Aye Finance

Leading small-ticket lender in MSME ecosystem with focus on serving large and untapped market of micro enterprises.

Comprehensive portfolio of lending products for micro enterprises resulting in high customer retention.

Strong underwriting method.

Robust multi-tiered collections capabilities.

Building resilience through technological prowess.

Access to diversified lender base and cost-effective financing.

Experienced and professional management team backed by marquee investors with a committed employee base.

The company is subject to the risk of non-payment or default by our borrowers which may adversely affect its business, results of operations and financial condition. The company`s Gross NPA ratio has increased from 2.49% as of March 31, 2023 to 4.21% as of March 31, 2025, and was 4.85% as of September 30, 2025.

The company`s operations depend on the accuracy and completeness of information provided by its customers and certain third party service providers and our reliance on any erroneous or misleading information may affect the company`s judgement of their creditworthiness, as well as the value of and title to the collateral.

If the company is unable to control the level of Gross Non-Performing Assets / Stage 3 Assets / Net NPAs in our portfolio effectively, or if the company is unable to maintain adequate provisioning coverage, or if there is any change in regulatorily mandated provisioning requirements, the company`s financial condition and results of operations may be adversely affected.

In the six months ended September 30, 2025 and September 30, 2024 and Fiscals 2025, 2024 and 2023, unsecured loans comprised 37.97%, 41.47%, 39.68%, 37.91% and 30.26% of the company`s total assets under management, respectively. If the company is unable to recover such receivables in a timely manner or at all, the company`s business, results of operations, cash flows and financial condition may be adversely affected.

The company has experienced negative cash flows from operating activities in the past. Any negative cash flows in the future would adversely affect its cash flow requirements, which may adversely affect the company`s ability to operate its business and implement the company`s growth plans, thereby affecting its financial condition.

The company`s business is vulnerable to interest rate risk. In the six months ended September 30, 2025 and September 30, 2024 and in Fiscals 2025, 2024 and 2023, the company`s interest income accounted for 85.03%, 89.29%, 88.10%, 88.52% and 88.05% of its total income, respectively. Volatility in interest rates could have an adverse effect on the company`s net interest income and net interest margin, thereby affecting its results of operations and cash flows.

The company requires substantial capital for its business and any disruption in the company`s sources of capital could have an adverse effect on its business, results of operations, cash flows and financial condition.

The company may not be able to sustain or manage its growth or execute the company`s growth strategy. If the company fails to increase the company`s operational efficiency, the company may have higher operating costs and lower profitability and cash flows or operate its business effectively.

The company is subject to various covenants and obligations under its financing arrangements. Inability to meet the company`s obligations could adversely affect its business, results of operations, cash flows and financial condition.

The company may faces asset-liability mismatches, which could affect its liquidity and consequently, may adversely affect the company`s operations and profitability.

As on the date of this Red Herring Prospectus, the company holds a credit rating of A with a stable outlook. Any downgrade in the company`s credit ratings could increase our borrowing costs, affect its ability to obtain financing, and adversely affect the company`s business, results of operations, cash flows and financial condition.

Deterioration in the performance of any pool of receivables securitized to banks and other institutions may adversely impact the company`s results of operations. As of September 30, 2025, September 30, 2024, March 31, 2025, March 31, 2024 and March 31, 2023, the company`s outstanding borrowings through pass through certificates were Rs. 10,205.77 million, Rs. 8,523.98 million, Rs. 9,251.27 million, Rs. 8,008.48 million and 5,620.40 million, respectively, which comprised 19.56%, 20.88%, 20.44%, 22.89% and 24.48% of its total borrowings, respectively.

Customers may seek to refinance their loans by balance transfers to other banks or financial institutions.

The company has listed non-convertible debentures and are subject to rules and regulations with respect to such listed NCDs. Any non-compliances with such rules and regulations, could subject the company to penal actions, which may have an adverse effect on its business, results of operations, financial condition and cash flows.

