Muthoot Microfin expects 50 per cent of its collections to come digitally by September

The third largest microfinance lender Muthoot Microfin expects 50 per cent of its collections to come digitally by September, up from 34 per cent now.

The Kerala-based lender from the Muthoot Pappachen Group, collected as much as ₹1,000 crore or 34 per cent of its entire collection digitally as of March, which was only ₹168.30 crore in the previous fiscal. Its monthly collections average at ₹550 crore now.

"For the first time our digital repayments have crossed ₹1,000 crore in FY22 -- ₹1,088 crore to be precise, which is 34 per cent of our total collections -- which is a growth of 547 per cent on-year. Already our loan disbursals are only done digitally. And we want to take this to at least 50 per cent by September this year, chief executive Sadaf Sayeed told PTI over phone.

The microlender expects to disburse 25-30 per cent more loans this fiscal, taking its assets to around ₹12,000 crore, on the back of a 47 per cent growth in the just-concluded fiscal.

The company closed FY23 with a loan book of ₹9,209 crore and a likely net income of ₹200 crore.

The company will be entering Rajasthan this year, and has already entered Uttarakhand and Himachal earlier this year.

Sayeed said as an incentive to the customers to pay online, they are giving a ₹10 cashback on every loan payment under its digital payment initiative called Parivartan.

The digital initiative has resulted in minimal operational expenses, a positive impact on staff productivity, quick turnaround time and cashless transactions, he said.

The digital collection was highest in the south with a 54 per cent share of the total with Kerala and Tamil Nadu leading the digital collections above ₹250 crore. The north had a 28 per cent share, with the east and west clocking the rest, he said, adding Bihar contributed the most to digital collection with over 40 per cent or ₹130 crore.

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

Muthoot Microfin, backed by two US-based private equity funds -- Greater Pacific Capital and Creation Investments Capital Management -- serves over 2.77 million customers as of March 2023, which grew from 2.1 million in FY22.

Greater Pacific entered with USD 60 million infusion in December 2021 for 14 per cent stake and picked an additional 2.7 per cent in December 2022 for USD 20 million. Creation Capital first came on board in December 2016 with ₹100 crore and pumped in ₹30 crore later and then gave in ₹27 crore more through the recent rights issue. It owns 9.3 per cent in the company now.