Micro-finance institution (MFI) Satin Creditcare is targeting to improve its credit cost to near 4 per cent from 4.23 per cent in Q3, chairman and MD HP Singh said in an interaction. He shares business guidance and whether the funding scenario for MFIs has improved. Edited excerpts:
Your disbursements rose 20 per cent sequentially. Is double-digit growth back for Satin?
Let us look at the yearly growth, that is more prudent. Each year, the first two quarters are typically tepid because of heat waves, monsoon etc. It is safe to assume that we will be range-bound in terms of growth of 10-15 per cent year-on-year (y-o-y). We do not want to go overboard and will grow cautiously, with focus on portfolio quality.
Your loan rejection rate is considerably high at 65 per cent. Would it remain in same range?
It has to be looked at in a complete context. Rejection rate of 65 per cent is probably good enough because we want to acquire customers who pass our test of underwriting standards. We have used a lot of levers, in terms of social score card, pin-codes etc. When we put all that together, we feel we are doing the best out of it. And we feel that there is no dearth of clients to be found because geographies are still wide open. We don’t do half of the districts in Uttar Pradesh, our biggest market. We don’t want to venture into areas which will affect portfolio quality. 10-15 per cent growth is decent for us as we have other subsidiaries to grow as well.
What will be the trajectory of margins from hereon?
Margins will remain stable because we have done quite a lot of work on cost of funds side. We have been able to bring it down by about 50 basis points (bps). If there is another repo rate cut, we will think of possibility to pass it on to borrowers because we have a healthy margin now.
Your portfolio at risk loans have reduced across buckets. Will this trend continue?
Our guidance on credit cost for FY26 was that we will post less than 4.6 per cent, as reported last year. In the 9MFY26, it is at 4.52 per cent but in Q3 it was 4.23 per cent. I think we will keep the momentum going in Q4 as well. My sense is that we will probably be closer to 4 per cent when we end the whole year. If you look at it, focus is on how do we shape up FY27. We are doing a lot, enhancing underwriting capability, so that even this 4 per cent credit cost gets dropped by another 1 per cent or so.
Has the funding scenario for MFI sector improved?
On the ground, yes there is a funding challenge for small and mid-sized MFIs. They are facing many challenges. Since the sector was going through headwinds, even some of the other players were feeling some kind of rigidity in getting funds from banks and other institutions. But I think it is opening up now. My sense is that once we get the credit guarantee scheme out in open, then probably lenders will open up purse.
What is the update on your branch expansion plans and AIF launch?
We have opened 203 branches in the last quarter. We will open the balance in this quarter. So initial target of launching 400 branches in the current fiscal is on track. In 9MFY26, we have opened 363 branches. With regard to AIF, our application is with SEBI and once we get clearance, we will move forward with the launch. The application was made in December.
Published on January 30, 2026
