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Fusion Finance Aims to Cut Microfinance Share From 88% to 70% by FY29

When a specialized microfinance lender deliberately cuts its core MFI portfolio share from 88% to 70%, credit risk defense takes priority over monoline growth.

88% to 70%Fusion Finance Linited

Markets1 min read

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Fusion Finance has announced a strategic shift to reduce its reliance on traditional Joint Liability Group (JLG) microfinance loans over the next three years.

The company aims to bring down its microfinance share from 88% to 70% by FY29, while launching a dedicated "Individual Loans" product for higher-income retail borrowers.

Alongside the product shift, Fusion Finance is targeting ₹10,000 crore in AUM while pushing its Return on Assets (RoA) to 4.0% by fiscal year-end.

Why is shifting from group microfinance to individual retail loans a critical strategic pivot?

It highlights three microfinance sector realities:

→ Mitigating JLG Contagion Risk: Traditional group-lending models face elevated credit cost volatility during regional over-indebtedness or localized stress events. → Retaining Graduating Borrowers: Transitioning mature MFI clients into larger individual loans (targeting >₹3 lakh household incomes) prevents customer churn to commercial banks. → Margin & RoA Protection: Diversifying into higher-ticket individual and MSME loans stabilizes credit costs, supporting a 4.0% target RoA.

In financial inclusion, evolving from monoline microfinance into multi-product retail lending is how specialized NBFC-MFIs mature into resilient financial institutions.

Balancing social credit delivery with disciplined portfolio diversification protects balance sheets across economic cycles.

Why it matters

DISCIPLINED PORTFOLIO

Sources

Finsamudra Desk14 Aug 2026, 1:17 pm IST
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