Muthoot Microfin CEO Sadaf Sayeed has declared that the microfinance sector has definitively moved past its most challenging period, with the company now positioned for sustained growth driven by improving asset quality and strengthening profitability metrics.

Strong Growth Trajectory Expected

Sayeed expects significant expansion in the company's lending portfolio, with assets under management projected to rise substantially in FY26. The growth momentum is supported by robust disbursement activity and improving market confidence.

Asset Quality Shows Remarkable Improvement

The turnaround is most evident in asset quality metrics, with the portfolio disbursed during the current financial year showing almost no stress. Collections across the broader book are improving significantly, providing confidence in earnings visibility and balance-sheet strength.

Profitability Metrics Strengthen

The operational improvements are translating into enhanced profitability across key metrics. Sayeed highlighted that the dramatic reduction in credit costs should drive substantial improvements in return ratios.

Strategic Shift Toward Bond Market Funding

Muthoot Microfin is strategically diversifying its funding profile by increasing reliance on bond markets. This shift supports the company's evolution toward longer-term lending products while improving asset-liability matching.

Sayeed explained that bonds have become crucial as the company expands beyond traditional microfinance into individual loans and loan-against-property products requiring longer-term funding. The three to five-year tenor of bonds and external commercial borrowings provides greater flexibility and improved asset-liability matching.

Market Recovery Signals Broader Sector Strength

The CEO's confidence reflects broader improvements across the microfinance sector, with steady recovery driven by improving collections, lower delinquencies, and measured growth resumption. The company sees growing opportunities to replace higher-cost bank loans with lower-cost bond funding, particularly as policy rates soften and retail participation in bond markets increases.

Muthoot Microfin Limited has successfully completed the allotment of 75,000 senior secured redeemable non-convertible debentures (NCDs) worth ₹75.00 crores. The company informed stock exchanges on January 06, 2026, about the completion of this significant fundraising initiative under its Series B debentures program.

Allotment Details and Regulatory Compliance

The Debenture Issue and Allotment Committee approved the final allotment on January 06, 2026, following the initial approval from the Board of Directors on May 8, 2025. The company has filed the necessary intimation with BSE Limited and National Stock Exchange of India Limited under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Security and Payment Structure

The NCDs are secured by a first ranking and exclusive charge of 1.05x over the company's receivables, including present and future receivables that are free from any encumbrances. The debentures offer a 9.70% annual coupon rate with monthly payment schedule, providing regular income to investors throughout the 23-month tenure.

Series B Debentures Framework

These Series B debentures are part of a larger framework involving up to 1,50,000 NCDs across two series (Series A and Series B). The current allotment represents the second series of the company's comprehensive debt fundraising program conducted on a private placement basis. The listed, rated, senior secured, transferable, and redeemable nature of these debentures provides multiple layers of investor protection and liquidity options.

Strategic Capital Raising

This successful completion of the ₹75.00 crore NCD allotment demonstrates Muthoot Microfin's ability to access debt capital markets effectively. The regulatory compliance and timely completion of the allotment process reflects the company's commitment to transparency and adherence to market regulations, strengthening its position in the microfinance sector.