Dugar Finance has raised $5 million (approximately ₹45 crore) in a Pre-Series A funding round led by HegdInvest, as it looks to scale its secured MSME lending business across India.
The funding marks a key milestone for the Chennai-based non-banking financial company (NBFC), reinforcing investor confidence in impact-driven lending platforms focused on underserved markets.
Funding to Strengthen MSME Lending and Expansion
The fresh capital will be used to:
- Expand its secured MSME lending portfolio
- Strengthen its vehicle finance business
- Increase presence in semi-urban and rural markets
- Scale operations across Tier 2 to Tier 6 cities
The company is focused on building a diversified lending platform, catering to small businesses and micro-entrepreneurs who often lack access to formal credit.
Focus on Underserved Markets
Dugar Finance has built its business around financial inclusion, targeting borrowers in smaller towns and rural regions.
Its lending model emphasizes:
- Income-generating loans for MSMEs
- Financing for commercial and passenger vehicles
- Structured underwriting and risk management
By focusing on underserved segments, the company is helping bridge the credit gap in India’s MSME ecosystem, a sector that contributes significantly to employment and economic growth.
Investing in Technology and Risk Systems
A portion of the funding will also be deployed toward:
- Enhancing technology infrastructure
- Building analytics-led underwriting models
- Strengthening centralized risk management systems
- Hiring senior leadership across key functions
These investments are expected to improve operational efficiency and enable scalable, data-driven lending.
Growth Strategy and Business Momentum
Founded and led by Ramesh Dugar, the company has historically focused on vehicle finance, which has served as a strong foundation for its lending business.
It is now expanding into secured MSME lending to build a more balanced and resilient loan portfolio. The company currently operates across multiple states and plans to expand into additional regions over the next few years.
Dugar Finance is also targeting significant growth in assets under management (AUM), with ambitions to scale its lending book while maintaining strong asset quality and low non-performing assets.
Rising Investor Interest in MSME Lending
The investment by HegdInvest reflects growing interest in NBFCs and fintech lenders focused on MSMEs, particularly those operating in underserved geographies.
Key drivers include:
- Increasing demand for formal credit in smaller towns
- Government push for financial inclusion
- Opportunity to build sustainable, secured lending models
As traditional financial institutions often under-serve this segment, specialized lenders like Dugar Finance are emerging as critical enablers of small business growth.
The Road Ahead
With fresh capital and a clear expansion strategy, Dugar Finance aims to:
- Deepen its footprint in rural and semi-urban India
- Scale its MSME lending operations significantly
- Build a diversified and resilient lending portfolio
As India’s MSME sector continues to expand, the company is well-positioned to play a key role in improving access to credit and driving grassroots economic growth.
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