Muthoot Microfin expects 50% of its collections to come digitally by Sept

Third-largest microfinance lender Muthoot Microfin expects 50 percent of its collections to come digitally by September, up from 34 percent now.

The Kerala-based lender from Muthoot Pappachen Group, has raised up to Rs 1,000 crore or 34 per cent of its entire collection digitally as of March, which was just Rs 168.30 crore in the previous financial year. Its average monthly collections are Rs 550 crore now.

“For the first time our digital payments crossed Rs 1,000 crore in FY22 – Rs 1,088 crore to be exact, which is 34 per cent of our total collections – a growth of 547 per cent year-on-year. Our loan disbursements are already done digitally only, and we want We want to reach at least 50 percent by September this year,” CEO Sadaf Saeed told PTI by phone.

The microlender expects to disburse 25-30 per cent additional loans in this financial year, taking its assets to around Rs 12,000 crore, on the back of 47 per cent growth in the just ended fiscal year.

The company closed the financial year 23 with a loan book of Rs. 9,209 crore and potential net income of Rs. 200 crore.

The company will enter Rajasthan this year, and it has already entered Uttarakhand and Himachal earlier this year.

As an incentive for customers to pay online, Saeed said they are offering cashback of Rs 10 on every loan payment under a digital payment initiative called Parivartan.

He said that the digital initiative led to minimal operating expenses, a positive impact on employee productivity, and speedy completion of transactions and cashless transactions.

The highest digital collection was in the South with a share of 54 per cent of the total with Kerala and Tamil Nadu leading the digital collections of over Rs 250 crore. He said the North had 28 percent of the share, while the East and West account for the rest, adding that Bihar contributed the most to digital aggregation with more than 40 percent or 130 crore.

He said the majority of digital payments are made through UPI, with a very nominal percentage through net banking or debit cards.

Muthoot Microfin, which is backed by two US private equity funds – Greater Pacific Capital and Creation Investments Capital Management – serves more than 2.77 million customers as of March 2023, which has grown from 2.1 million in FY22.

Greater Pacific entered with an injection of $60 million in December 2021 for a 14 percent stake and acquired an additional 2.7 percent in December 2022 for $20 million. Creation Capital debuted in December 2016 with Rs 100 crore, injected Rs 30 crore later and then delivered Rs 27 crore more with its latest rights issue. She owns 9.3 percent in the company now.