• Rate transmission: The hike was expected and is largely priced in; rate transmission typically takes 3 to 6 months. Most Muthoot Microfin loans are fixed-rate, while roughly 35% of its borrowing is variable-rate, so management sees no immediate need to pass the increase on to customers.
• Margins and funding: Management said margins are improving as cost of funds falls, including a 14-basis-point reduction in the previous quarter and a further decline in the current quarter. It expects liquidity and competition among lenders to support borrowing at good rates.
• Credit growth: Industry credit growth is around 18% to 19%, and management expects growth to remain strong, including during the NBFC and MFI industry’s key Quarter 3 and Quarter 4 disbursement periods. It does not expect the rate hike to materially affect credit growth, given ample liquidity and festive-season demand.
• RBI and inflation: Management viewed the hike as a positive, timely step focused on controlling inflation, which particularly affects the economically weaker customers the company serves. It cited RBI’s calibrated-tightening stance and inflation guidance of 5% to 5.2%, revised 20 basis points higher, and noted FCNR deposits would remain outside the CRR.