Fusion Fin aims to up MSME loans to 15 pc in FY27

Mumbai, May 17 (PTI) Fusion Finance expects its MSME portfolio to account for 14-15 per cent of its overall loan book in the current financial year, as the microfinance lender looks to diversify growth, a top company official said.
    The company is maintaining an additional liquidity buffer amid uncertainties arising from the West Asia crisis, the official added.
    "For FY27, we expect MSME to account for around 14-15 per cent of the total book. Assuming an asset under management of Rs 10,000 crore in FY27, that would mean an MSME portfolio around Rs 1,400 crore," Sanjay Garyali, managing director and chief executive officer of Fusion Finance, told PTI.
     Garyali added that the company ended the year with about Rs 45-50 crore of monthly MSME disbursements. "We are targeting to take this up by 40-50 per cent month-on-month this year."
    The MSME portfolio currently stands at around Rs 700-800 crore and is focused largely on small, consumption-linked businesses such as kirana stores and local shops in tier-III and tier-IV markets.
    According to Garyali, these borrowers are relatively insulated from global disruptions and fuel price shocks, compared to export-linked businesses, and are more vulnerable to a sharp fall in consumption demand than supply-side disruptions.
    Amid rising geopolitical tensions and concerns over elevated oil prices, Fusion Finance has strengthened its liquidity position as a precautionary measure. The company is currently maintaining liquidity of around Rs 1,800-2,000 crore against an internal requirement of about Rs 1,400 crore, creating an additional buffer of roughly Rs 500 crore.
     In addition, the lender has around Rs 1,250 crore of sanctioned funding lines available for drawdown and another Rs 2,500 crore worth of pipeline at an advanced stage, which can be converted into sanctions if required.
    "We may continue to carry this additional liquidity till the situation settles, though it comes at a cost," Garyali said, adding that the move is aimed at protecting the balance sheet in case global uncertainties deepen.
     Garyali said it has built a relatively resilient borrower base over the last one-and-a-half years by focusing on lower-risk and lower-leverage customers, which it believes would be better placed to withstand inflationary and macroeconomic shocks.
    The company also indicated a calibrated growth strategy, saying portfolio quality and profitability would take precedence over aggressive expansion in the unsecured lending business.
    Fusion Finance has guided for monthly disbursements of Rs 750-800 crore in FY27, up from around Rs 700 crore in the March quarter, which could help the company reach an AUM of around Rs 10,000 crore this fiscal.
    On provisions, Garyali said it may continue to gradually release management overlay provisions if asset quality trends remain stable, although geopolitical uncertainty has prompted a more conservative approach.
    In the March quarter, it drew down Rs 10 crore from the overlay provision, lower than the Rs 15 crore it would otherwise have considered in the absence of uncertainty.

(This story has not been edited by THE WEEK and is auto-generated from PTI)