Satya Micro Capital to sell its housing finance arm to address liquidity crunch

Kolkata: Satya Micro Capital, once a top 10 microfinance company, is planning to sell its wholly owned housing finance subsidiary to address its sustained liquidity tightness and remain solvent.

The problem intensified for the lender after its majority owner, Japan's Gojo & Co, which holds a 53% stake, backed out from a proposed rights issue last year amid sectoral asset quality stress.

The Delhi-based non-banking financial company-microfinance institution (NBFC-MFI) is looking to mobilise Rs 150-200 crore through the sale of the subsidiary, managing director Vivek Tiwari told ET. Satya Micro Housing Finance has Rs 260 crore of loan portfolio.


"We have shortlisted three suitors from a list of seven-eight and are looking to seal the deal in a month," Tiwari said.

The 10-year old NBFC-MFI has to repay about Rs 175 crore by the end of December while carrying another Rs 800 crore of overseas loans, people aware of the matter said.

The company in distress has also opened a business correspondent wing to act as a bank’s agent to expand an off-balance sheet business.

“I have to bring down my operating cost, which has risen sharply to about 13% as we had limited disbursement in the past 18 months," Tiwari said.

An operating cost of 6-7% is ideal for a microfinance lender.

Satya Micro Capital's assets under management fell to below Rs 2,000 crore at the end of June this year from Rs 6,000 crore in April 2024.

The failure to raise a rights issue in 2025, as Gojo and Co backed out, forced the microfinance company to slow lending last year while the entire microfinance industry was battling severe asset quality stress.

It raised about Rs 80 crore of equity in the fourth quarter of 2025-26, followed by another Rs 28 crore in April this year, albeit much less than the planned Rs 200 crore.

“It shall need to raise substantial incremental equity to improve its capitalisation and solvency profiles, given the weak asset quality and expected losses,” rating company ICRA said after downgrading Satya Micro Capital’s debt instruments in September to below investment grade.

The downgrade factored in the sustained weakness in the company’s solvency and financial flexibility, which has continued to strain its liquidity position. Satya Micro Capital reported a net loss of Rs. 39 crore for the first quarter of this financial year after a Rs 790 crore annual loss in 2025-26. Its gross non-performing assets ratio surged to 4.7% at the end of June last year from 1.2% at the end of March. Capital adequacy stood at 17.9% at the end of June.

The company also failed to comply with the minimum qualifying asset requirement, with qualifying assets constituting about 48% of total assets as of June this year, compared with the regulatory requirement of 60%. The Reserve Bank of India has allowed it to comply with the regulation by March 31, 2027.

The negative outlook on the rating reflects ICRA’s expectation that the company’s liquidity and solvency profiles will remain stretched.