Vegafin, a new MSME-lending platform founded and promoted by former ICICI Bank executive Bijith Bhaskar, has secured a commitment of up to Rs 1,000 crore (about $106 million) from Premji Invest, Norwest and Lok Capital to build what it describes as an AI-first lender for India’s small businesses. The first step is the acquisition of a majority stake in Bizloan, a Gurugram-based non-banking financial company (NBFC) focused on secured MSME loans, according to a statement issued on 21 October.
Vegafin and the financial investors have entered into definitive agreements for the Bizloan stake. The transaction remains subject to regulatory approvals and customary closing conditions. EY Investment Banking was the exclusive financial advisor on the deal.
An NBFC platform to start with
Bizloan began operations in 2018 and was founded by veteran bankers Rahul Jain, Abhishek Mishra and Vikram Diwan. The lender operates more than 35 branches across five states and manages assets under management (AUM) of about Rs 235 crore, according to the statement.
The deal also changes Bizloan’s shareholder base. BLinC Invest will remain an investor, while the Michael & Susan Dell Foundation and Mohan Enterprises will exit their holdings.
In an interaction with The Times of India, Bhaskar said buying an existing lender would save Vegafin 18 to 24 months compared with building a business from scratch. He told the newspaper that the company aims to triple its current AUM over the next 12 to 18 months and enter two or three new states over the next six to 12 months.
AI underwriting with on-ground reach
Vegafin plans to combine AI-driven underwriting, digital workflows and data-led credit decisioning with a physical distribution network. The aim is faster turnaround, sharper risk selection and lower operating costs as it widens access to credit for underserved MSMEs.
“We intend to build a hybrid ‘phygital’ lending platform to democratize access to MSME credit,” Bhaskar said in the statement, adding that the company wants to use data from multiple sources to assess credit risk in a faster, more granular and more accurate way.
According to The Times of India, Vegafin will focus on loans of Rs 8 lakh to Rs 30 lakh for businesses such as kirana stores, hardware shops and pharmacies, many of which may not have fully formalised income documentation. The capital will go towards growing the loan book and building proprietary loan origination and management systems.
Addressing the MSME credit gap
Bhaskar put India’s MSME credit gap at more than Rs 30 trillion. “There is a clear need for a pan-India player with a strong MSME focus, efficient cost of service and ability to price risk accurately,” he said.
Before founding Vegafin, Bhaskar spent more than two decades at ICICI Bank. He held leadership roles across retail banking, digital banking, credit cards, consumer finance and merchant ecosystems.
The investors described the bet as an attempt to use technology to lower the cost of serving small borrowers. Saravanan Nattanmai, Partner, Financial Services at Premji Invest, said the firm sees “a meaningful opportunity to use technology to reduce friction and improve access to credit for MSMEs in India.” Norwest’s Niren Shah and Nikhil Kookada said they believe “the next generation of MSME lenders will be built around technology, AI and data-led underwriting with digitally integrated distribution.”
Rajat Bansal, Partner at Lok Capital, said small businesses and lower-income households in semi-rural and rural India are still significantly underserved by formal credit. Bizloan founder Rahul Jain said the company will scale its on-ground presence alongside stronger digital capabilities.
