D Arulmany, MD & CEO of Veritas, builds a successful NBFC by leveraging his rural roots and expertise. (Veritas Finance)
Veritas Finance: Chennai-based Veritas Finance Private Limited, a non-banking financial company (NBFC) with a strong focus on rural lending, has emerged as a leading player in the industry. The company’s success can be attributed to its founder, D Arulmany, who built his business on his deep understanding of the financial ecosystem in rural India.
Arulmany’s Journey and Expertise:
Hailing from a village in the foothills of Pachamalai in Perambalur district, Arulmany pursued a postgraduate program in rural management at the Institute of Rural Management (IRMA), Anand, in Gujarat. This laid the foundation for his career in businesses associated with the rural segment. Over the next four decades, he gained invaluable experience working in various cooperative institutions, including the Oilseeds Federation, Tamil Nadu Co-operative Milk Producers’ Federation Limited (Aavin), Maxworth Orchards, and Hatsun Agro. (Veritas Finance)
The Turning Point:
Arulmany’s career took a significant turn when he joined Cholamandalam Investment and Finance Company Limited in 1995 as a manager. During his 12-year tenure, he gained in-depth knowledge of the NBFC sector and rose to the position of senior vice-president and business head. It was here that he recognized the immense opportunities that lay in the rural market and decided to tap into it. Mentored by industry veterans such as M Anandan and P N Vasudevan, Arulmany’s vision took shape. (Veritas Finance)
Launch of Veritas and Focus on Rural Lending:
In 2015, Arulmany launched Veritas Finance with an initial capital of Rs 43.6 crore sourced from individuals and investors. With a strong belief in the creditworthiness of rural borrowers, he focused solely on rural lending. The company’s first branch was established in Coimbatore, and the name Veritas, meaning “truth” in Latin, was chosen to reflect their reliance on rural borrowers known for their prompt repayment habits. The faith placed in rural borrowers was justified, as Veritas boasts an impressive repayment rate of 98%.
Growth and Expansion:
Veritas Finance, headquartered in Chennai, follows a hub and spoke model and expanded across Tamil Nadu. From humble assets under management (AUM) of Rs 6 crore in FY2016, Veritas now boasts an AUM of over Rs 3,500 crore as of March 31, 2023. With more than 285 branches spread across eight states, the company is further expanding its presence in Chhattisgarh and Bihar in the current financial year. Recently, Veritas announced a significant investment of Rs 1,200 crore, reflecting investor confidence in the company’s growth potential.
While Veritas has achieved remarkable success, it has not been immune to challenges. Arulmany recalls that each capital raise was followed by a crisis, be it a natural disaster, a pandemic, or a financial crisis. Despite these hurdles, the company has consistently thrived, demonstrating its resilience and commitment to serving its customers.
Innovative Credit Evaluation:
Veritas has developed an in-house credit scorecard model to evaluate customers without traditional credit scores from agencies like CIBIL. Arulmany personally evaluated 500 borrowers during the company’s early days and passed on his evaluation method to his team. He advises young CEOs to invest considerable time in learning and gaining experience before launching their own ventures.
Future Plans and Listing:
Looking ahead, Veritas Finance is preparing for a listing in the next two years. With a customer base of over 1.2 lakh people and a reputation for rural-focused lending, the company is well-positioned for continued success and growth in the NBFC sector.
D Arulmany’s journey and Veritas Finance’s success serve as a testament to the power of understanding and catering to the unique needs of rural India. By leveraging his rural roots and expertise, Arulmany has built a thriving NBFC that has transformed the lives of countless individuals and small businesses in rural communities.