Muthoot Microfin Eyes Gold Loan Co-Lending Tie-Up with Muthoot Fincorp

Muthoot Microfin is planning to take on co-loans for golden loans with his older Muthoot Fincorp as part of his strategy to diversify his loan book.

The Tie-Up means that Muthoot Microfin has the loan from the MFI customers, and Muthoot Fincorp endorsed the loan and storing the yellow metal.

While Muthoot Microfin, an NBFC-MFI (non-bank financing company Microfinance Institution), will take 60 percent exposure under CO-Laing Regulation, the balance will be taken by the parent NBFC Muthoot Fincorp.

“After the RBI recently issued instructions on co-loan schemes, we look at a bond with our parent company that is Van Gold Finance … And we have about 8 Lakh customers who have a gold loan outside exposure. So we will offer them gold loans under the co-lending platform,” said Sadaf Sayeed, CEO, Muthoot Microfin.

Referring to the RBI that relaxes the qualifying asset criteria for NBFC MFIs, Sayeed emphasized that this will encourage innovation and enable them to offer other non-microfinance loans.

After an evaluation of the qualifying asset criteria for NBFC MFIs, RBI said, in June 2025, in starting qualifying assets (microfinance loans) at least 60 percent of the total assets (against 75 percent earlier), on a current basis.

A microfinance loan is defined as a collateral loan given to a household with an annual family income up to £ 3 lakh.

Sayeed noted that from the 34 LAKH customers of Muthoot Microfin, 12.37 Lakh customers have retailings of different types, such as personal loan, business loan, home credit or mortgage or a gold loan.

“The focus of our company and also the industry is to meet these customers, who take loans from other lenders. Why should they not take it from the NBFC-MFI company themselves? … So, these customers, who borrow in the group format, graduate an individual loan format,” he said.

In this respect, Sayeed said that his company has launched Micro-Lap (loan against real estate) and individual loans for micro and small enterprise financing.

“Our Micro Lap product offers loans from £ 3 lakh to around £ 7 lakh to customers who have property to promise.

“We have seen that almost 1.14,000 of our customers have mortgage or housing loans, which contribute to around 6,000 crore aum elsewhere. So we look at a balance transfer of the loans,” said the Muthoot Microfin CEO.

Sayeed underlined that individual loans (for micro and small enterprise financing) are offered to customers who have visited the company for 5 to 6 years.

The company graduates these customers from a Joint Lending Group format to an individual loan format. These loans would be offered based on their income.

“And we use the Gen-AI technology for endorsing these loans. So the field officer has a personal discussion in the local language with the customer, which has been recorded. The speech recording is converted into English text and the text is converted into a memo of credit assessment,” he added.

“So, within a few minutes, a memo of credit assessment is drawn up and a centralized insurance team looks at it. And of these customers we only focus on those who have credit score of 730 and higher,” said Sayeed.

With the help of new, non-microfinance loan products, Muthoot Microfin is planning to change the composition of his loan mix of the current 94 percent, and 6 percent secure loans (in its assets under management of £ 12.253 crore on the basis of June-End 2025) to 70 per cents per cents.

Published on August 22, 2025