Muthoot Microfin is banking on its newly-launched Suvidha loan product to fuel growth in the overall business. Launched in October last year, Suvidha offers loans in the average ticket size of Rs 10,000-Rs 85,000, with a tenures of 12-36 months.
“We have already disbursed `87 crore worth of loans under Suvidha in the December quarter. Going ahead, this would be a key tool to extend our loans and increase the wallet share with our existing customers,” chief executive officer (CEO) Sadaf Sayeed said, adding that the company aims to keep the customer retention ratio at 96%.
In addition to bureau data, Suvidha utilises a special scorecard that Muthoot Microfin has developed along with Equifax. The service is accessible through the Mahila Mitra mobile application.
Around 10% of the company’s disbursements will be made through Suvidha by September 2024, Sayeed said. In the next three years, the company expects 20-25% of its customers to avail Suvidha loans.
The company’s disbursements rose 19.4% year-on-year (y-o-y) to `2,592 crore in the December quarter. The assets under management rose nearly 39% y-o-y to `11,458 crore as on December 31.
The company has made sizeable investments in technology. Nearly half of its 3.3 million customer base have downloaded the Mahila Mitra application for access to Suvidha.
The company’s digital clients rose to 2.7 million as on December 31, from 1.53 million a year ago. Currently, around 28% of the collections is made through the digital route. Overall, the collection efficiency ratio rose to 98.4% as on December 31, from 96.9% a year ago.
In December, the company raised `750 crore through an initial public offering (IPO) and this has helped increase the capital adequacy ratio to 29.6%. As of December 31, the company’s borrowings stand at around `8,000 crore. It plans to borrow an additional `2,000 crore in the remainder of this financial year.
“Once we achieve a AA debt rating, we will also have access to debt capital from mutual funds, insurance and the bond market, which will help reduce the cost of funds. With the rate cuts, the cost of funds will come down further. The company will continue to pass on the benefit of a lower cost of funds to borrowers,” he said.
The firm’s net interest margin rose to 12.6% in the December quarter from 11.7% a year ago. The company intends to maintain the margin at similar levels in the next financial year too.
“We are cutting the interest rate on our loans by 25-55 basis points, depending on the risk category. Despite this, we will be able to maintain our margins at the current level,” he said.