Paisalo Digital has officially signed a Memorandum of Understanding with LoanKhata for a proposed co-lending partnership, as outlined in a regulatory filing submitted to the National Stock Exchange of India (NSE). This collaboration represents another significant step in Paisalo's acceleration phase as the company continues to scale its loan book, expand distribution channels, and strengthen its technology-led lending model. The partnership is specifically targeted towards micro-enterprises and MSMEs across India, furthering Paisalo Digital's ambitions of expanding formal credit access to underserved borrowers. According to Santanu Agarwal, Deputy Managing Director of Paisalo Digital Limited, the company remains focused on scaling up while maintaining disciplined underwriting and robust asset quality, stating that the proposed partnership represents an important milestone in their journey to serve a larger base of eligible MSME and micro-enterprise borrowers across India.
Under the signed MoU, Paisalo and LoanKhata intend to establish a co-lending facility aggregating up to ₹1,000 crore, as reported in the regulatory filing. The proposed participation structure envisages Paisalo funding 80% and LoanKhata funding 20% of each eligible loan. This structured approach ensures balanced risk distribution between the two partners while maintaining Paisalo's majority funding position. The collaboration is expected to enhance Paisalo's distribution reach by merging its extensive network with LoanKhata's last-mile ecosystem, creating a scalable operating model that combines LoanKhata's extensive network of over 1,00,000 retailer/CSP touchpoints and access to more than 90 million customers with Paisalo's 5,995 touchpoints, technology-enabled underwriting, digital onboarding and collection capabilities.
The facility will focus specifically on Micro-enterprises and MSMEs, as reported in the regulatory filing. This sector-specific approach aligns with Paisalo's strategy to serve small and medium-sized businesses, which typically require specialized lending solutions. Paisalo has demonstrated rapid expansion, growing from 1,052 touchpoints in FY23 to 5,995 touchpoints in Q1 FY27. This network includes 424 branches, 3,997 distribution points, and 1,574 business correspondents spread across 23 states. LoanKhata complements this with a vast network of over 1,00,000 retailers and a customer base exceeding 90 million, enabling deeper penetration into semi-urban and rural markets. Together, this combined reach is expected to strengthen sourcing, onboarding and customer engagement across underserved, semi-urban and rural markets, creating a more AI-enabled, distribution-led and partnership-driven growth platform anchored in responsible lending and strong governance.
The partnership aims to support Paisalo's ambitious three-year roadmap which seeks to double its Assets Under Management (AUM), income, and Profit After Tax (PAT), while maintaining the highest asset quality standards. According to Santanu Agarwal, Deputy Managing Director of Paisalo Digital Limited, the company has built strong momentum across AUM growth, profitability, distribution expansion and asset quality, and their three-year roadmap is focused on doubling AUM, income and PAT while preserving the discipline of their lending franchise. Paisalo has recently demonstrated strong financial performance with consolidated net profit growing 29.98% year-on-year to ₹61.31 crore in Q1 FY27, compared to ₹47.17 crore in June 2025. The company has also successfully completed a ₹300 crore capital raise via Non-Convertible Debentures and seen promoter shareholding increase to 46.72% in Q1 FY27 from 41.75% in FY26.
The proposed ₹1,000 crore co-lending partnership with LoanKhata represents a significant milestone in Paisalo's growth strategy, combining with the earlier ₹500 crore FatakPay agreement signed within the same month. This aggressive expansion through back-to-back partnerships demonstrates the company's commitment to scaling its co-lending strategy while maintaining an asset-light approach. The 80:20 co-lending structure leverages LoanKhata's capital and sourcing capability, enabling Paisalo to fund 80% while keeping operations balance-sheet light. The partnership highlights how non-banking financial companies are utilizing digital distribution ecosystems to address credit gaps in the MSME sector, positioning Paisalo to serve a larger segment of MSMEs and micro-enterprises across India through integrated distribution systems. The collaboration strengthens Paisalo's acceleration roadmap through enhanced last-mile reach, stronger borrower acquisition, expanded origination capacity for micro-enterprises and MSMEs, and asset-light distribution scale that enables deeper borrower access through LoanKhata's existing retailer network.
