Muthoot Microfin to raise $40 million from responsAbility, BlueOrchard

Kolkata: Muthoot Microfin has started the process of mobilising $40 million of external debt from Swiss impact investors responsAbility Investments AG and BlueOrchard after delaying the drawdown by a quarter due to high hedging costs.

The chief executive at the microfinance lender Sadaf Sayeed told ET that the external commercial borrowing (ECB) is likely to be completed by December.

He said that responsAbility has officially agreed to extend the timeline to December-end from an earlier September deadline while the formalities with BlueOrchard are under process.


"There is some correction in the hedging cost and therefore we have decided to go ahead with the fund mobilisation. The stability is also back," Sayeed told ET.

Muthoot is looking to raise $25 million from ResponsAbility and another $15 million from BlueOrchard. The investors sanctioned the loan in January.

The currency hedging costs remained elevated and volaile ever since the West Asia crisis broke out. The one-year forward It intensified to 4.5% in mid October, raising the hedging cost to over 9% on October 15 from 7.40% a month prior.

Although the one-year forward premium cooled off from the highs to 3.95% on Friday, it is still far above the traditional 2%–3% average, a treasury head with a private sector bank said.

Muthoot Microfin, one of the top non-banking financial company-microfinance institutions in terms of gross loan portfolio, regularly taps the overseas debt market to diversify its resource base. It mobilised Rs 1,352 crore through ECB in 2025-26, about 15% of its total annual borrowing.

Its average cost of borrowing declined to 9.93%, entering single-digit territory for the first time, from 10.26% in FY26.

The subsidiary of Kerala-based Muthoot Pappachan Group's flagship Muthoot Fincorp expanded its gross loan portfolio by 22% year-on-year to Rs 15,323 crore at the end of September while the secured non-microfinance portfolio surged 31%. Its active customer base stood at 32.7 lakh, supported by a pan-India network of 1,675 branches.