According to CEO Sadaf Sayeed, Muthoot Microfin is launching consumer durable loans ahead of the festive season to serve aspirational households. As reported by Business Standard, Sayeed explained that the company is targeting customers who need to buy new refrigerators, two-wheelers, or mobile phones during the festive period. The lender released its July-September earnings on Thursday, highlighting this strategic expansion beyond traditional group lending.
In a significant development, prolonged food inflation (9-12 months) has emerged as the main risk affecting microfinance budgets, according to CEO Sadaf Sayeed in an interview with Business Standard. While direct geopolitical or gas-price impacts were temporary and successfully mitigated, the sustained food price pressure poses a more persistent challenge. However, Sayeed noted that normal crop sowing should keep prices stable, providing some optimism for the sector's outlook.
The microfinance lender operates across 22 states with a current portfolio mix of 23% in the North, 16% in the West, and the balance in the East. According to Business Standard, Sayeed confirmed the company's strategy targets a 50:50 mix between South India and the rest of India, with no single state exceeding 25% of the portfolio. Muthoot Microfin plans to open 30 new branches this financial year, focusing on deepening presence in Assam, Telangana, and Andhra Pradesh while expanding in existing markets like Tamil Nadu, Kerala, Uttar Pradesh, and Bihar.
The company partners with Bengaluru-based Able Credit to use generative AI for credit underwriting, recording conversations between credit officers and customers in local languages. As reported by Business Standard, this AI tool has been operational for over a year and powers the entire individual loan portfolio while maintaining a 0% delinquency rate. The lender's digital collections have increased from 40% to 47% recently, with a target of 75% digital collections well before 2030. The company is also expanding its Suvidha Plus digital product, which allows customers to complete the entire loan journey digitally in about 30 minutes.
Under its '30-30 Vision', Muthoot Microfin targets ₹30,000 crore in assets under management (AUM) by 2030, with a 55% JLG (joint liability group) and 45% non-JLG split. According to Business Standard, Sayeed explained that this 55-45 split reduces single-product vulnerability and allows diversification into more stable, higher-margin income streams. Within non-JLG, individual loans will form 30%, loans against property 10%, and gold loans 5%. The company maintains ₹6,000 crore in available liquidity/sanctions and achieved a Q1 credit rating upgrade to AA-, with cost of funds falling 20 basis points this quarter. Management remains confident in achieving their 12.5% net interest margin (NIM) guidance for FY27.
The lender's ₹4,165 crore individual loans portfolio maintains near-zero delinquency, while gold loans disburse ₹150 crore monthly via a co-lending partnership with Muthoot Finance. As reported by Business Standard, the company currently serves 3.2 million customers with over 2.1 million using the app for end-to-end digital loan disbursal. The digital platform enables customers to complete the entire loan journey digitally in about 30 minutes, straight to the borrower without needing field officers. Management cited prolonged food inflation as the main risk affecting microfinance budgets, though normal crop sowing should keep prices stable.
