Now Reading: El Niño impact on rural borrowers eases, says Muthoot Microfin CEO
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El Niño impact on rural borrowers eases, says Muthoot Microfin CEO
El Niño impact on rural borrowers eases, says Muthoot Microfin CEO
The impact of El Niño on rural borrowers is fading as rainfall improves, according to Sadaf Sayeed, CEO of Muthoot Microfin. The rain deficit has narrowed from 43% to about 12%, boosting…
The Story in Brief
The impact of El Niño on rural borrowers is fading as rainfall improves, according to Sadaf Sayeed, CEO of Muthoot Microfin. The rain deficit has narrowed from 43% to about 12%, boosting cash flows at the bottom of the pyramid. The company reported a sharp improvement in Q1 asset quality, with collection efficiency rising to 97.97% from 93% a year ago and gross NPAs falling to 3.7% from 4.85%.
Muthoot Microfin has raised its FY27 AUM growth guidance to 18-20% from 12-15% and expects to cross Rs 17,000 crore in AUM. Credit costs halved to 2.6%, and net interest margin stood at 12%. The company is diversifying beyond group lending, achieving a 24% share of non-group loans in Q1, and plans to add 70 branches this year. However, Sayeed cautioned that the microfinance sector remains challenging, especially for smaller entities.
The Indian Opinion
The narrative that El Niño has wrecked rural microfinance is being softened by Muthoot Microfin's CEO, but the sector is not out of the woods. His own warning that smaller entities lack liquidity and the slow offtake of the Rs 20,000 crore credit guarantee scheme suggest recovery is uneven. The real test is whether sustained rains can translate into broad-based cash flow improvement, or if the bifurcation between large and small lenders will deepen.
Source: livemint.com
This story was synthesised by AI from the source linked above.
