Paisalo Digital Eyes Fresh Capital via NCDs as Growth Momentum Builds

Overview:

Paisalo Digital Limited, a non-banking financial company (NBFC) backed by LIC and SBI Life Insurance, has announced plans to consider the issuance of Non-Convertible Debentures (NCDs) through a private placement route. The move is part of its broader strategy to strengthen its lending capacity and maintain growth in underserved credit markets. The company’s Operations and Finance Committee is scheduled to meet on June 3, 2025, to finalize the allotment structure and terms.

Key Developments:

- Paisalo Digital will consider issuing secured, rated, listed, redeemable NCDs worth up to Rs 50 crore
- The issuance will be done via private placement, targeting institutional investors
- The NCDs will carry a 10 percent annual coupon, paid monthly
- Tenure of the debentures is set at 24 months, with redemption at par

Strategic Purpose and Financial Goals:

Paisalo Digital aims to deploy the raised capital to expand its loan book, particularly in the MSME and income-generating segments.
- The funds will support credit distribution in rural and semi-urban areas
- The company plans to maintain a first-ranking pari-passu charge on loan receivables to secure the NCDs
- Security coverage will be maintained at 1.10 times the outstanding principal

Terms of the NCD Issuance:

- Instrument Type: Rated, listed, senior, secured, redeemable, taxable NCDs
- Mode of Issuance: Private placement
- Face Value: Rs 1,00,000 per NCD
- Total Number of NCDs: 5,000
- Aggregate Issue Size: Rs 50 crore
- Coupon Rate: 10 percent per annum
- Coupon Frequency: Monthly
- Tenure: 24 months
- Redemption Date: June 3, 2027
- Default Penalty: Coupon rate plus 2 percent per annum for delays beyond three months

Performance Snapshot:

Paisalo Digital has demonstrated consistent financial performance, reinforcing investor confidence.
- Q4 FY25 net profit stood at Rs 46.29 crore, up 26 percent year-on-year
- FY25 net profit reached Rs 200.12 crore, marking a 12 percent annual growth
- The company declared a final dividend of 10 percent per share for FY25
- Total sales for Q4 FY25 were Rs 193.77 crore

Investor Confidence and Institutional Backing:

Paisalo Digital’s credibility is bolstered by strong institutional support.
- LIC holds a 1.9 percent stake in the company
- SBI Life Insurance owns 9.4 percent
- The company has over 65 lakh customers and 3,275 touchpoints across 22 states

Market Sentiment and Strategic Outlook:

The decision to issue NCDs reflects Paisalo Digital’s intent to access long-term, cost-effective funding while maintaining investor security.
- The move aligns with its mission of financial inclusion and digital expansion
- Analysts view the NCD issuance as a prudent step to sustain growth in the MSME lending space
- The company has maintained a clean regulatory record with no reported defaults

Conclusion:

Paisalo Digital’s upcoming board meeting to consider NCD issuance signals a proactive approach to capital mobilization. With strong financials, institutional backing, and a clear growth strategy, the company is well-positioned to leverage debt instruments for expanding its footprint in India’s credit-starved regions.

Source: GoodReturns, HDFC Sky, July 31, 2025.