Fusion Finance transfers Rs 255 crore MFI loans in September quarter

Fusion Finance Limited transferred Rs 255.38 crore of non-default microfinance institution (MFI) loans through one assignment in the quarter ended September 30, 2026, retaining a 10.00% beneficial economic interest. Fusion Finance also transferred Rs 54.16 crore of stressed non-performing assets (NPAs) across 1,422 accounts to an asset reconstruction company (ARC).

What loans did Fusion Finance transfer in September 2026?

Fusion Finance transferred two separate loan pools in the quarter ended September 30, 2026: Rs 255.38 crore of non-default MFI loans and Rs 54.16 crore of stressed loans. The disclosures were made under Reserve Bank of India (RBI) directions covering credit-risk transfer, distribution and financial-statement disclosures for non-banking financial companies.

The non-default MFI assignment was larger than the stressed-loan transfer by Rs 201.22 crore. It covered 71,572 loans in one transaction, while the ARC transfer covered 1,422 accounts. Fusion Finance reported the MFI pool as aggregate loans including retention, whereas it reported the stressed pool as aggregate principal outstanding, so the two values are distinct disclosed measures.

Fusion Finance did not acquire loans through assignment in the September 2026 quarter, and it did not acquire stressed loans. The filing therefore records transfers out of the lender rather than purchases of loan pools during the reported quarter.

How was Fusion Finance's Rs 255 crore MFI assignment structured?

Fusion Finance completed one assignment of 71,572 MFI loans with an aggregate amount of Rs 255.38 crore, including its retained interest, in the quarter ended September 30, 2026. Sale consideration excluding retention was Rs 229.84 crore, and Fusion Finance retained 10.00% of beneficial economic interest as the originator.

The Rs 25.54 crore difference between aggregate loans including retention and sale consideration excluding retention reflects the different bases disclosed for the transaction. Fusion Finance did not disclose a counterparty name, a separate valuation of the retained interest, or an accounting gain or loss on the assignment in its September-quarter loan-transfer table.

The assigned MFI pool had a weighted average maturity of 15 months and a weighted average holding period of nine months. Fusion Finance marked rated-wise distribution of rated loans as not applicable and did not provide a tangible security-cover figure for the assigned pool.

The filing leaves blank the fields for transactions where transferred loans were agreed to be replaced and for the number of loans actually replaced. Fusion Finance reported a single domestic lending segment in its financial-results notes for the quarter and half year ended September 30, 2026.

What were the terms of Fusion Finance's stressed-loan transfer?

Fusion Finance transferred Rs 54.16 crore of stressed loans to an ARC across 1,422 accounts in the quarter ended September 30, 2026. The pool had a weighted average residual tenure of 43 months, compared with the 15-month weighted average maturity reported for the separately assigned non-default MFI pool.

The stressed pool had a net book value of Rs 27.81 crore at transfer and aggregate consideration of Rs 35.20 crore. Its Rs 54.16 crore aggregate principal outstanding included a Rs 3.60 crore written-off pool, meaning the principal-outstanding amount is not the same measure as net book value or consideration.

Fusion Finance reported no additional consideration realised during the quarter for accounts transferred in earlier years. It also disclosed a Rs 28.16 crore book value for the security receipts (SRs) linked to the ARC transfer as at September 30, 2026.

The SRs were unrated at September 30, 2026 because the initial recovery rating was not yet due, according to Fusion Finance. The filing says the ARC must obtain an initial rating from an approved credit-rating agency within six months of acquiring the assets under the RBI Asset Reconstruction Companies Direction, 2024.

How do the transfers relate to Fusion Finance's balance sheet?

Fusion Finance reported total assets of Rs 8,856.98 crore at September 30, 2026, up Rs 562.18 crore from Rs 8,294.80 crore at March 31, 2026. Loans presented within financial assets increased to Rs 6,789.56 crore from Rs 6,000.83 crore over the same period, alongside the Rs 255.38 crore MFI assignment and Rs 54.16 crore stressed-loan transfer.

Borrowings other than debt securities rose to Rs 5,614.95 crore at September 30, 2026 from Rs 5,210.60 crore at March 31, 2026. Debt securities declined to Rs 266.90 crore from Rs 305.93 crore, while total financial liabilities increased to Rs 6,194.40 crore from Rs 5,804.22 crore.

For the half year ended September 30, 2026, Fusion Finance reported profit before tax of Rs 148.89 crore, compared with a loss before tax of Rs 114.39 crore in the half year ended September 30, 2025. Impairment of financial instruments declined to Rs 78.19 crore from Rs 290.01 crore, and net profit after tax for the 2026 half year was Rs 148.89 crore.

Fusion Finance reported total equity of Rs 2,613.85 crore at September 30, 2026, compared with Rs 2,455.93 crore at March 31, 2026. Its disclosures also showed a debt-equity ratio of 2.27 times and a capital-to-risk-weighted-assets ratio of 36.75% at the September 2026 reporting date.

Conclusion

Fusion Finance used two different portfolio-transfer mechanisms in the September 2026 quarter: a Rs 255.38 crore assignment of non-default MFI loans with 10.00% retained beneficial economic interest, and a Rs 54.16 crore ARC transfer of stressed loans. The MFI assignment was substantially larger by value and number of loans, while the stressed pool carried a 43-month weighted average residual tenure.

The next disclosed development to watch is the initial recovery rating for the SRs, which Fusion Finance said the ARC must obtain within six months of asset acquisition and which was not yet due at September 30, 2026. Subsequent disclosures may also update the Rs 28.16 crore SR book value, the Rs 35.20 crore stressed-pool consideration and any further transfers or acquisitions.