How Alok Mittal and Indifi Built a Lending Business by Saying No to Growth
Inside the September'23 decision that cut 30% of approvals overnight, the 85% credit gap, and what India's most disciplined MSME lender knows about risk that the rest of the industry is still learning
It was September 2023, and Indian unsecured lending was having the time of its life. Post-COVID survivors had cleaned up their books, capital was flowing, and NBFCs were growing 40 to 60 percent a year.
Inside a risk meeting at Indifi Technologies, somebody made a call that, depending on how you looked at it, was either insane or the most disciplined decision an Indian fintech had made in a decade. They turned the tap off for 30 percent of every customer they would have approved the month before.
We stopped lending to about 30% of the people we would have lent to in August 23, in one stroke. Our monitoring systems were doing their job, and our organisation culture was allowing us to listen to those signals.
Twelve months later, the rest of the industry would learn what Indifi already suspected. The 2024-25 cycle hit the unsecured MSME sector harder than anything since COVID. Industry credit costs escalated 70 to 80 percent. Indifi’s? Around 30.
The man behind that September call is Alok Mittal, Co-founder and CEO of Indifi.
Check out the video of the conversation here or read on for insights.
The 85% Problem
Alok is not a career banker. He is a coder by training, an early-career engineer at Hughes Software, and the Co-founder of JobsAhead.com, which Monster acquired in 2004. He then co-founded the Indian Angel Network and ran Canaan Partners’ India business from 2006 to 2015. Inside those deal rooms, the thesis for Indifi got built.
When we talk about entrepreneurs, we are only talking about venture-backed entrepreneurs. Whereas there are 60 million other entrepreneurs in this country who are running their business. And those entrepreneurs are underserved for capital.
SIDBI’s 2025 report puts formal institutional credit penetration among Indian MSMEs at 18 percent. The credit gap is roughly 30 lakh crore rupees. The retail and trading sector, which has almost no fixed assets to pledge, faces a 33 percent operational financing gap.
Eighty-five percent of Indians, your countrymen and mine, are not credit-unworthy. We just have not been able to figure out which ones are and which ones are not.
How Indifi Underwrites
A new NBFC borrows at 14 to 16 percent. A bank borrows at 5 to 6, because it gets to use savings deposits paying near-zero interest. Banks lend at 11 to 12 to the safest customers, leaving the rest for younger NBFCs that have to lend at 22 to 28 and be very good at telling who will pay back. Indifi’s average yield sits at 22 to 24 percent, risk runs at three and a half to four percent annually, and cost of funds is around 10 percent, achieved by diversifying across 37 institutional lenders.
The deeper reason traditional lending misses the middle is psychological.
Human underwriters are good at looking at a policy and saying yes or no. But they are not good at looking at a file and saying, is the probability of default here 2% or 5%? So you won’t serve the 5% risk customer, even if that customer is willing to pay you higher.
So banks default to narrow bands. Sub-2 percent risk, 17 to 20 percent pricing. Everyone outside is invisible. Indifi runs 50 to 60 parameters through machine learning to price risk across a wide spectrum and stays profitable on a portfolio basis.
Half of Indifi’s loan book originates through digital ecosystems: Swiggy, Zomato, Amazon, Flipkart, payment players. A Swiggy restaurant’s monthly receipts tell you everything about its ability to pay back. During demonetisation and COVID, lenders relying on branch verification went blind. Indifi did not.
The other discipline Alok hammers on is vintage pool analysis. NPA, the headline metric, is mathematically gamed by growth: new loans take 12 to 18 months to go bad, so doubling your book dilutes your NPA.
In a good cycle, every lending company looks good on those metrics. But if you look purely at one cohort, January to March 2023 originations, that cohort is fixed. How are losses rising in it? Are they stable across cohorts? That’s vintage pool analysis.
It is, conveniently, how Indifi spotted something the market had not, sometime in mid-2023.
The Red Button and What Survived
In September 2023, Alok and his team pressed it. AUM, which had peaked at 2,178 crore rupees in March 2024, drifted to about 1,998 crore by June 2025. FY25 closed with a 45 crore rupee net loss, weighed down by provisioning and an accounting transition. GNPA hit 4.56 percent in Q1 FY26.
What survived was the rest of the book. Operating revenue grew 22 percent year-on-year to 360 crore rupees. EBITDA climbed from 90 to 107 crore. Tier 1 capital adequacy stood at 23.92 percent, gearing at 2.2 times, both far stronger than the 15 percent regulatory floor. Indifi returned to operational profitability in Q2 FY26. In March 2026, BlackSoil extended a 40 crore rupee venture debt facility.
Across its lifecycle, Indifi has raised over 129 million dollars, including a 35 million dollar Series E led by ICICI Venture in June 2023, and disbursed over 497 million dollars across 73,000 loans to more than 55,000 MSMEs.
Our credit performance is actually better now than what it was in 2021–22. But the team is still very cautious, because their sense is that at the market level, this hasn’t sorted itself out.
The macro made the discipline look prescient. US tariffs on Indian exports climbed to 50 percent on textiles, gems, and leather through 2025, contracting exports to the US by 37.5 percent in the worst-hit segments. The Middle East conflict inflated freight, LPG, and fuel costs. Small manufacturers and kirana stores absorbed the squeeze, distress that does not show up in a Cibil score but does show up in a restaurant’s daily Swiggy receipts.
Indifi is not a unicorn. It has not filed for an IPO. What it has done is survive the first proper Indian credit cycle of the digital era with its capital structure intact. For a fintech founder in 2026, that may be the more interesting story.
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