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Startup Deep Dive : Veritas Finance — profitable since day one, this Chennai NBFC is now headed for an IPO

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The Invincible India Startup Deep Dive featured graphic for Veritas Finance.

Veritas Finance has never posted an annual loss in the decade since it started lending to shopkeepers, mechanics and small manufacturers who cannot produce a salary slip or an income-tax return. That is an unusual claim for a startup-era NBFC to make, and it is one the company itself makes in its own investor material. By 31 March 2026 the same lender had ₹9,134 crore ($951 million) of loans under management, according to its refiled draft red herring prospectus (DRHP) with SEBI, and had picked up a unicorn valuation along the way.

The contradiction is worth sitting with. Lending to India’s informal, undocumented small-business owner is exactly the segment banks avoid, because there is no credit bureau history and no audited balance sheet to underwrite against. Veritas built its entire model around that gap, scaled it from a ₹13.6 crore starting corpus in Chennai to a company preparing for a stock exchange listing, and did it while surviving demonetisation and a pandemic moratorium. This piece traces how, with the numbers on both sides of every claim.

Quick facts

Company Veritas Finance Limited
Founded Incorporated 2015; registered with the RBI as an NBFC in October 2015
Founder D Arulmany (Managing Director & CEO)
Businesses Rural business loans, affordable home loans, used commercial vehicle loans, working capital loans to MSMEs and self-employed individuals
Latest FY revenue Total income ₹1,550.7 crore, FY25 (year ended 31 March 2025)
Latest FY profit Profit after tax ₹330.4 crore, FY26 (year ended 31 March 2026)
Listed Private; DRHP refiled with SEBI on 30 July 2026 for an IPO on the BSE and NSE
Market value / last valuation Reported at $1 billion to $1.5 billion (₹9,600 crore–₹14,400 crore) as of September 2025
Key shareholders Norwest Venture Partners (21.58%), Kedaara Capital Fund (15.08%), British International Investment (10.33%), Lok Capital (9.48%), founder D Arulmany and family

What they do

Veritas Finance is a Chennai-headquartered, non-deposit-taking NBFC, registered with the Reserve Bank of India and classified as an NBFC-Middle Layer under the RBI’s scale-based regulation. It lends small-ticket, largely secured loans to micro, small and medium enterprises and self-employed individuals in rural and semi-urban India, most of whom have thin or no formal credit history. Its four product lines, as detailed in its refiled DRHP, are rural business loans (working capital and expansion finance for small traders and manufacturers), affordable home loans for self-construction or purchase in tier-I and tier-II towns, used commercial vehicle loans for rural transport operators, and short-tenure unsecured working-capital loans for shopkeepers. As of the July 2026 DRHP refiling, it ran 444 branches across 10 states and one union territory, with Tamil Nadu, Andhra Pradesh, Telangana, Karnataka and West Bengal as its core markets.

The origin

D Arulmany did not come to small-business lending as an outsider. He spent more than 11 years at Cholamandalam Investment and Finance’s DBS-backed unit, CholaDBS, where he ran the light commercial vehicle and three-wheeler financing business and built out a captive direct-selling-agent and franchisee network that took the company into more than 300 small towns. From 2010 to 2014 he was President and CEO of Aptus Value Housing Finance, joining when it was still an idea and helping build it into a serious affordable-housing lender. A BBA from Madurai Kamaraj University and a postgraduate diploma in rural management from the Institute of Rural Management Anand (IRMA) sat underneath both jobs, and it was the rural-management training, according to his own company biography, that pushed him toward the underserved end of the credit market. He incorporated Veritas Finance in 2015 and had it registered as an NBFC with the RBI that October, with an initial capital base of ₹13.6 crore, betting that the same disciplined branch-and-franchise model he had used for vehicles and homes could be built for MSME working-capital loans from scratch.

The struggle years

Veritas launched its lending operations in October 2015, a little over a year before the November 2016 demonetisation of high-value currency notes tore through India’s cash-dependent informal economy — precisely the customer base the company had just started underwriting. Collections and disbursements in cash-heavy rural markets were disrupted at a company that had barely completed a year of operations; its own FY2016-17 annual report frames the disruption as a forcing function toward digitisation rather than dwelling on the damage, but the timing left it with almost no cushion to absorb a shock. It kept lending through it, reporting monthly disbursements of more than ₹20 crore and borrowings of nearly ₹100 crore from over ten lenders inside its first year, according to company disclosures.

The second and more serious stress came four years later. When the RBI’s COVID-19 loan moratorium (March–August 2020) ended, collection stress in Veritas’s rural, self-employed borrower base showed up quickly: overdue accounts of 0 days past due or more peaked at 14.54% by 30 November 2020, per the company’s CARE Ratings rating rationale. Slippage into non-performing accounts rose to 5.35% in FY21 from 3.78% in FY20, and gross and net Stage III assets moved to 2.70% and 1.38% as of 31 March 2021, from 1.86% and 1.29% a year earlier, with the company writing off ₹23.28 crore during FY21 to keep the headline ratios contained. Business India’s later reporting on the company notes that Veritas came out of the pandemic having introduced a risk-based pricing model and, despite the “higher credit cost reported on account of COVID-19-induced pandemic,” kept improving its profitability metrics through the two pandemic years rather than after them.