The company`s inability to expand its business in the company`s target segment or the sub-optimal performance of any of the company`s new branches could adversely affect its business, results of operations, financial condition and cash flows.

As a NBFC-ML, the company is subject to periodic inspections by the Reserve Bank of India. Non-compliance with observations made by the RBI during these inspections could expose the company to penalties and restrictions, which may have an adverse effect on the company`s business, results of operations, cash flows and financial condition.

The company`s inability to compete effectively in an increasingly competitive industry may adversely affect its market share, business and financial condition.

The company`s inability to assess and recover the full value of collateral, or amounts outstanding under defaulted loans in a timely manner, or at all, could adversely affect its business, results of operations and financial condition.

The Company and Directors are or may be involved in certain legal and regulatory proceedings. Any adverse decision in such proceedings may have a material adverse effect on its business, financial condition, cash flows and results of operations.

The company is dependents on its Senior Management, Key Managerial Personnel and the company`s employees, and the loss of, or the company`s inability to hire, retain, train, and motivate qualified personnel could adversely affect its business, results of operations, cash flows and financial condition.

The company`s inability to continuously evolve its technology driven offerings could impact the company`s ability to compete with existing players and new entrants which could adversely impact its business, results of operations, cash flows and financial condition.

If the company fails to maintain the quality of customer service, the company may faces difficulties in maintaining existing and acquiring new customers and its business may be harmed.

The company`s Statutory Auditors have included a remark under the section `Other Legal and Regulatory Requirements` in their audit reports for Fiscals 2024 and 2025.

The company is subject to the regulatory framework governing the financial services industry, including the various regulatory requirements of the Reserve Bank of India ("RBI"). Non-compliance of the regulations or changes in existing regulations could adversely affect the company`s business, results of operations and prospects.

An increase in portfolio at risk over 30 days ("PAR 30+") may adversely affect the company`s asset quality, business, and results of operations.

The Company does not have an identifiable promoter in terms of the SEBI ICDR Regulations and the Companies Act, 2013.

The company is expected to maintain optimal levels of operating expenditure ratio, credit costs and provision coverage ratio and failures to do so may have adverse impacts on the company`s business, results of operations, cash flows and financial conditions.

The company`s inability to manage its employee related expenses could adversely impact the company`s results of operations, financial condition and cash flows.

Certain of the company`s historical records are not traceable, and there have been some delays and inaccuracies in the filing of certain forms with the RoC. The company cannot assure that regulatory proceedings or actions will not be initiated against the company in the future and we will not be subject to any penalty imposed by the competent regulatory authority in this regard.

The company derives a portion of its interest income (excluding direct assignment purchases and co-lending adjustments and interest reversals in NPA cases) and AUM from the company`s operations in certain states in India, and any adverse developments in these states could affect its operations, business and results of operations.

The company`s business is subject to seasonality, which may contribute to fluctuations in the company`s results of operations and financial condition.

The company does not own any of its branch offices, including the company`s Registered Office and the company`s Corporate Office. Any termination or failures by the company to renew the lease and license agreements in a favorable and timely manner, or at all, could adversely affect its business, cash flows and results of operations. Additionally, the company may be unable to enforce the company`s rights under agreements with third parties due to inadequate stamping or nonregistration of such agreements.

The company may enter into related party transactions in the ordinary course of its business and may continue to do so in future. There may be conflicts of interest associated with such transactions and there can be no assurance that such transactions will not have an adverse effect on the company`s results of operation and financial condition.

There have been certain instances of delays in payment of statutory dues by the Company in the past. Any delay in payment of statutory dues by the Company in future, may result in the imposition of penalties and in turn may have an adverse effect on the Company`s business, financial condition, results of operation and cash flows.

The company relies on third party service providers for certain aspects of the company`s business, who may not perform their obligations satisfactorily or in compliance with law, which may in turn adversely impact its results of operations.

As of September 30, 2025, the company had contingent liabilities which have not been provided for in the company`s financial statements and could adversely affect its financial condition.

