Fusion Finance cuts 3+ lender borrower book share to 5.8%

Fusion Finance Limited reduced borrowers associated with three or more other microfinance institution (MFI) lenders to 5.8% of its book in September 2026, from 31.5% in March 2024, while Fusion-only borrowers rose to 39.5% from 30.9%. The shift coincided with zero disbursements to the highest lender-association category through Q2 FY27.

How far has Fusion Finance reduced multi-lender borrower exposure?

Fusion Finance reduced the Fusion+3-or-more category to 5.8% of its book in September 2026, down from 7.7% in March 2026, 18.1% in March 2025 and 31.5% in March 2024. The presentation also reported this category at 3.7% on its POS measure in September 2026, compared with 5.0% in March 2026.

The book mix moved toward customers with fewer lender associations. Fusion-only customers represented 39.5% in September 2026, compared with 37.1% in March 2026 and 30.9% in March 2024. Fusion+1 customers increased to 34.3% from 19.7% over the March 2024-to-September 2026 period, while Fusion+2 customers were 20.4%, compared with 17.8% in March 2024.

Together, Fusion-only and Fusion+1 customers accounted for 73.8% of the book in September 2026, up from 69.9% in March 2026 and 50.6% in March 2024. This change reflects the composition of the reported book; the presentation does not provide borrower-level default outcomes by lender-association category.

How selective were Fusion Finance's new disbursements?

Fusion Finance reported no disbursements to the Fusion+3 category in every quarter from Q1 FY26 through Q2 FY27, based on its quarterly-average disbursement mix. In Q2 FY27, Fusion-only borrowers received 49% of disbursements, Fusion+1 borrowers received 34%, and Fusion+2 borrowers received 16%; the displayed percentages total 99% because of rounding.

Fusion Finance says it onboards customers only if they are current on all their MFI loans. Its approval rate was 27% in Q2 FY27, compared with 14% in Q1 FY26 and 25% in Q1 FY27, although it was below the 30% reported for Q4 FY26.

Average monthly disbursement was Rs 536 crore in Q2 FY27, down from Rs 563 crore in Q1 FY27 but above Rs 297 crore in Q1 FY26. Average monthly customers were 85,130 in Q2 FY27, compared with 92,124 in Q1 FY27 and a peak of 1,10,589 in Q4 FY26.

Are Fusion Finance customers taking larger ticket sizes?

Fusion Finance's customer ticket-size distribution shifted toward larger brackets by September 2026. Customers in the up-to-Rs 40,000 bracket accounted for 34%, down from 67% in June 2025, while the above-Rs 60,000-to-Rs 1 lakh bracket reached 31%, up from 12%.

Customers with tickets of Rs 1 lakh or more represented 3% in September 2026, after being recorded at 0% from June 2025 through June 2026. The above-Rs 40,000-to-Rs 60,000 bracket was 31% in September 2026, compared with 21% in June 2025.

Total MFI exposure among Fusion Finance customers also moved into higher brackets. Customers with exposure of Rs 1 lakh or more accounted for 31% in September 2026, up from 23% in June 2025 and 26% in March 2026. Conversely, the up-to-Rs 40,000 exposure band fell to 27% from 37%, while the above-Rs 60,000-to-Rs 1 lakh band was unchanged at 25%.

The presentation identifies Equifax as the source for these portfolio data and says calculations cover all Fusion Finance customers. It shows distributional changes, but does not specify whether the larger ticket mix resulted from changes in customer demand, underwriting limits or loan renewal patterns.

What does Fusion Finance's cycle mix show about lending activity?

First-cycle loans represented 39% of Q2 FY27 disbursements, up from 36% in Q1 FY27 and 37% in Q4 FY26. Second-cycle loans were 27%, down from 32% in both preceding quarters, while third-cycle-and-higher loans were 35%, up from 32% in Q1 FY27.

Each of the first-, second- and third-cycle-and-higher groups recorded 0% in the Fusion+3 column in Q2 FY27. Within first-cycle disbursements, Fusion-only borrowers contributed 25%, Fusion+1 borrowers 11% and Fusion+2 borrowers 3%.

New customers accounted for 28% of Q2 FY27 disbursement value, compared with 27% in Q1 FY27 and 24% in Q1 FY26. Existing customers accounted for 72%, down from 76% in Q1 FY26. Average ticket size across all cycles increased to Rs 62,905 in Q2 FY27 from Rs 55,308 in Q1 FY26, while the third-cycle-and-higher average rose to Rs 79,784 from Rs 69,936.

How did Q2 FY27 disbursement volumes change by state?

Fusion Finance's average monthly disbursement of Rs 536 crore in Q2 FY27 was 5% lower quarter on quarter than Rs 563 crore in Q1 FY27, but 32% higher year on year than Rs 406 crore in Q2 FY26. Uttar Pradesh accounted for Rs 141 crore, or 26% of Q2 FY27 disbursement, followed by Bihar at Rs 95 crore, or 18%.

Disbursement in Uttar Pradesh declined 7% quarter on quarter from Rs 151 crore, while Bihar fell 13% from Rs 109 crore. Other states contributed Rs 154 crore, up 2% from Rs 150 crore in Q1 FY27 and accounting for 29% of the Q2 FY27 total.

Fusion Finance said floods across five states in Q2 FY27 disrupted customer access and business activity, and that collections were prioritised. The company said disbursement had subsequently normalised to normal run rates, but did not provide a dated target or quantified forecast for future state-level disbursements.

Conclusion

Fusion Finance's reported borrower mix shows a marked reduction in its highest lender-association group, with Fusion+3-or-more customers falling to 5.8% in September 2026 from 31.5% in March 2024. Its disbursement mix recorded 0% for that category from Q1 FY26 through Q2 FY27, while larger-ticket customer brackets became more prominent.

The next disclosed execution point is Fusion Finance's branch plan: its branch count fell to 1,475 in Q2 FY27 from 1,545 in Q2 FY26, while assets under management per branch increased to Rs 5.4 crore from Rs 4.6 crore. Management plans to consolidate low-productivity branches and open about 50 new branches.