Finnable Credit - ₹3,100 Cr AUM Fintech at BBB+, But 80% of the Book Isn't Even Theirs

Community Lounge
1

Finnable Credit Private Limited (FCPL) landed on my radar because of the yield. Their NCDs are going out at 11.75-12.75% across recent tranches, which is high for a BBB+ (Stable) rated name. CARE Ratings assigned the rating in September 2025 and reaffirmed it in January 2026, so this isn’t stale. But when I started digging into the structure, I found something that changes how you should think about this credit entirely.

The headline AUM is ₹3,110 crore as of September 2025. Sounds like a reasonable mid-size NBFC. But only 19.2% of that AUM (roughly ₹598 crore) sits on Finnable’s own balance sheet. The other 80.8% (roughly ₹2,512 crore) is off-book, originated through co-lending partnerships with other NBFCs. Finnable provides the technology, origination, and servicing through its wholly-owned subsidiary Finnable Technologies Private Limited (FTPL), while partner NBFCs carry the credit risk on their books.

This distinction matters enormously for bondholders. When you buy a Finnable NCD, your repayment depends on the performance of the ₹598 crore on-book portfolio, not the ₹3,110 crore headline AUM. The off-book portfolio generates fee income for Finnable, but the credit risk sits elsewhere. If the off-book portfolio deteriorates, Finnable’s fee income drops and its FLDG (first loss default guarantee) obligations get triggered, but the direct balance sheet impact is more contained.

Let me walk through the full picture.

The company: FCPL was incorporated in August 2015 in Bangalore, registered as a Base Layer NBFC with RBI. Founded by Nitin Gupta (ex-analytics, previously built an analytics company serving global banks), Amit Arora (21 years in retail banking across risk, business, and digital banking), and Viraj Tyagi. The tech platform is run through FTPL, which handles origination, risk assessment, and disbursement on a fully digital basis with minimal manual intervention.

What they lend: 100% unsecured personal loans to salaried individuals. Average ticket size of ₹2.5 lakh (max ₹10 lakh). Average tenure of 42 months. Yield of approximately 25%. Present across 23 states. Unlike many fintechs that are entirely digital, Finnable also does physical verification of residence and office (triggered by tech, completed within about 1 hour) and maintains an in-house collection team of roughly 1,300 employees covering everything up to 150 DPD. No outsourced collections until after 150 days.

The growth trajectory has been explosive. AUM went from ₹370 crore in March 2022 to ₹1,899 crore in March 2024 to ₹2,756 crore in March 2025 to ₹3,110 crore in September 2025. That’s roughly 85% CAGR since FY22. The on-book portfolio specifically has only scaled meaningfully from FY25 onwards.

Financials (consolidated, from CARE rationale, January 2026):

FY2024: Total income ₹183 crore, PAT negative ₹5.8 crore, AUM ₹1,899 crore, GNPA 2.86%, ROMA negative 0.38% FY2025: Total income ₹278 crore, PAT ₹6.7 crore, AUM ₹2,756 crore, GNPA 0.15%, ROMA 0.27%, on-book gearing 1.12x, AUM/TNW 12.13x, CAR 40.03% H1 FY2026: Total income ₹205 crore, PAT ₹26.4 crore, AUM ₹3,110 crore, GNPA 0.33%, ROMA 1.63% (annualised), on-book gearing 0.76x, AUM/TNW 6.10x, CAR 40.32%

A few things pop out. First, the company only turned profitable from Q3 FY25. Before that, it was loss-making with high opex as it built the platform and team. So the profitability track record is about 5-6 quarters old. Second, the GNPA swing from 2.86% in FY24 to 0.15% in FY25 is dramatic and needs context (likely driven by write-offs and the shift in portfolio composition as on-book scaled). Third, the AUM/TNW ratio dropped from 12.13x to 6.10x because of a massive ₹250 crore equity raise in September 2025, which brought net worth to ₹510 crore. Without that raise, the ratio would still be in double digits.

Capitalisation: ₹525 crore raised cumulatively since inception. The September 2025 raise of ₹250 crore was the largest single infusion. On-book gearing at 0.76x looks very comfortable, but the adjusted gearing (debt/TNW adjusted for FLDG) was 1.83x as of June 2025. Management targets on-book gearing below 3x and AUM/TNW below 6x on a steady-state basis.

