Gurgaon-based Aye Finance serves the MSME sector through a network of 39 branches.
The company plans to use a part of the funds to improve its technology stack for better data insights and the rest of it towards giving loans to new and existing customers.
"The additional funds from Blue Orchard will be utilised to further strengthen our funding position and allow us to facilitate the inclusion of a larger number of micro and small businesses in the realm of mainstream economy."
Switzerland-based Blue Orchard was founded in 2001by an initiative of the UN as the first commercial manager of microfinance debt investments worldwide. The organisation offers premium investment solutions to qualified investors and provides debt and equity financing to institutions in emerging and frontier markets.
In March, Aye Finance received a credit facility of $3.1 million from the State Bank of India. In November last year, it had raised $10 million in series-B equity led by LGT Impact Ventures, SAIF Partners and Accion.
Founded by former bankers Sanjay Sharma and Vikram Jetley in 2014, Aye Finance has over 18,000 customers.
The company has so far disbursed Rs 200 crore worth of loans to MSMEs in India. It plans to disburse around Rs 500 crore worth of loans by the end of this financial year.