Our aim is to provide financial support to disadvantaged women: Sadaf Sayeed, Muthoot Microfin

Most people associate the name ‘Muthoot’ with gold loan, as Muthoot Fincorp is one of the largest gold loan NBFC (Non Banking Financial Company) in the country.

Muthoot Finance, Muthoot Microfin, gold loan, housing finance, personal loan, insurance, gold coin, money transfer, foreign exchange, NCD, entrepreneurial aspirations, rural women, Sadaf Sayeed
Apart from Muthoot Fincorp, the NBFC has another wing – Muthoot Microfin – which is working hard to fund the entrepreneurial aspirations of rural women.

Most people associate the name ‘Muthoot’ with gold loan, as Muthoot Fincorp is one of the largest gold loan NBFC (Non Banking Financial Company) in the country. Apart from gold loan, Muthoot Fincorp is also involved in providing services like housing finance, personal loan, insurance, gold coin, money transfer, foreign exchange and NCD.

Apart from Muthoot Fincorp, the NBFC has another wing – Muthoot Microfin – which is working hard to fund the entrepreneurial aspirations of rural women.

Muthoot Microfin CEO Sadaf Sayeed talks to Financial Express Online on the journey of the company on empowering rural women.

Q. What initiatives have you taken for boosting the income of rural women entrepreneurs in India?

Apart from offering financial services in the form of collateral-free microfinance loans, Muthoot Microfin provides skill training and financial literacy to its clients.

Skill training could be upskilling or training on an entirely new skill like tailoring or candle making to diversify the earnings potential of our customers.

Our principal products, i.e. Income-generating loans offered to women in underserved areas are intended to provide capital for their micro/small businesses. The loans are offered for businesses in multiple sectors. Income generating loans are backed with group guarantee in a joint liability group.

Lack of capital is identified as one of the most important obstacles for disadvantaged women to venture into entrepreneurship. Our aim is to provide financial support to disadvantaged women who have the potential to uplift themselves in the society, but investment has been the hindering factor all while.

We believe that when women have access to finance, they empower themselves by earning more, building assets, and cushion themselves against external shocks. Such financial support can help disadvantaged households to move from everyday survival to planning for the future: invest in better nutrition, housing, health, and education etc.

Q. What is your loan disbursal portfolio w.r.t small scale women entrepreneurs?

More than 97 per cent of our portfolio is pure microfinance loans offered to women entrepreneurs hailing from remote rural sectors of India. All these women run micro/small businesses like tailoring, animal husbandry, pottery/candle making etc.

Q. Kindly share some details about how a woman entrepreneur can avail of the loan. Also, share details about the rate of interest and loan duration?

Muthoot Microfin is spread across 16 states and Union Territory with more than 830 branches in rural sectors of the country. Microfinance operations are typically designed in a way that our Relationship Officers scouts for potential customers and spread awareness on our financial offerings. In most of the cases, our ROs approach the customers and customers are referred by existing customers.

A women entrepreneur can also approach our branches to avail the services. From submission of application to disbursal of loan, everything is done through digital means and gets over in just 4 days. The institution directly transfers the loan amount to borrowers’ bank accounts.

The loan tenure can be availed for weekly repayments (52/104 weeks) 0r 12/24 monthly repayments. We offer competitive interest rates in the industry with insurance coverage for applicants and co-applicant.

Q. What steps have you taken to provide ease of repayment to those who are in remote locations?

As mentioned earlier, we primarily offer our financial services to women living in the remote rural sectors of our country. The repayments are collected by our relationship officers at the centre meetings held at the customers’ neighbourhood. Further, for the ease of repayment, we have weekly and monthly collection schemes.

To pioneer in the technological advancement in the microfinance industry, Muthoot Microfin developed “Mahila Mitra customer App” with native language support in all the operational states.

Q. Share details about the Mahila Mitra app.

The App, launched prior to the pandemic received an overwhelming response from our clients. The primary purpose of the App was to promote digitalisation, however, the App helped us most through the pandemic by offering digital repayment options for our customers. The app facilitated the process of repaying loans during the lockdown where physical collection was becoming impossible. Through the App, Muthoot Microfin was able to instill a sense of empowerment among the women who face multiple challenges owing to societal and infra constraints, especially during the pandemic. They are now in possession of their info on click of a button as the Mahila Mitra app is integrated with all popular payment modes like BBPS, Net banking, Debit Card, UPI etc, which would be immediately reflected in customer accounts.

Apart from repayment options, the app also gives notification for new offers, Overdue reminder with payment link, details of amount paid etc, all in the region’s local language. In a bid to encourage digital payment, Muthoot Microfin has also introduced a cash back offer – based on award points – scheme. Mahila Mitra App also helps in filing grievances and furnishes the location and route to reach nearby branches. The widespread adoption and acceptance of the app has also made it an effective tool to back government’s initiatives of promoting digitalisation alongside financial inclusion.

Q. How the recent funding will help women entrepreneurship in rural areas?

With additional funding we would be able to leverage more and reach out to more rural households. In the next 2-3 years Muthoot Microfin will open 500 more branches in rural areas. The entire amount of funds received will be utilised to leverage and to disburse loans to lakhs of women entrepreneurs from the rural outskirts of India. We also strive to promote gender equality by providing livelihood solutions to women from such sectors – thus empowering women and improving household well-being.

Further, we enable women entrepreneurs to access easy credit to provide for education and healthcare. Our financial services will lead to job and wealth creation and ensure significant economic gains for the nation as a whole.

Q. With a planned AUM of Rs 10000 crore in 2024, how do you intend to approach it?

Muthoot Microfin looks to double its assets under management to Rs 10,000 crore over the next two to three years, with an immediate target to reach Rs 6,200 crore by March 2022. MML is gearing up to go for IPO (initial public offer) in 18-24 months.

To achieve this, we are planning to disburse Rs 4500 crore this year and Rs 7000 crore next year. We will be opening almost 500 new branches and promoting our internal talent to look after our expansion plans. We will establish Muthoot Microfin as a market leader in the near future.

The recent funding ($50 million) we received from Greater Pacific Capital (GPC) reaffirms the faith of investors in the sector. This is the biggest PE investment in India’s microfinance space post the pandemic. The industry has already bounced back with healthy loan disbursement and collections.

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