The turning point

At launch, Veritas set itself an internal target of ₹1,000 crore in loan assets within 1,000 days. It did not hit that literally: by Business India’s account, the company reached the ₹1,000 crore AUM mark in roughly four years of operations rather than 1,000 days, and it treats that milestone — not the exact timing — as the end of its early-stage validation phase. What changed on the other side of it was who was willing to fund the company. Through 2016 to 2018, Veritas had raised money almost entirely from impact-oriented investors — Lok Capital, Caspian, CDC Group (now British International Investment), Incofin and BlueOrchard — in rounds of ₹30 crore, ₹120 crore and ₹55 crore. Once the loan book crossed the ₹1,000 crore mark and reached ₹1,308 crore by February 2020 across 201 branches and 48,638 customers, mainstream growth-equity investors arrived: Kedaara Capital led a ₹350 crore Series E in 2020, and Kedaara and Norwest Venture Partners co-led a ₹440 crore round in October 2021 at ₹185 crore apiece. The AUM growth accelerated sharply afterward, hitting a 61.76% compound annual growth rate between FY22 and FY24, according to CARE Ratings data cited by Business India — the clearest sign that the pre-2020 validation phase had done its job.

The money behind it

Veritas has raised money in roughly a dozen rounds since 2016, moving from impact-investment backers to large growth-equity funds as it scaled, then into pre-IPO territory. Its cumulative equity funding since inception stood at about ₹1,835 crore as of September 2025, per ScanX’s corporate-actions tracker.

Kedaara Capital and Norwest Venture Partners changed the company’s trajectory the most: both entered once the MSME-lending model had already been de-risked by five years of operating history, and both stayed on through the IPO process, together holding more than 36% of the company as per the July 2026 refiled DRHP (AngelOne). Its reported valuation has since been pegged at $1 billion by ScanX’s unicorn tracker (16 September 2025) and at a higher $1.5 billion by Tracxn’s company profile for the same period — the two trackers disagree, and Veritas itself has not confirmed either figure publicly, so both are given here as reported.

How it makes money

Veritas earns interest income on loans it originates and holds largely on its own book, funded by a mix of bank borrowings, non-convertible debentures (rated CARE AA-) and equity. The mechanics:

The numbers

Veritas has reported profit after tax in every year for which figures are available, with revenue and profit both compounding faster than the broader NBFC-MSME sector through FY24–FY26.

₹ crore FY24 (year to 31 Mar 2024) FY25 (year to 31 Mar 2025) FY26 (year to 31 Mar 2026)
Total income 1,117.5 1,550.7 Not separately disclosed*
Profit after tax 245.1 295.1 330.4
Loans under management (year-end) n/a in sources reviewed 7,348.6 9,134.2

*Veritas’s FY26 total income was not separately broken out in the sources reviewed for this piece; its net interest income for FY26 was ₹1,133.5 crore, an 18% rise over FY25, per its refiled DRHP (AngelOne, 2026). Total-income and PAT figures for FY24 and FY25 are drawn from Veritas’s own annual report data (WWIPL financial summary, accessed September 2026); FY26 figures are from the company’s July 2026 DRHP refiling.

Where the money comes from

Veritas is not a diversified lender by product; it is concentrated by design in one segment and expanding cautiously outward from it.

The risks

The takeaway

The lesson in Veritas Finance’s decade is not that lending to the informal economy is safe — the FY21 slippage numbers show it is not. It is that the segment can be underwritten profitably if the underwriting method is built for the borrower rather than adapted from a bank’s documentation-first checklist, and if the company is disciplined enough to stay concentrated in what it actually understands before chasing scale in adjacent markets. Veritas resisted diversifying into unsecured digital lending even after growth-equity money made that option easy to fund; it added housing and vehicle loans only once its core MSME book had proven itself for years. That sequencing, more than any single funding round, is why a Chennai NBFC nobody outside credit-rating circles had heard of a decade ago is now the one filing IPO papers.

Frequently asked questions

What does Veritas Finance do?

It is a Chennai-headquartered NBFC that lends to micro, small and medium enterprises and self-employed individuals in rural and semi-urban India, mostly through secured rural business loans, alongside affordable home loans, used commercial vehicle loans and working-capital loans.

Who founded Veritas Finance and when?

D Arulmany, a financial-services executive who had previously run vehicle financing at Cholamandalam’s CholaDBS unit and led Aptus Value Housing Finance as President and CEO, incorporated Veritas Finance in 2015; it was registered as an NBFC with the RBI that October.

Who are Veritas Finance’s major investors?

As of its July 2026 DRHP refiling, its largest shareholders are Norwest Venture Partners (21.58%), Kedaara Capital Fund (15.08%), British International Investment (10.33%) and Lok Capital (9.48%), alongside Multiples Private Equity, the International Finance Corporation and Avendus Future Leaders Fund from later rounds.

Is Veritas Finance profitable, and what is it worth?

Yes — it reported profit after tax of ₹245.1 crore in FY24, ₹295.1 crore in FY25 and ₹330.4 crore in FY26. Its valuation has been reported at $1 billion (ScanX, September 2025) to $1.5 billion (Tracxn, September 2025); the company has not confirmed either figure.

What is the status of Veritas Finance’s IPO?

Veritas first filed a DRHP with SEBI in January 2025 for a roughly ₹2,800 crore offering, then refiled on 30 July 2026 with a ₹900 crore fresh issue and an offer for sale of up to 1.28 crore shares, with ICICI Securities, IIFL Capital Services, JM Financial and SBI Capital Markets as lead managers for a planned BSE and NSE listing.

Sources

Figures are as of September 2026. Currency converted at $1 ≈ ₹96.0 as of 18 September 2026 (Trading Economics).

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