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Fusion Finance Limited, Portfolio Diversification, Microfinance (MFI) Reduction 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

FINSAMUDRA DESK · 14 Aug 2026, 1:17 pm IST · 1 MIN

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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.

Sources

Fusion Finance Limited, Portfolio Diversification, Microfinance (MFI) Reduction to 70% by FY29.

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