Microfinance institution Satin Creditcare Network Ltd (SCNL) is focusing on innovative risk management practices and efficient collection mechanisms to drive growth amid a “challenging” environment, says its chairman.

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Satin Creditcare Network Chairman and Managing Director H P Singh noted that the microfinance industry is going through several challenges such as over-leveraging, a rise in credit supply, delinquencies, and environmental risks.

The company believes that innovative risk management practices and efficient collection mechanisms will help the company navigate this difficult period and drive future growth, he said.

“We have focused on strengthening our underwriting practices to prevent over-leverage. We have taken measures such as no loans are granted to overdue customers, we leverage credit bureau data and use application-based scorecards for better risk assessment,” Singh explained.

The company continues to adhere to ‘one loan per client' policy to prevent over-leveraging and ensure responsible lending, he said.

Satin Creditcare ceased disbursements to new-to-credit clients in 561 branches in the second quarter, up from 200 in the first quarter of FY25, and halted new client acquisitions in 242 branches, the CMD said.

“All these steps help ensure that loans are only extended to customers with the ability to repay, thus reducing the risk of delinquencies,” Singh said. SCNL's consolidated assets under management (AUM) rose by 16 per cent year-over-year to Rs 11,749 crore in the first half of 2024-25.

Disbursements stood at Rs 4,733 crore on a consolidated basis in April-September. The MFI has a branch network of 1,463 offices as of September 2024.

The on-book gross NPAs stood at Rs 286 crore as of September 30, 2024, which is 3.5 per cent of the on-book portfolio.

The company said it is working to ensure that delinquency trends stabilize from the fourth quarter of 2024-25 onwards.