AI dashboards and bots for calling the borrowers,

• IVR (Interactive Voice Response): Automated reminder calls with borrower input (Press 1 to pay, 2 for support, etc.),

• Human touch (telecallers and field agents) for softer buckets, and

• Specialized agencies for the toughest cases.

• Merely having multiple communication tools is not enough. Its the intelligent orchestration between them that drives performance.

For instance, after a borrower reads a WhatsApp message or listens to a 10-second IVR:

• Trigger an AI bot call within 1 hour

• If no response, auto-assign to a telecaller

• If unreachable, escalate to a field agent within 48 hours.

The challenge: How do we ensure these conversations stay professional, compliant, and effective without manually reviewing thousands of calls?

Thats where Senti, ourAI-powered

listener; fits in.

Trained on over five lakh recordings, Senti flags tone issues in real time across Hindi, English, and regional languages. By automating what used to take entire audit teams, Senti has cut manual call reviews by 90% for Apollo and our partners, making collections faster, sharper, and far less error-nrone.

Step 5: The Team Behind It All

Pulling this off takes more than strategy: it takes a sharp, lean team. Our 30-member crew is built for speed and precision:

And because the next edge in lending will come from data, were hiring data scientists and credit-risk strategists to sharpen our models and strengthen underwriting, making sure every rupee we deploy is backed by intelligence, not instinct.

8. Building with Intent

Indias lending blockbuster is far from over. With 63 million MSMEs facing a ?103 trillion credit gap 10, a ^40,000-crore collections market growing at 18% annually 11, and 650 million smartphone users making 15 billion UPI transactions a month, the sequel is already in production.

Apollo will keep funding the right scripts: channels where credit is most needed but hardest to reach, with clear pricing, clean governance, and tech-driven guardrails.