Asset quality: Reported GNPA on the on-book portfolio is 0.33% (September 2025). But the total AUM 90+ DPD is 1.07%, which is more relevant because it captures the full lending activity including off-book. Write-offs were 2.39% of AUM in FY25. Current bucket bounce rate of about 12.5%, on a reducing trend. CARE notes the portfolio hasn’t been tested across economic cycles and the credit engine is still evolving.

Funding as of November 2025: NBFC/FI term loans 40.4%, NCDs 28.8%, bank borrowings (including SFBs and private banks) 25.1%, pass-through certificates 5.6%. Cost of funds is high, which is typical for a BBB+ rated new-vintage NBFC.

Liquidity: Free cash of ₹33 crore (consolidated, June 2025). Scheduled inflows from advances of ₹100 crore against repayments of ₹145 crore over the next 12 months, with the gap covered by the September 2025 equity raise.

The question for this forum: Finnable is growing at 85% CAGR, just turned profitable, has 80% of its AUM off-book, lends unsecured to salaried borrowers at 25% yield, and is offering 11.75-12.75% on its NCDs. Is this a high-conviction fintech growth story that’s temporarily mispriced at BBB+, or is it an untested credit model where the real risk hasn’t shown up yet because the book is too young?

Disc: Not invested. Studying.

2

The on-book vs off-book split is the single most important thing to understand about this credit, and I think most people looking at the headline numbers will miss it.

When Finnable reports ₹3,110 crore AUM and 1.07% 90+ DPD, the natural reaction is “₹3,000+ crore NBFC with 1% delinquency, that’s fine.” But the ₹598 crore on-book is the part that directly affects NCD repayment. The off-book ₹2,512 crore is generating fee income and servicing revenue for Finnable, which supports profitability and indirectly supports debt service. But if the off-book partners pull back or if FLDG obligations get triggered on a large scale, Finnable’s economics change fast.

The FLDG angle is something CARE flags explicitly. The adjusted gearing (debt/TNW adjusted for FLDG) was 1.83x vs the raw on-book gearing of 0.76x. That gap tells you how much contingent liability sits in the FLDG commitments. If credit costs spike on the off-book portfolio, Finnable has to make good on its first-loss commitments, which reduces its effective net worth. CARE’s downgrade trigger is overall gearing (borrowings/TNW adjusted for FLDG) exceeding 3.5x or AUM/TNW exceeding 6x on a sustained basis.

The write-off rate of 2.39% of AUM in FY25 is actually reasonable for unsecured personal loans. Industry averages for this segment tend to be 2-4% for good operators and 4-6% for weaker ones. Finnable’s 2.39% suggests the credit engine is performing adequately. But, and this is the big caveat, the portfolio is young. Most of the book was originated in the last 18-24 months during a relatively benign economic environment. We don’t know what happens to a 42-month average tenure book originated in FY24-FY25 when (not if) the next economic slowdown hits. The salaried borrower focus helps (salaried individuals are less cyclical than self-employed), but ₹2.5 lakh unsecured loans at 25% yield to borrowers who need “quick turnaround and paperless processing” is still fundamentally a higher-risk segment.

3

Let me give some credit to what Finnable is doing right, because the credit concerns are obvious and the strengths deserve equal airtime.

The September 2025 equity raise of ₹250 crore is a strong signal. Someone (or multiple someones) put in a quarter of a billion in fresh equity into a fintech NBFC that only turned profitable two quarters earlier. Cumulative equity of ₹525 crore against an on-book portfolio of ₹598 crore means the equity base nearly matches the loan book. For an NCD holder, that’s meaningful downside protection. Even if the entire on-book portfolio took a 20-30% hit, the equity buffer absorbs it before debt holders are affected. CAR at 40.32% is well above regulatory minimums and even above most established NBFCs.

The in-house collections model is a genuine differentiator from the pure-play digital lenders we’ve discussed (like Unifinz/lendingplate). Finnable employs 1,300 people for sales, verification, and collections, does physical verification of residence and office for every loan, and keeps collections in-house up to 150 DPD. That’s more like a traditional NBFC operating model overlaid with fintech origination. The bounce rate of 12.5% (and declining) tells you the collection machinery is working. For comparison, many digital PL lenders operate at 15-20% bounce rates.

The profitability trajectory from H1 FY26 is encouraging. ₹26.4 crore PAT in six months against a net worth of ₹510 crore (roughly 10% annualised ROE) suggests the business is starting to generate real earnings as scale benefits kick in. If FY26 full-year PAT comes in at ₹50+ crore, the company starts building organic capital to support growth, reducing dependence on external equity raises.