The company relies on the company`s information technology systems for its business and any inadequacy or security breach in such systems could adversely affect the company`s results of operations, cash flows and reputation.

The company may not be able to identify, monitor and manage risks or effectively implement the company`s risk management policies, which could adversely affect its business, financial condition and results of operations.

Any failures or significant weakness of the company`s internal processes or systems could cause operational errors or incidents of fraud, which would adversely affect its business, profitability and reputation.

The company is exposed to operational risks and losses that may occur due to acts of misappropriation or fraud by its employees.

Some of the company`s Directors may have interest in entities, which are in businesses similar to the company`s and this may result in conflict of interest with the company.

The company`s credit decisions are led by internal credit policy and an inability to make accurate credit decisions could adversely impact the company`s business and financial results.

The company`s insurance coverage may not be sufficient or may not adequately protect the company against all material hazards, which may adversely affect its business, results of operations, cash flows and financial condition.

As a NBFC, the company is subject to RBI`s regulations in relation to excess interest. Non-adherence and noncompliance of the same could adversely affect the company`s business, results of operations and prospects.

The company is subject to regulations on foreign debt and priority sector lending issued by the RBI. Changes in these regulations can could adversely affect its business, results of operations and prospects.

The company operates in an industry which is significantly influenced by favourable government initiatives which may lead to increased competition.

The company may incur additional expenses and operational challenges while operating in semi-urban markets.

The company is subject to collateral value fluctuations and are exposed to technological failures in the company`s day-today business.

The company`s underwriting operations and field collections are vulnerable to inaccurate credit assessments which may impair its credit risk management and could have an adverse effect on the company`s business, results of operations, cash flows and financial condition.

The company is vulnerable to errors in loan processing and disbursement, which can lead to financial losses, reputational damage and may adversely affect its business, cash flows, and financial condition.

The company is required to obtain certain statutory and regulatory licenses and approvals for the company`s operations and any failures or omission to obtain, maintain or renew such licenses and approvals in a timely manner, or at all, could adversely affect the company`s business, cash flows and results of operations.

The company is required to ensure compliance with money-laundering laws and a failures to detect money laundering or other illegal activities in a timely manner could expose the company to liabilities which in turn may adversely affect its business and reputation.

Any negative publicity regarding the Company or the financial services industry could damage the company`s reputation and adversely impact its business and financial results.

The company may be unable to adequately protect its intellectual property and may be subject to risks of infringement claims.

Industry information included in this Red Herring Prospectus has been derived from an industry report prepared by CRISIL, exclusively commissioned and paid for by the company for such purpose.

The Company may not be able to pay dividends in the future. The company`s ability to pay dividends in the future will depend upon its future earnings, financial condition, profit after tax available for distribution, cash flows, working capital requirements and capital expenditure and the terms of the company`s inancing arrangements.

Certain financial information in this Red Herring Prospectus has been presented on an annualized basis.

The company will not receive any proceeds from the Offer for Sale portion. Further, the objects of the Fresh Issue for which the funds are being raised have not been appraised by any bank or financial institutions. Any variation in the utilization of our Net Proceeds as disclosed in this Red Herring Prospectus would be subject to certain compliance requirements, including prior Shareholders` approval.

There is no assurance that even after capital infusion in the Company through the Net Proceeds, the Company will achieve the expected growth in the company`s revenue, profitability or business operations.

The company is subject to the bankruptcy code in India, the applicability of which may impact the company`s ability to recover loans from customers.

The company has in this Red Herring Prospectus included certain non-GAAP financial measures and certain other industry measures related to the company`s operations and financial performance. These non-GAAP measures and industry measures may vary from any standard methodology that is applicable across the financial services industry, and therefore may not be comparable with financial or industry related statistical information of similar nomenclature computed and presented by other companies.

Significant differences exist between Ind AS and other accounting principles, such as U.S. GAAP and IFRS, which investors may be more familiar with and may consider material to their assessment of the company`s financial condition.