Muthoot Capital Services is a deposit-taking NBFC that puts two-wheelers within reach of India’s semi-urban and rural self-employed - the “common man” the Muthoot Pappachan Group has served since 1887, when it began as a grain trader before moving into chit funds and gold loans. Listed on the BSE and NSE, the company was established in 1994 and today finances over six lakh live loans under the brand “Loans on Wheels,” operating across 20 states with a concentration in Tier 3 and Tier 4 centres. Its recurring approach is to lend against vehicles to customers that banks often overlook - roughly half are new to credit - using a technology backbone that automates origination, collections and risk decisions, while a recent balance-sheet clean-up through asset reconstruction companies has sharpened its focus on the core retail book.
Business segments
Two engines - a dominant two-wheeler financing franchise and a set of younger vehicle and personal loan lines - both fed by the same semi-urban distribution network and digital collections infrastructure.
1. Two-wheeler financing: the franchise that carries the company
Two-wheeler loans are the foundational product, generating the highest yield in the retail portfolio and serving as the primary customer-acquisition engine for every other loan the company sells.
- Finances the common man’s first vehicle - the loan puts a motorcycle or scooter within reach of mid-income, self-employed borrowers in semi-urban and rural India, many of whom have no credit history; about half of MCSL’s customers are new to credit.
- Concentrated on India’s top-selling brands - Hero and Honda together account for 70% of the two-wheeler portfolio, with TVS adding another 14%, so the book tracks the models that hold resale value and have wide service networks.
- Risk-based pricing replaced one-size-fits-all - the company moved from a scheme-based model, where every customer got the same rate, to pricing that charges higher-risk borrowers more, which lets it serve a wider credit spectrum without subsidising riskier loans.
- Origination is fast and dealer-led - a new Loan Origination System delivers approvals in five minutes and disbursements in 30 to 45 minutes, while the company pushes deeper into sub-dealer and multi-brand outlets to capture demand beyond the main showrooms.
- A used-two-wheeler line is being built - the company planned to launch used-two-wheeler financing in the third quarter of FY26, extending the same underwriting and collections machinery to a larger, more fragmented market.
2. Used-car, commercial-vehicle and personal loans: graduating the customer
These younger loan books let existing two-wheeler customers step up to a four-wheeler or a commercial vehicle, while loyalty loans give the best-performing borrowers additional credit - all at asset-quality levels that are markedly better than the core two-wheeler book.
- Used cars for the salaried and the self-employed - the four-wheeler loan, launched in FY20, operates through more than 200 active dealers and direct selling agents, with roughly 40% of customers coming from the salaried class rather than the company’s typical self-employed base.
- Commercial vehicles grew almost fourfold in a year - the CV book expanded from about ₹61 crore to roughly ₹240 crore during FY26, financing used light commercial vehicles and construction equipment in a segment where banks are not popular, giving NBFCs a structural advantage.
- Loyalty loans carry the highest yield - at nearly 25%, the top-up loan product for existing customers is the highest-yielding line in the retail portfolio, built on repayment behaviour the company has already observed.
- Asset quality is far stronger than in two-wheelers - gross NPAs sit at 1.72% for four-wheelers and 0.55% for commercial vehicles, compared with roughly 7.4% for two-wheelers, reflecting the more established credit profile of customers who graduate to these products.
Technology and collections backbone
A digital-first infrastructure runs origination, collections and customer engagement, with AI handling the bulk of early-stage delinquency intervention and over 80% of repayments flowing through electronic channels.
- Scorecards decide who gets chased and how - pre-delinquency scorecards predict the probability of default, while post-delinquency scorecards identify which customers are likely to roll back versus roll forward; collection allocation follows the scorecard outcome rather than a fixed queue.
- Digital repayments are overtaking cash - the share of collections through NACH and bank channels rose from 62% to 66% during FY26, while cash collections fell from 38% to 34%, reducing leakage and operational burden.
- The customer app closes the loop - the “MPower Muthoot App” and WhatsApp services let customers transact and access loan information on their phones, supporting paperless servicing across a book of over six lakh live loans.
Group structure and partners
MCSL is a standalone public company with no subsidiaries, but it runs on the rails of the wider Muthoot Pappachan Group - especially the 3,800-branch network of flagship Muthoot FinCorp, which sources customers, collects repayments and is now being wired into a model where it manages the entire loan lifecycle.
- Muthoot FinCorp branches act as a distribution engine - over 3,800 MFL branches are used for customer acquisition, lead conversion, collections and servicing, and under a new “DC model” those branches will handle the full loan lifecycle from sourcing to foreclosure, sharing in the AUM so they have a continuing interest in performance.
- Co-lending is being wound back - new disbursements with Wheels EMI, Manba Finance and Credit Wise Capital have been stopped, and the co-lending book has shrunk by 36.6% year-on-year, shifting the mix decisively toward MCSL’s own balance sheet.
- Fourth-generation leadership is in place - in December 2024, four members of the next generation joined the board as executive and non-executive directors, with RBI approval, embedding family continuity at the governance level.