Interview: Spandana Spoorthy to soon launch MSME lending services, says MD and CEO

The segment we are targeting will be semi-urban and rural geographies of our country, Saxena said.

Hyderabad-based microfinance company Spandana Spoorthy Finance will soon launch micro, small and medium enterprises (MSME) lending services, said managing director and chief executive officer Shalabh Saxena.

In an interaction with Moneycontrol, Saxena said the company has seen huge opportunities in its customer segment and also the market in general for MSME loans, and hence has chosen to start lending into these segments.

“We have seen demand from our existing and new customers for small business related purposes. We will soon start micro MSME lending,” Saxena said.

The company, Saxena said, also aims to reach an asset under management (AUM) of Rs 17,000 crore by the end of financial year 2024-25. “Currently, our AUM is around Rs 9,000 crore and by the end of FY25, we want to reach Rs 17,000 crore. For this, we set a three-year plan in 2022,” Saxena said.

Edited excerpts.

Firstly, how was your business in FY23?

The year began with management changes in the company. Besides, there were Covid-related portfolio challenges which we had to deal with at the beginning of the year. We wrote off Rs 701 crore in Q1 and hence reported a loss. But soon we worked on strengthening our branch network, added some new branches and mainly worked on improving our asset quality.

Also read: MFIs post robust profit and healthy asset quality in Q1

Later, we focused on improving the financial health of the company and brought in a weekly branch meeting model, which worked well and improved our efficiency.

What are some segments where you see aggressive growth?

Microfinance remains our core business and here we have seen maximum demand. Loan Against Property is another segment where we see a lot of potential and have hence focused on building a new team to cater to this segment over the past couple of quarters. We have opened branches in Rajasthan (apart from our existing distribution in this product) to cater to the demand.

Also, we are working on a new micro MSME lending service facility wherein we plan to lend to our existing and new customers for their MSME credit needs.

Also read: Interview| Digital lending to be the next big thing in microfinance: Arohan Finance MD

Can you elaborate on your micro MSME lending plan?

We have seen a rise in the credit demand from our existing and new customers for loans for small businesses, retailers, local shops and other similar places. The segment we are targeting will be semi-urban and rural geographies of our country. Hence, we are planning to launch our credit facility for this segment in the next few weeks.

How are you working on your digital growth?

Our business demands the need for a physical and digital presence. In line with our plans to launch digital services, we will not leave our physical growth behind. Instead, we plan to work on a mixed approach where digital will be an enabler.

Disbursements are working for us through our digital channels. We have seen two-fold growth. Onboarding new customers digitally is a work in progress.

Also read: Spandana Sphoorty dismisses reports of sale to Yes Bank, calls them 'speculative'

There were reports of Yes Bank planning to acquire your company…

For the next few years, our plan is to work on our growth and achieve the targets we have set in our plan for FY25. We believe there is a lot of value to be delivered and hence any such talk at this stage would not be appropriate.

In line with this, what is the plan for the next few years?

We had set a three-year plan in 2022 where we target to have an AUM of Rs 17,000 crore. Currently, our AUM stands at around Rs 9,000 crore. To achieve this, we will clearly focus on microfinance, housing finance and micro MSME lending.