How three friends built a Rs 2,000 Cr rural financial company from Bihar

Three friends who began their career as loan recovery agents for the State Bank of India (SBI) in Bihar have now transformed into entrepreneurs, running a financial services institution focused on customers in rural India with assets under management (AUM) of Rs 2,000 crore.

This is the journey of SAVE Group, founded by Ajeet Kumar Singh, Pankaj Kumar, and Ajay Kumar Sinha. From their humble beginnings in rural Bihar, they have now expanded their operations nationwide.

The trio were operating as loan recovery agents between 2005 and 2010. Post that, they began their entrepreneurial journey in the business correspondent (BC) segment. The BC model, introduced by the central government to promote financial inclusion, especially in rural areas, serves as a branch extension of banks to deliver banking services.

“We saw business correspondent as a big opportunity as close to 70% of the population did not have a bank account,” says Ajeet Kumar Singh, Co-founder and Managing Director of SAVE Solutions, in a conversation with SMB Story.

The experience of the three founders in the rural market helped them in setting up their business in the year 2010 at Gaya, Bihar, with an investment of Rs 10 lakh.

To begin with, they went about setting up customer service points (CSP) in rural areas to provide people with all banking services. Initially, they started with Bihar and then they extended to other states like Jharkhand, Uttar Pradesh, Chhattisgarh, and Madhya Pradesh to name a few.

SAVE Group has BC partnerships with four public sector banks—SBI, Punjab National Bank (PNB), Bank of Baroda (BoB), and Central Bank.

The banking services under the BC model were done by SAVE Group till around 2017-18. After that, it branched into the microfinance business and started offering loans to customers. According to the founders, microfinance was a growth opportunity as it could provide small-ticket loans.

“We give loans starting from as low as Rs 10,000 going all the way up to Rs 30 lakh,” says Singh.

Today, SAVE Group operates through four key business segments — Business Correspondent (BC) services, microfinance for small-ticket loans, NBFC service for business loans, and housing finance. It has 15,000 Customer Service Points (CSPs) across the country, with 90% of them situated in rural areas.

“We have a daily footfall of 4-5 lakh people and have opened 2.15 crore bank accounts,” says Singh.

The biggest reason for their success has been their understanding of the rural markets. Leveraging their extensive network of CSPs, SAVE Group is able to collect multiple data points of customers, which helps them in giving out any kind of loans.

According to Singh, the company’s credit underwriters’ team collects information about each customer, including whether they own a house, their spending habits, general lifestyle, and other such details. It currently has on roll employees of over 3,800, and including those from customer service point, the total number is more than 30,000.

“We need to have people on the ground to get all this information as data is not easily accessible unlike the urban areas,” Singh says.

This is also reflected in the demand for various kinds of financial products across geographies. There is strong demand for microfinance products in Bihar, Uttar Pradesh, and Chhattisgarh, while housing finance gets strong traction in Delhi-NCR, says Singh.

At the same time, it has also integrated technology into its operations, allowing them to provide loans of up to Rs 3 lakh through the digital route without the need for any face-to-face interaction.

Despite the growth, SAVE Group has faced several challenges in its business, with one of the biggest being the impact of climatic conditions. Any natural disaster in terms of flood or drought has a direct bearing on the income of rural households.

The company competes with all microfinance companies and other small finance banks.

The group raised funding of $13 million from Incofin and Maj Invest in May 2024. It also acquired Bengaluru-based microfinance company SaGraha in 2022. The total turnover of the company is Rs 550.91 crore, and it claims to have recorded a year-on-year growth of 31%.

As part of its future plans, SAVE Group aims to grow its AUM to around Rs 4,000-5,000 crore in the next three to four years, and also plans to expand its customer base.

“Our biggest USP is our presence in the rural areas as we understand this market well. We have a CSP even in the Leh Ladakh region,” he remarks.

(The copy was updated with the correct designation.)