Spandana Sphoorty Financial is a microfinance institution that puts small, unsecured loans into the hands of women in India’s villages and small towns, funding the tiny businesses-tailoring, cattle rearing, a village grocery-that formal banks overlook. It has done this for over two decades, building a field force of more than seven thousand loan officers who meet borrowers in their own communities, and it is now rebuilding its technology backbone with a new loan platform to make that model sharper and more flexible. The recurring approach is a high-touch, group-guarantee method: women form Joint Liability Groups that stand behind each other’s repayments, which lets Spandana lend without collateral and keep credit flowing in places where a credit score is still a rarity. # Business segments A single engine with two emerging extensions-a core group-lending book that generates the spread, a secured loan book being folded in from a subsidiary, and an individual loan product under construction on a new technology platform. ## 1. Joint Liability Group microfinance: the main engine in rural India **A field-based model that disburses small, unsecured loans to groups of women, collects repayments in person, and earns the spread between a portfolio yield of roughly 23% and a cost of borrowing that is trending below 12.5%.** - **Loans backed by group guarantee, not collateral** - borrowers are organised into Joint Liability Groups where members co-guarantee each other, which substitutes for the property or salary slips they do not have and gives Spandana a way to lend to households with no formal credit history. - **Earnings come from the spread** - the company lends at a blended portfolio yield of 22.8% and a disbursement yield on new loans of about 25.25%, while its marginal cost of borrowing was 12% in the most recent quarter, so the gap between what it earns and what it pays for funds is the core profit engine. - **A direct, feet-on-the-ground distribution machine** - 7,162 loan officers work out of 1,457 branches, each officer handling roughly 200 customers, which means the company reaches borrowers in their own villages through weekly or monthly collection meetings rather than waiting for them to walk into a branch. - **Lending is deliberately spread thin across the map** - no single state accounts for more than 15% of the loan book, the largest district is only 2.3%, and the biggest branch is just 0.3%, so a local economic shock or a political disruption in one pocket cannot sink the whole portfolio. - **The new book is being written under tighter rules** - roughly 80% of the loan book was originated after April 2025 under industry guardrails that cap total borrower debt at ₹2 lakh and limit each woman to three microfinance lenders, and that cohort is showing 99.7% collection efficiency over eight months of seasoning. ## 2. Micro Loan Against Property: a secured book being absorbed from a subsidiary **A small but growing portfolio of property-backed loans, currently sitting inside Criss Financial, that will add an 8-10% secured layer to the balance sheet once the merger closes.** - **Loans backed by property, not just group promise** - Criss Financial runs a Micro-LAP book of roughly ₹322 crores across six states, where the loan is secured against a borrower’s property, giving Spandana a different risk profile and a way to serve customers who need larger amounts than a JLG loan provides. - **The merger turns two entities into one** - Criss Financial is a 99.92%-owned subsidiary that is being amalgamated into Spandana, a move designed to cut duplicate costs, put idle capital to work, and let the combined field force offer both unsecured and secured products from the same branch. - **A stepping stone into new markets** - CFL already operates secured loans in Rajasthan, Madhya Pradesh, Karnataka, Tamil Nadu, Andhra Pradesh, and Telangana, so the merger gives Spandana a ready-made secured-lending footprint without having to build it from scratch. ## 3. Individual loans: the next product on a new technology backbone **A loan for a single borrower, without the group structure, being built as the first product on a new Loan Origination System from Perfios-expected to go live in early FY27.** - **Designed for customers who outgrow the group model** - as a JLG borrower’s business grows and her credit history builds, an individual loan lets Spandana keep serving her with a product that matches her life stage, rather than losing her to another lender. # Group structure and partners **A listed NBFC-MFI with a large institutional backer, a subsidiary being merged in, and a partly-paid equity structure that gives it a call on additional capital.** - **Kedaara Capital is the anchor shareholder** - the private equity firm held a 48.2% stake as of March 2026, giving Spandana an institutional owner with deep pockets and a long-term horizon. - **Two classes of shares trade on the exchanges** - the fully paid-up shares (SPANDANA) and the partly paid-up shares (SSFLPP) are both listed, with the company holding the right to call up the remaining ₹200 crore from the partly-paid rights issue until March 2027. - **Criss Financial is being folded in** - the 99.92% subsidiary will merge into Spandana at a swap ratio of 73 Spandana shares for every 100 CFL shares, subject to regulatory approvals, with the process expected to take five to six months from May 2026. - **A stressed-loan portfolio was sold to an ARC** - in December 2025, the company transferred a pool of stressed and written-off loans with an outstanding balance of ₹493.55 crore to an Asset Reconstruction Company for a consideration of ₹34.55 crore, cleaning up the legacy book.