1 Navadhan operates a unique business model focused on addressing the financial needs of underserved rural markets. How do AceN’s three core features—alternative data, cash flow tracking, and API integration—address these challenges?

Navadhan is a rural fintech company offering Tech-led finance solutions. Navadhan stands for New-Wealth, deriving its mission of creating New-Wealth for the underbanked missing-middle segment. Our platform, AceN, is a cutting-edge tech platform with proprietary tech solutions such as AI-driven tools for credit evaluation, household profiling, cash flow discounting, and a credit allocation engine.

This is a fit-for-purpose solution where we assess the profile of the customers, their cash flows, and their sources of income. We look at the profiles of multiple income earners in the households and then underwrite them. We have built an end-to-end tech platform, AceN which connects customers to the lender partners. On one side, we have a completely paperless, seamless customer journey from onboarding of customers, underwriting, servicing, and multi-mode collections. On the other hand, for lender partners, we API- integrate with them to enable a seamless flow of data and facilitate the creation of a Priority Sector Loan (PSL). The idea is to build a moat so that the rural small businesses can be served at scale, pan-India. And then at a certain stage, the aspiration is to export the tech solution to other countries as well, because the application is very uniform for this segment of society.

2 How does your alternative underwriting model leverage digital footprints and cash flow surrogates to evaluate creditworthiness effectively? Could you share specific metrics or success stories that demonstrate its impact?"

I think the proof of the pudding is that predictive analysis should produce a good result. Navadhan has consistently enjoyed 98 to 99% collection efficiency so far. Our risk portfolio is 3 to 4 times better than our industry peers. We believe it is because we keep our credit filters very tight, as we have only 13 to 14% approval rates currently, which is typically between 40 to 60% in the market. Now this means that there is an opportunity to have at least 7-8% more customers within our ambit.

The first stage of assessment is to identify the household of the proprietor of the business and assess the risk of the proprietor. The process starts with the enrollment of the household, followed by the KYC authentication and credit bureau checks of all the members. Once that is done, we do a profiling of the household in terms of their living standard, occupational activities, educational profile, social standing, and their social behaviour. After that, we look at the assets at the household level and the changes in assets. This means we look at the delta in the fixed asset wealth creation that the household has done.

Further, we look at the cash flows of the business, agriculture, or any other activity. AceN also predicts future expenditure based on the household profile. For instance, if there are marriageable younger adults in the family, or if there are old people who may require medical services in the future, we discount those expenditures and incomes. Finally, we arrive at the monthly free cash flow and the EMI the person can service. We also offer customers the option of either a secured or unsecured loan.

3 Navadhan combines a ‘brick-to-click’ model—how do your field teams collaborate with your tech platform to address the unique needs of rural MSMEs? Can you share examples of critical insights that have refined this approach?

It's the reverse. The tech teams are building solutions for the field teams. On our tech roadmap, the product team’s job is to understand the sensitivity of how to improvise, increase efficiencies, and make things work towards the mission.

For example, regarding KYC, for the customer’s convenience, we have built redundancy processes for validation if the UIDAI website is down. The product team is the link between what is required and what is being developed. Behind the product team, there's a DevOps team, a testing team, an engineering team, and product analysts. So, it looks like a full-fledged tech business, beyond the product.

4 What are the biggest operational and cultural challenges you face in scaling your services across diverse rural markets? How does your tech-driven approach mitigate these issues?

I would say cultural sensitivity and tech interplay should exist. We ask open-ended questions that vary with the geography and other demographic factors of the borrowers. Most of our customer support officers come from the same backgrounds as our customers. Therefore, tech plays a crucial role in managing this tailor-made sensitivity intertwined in the business.

5 Where do you see Navadhan Capital in the next five years? What key milestones do you envision in contributing to the broader formalisation of India's rural economy?

I would say that besides getting recognized as a substantive financial inclusion firm, especially in rural small business financing, we want to be a substantial player in creating a tangible impact in climate and smart agri practices. We are extremely enthusiastic about what the future holds around it because there is a lot of noise on the climate side, but we are quietly building it.

We help farmers in implementing smart irrigation solutions. We finance their activity as well, along with providing technical and operational support in collaboration with local universities. We also assist in soil testing to reduce the utilisation of chemical fertilisers.

Another cause we are championing is being lenders with care. where we are solving the underemployment issue, which is increasing in India. Also, we are working with various NGOs to focus on adolescent health issues, specifically concerning female health. We are making strides in this arena with our community outreach—this allows us to build goodwill in the community as well as create social harmony.