At 11.75-12.75% for BBB+, the yield is attractive if you believe the credit model works. Compare this to Satin Finserv at 10.85% for A- (parent-supported, weak standalone) or Unifinz at 13% for BBB- (micro-duration lending, 164% yield on loans). Finnable sits between these in risk-return terms. You’re getting a higher-rated credit than Unifinz with more conventional loan tenors and salaried borrowers, but paying 1-2% less in yield.

4

The elephant in the room is that the on-book portfolio only scaled from FY25. That means the vintage of the own-book is roughly 12-18 months old for most of the ₹598 crore. For a loan with 42-month average tenure, we haven’t even seen the first full repayment cycle complete on the bulk of the portfolio.

The GNPA reported on the on-book (0.33%) looks clean, but it’s worth understanding what this number actually tells you at this stage of the book’s life. Most personal loans have a stress pattern where delinquencies peak somewhere between month 12 and month 24. A book that’s 12-18 months old is just entering the window where stress typically shows up. The fact that GNPA was 2.86% in FY24 (when the on-book was much smaller and presumably even younger) and then dropped to 0.15% in FY25 suggests aggressive write-offs rather than genuine portfolio improvement. CARE explicitly notes that “elevated write-offs are inherent to unsecured PL segment.”

The regulatory risk deserves attention too. Finnable operates through the NBFC (FCPL) plus lending service provider (FTPL) structure that’s common among fintechs. RBI has been progressively tightening regulations around digital lending, FLDG arrangements, and LSP relationships. The recent risk weight increase on unsecured lending (subsequently partially reversed) showed how quickly regulatory action can change the economics of this business. If RBI decides to cap the amount of FLDG an originator can provide, or tightens the disclosure requirements for off-book arrangements, Finnable’s partnership model could face friction.

The concentrated funding profile is another flag. 40.4% from NBFCs/FIs, 28.8% from NCDs, 25.1% from banks. Getting banks to 25% is actually decent for a BBB+ fintech, but the cost of funds remains high. At 25% yield on loans and a high cost of funds, the margin looks healthy in aggregate. But if credit costs normalise upward (which they will as the book seasons), the margin compression hits profitability hard because opex is still being scaled.

5

Good breakdown all around. Let me try to frame the risk-return for someone considering this.

Finnable sits in a category we haven’t really discussed before on this forum. It’s not a traditional NBFC like Muthoottu Mini (gold-backed, 60-year track record). It’s not a parent-supported subsidiary like Satin Finserv. It’s not a distressed turnaround like ESAF. It’s a venture-funded fintech NBFC that’s rapidly scaling an unsecured lending business through a mix of on-book and off-book models, has just turned profitable, and is offering 11.75-12.75% at BBB+ to fund its growth.

The bull case: ₹525 crore of equity backing (with more expected), salaried-only borrower base, 40%+ CAR, technology-driven underwriting with physical verification, in-house collections, rapidly improving profitability (₹26.4 crore PAT in H1 FY26), and experienced founders from banking backgrounds. At 11.75-12.75%, you’re getting paid handsomely for a BBB+ credit with a thick equity cushion.

The bear case: 80% of AUM is off-book so the headline numbers overstate the NBFC’s direct lending scale. The on-book portfolio is barely 12-18 months old and hasn’t been tested through a cycle. Profitability track record is 5-6 quarters. GNPA numbers at this stage of the book’s life don’t mean much because stress typically emerges at month 12-24. Write-offs of 2.39% are reasonable today but could easily normalise to 3-4% as the book seasons. The company is locked into a continuous equity raise cycle to stay within AUM/TNW covenants. Funding is concentrated and expensive. Regulatory risk from the digital lending framework is real.

My take: I’d treat Finnable as a “venture-stage NBFC” allocation, not a core fixed income holding. The 11.75-12.75% yield compensates adequately for the risks, especially given the equity cushion and CAR above 40%. But the lack of a full credit cycle track record and the dependency on continuous equity raises mean this belongs in the 1-2% of portfolio bucket, not 5%. The key thing to watch over the next 2-3 quarters is what happens to the 90+ DPD on the total AUM as the FY24-FY25 vintages season past the 18-24 month mark. If 90+ DPD stays below 1.5% and write-offs stay below 3%, the credit engine is validated. If those numbers start creeping up meaningfully, the equity buffer matters a lot more.

Will update when FY26 numbers are out.

Disc: Not invested. On the high-yield watchlist.