Kochi, June 9 : Muthoot Microfin Limited , among India’s Non-Banking Financial Company-Micro Finance Institution , today announced that CRISIL Ratings has upgraded its long-term credit rating to CRISIL AA-/Stable from CRISIL A+/Positive. The Company’s Commercial Paper rating has been reaffirmed at CRISIL A1+.
The upgrade is expected to further enhance the Company’s access to diversified funding sources at competitive rates, supporting a continued reduction in borrowing costs. Muthoot Microfin has already demonstrated significant progress in lowering its cost of funds, which declined from 11.0% in FY25 to 10.3% in Ǫ4 FY26, while the incremental cost of funds has come down to 9.9%. The improved credit profile will help sustain this trend, enabling the Company to optimize its liability mix and strengthen net interest margins over the medium term.
Overview of the Rating Action
The upgrade reflects Muthoot Microfin’s strengthening credit profile, underpinned by improving asset quality, a recovery in profitability, adequate capitalisation, a diversified resource profile, anda robust liquidity position. Theratingalso factors in thecontinuedfinancial, operational, and management support from its parent, Muthoot Fincorp Limited, the flagship company of the Muthoot Pappachan Group.
Key Drivers:
• Improving Asset Quality: GNPAs declined to 3.89% from 4.84%, and collection efficiency held above 96% backed by tighter underwriting, portfolio guardrails, and a provision cover of 71.5%.
• AUM Growth Back on Track AUM grew ~13% year-on-year to Rs. 14,006 crore in FY26, a strong rebound from just 1.3% growth in FY25, driven by improved disbursements following portfolio stabilisation.
• Sharp Profitability Turnaround PAT recovered to ~Rs. 170 crore in FY26 from a loss of Rs. 222 crore in FY25, with credit costs halving to 3.5%.
• Well-Capitalised Balance Sheet Net worth stood at Rs. 2,854 crore with gearing at a comfortable 3.3x times as of March 31, 2026, further strengthened by strong parental support enabling timely fund mobilisation. Healthy CRAR at 23.9%.
Commenting on this development Mr. Thomas Muthoot, Chairman and Non-Executive Director, Muthoot Microfin, said,
“We are delighted to receive this rating upgrade, which reflects the trust and confidence that our stakeholders have placed in Muthoot Microfin. In a period when the microfinance sector continues to navigate a challenging operating environment, this upgrade stands out as a recognition of our resilient business model, prudent governance, increasing diversification and disciplined execution.
It is particularly encouraging to be among the few NBFC-MFIs to receive a positive rating action during this period. As we look ahead, we remain focused on building a resilient and future-ready institution that delivers sustainable value while advancing the cause of financial inclusion.”
Commenting on this development Mr. Sadaf Sayeed, CEO, Muthoot Microfin, said,
“The upgrade from CRISIL A+ to CRISIL AA- is a significant milestone for Muthoot Microfin and reflects the strength of our operations, financial discipline, and consistent execution. It reinforces the confidence of lenders, investors, and other stakeholders in our long-term growth strategy.
This higher rating strengthens our funding profile by enabling access to a wider pool of lenders. It also enhances our ability to secure funding on more competitive terms, supporting our ongoing efforts to reduce the cost of funds and improve net interest margins (NIMs).
The upgrade is an important step toward our Vision 2030 goals of achieving Rs. 30,000 crore in AUM, having an ROA of 5%+ and positively impacting 10 million households. We remain committed to empowering underserved women and expanding access to inclusive financial services across India.”