Fusion Finance to bet on MSMEs, expects better show in Q3
Microfinance
company
Fusion Finance
is expecting to turn around from third quarter, while the company would seek to lower concentration risk by increasing the share of
secured lending
to micro, small and medium enterprises, chief executive Sanjay Garyali told ET.
"The growth is kicking in in the MSME space. The priority would be MSME in the next two years," Garyali said in his first ever media interaction after assuming the role of chief executive in March.
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He said that the company will be aiming to take the share of MSME book to 18-20% by the next two years from 8% at present.
The lender's
assets under management
(AUM) contracted 37% year-on-year to ₹7,688 crore at the end of June, from ₹12,193 crore a year ago, after it slowed loan disbursals to the overleveraged and defaulting bottom-of-the-pyramid borrowers.
Garyali said that 44% of the AUM is of new loans with 6 months of average life and the new loans are showing a better repayment record than the old portfolio. Overall, it has seen a collection efficiency of 98.6%, up from 96.6% nine months back. The stress in sector led to a consecutive five quarter net loss for Fusion. It suffered a ₹92 crore loss in Q1 of the current fiscal after ₹1,225 crore annual loss in FY25. Garyali expected credit costs to come down further in the second quarter helping it to get closer to making profit.
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