Muthoot Microfin intends to raise the share of loans not related to the group's joint liability (non-JLG) to 40% over two years. This plan is being implemented against the backdrop of an expected decrease in the company's funding cost following its rating upgrade to AA-.
Sadaf Sayeed, CEO and Managing Director, told Business Standard that the company anticipates that the cost of funds will drop to the level of 9.75–9.8 percent. Previously, the current cost was 10.13 percent, and the rating upgrade should reduce financing expenses by 25–30 basis points.
The company has already achieved the previously set target ratio of JLG to non-JLG loans at 75:25. Consequently, management has adjusted the short-term forecast to 70:30. However, the long-term goal remains ambitious: within two years, the share of non-JLG loans should be 40%, and JLG should be 60%.
As part of expanding the non-JLG lending segment, Muthoot Microfin is actively developing business in Loan Against Property (LAP) and gold loans. The LAP portfolio has reached approximately 72 crore rupees, and the gold loan portfolio is around 350 crore rupees. The company disburses nearly 100 crore rupees monthly in gold loans and plans to allocate about 1,200 crore rupees over the year, bringing the total portfolio volume to 500 crore rupees.
The overall collection level of the company has improved to approximately 98 percent. The lowest delinquency rates are observed in Kerala and Tamil Nadu, while Karnataka has shown improvement after issues related to legislation introduced in December 2025. Recovery is also noted in Bihar and Uttar Pradesh.
Muthoot Microfin began its operations in Andhra Pradesh, Telangana, and Assam and plans to deepen its presence in these states. Furthermore, the company may consider expanding into additional northern states, including Jammu and Kashmir.
The company is also evaluating the possibility of attracting foreign borrowings, but is currently holding back due to currency volatility and high hedging costs. Previously, the company engaged in ECB borrowings, but is now awaiting stabilization of market conditions.
Regarding co-lending, the business with partners, which previously accounted for 500–600 crore rupees, has decreased due to new directives. After completing system modifications, the company expects to grow this segment to at least 1,000 crore rupees.
Approximately 50 percent of the company's borrowings comes from term loans from banks, and 20 percent from structured products, including Purchase Transactions Certificates (PTC) and direct assignment. In the PTC market, the company holds a borrower position at a rate of about 8.1–8.2 percent.
As of June 30, 2026, Muthoot Microfin's Assets Under Management (AUM) stood at 14,457 crore rupees, demonstrating an 18 percent year-on-year growth and 3 percent sequentially, supported by the expansion of the loan portfolio. For the quarter ending June 30, 2026, the company's net profit was 81.34 crore rupees compared to 6.18 crore rupees the previous year.
