In 1994, Rajendra Kumar Setia noticed a problem faced by small traders, transporters and self-employed individuals in Rajasthan. While brimming with ambition, they all were bogged down by the lack of institutional credit. Other borrowing options, few and far between, were quite exploitative.
Setia, a first-generation entrepreneur and son of the soil, decided to fill that void and founded SK Finance. Three decades later, it has become one of India’s fastest-growing non-banking finance companies (NBFCs) in the vehicle financing segment and the MSME financing segment, with a total of Rs13,261.13 crore asset under management (AUM) as on 2024-25, its AUM CAGR for 2017-25 recording 41.50 per cent. The company had disbursements of Rs8,398.41 crore in 2024-25, with a capital adequacy of 29.5 per cent. Its PAT was Rs379.66 crore and the cost-to-income ratio, 48.67 per cent, in 2024-25.
SK Finance deepened its geographic reach in 2024-25, after building on the previous year’s foray into Uttar Pradesh and Karnataka. The company has intensified its penetration in existing states and today operates across 12 states and Union territories (Rajasthan, Madhya Pradesh, Gujarat, Maharashtra, Haryana, Punjab, Uttar Pradesh, Karnataka, Himachal Pradesh, Chhattisgarh, Uttarakhand and Delhi NCR). It has also strengthened its human capital, with 648 branches and over 12,416 employees as on 31 March 2025. The company serves over half a million borrowers, predominantly in semi-urban and rural India, with 590,000 active loan accounts, as of 2024-25.
“Even in a year shaped by macro-economic headwinds, our focus remained clear – understanding our customers’ needs and evolving with their financial aspirations, delivering tangible solutions and fostering enduring bonds,” affirms Setia, MD & CEO, SK Finance. “Beyond lending, we focus on financial literacy and community outreach to foster economic growth at the grassroots level.”
Rural semi-urban focus
With a strong presence in the vehicle financing and MSME lending segments, SK Finance is committed to addressing the credit needs of unbanked and underserved populations. SK Finance operates in a fairly non-cyclical product segment and finances primarily income generating activities.
The NBFC operates in two primary verticals: vehicle financing and loans to micro, small and medium enterprises (MSMEs). Unlike urban-focussed lenders, SK has always placed its bets on underserved, informal borrowers in Tiers II, III and beyond, those without credit histories, but with steady incomes and strong intent.
“Our governance framework is designed to uphold our ‘CARE’ (customer priority, agility, reliability & empathy) mission across the organisation,” adds Yash Setia, whole-time director, SK Finance. “This spirit of relentless determination guides us as we deepen our rural outreach, accelerate digital adoption, and unlock new efficiencies”.
According to the CRISIL Report, the overall vehicle finance credit is expected to grow at a CAGR of 16-18 per cent from 2022-23 to 2026-27, to reach about Rs21 trillion. The company aims to leverage this position in continuing to grow their vehicle financing vertical. In the vehicle finance space, the company focusses on used vehicles, with nearly 78.19 per cent of its loan book in 2024- for used vehicle financing. It offers a diverse loan portfolio including commercial vehicle loans, tractor loans, car loans and two-wheeler loans.
Many of these are bought by first-time owners, who use them to generate income. The company has a secured, granular and retail loan portfolio, covering both new and used vehicles, with the exception of medium and heavy commercial vehicles.
Largest category
Commercial vehicles, excluding medium and heavy commercial vehicles, represent SK Finance’s main product category. The company’s primary focus within this area is on financing small and light commercial vehicles. The demand for these vehicles is mainly driven by the basic consumption needs of the local economy. Serving the everyday requirements of the local ecosystem, this demand tends to be relatively non-cyclical. Over the years, the organisation has successfully carved out a niche in the financing of used commercial vehicles.
As on 31 March 2025, the AUM within its commercial vehicle division amounted to Rs5,021.83 crore, constituting 37.86 per cent of the total AUM. This division has achieved an AUM growth of 13.17 per cent y-o-y, supported by disbursements of Rs3,107.52 crore in 2024-25, reflecting a y-o-y increase of 3.04 per cent.
The company’s primary focus within the car product line is on used passenger vehicles, with an average loan amount of Rs4.76 lakh. These vehicles largely represent an aspirational purchase for the working population in rural and semi-urban India. Its customers utilise their cars for personal purposes. As of the end of March 2025, the assets under management in the car division totalled Rs2,707.29 crore, which is 20.42 per cent of the overall AUM. This division experienced an AUM growth of 33.59 per cent y-o-y, supported by disbursements of Rs1,758.67 crore in 2024-25, achieving a y-o-y growth of 17.56 per cent.
