Motilal Oswal met with the senior leadership team of CreditAccess Grameen (CREDAG), represented by Mr. Udaya Kumar Hebbar, MD, and Mr. Ganesh Narayanan, CEO, at its corporate office in Bangalore. We present below the key takeaways from our management meeting that covered the microfinance industry in general, the specific challenges in Karnataka, and CREDAG’s strategic approach to customer acquisition, risk management, and future growth.
CREDAG acknowledged the recent challenges in the Karnataka microfinance sector but noted that police action has decreased significantly. Further, the company’s employee centricity is aiding its strong recovery in Karnataka (post-ordinance). The company expects normalcy to be restored from 2QFY26 onwards and that its financials should be "clean" (from the ongoing credit cycle), except for the Karnataka slippages in 4QFY25, which might linger until Sep’26. The customer acquisition rate has increased from Dec’24 onwards, and CREDAG targets to acquire 100,000 customers per month (on average) over FY26. The company’s focus is on field due diligence and knowing the customer, with a consistent lending approach even during challenging times, and it is focusing on controlling credit costs rather than prioritizing growth. According to the management, the overleveraging problem has been largely addressed, and it expects very minimal impact on its loan growth or asset quality from the (potential) implementation of MFIN guardrails 2.0 from Apr’25 onwards.
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