Steering Through Challenges: Fusion Micro Finance's Strategic Focus on Cost Efficiency and Credit Quality

In a candid discussion about the evolving financial landscape, Sanjay Garyali, CEO of Fusion Micro Finance, outlined the company's laser-sharp focus on two critical areas: curtailing operating expenses (OPEX) and rigorously managing credit costs. This strategic emphasis comes as the microfinance sector navigates a dynamic environment, demanding both agility and financial prudence.

Garyali highlighted the robust performance in the fiscal fourth quarter of FY24, where the company demonstrated resilient growth while simultaneously implementing stringent cost-control measures.

"Our priority remains sustainable growth coupled with enhanced profitability," Garyali stated. "We've achieved significant milestones in asset quality improvement, reflecting our proactive approach to risk management and collection efficiencies."

The CEO elaborated on initiatives aimed at optimizing operational expenditure.

This includes leveraging technology for process automation, streamlining back-office functions, and optimizing branch network efficiency. "Every rupee saved in OPEX directly contributes to our bottom line and allows us to pass on benefits, where possible, to our customers or reinvest in crucial areas like digital transformation," he explained.

He underscored the importance of a lean operational model to withstand market fluctuations and maintain competitive advantage.

Addressing the equally vital aspect of credit costs, Garyali revealed an aggressive strategy to minimize provisions and non-performing assets (NPAs). "Our refined underwriting models, coupled with enhanced collection mechanisms and early warning systems, are pivotal," he remarked.

The company has invested heavily in data analytics to gain deeper insights into borrower behavior and identify potential risks proactively. This proactive stance has reportedly led to a noticeable decline in new NPA formations and an improved recovery rate for existing stressed assets.

Looking ahead, Fusion Micro Finance remains optimistic about its growth trajectory, projecting a healthy expansion in Assets Under Management (AUM) while maintaining a vigilant eye on asset quality.

Garyali emphasized the commitment to financial inclusion, ensuring that their growth is responsible and benefits their target demographic. "Our vision is to empower more individuals and small businesses, and we believe our current strategies position us strongly to achieve this while delivering consistent value to our shareholders," he concluded, affirming the company's dedication to resilience and long-term value creation in a competitive market.