Fusion Finance aims to expand beyond microfinance by launching unsecured individual loans targeted at higher-income customers, as part of a strategy to balance its lending portfolio and improve asset growth.
Fusion Finance is preparing to widen its lending mix beyond microfinance, with individual loans set to become a new growth engine as the non-banking finance company seeks to build a more balanced portfolio, according to The Hindu BusinessLine. The move marks a gradual shift away from a business that still accounts for about 88% of assets under management, as the company looks to add more higher-value lending over the next few years.
The company plans to launch its individual loan offering from September, subject to the rollout schedule, and expects that product to be unsecured and outside the joint liability group model used in microfinance. Sanjay Garyali, Fusion Finance’s managing director and chief executive, said the new loans will primarily target customers earning more than ₹3 lakh a year. He said the average ticket size is likely to be between ₹1.25 lakh and ₹1.5 lakh, with the maximum capped at ₹2 lakh.
Garyali said the diversification strategy is built around three borrower segments. Customers earning below ₹3 lakh will continue to be served through the microfinance business, while those above that threshold will be approached through secured and unsecured individual loans. The third leg of the plan is the MSME book, which is currently fully secured and concentrated largely on shopkeepers and small retail businesses backed by self-occupied residential or commercial property. At present, MSME lending makes up about 12% of assets under management.
Over the next 2.5 years, Fusion expects the microfinance share of its portfolio to fall to about 70%, with MSME lending rising to nearly 20% and individual loans contributing the remaining 10%. The company said it remains confident of reaching ₹10,000 crore in assets under management in FY27, helped by tighter underwriting, stronger collections and technology-led productivity gains. In the first quarter, it reported a write-back of ₹21 crore from provisions for doubtful loans, following write-backs of ₹20 crore and ₹18 crore in the previous two quarters.
Fusion has also outlined a set of operating and financial goals for FY27, including a return on assets of 4% by the fourth quarter, credit costs of 2%, collection efficiency of 99.75% and the ₹10,000 crore asset target. Financial Express reported that the company is also aiming for 20% to 25% growth in assets under management over the next two to three years, with Garyali describing a steady-state return on assets of 3.75% to 4% as the long-term objective.
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