Our aim is to provide financial support to disadvantaged women: Sadaf Sayeed, Muthoot Microfin

Most people associate the name “Muthoot” with gold lending because Muthoot Fincorp is one of the largest NBFC (Non Banking Financial Company) gold lending in the country.

Most people associate the name “Muthoot” with gold lending because Muthoot Fincorp is one of the largest NBFC (Non Banking Financial Company) gold lending in the country. Apart from gold lending, Muthoot Fincorp is also involved in providing services such as housing finance, personal loan, insurance, gold coin, money transfer, foreign exchange and NTMs.

Besides Muthoot Fincorp, NBFC has another wing – Muthoot Microfin – which works hard to finance the entrepreneurial aspirations of rural women.

Muthoot Microfin CEO Sadaf Sayeed speaks to Financial Express Online about the company’s journey to empowering rural women.

Q. What initiatives have you taken to increase the incomes of rural women entrepreneurs in India?

In addition to offering financial services in the form of unsecured microfinance loans, Muthoot Microfin offers professional training and financial education to its clients.

Vocational training can be an upgrade or training in an entirely new skill such as sewing or candle making to diversify our clients’ earning potential.

Our main products, i.e. income-generating loans offered to women in underserved areas, are intended to provide capital to their micro/small businesses. Loans are available to businesses in several sectors. Income-generating loans are backed by a group guarantee in a joint and several liability group.

Lack of capital is identified as one of the main obstacles preventing disadvantaged women from embarking on entrepreneurship. Our goal is to provide financial support to disadvantaged women who have the potential to rise in society, but investment has always been the hindering factor.

We believe that when women have access to finance, they empower themselves by earning more, accumulating assets, and protecting themselves against external shocks. Such financial support can help disadvantaged households move from day-to-day survival to planning for the future: investing in better food, housing, health, education, etc.

Q. What is your loan disbursement portfolio in relation to women small-scale entrepreneurs?

Over 97% of our portfolio are pure microfinance loans offered to female entrepreneurs from remote rural areas of India. All of these women run micro/small businesses like sewing, animal husbandry, pottery/candle making, etc.

Q. Please share some details on how a female entrepreneur can benefit from the loan. Also share details about the interest rate and term of the loan?

Muthoot Microfin is spread across 16 states and the Union Territory with over 830 branches in rural areas nationwide. Microfinance operations are generally designed in such a way that our relationship managers seek out potential clients and publicize our financial offers. In most cases, our ORs approach clients and clients are referred by existing clients.

A woman entrepreneur can also contact our branches to take advantage of the services. From application submission to loan disbursement, everything is done through digital means and is completed in just 4 days. The institution directly transfers the loan amount to the bank accounts of the borrowers.

The term of the loan can be used for weekly repayments (52/104 weeks) or 12/24 monthly repayments. We offer industry competitive interest rates with insurance coverage for applicants and co-applicants.

Q. What steps have you taken to facilitate reimbursement for those in remote areas?

As mentioned earlier, we mainly offer our financial services to women living in remote rural areas of our country. Reimbursements are collected by our relationship managers during center meetings held in the customer’s area. In addition, to facilitate repayment, we have weekly and monthly collection programs.

To pioneer technological advancement in the microfinance sector, Muthoot Microfin has developed “Mahila Mitra Client Application” with native language support in all operational states.

Q. Share details about Mahila Mitra app.

The app, launched before the pandemic, received an overwhelming response from our customers. The main purpose of the app was to promote digitization, however, the app helped us the most through the pandemic by providing digital reimbursement options to our customers. The app facilitated the loan repayment process during the lockdown where physical collection became impossible. Through the app, Muthoot Microfin has been able to instill a sense of empowerment in women who face multiple challenges due to societal and infra constraints, especially during the pandemic. They are now in possession of their information at the click of a button, as the Mahila Mitra app is integrated with all popular payment methods such as BBPS, Net Banking, Debit Card, UPI, etc., which would be immediately reflected in customer accounts.

Along with refund options, the app also provides notification for new offers, overdue reminder with payment link, details of amount paid, etc., all in the local language of the region. In an effort to encourage digital payment, Muthoot Microfin has also introduced a cashback offer based on reward points. Mahila Mitra App also helps in filing claims and provides location and driving directions to reach nearby branches. The app’s widespread adoption and acceptance has also made it an effective tool to support government initiatives to promote digitalization alongside financial inclusion.

Q. How will recent funding help female entrepreneurship in rural areas?

With additional funding, we would be able to mobilize more and reach more rural households. Over the next 2-3 years, Muthoot Microfin will open 500 additional branches in rural areas. The total amount of funds received will be used to mobilize and disburse loans to thousands of women entrepreneurs in the rural periphery of India. We also strive to promote gender equality by providing livelihood solutions for women in these sectors – thereby empowering women and improving household well-being.

In addition, we provide women entrepreneurs with easy access to credit to enable them to access education and health care. Our financial services will lead to the creation of jobs and wealth and ensure significant economic gains for the nation as a whole.

Q. With an expected AUM of Rs 10,000 crore in 2024, how do you plan to approach it?

Muthoot Microfin is looking to double its assets under management to Rs 10,000 crore over the next two to three years, with an immediate target of reaching Rs 6,200 crore by March 2022. MML is preparing to go for IPO (public offering initial) in 18-24 months.

To achieve this, we plan to shell out Rs 4500 crore this year and Rs 7000 crore next year. We will open nearly 500 new branches and promote our internal talents to carry out our expansion plans. We will make Muthoot Microfin a market leader in the near future.

The recent funding ($50 million) we received from Greater Pacific Capital (GPC) reaffirms investor confidence in the sector. This is the largest private equity investment in India’s microfinance space post-pandemic. The industry has already rebounded with healthy disbursements and loan collections.

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