Muthoot Microfin Raises ₹250 Crore Through NCDs at 9.25% Coupon
Muthoot Microfin Limited (NSE: MUTHOOTMF; BSE: 544055) has raised ₹250 crore through the allotment of listed, rated, secured and redeemable Non-Convertible Debentures (NCDs) on a private placement basis.
The company announced the fundraise on September 15, 2026, stating that the latest borrowing is part of its strategy to strengthen its funding profile, diversify its liability mix and optimise its overall cost of borrowing.
The NCDs will be listed on BSE Limited.
₹250 Crore NCD Issue Details
Muthoot Microfin has allotted 2,50,000 NCDs with a face value of ₹10,000 each, aggregating to ₹250 crore.
Key terms of the issue include:
- Issue size: ₹250 crore
- Number of NCDs: 2,50,000
- Face value: ₹10,000 per NCD
- Tenure: 24 months
- Coupon rate: 9.25% per annum
- Interest payment: Monthly
- Nature: Listed, rated, secured and redeemable NCDs
- Issue method: Private placement
- Listing: BSE Limited
- Security: First-ranking, exclusive charge over the company’s receivables
The company said the fundraise is within the limits approved by its Board of Directors.
Muthoot Microfin Focuses on Lower Borrowing Costs
According to CEO Sadaf Sayeed, the latest fundraise is aimed at strengthening the company’s funding profile and maintaining access to diversified sources of capital.
The company said its cost of funds declined by 75 basis points in FY26.
Muthoot Microfin also highlighted its recent credit-rating upgrade to CRISIL AA-/Stable, which it believes strengthens its ability to access funding at competitive rates.
The company said that, over the medium term, optimising borrowing costs could support margins while allowing it to continue expanding its customer base.
Why the NCD Raise Matters for Investors
For a microfinance institution, access to funding and the cost of that funding are important factors affecting profitability.
Muthoot Microfin’s latest borrowing therefore has relevance beyond the ₹250 crore headline amount.
The company is looking to:
- Diversify its sources of funding
- Optimise its overall borrowing cost
- Strengthen its liability mix
- Support business growth
- Improve margins over the medium term
However, the 9.25% coupon also provides investors with a clear indication of the cost associated with this particular NCD issue.
The ultimate benefit to shareholders will depend on how effectively the company deploys the funds and whether asset yields and operating performance remain supportive.
Muthoot Microfin’s Scale
As of June 30, 2026, Muthoot Microfin had:
- 3.25 million active customers
- 1,671 branches
- Presence across 21 states
- Operations across 392 districts
- Gross Loan Portfolio (GLP): ₹14,457.2 crore
The company primarily provides microfinance loans, including income-generating loans to women engaged in small businesses.
Its operations are focused on financial inclusion and serving customers in rural and underserved markets.
Credit Rating Upgrade Adds Funding Support
Muthoot Microfin has pointed to its CRISIL AA-/Stable rating as an important factor supporting its ability to access capital.
For investors, the rating is relevant because the company’s business model depends heavily on continued access to debt and other sources of funding.
A stronger credit profile can potentially improve access to capital and help the company manage funding costs, although actual borrowing costs will continue to depend on market conditions and the terms of individual issuances.
Investor Watch: Cost of Funds and Margins
The key metrics to monitor following the NCD issue will be the company’s cost of funds, net interest margins, asset quality, loan growth and credit costs.
The 75-basis-point decline in cost of funds during FY26 is positive from a funding perspective. Investors will want to see whether the company can sustain or further improve this trend while maintaining healthy loan growth and asset quality.
The ₹250 crore fund raise itself does not automatically translate into higher earnings. Its impact will depend on deployment, incremental borrowing costs, and the returns generated from the company’s loan portfolio.
Investor Takeaway
Muthoot Microfin’s ₹250 crore NCD fundraise is a relevant development for investors tracking the company’s funding profile and the Indian microfinance sector.
The issue carries a 9.25% annual coupon with a 24-month tenure and is secured by a first-ranking, exclusive charge over the company’s receivables.
The company’s improving cost of funds and CRISIL AA-/Stable rating provide important context to the fundraise.
Going forward, investors should focus on whether Muthoot Microfin can continue to reduce its funding costs while maintaining loan growth, asset quality, and margins.
Source: Muthoot Microfin Limited, press release dated September 15, 2026.
Disclaimer: This article is for informational and educational purposes only and should not be considered investment advice or a recommendation to buy or sell any security. Investors should conduct their own research and consult a qualified financial adviser before making investment decisions.