While, during the harvesting period, the tractor is employed in agricultural activities, during the remainder of the year, it is used for other income-generating activities, such as the transportation of good, construction activities, water tank transportation, etc. At the close of March 2025, the assets under management in the tractor division amounted to Rs1,579.21 crore, constituting 11.91 per cent of the total AUM. This division recorded an AUM growth of 13.78 per cent y-o-y, supported by disbursements of Rs951.65 crore in 2024-25, achieving a y-o-y growth of 11.56 per cent.
MSME business
The company’s primary offering within the micro, small & medium-sized enterprise sector involves providing finance, based on inventory for specific identified business. These loans are small ticket loans, with an average ticket size of Rs4.12 lakh. The majority of these loans are secured against self-occupied residential property (SORP) and by self-occupied commercial property (SOCP). The company’s MSME loans are entirely sourced internally, with business development managers undertaking various marketing activities to connect with potential customers.
“Surpassing Rs13,000 crore AUM and registering a strong 27 per cent growth over the previous year, SK Finance has done admirably well, despite a tough macro environment,” affirms Amar Lal Daultani, non-executive chairperson, SK Finance. “Strategic investments in technology, people and operational improvements have been instrumental in achieving this while also laying a solid foundation for future growth. As we step into another year, we remain focussed on leveraging new opportunities and delivering sustained value to our stakeholders by strengthening our governance framework, deepening our market reach and reinforcing our commitment to financial inclusion”.
The secret behind this scale lies in SK’s ground-tested credit philosophy built on ‘Three ‘I’s’ -- income, intent and insurance. “Our first pillar, income, focusses on lending towards income-generating activities of our customers,” explains Setia. “This helps our credit decision-making process by focussing on the collateral value and income-generating capability of our customers. Our second pillar, intent, is based on evaluating the intent of the customer. The assessment of the customers’ incomes becomes relevant for us to identify their intent to pay through multiple reference checks. Our third pillar, insurance, refers to our underwriting process, whereby our security-backed lending acts as ‘insurance’ against potential customer defaults. Our underwriting process is conducted through a dedicated on-ground sales team and credit officers who independently evaluate each loan application”.
Beyond lending, we focus on financial literacy and community outreach to foster economic growth at the grassroots level
Their underwriting process is about seeing the person beyond the score. SK Finance has merged traditional relationship-based lending with cutting-edge technology. The company has developed what it calls a ‘phygital’ approach -- combining physical verification methods through on-ground sales teams with digitalised processes on its information technology platform. This approach helps SK underwrite ‘new-to-credit’ customers effectively.
SK Finance has digitised large parts of its operations. From eKYC and paperless underwriting to analytics-backed credit decisioning, the company has built a tech-stack that supports scale without sacrificing field insight.
Diversified funding
SK Finance has built a diversified funding strategy that provides both cost-effective capital and stability. This diversified funding approach allows the company to access cost-effective and long-term financing, while ensuring capital availability to meet business requirements.
Over the past decade, SK has attracted a formidable roster of investors. TPG Growth, Norwest Venture Partners, Evolvence, 360 One, and even MIT’s endowment fund have backed the company. In 2023-24, it raised Rs1,328 crore across primary and secondary deals to shore up growth and prepare for the IPO.
TPG, one of SK’s earliest backers, is confident about the NBFC’s trajectory. “We are pleased to see the significant progress being made by SK Finance since our initial investment in 2018, with the company today emerging as a scaled player in the used vehicle and MSME lending space,” remarks Simit Batra, principal, TPG Growth. “In addition to developing a robust operational model, the company’s tech supported business has delivered improved efficiencies”.
IPO ambitions
The upcoming issue consists of a fresh issue of Rs500 crore and an offer-for-sale of Rs1,700 crore. The proceeds from the fresh issue will be used to bolster capital adequacy and support future lending.
According to the CRISIL Report, SK Finance was the fastest growing player in the vehicle & MSME finance segment among the peers analysed, with a growing presence in the under-penetrated used CVs (excluding M& HCVs) and MSME financing segment based on its AUM CAGR in the respective vertical (for the period between 2020-21 and 2022-23).
SK’s roadmap now includes deeper penetration into existing geographies. The company also plans to expand MSME lending to more branches and explore adjacent opportunities such as insurance distribution to improve customer lifetime value. The strategy remains rooted in its core principles: secured lending, granular portfolios, tech-enabled processes and field-first culture. Setia and his team remain cautious of over-diversification, preferring to grow in markets where they can build community-level trust.