Millions of small business owners, be they shopkeepers, artisans, traders or farmers, across the country represent the backbone of India’s economy. Yet, access to formal credit remained elusive until a few years ago, due to limited documented financial history. This massive underserved segment found a champion in 2015 in Veritas Finance Limited, a Chennai-based, retail-focused, non-deposit NBFC that provides loans to underserved micro, small and medium enterprises (MSMEs) and self-employed individuals in rural and semi-urban India.
Over the past decade, the company has expanded its business to include home loans and used commercial vehicle loans. Veritas’ growth reflects the huge credit demand in the MSME sector. According to a CRISIL report, as of 31 March 2024, the total addressable credit demand was Rs67.5 lakh crore, of which current formal financing amounted to Rs35 lakh crore, leaving a potentially addressable MSME credit gap of Rs32.5 lakh crore to be fulfilled. NBFCs have stepped in to fill this void, now holding roughly 38 per cent of the secured MSME loan market. As of 30 September 2024, Veritas Finance’s AUM stands at Rs6,517.21 crore, representing a compound annual growth rate (CAGR) of 61.76 per cent between Financial Years 2022 and 2024. According to a CRISIL report, this makes Veritas the fastest-growing NBFC among its compared peers.
Established in 2015 by D Arulmany, a financial services veteran with over 25 years of experience at marquee institutions like Cholamandalam Investment and Finance Company and Aptus Value Housing Finance, Veritas Finance has carved out a niche in India’s NBFC landscape. The company’s mission is quite straightforward: to address the financial needs of underserved and underbanked MSMEs by offering a range of products.
They offer tailored products to address this gap for small business owners. One of the core offerings is rural business loans, which comprise small business loans and home construction loans. These are aimed at supporting businesses with their expansion and income generation needs, and self-employed or salaried individuals with constructing or completing the construction of their existing homes. These are secured loans given to borrowers with no credit history, with an average loan size of about Rs4.7 lakh.
Affordable home loans form another key category. These are secured loans designed for the self-construction of homes or for the affordable purchase of a home in Tier I and II cities. These loans average around Rs11.3 lakh. In addition, Veritas also offers used commercial vehicle loans, with an average loan size of Rs4.5 lakh, catering to rural and semi-urban transport operators. Borrowers often include small business owners, as well as agriculture and construction businesses, which purchase used commercial vehicles for transport. Working-capital loans are short-term, unsecured loans with an average ticket size of Rs1.8 lakh. These are offered to shopkeepers, restaurant owners, hardware store owners and other business owners to fund day-to-day operations.
Leadership team
D Arulmany, the MD & CEO, holds a bachelor’s degree in business administration from Madurai Kamaraj University, Tamil Nadu, and a Postgraduate Diploma in Rural Management (PGDRM) from the Institute of Rural Management, Anand. The rural management graduate wished to provide loans to entrepreneurs in rural India, which led to the birth of Veritas Finance. He has also completed a global programme for management development from the University of Michigan Business School, Michigan. Previously, he was associated with Aptus Value Housing Finance India Limited as President & CEO, and with Cholamandalam Investment and Finance Company Limited as Manager (Marketing).
Then there is J Prakash Rayen, also from Aptus, who was one of the first to join Veritas and currently serves as the ED - Operations. He holds a bachelor’s degree in science (physics) from Madurai Kamaraj University and a master’s degree in computer applications from Bharathidasan University, Tiruchirappalli.
Naveen Raj R joined Veritas as the CFO in March 2025. A highly accomplished finance professional with over 20 years of extensive experience in the financial services industry, his career includes notable tenures at some of the most prestigious firms, such as Deloitte, BSR & Co. LLP (KPMG - Audit Wing), and Five-Star Business Finance. He is a Chartered Accountant.
What sets Veritas apart is its technology-led approach to credit assessment and risk management. The company has developed a proprietary artificial intelligence and machine learning-enabled credit scoring model that goes beyond traditional metrics to evaluate borrowers and creditworthiness. Veritas combines data-driven underwriting with a human touch.
Veritas’ ‘triple AAA filter’ evaluates cash flow patterns, business stability, and repayment ability through multiple data points. This technology-driven approach has enabled the company to maintain robust asset quality while expanding rapidly into markets that other lenders often consider too risky. “Our credit assessment model looks at the borrower holistically. We analyse business cycles, seasonal variations, local market dynamics, and even social factors that traditional credit scoring might miss. This allows us to lend confidently to first-time borrowers who might be overlooked by banks,” says D Arulmany, MD & CEO, Veritas Finance.
