Microfinancing company Muthoot Microfin has commenced the disbursement of loans through its co-lending arrangement with the State Bank of India (SBI), the largest lender in the country. Under the partnership, the SBI has approved a Rs 500 crore limit, to be distributed in increments of Rs 100 crore. The loans, ranging from Rs 50,000 to Rs 3 lakhs, will be offered to selected and eligible customers, with a special focus on members of Joint Liability Groups (JLGs) involved in agricultural and related activities, as well as other income-generating projects.
Muthoot Microfin, which is a part of the Muthoot Pappachan Group, is also known as Muthoot Blue. Currently operating across 20 states and 369 districts, Muthoot Microfin plans to make this initiative available pan-India, ensuring broader access to credit for rural entrepreneurs. The collaboration with SBI enables lower interest rates, making loans more affordable for borrowers while driving financial inclusion and fostering self-sufficiency in underserved communities.
Key points:
> Loan Amounts and Disbursements: State Bank of India (SBI) has approved a limit of Rs 500 crore for the co-lending model, with disbursements to be made in increments of Rs 100 crore. Eligible customers can access loans ranging from Rs 50,000 to Rs 3 lakhs.
> Target Audience and Business Focus: This program specifically targets members of Joint Liability Groups (JLGs) involved in agricultural and related activities, as well as other income-generating projects.
> Geographic and Sectoral Expansion: Muthoot Microfin, currently operating in 20 states and 369 districts, aims to introduce this initiative nationwide. This expansion will help reach a wider audience of rural entrepreneurs and provide increased access to credit.
> Cost-Effective Financing: Through the partnership with SBI, borrowers can benefit from lower interest rates, making loans more affordable and accessible.
Sadaf Sayeed, CEO, Muthoot Microfin, said: “Our unique partnership with India’s largest lender, SBI, enables us to deliver affordable credit to women entrepreneurs, helping them grow their businesses and improve their livelihoods. With this collaboration, we aim to meet the growing demand for financial solutions across rural and semi-urban India, creating a sustainable impact and empowering communities through economic self-reliance.”
Muthoot Microfin is ranked as the fifth largest NBFC-microfinance company based on its gross loan portfolio. The company specializes in providing micro-loans to female clients, primarily for income-generating purposes, focusing on rural areas of India.
In Q2 FY25, Muthoot Microfin experienced a 44% decrease in net profit, amounting to Rs 61.6 crore. This decline was primarily attributed to the challenges faced in the microfinance industry and an increase in employee expenses. In comparison, the net profit was Rs 110 crore in the same period last year. Despite this, the operating profit showed a positive growth of 26%, reaching Rs 236 crore.
In order to address bad loans, the company allocated Rs 155 crore for provisions in the current quarter, a significant increase from Rs 41 crore in the previous year. The gross non-performing assets ratio also saw an uptick, rising to 2.7% at the end of September from 2.3% a year ago. Additionally, employee costs rose to Rs 133 crore in the quarter, up from Rs 111 crore in the corresponding period.