In practice, loan officers may still visit borrowers for assessment, but the process is standardised and scored by algorithms. The results speak for themselves. Despite focusing on a segment traditionally considered high-risk, Veritas has maintained a disciplined approach to credit, with 90 per cent of its loan portfolio secured. The company’s multi-layered collection ecosystem and data-driven risk management framework have helped it scale without compromising on asset quality.
Veritas’s distribution model uses a hub-and-spoke branch network: larger hub branches in semi-urban centres support smaller spoke offices in rural towns. This ensures local presence and last-mile reach. As of September 2024, Veritas operated 424 branches across 10 states and one union territory, and it has disbursed loans to over 195,000 borrowers since inception.
“Veritas’ in-depth understanding of micro-SME businesses across different geographies, combined with strong frameworks, has enabled it to build a large, diversified franchise. Arulmany, along with the top-notch management team, has scaled the business while maintaining pristine quality,” says Nithya Easwaran, MD of Multiples AAUM (MPI), which led a Rs1,200 crore funding round in 2023.
Veritas has delivered consistent profitability since Day 1, with a CAGR of 80.27 per cent between 2022 and 2024. Disbursements and loans too grew at a CAGR of 76.52 per cent and 61.76 per cent from 2022 to 2024 respectively. In 2019, the company hit its founding goal of Rs1,000 crore in AUM within 4 years – a milestone it had ambitiously set as “Rs1,000 crore in 1,000 days”. Since then, the growth trajectory has steepened. Its assets under management (AUM) expanded at a CAGR of 41 per cent over the last 5 years, reaching Rs7,349 crore as on 31 March 2025, according to a CARE Ratings release.
The company has received a credit ratings upgrade from CARE Ratings Limited across multiple instruments and facilities due to its growth. Its long-term bank facilities and non-convertible debentures – VII, VIII – have been upgraded to CARE AA-. The rating revision factors in the healthy capitalisation profile of the company, supported by consistent equity infusions and healthy internal accruals, which led to an increase in tangible net worth (TNW) to Rs2,710 crore as on 31 March 2025, compared to Rs2,279 crore as on 31 March 2024. Correspondingly, gearing remains moderate (about 2.1 times), and liquidity is robust. The ratings are also a result of the company’s healthy profitability levels, stable asset quality indicators, commensurate in-house processes, established risk management and management information systems (MIS), and strong liquidity position. Veritas’s asset quality is stable, with GNPA at 2.21 per cent and NNPA at 1.10 per cent as of 31 March 2025.
Backing from investors
Veritas’s growth story unfolds against the backdrop of a rapidly expanding NBFC sector in India. According to a CRISIL report, NBFC credit grew at a CAGR of 12 per cent during Financial Years 2019 to 2024 and is expected to accelerate to 15-17 per cent between FY2024 and 2027, driven by retail segment growth and MSME loans.
The company’s growth has been fuelled by capital from development-finance and private equity investors who share its mission. Early backers included Lok Capital and Caspian, which invested alongside the founders. In 2017, Veritas secured funding from British International Investment (BII) to accelerate expansion. Manav Bansal of BII highlights the impact: “We are proud to have partnered with Veritas, a company that has transformed access to finance for underserved SMEs, and continue to support its growth.” Over the years, Evolution/Edelweiss India Fund, Growth Catalyst Partners (Aion Capital), Norwest Venture Partners (NVP), Multiples PE and Kedaara Capital have also invested.
This has shaped Veritas’s strategy: while the early years focused strictly on MSME business loans, recent years saw planned diversification. Arulmany explains that once Veritas reached Rs1,000 crore AUM, they moved to adjacent products: affordable housing loans and used commercial vehicle loans in rural India. He adds, “The informal sector needs all these financial products – homes, vehicles, business capital – and Veritas can be the one-stop lender for them.”
Veritas Finance is now preparing for its next growth phase with an Initial Public Offering (IPO) of up to Rs2,800 crore, comprising a fresh issue of Rs600 crore and an offer for sale of Rs2,200 crore by existing shareholders. The company plans to utilise the net proceeds to augment its capital base for future business requirements and onward lending. As a recent investor notes, “We strongly believe in Veritas Finance’s business model that bridges the large credit gap that exists for the under-banked MSME space in India. The strength of the founder and management team has allowed the company the ability to grow profitably,” points out Rohit Batra, Managing Partner at Evolvence India.
The IPO comes at a time when Veritas has outlined clear strategies for future growth. The company plans to expand its rural business loan portfolio, further diversify its product offerings, deepen its presence in existing markets while expanding into new geographies, and continue widening its financing base.