Spandana tightens new lending at 18 Maharashtra branches

Spandana Sphoorty Financial Limited has tightened new-customer sourcing at 18 critical Maharashtra branches while 96% of its combined Rs 600 crore Karnataka and Maharashtra portfolio was current as of its October 30, 2026 call. Management said October collections and business remained steady, but Maharashtra required additional collection effort and monitoring.

Why is Spandana tightening lending in Maharashtra?

Spandana is tightening lending because management identified Maharashtra and Karnataka as states where weather-related stress could emerge, with Maharashtra requiring the more targeted response. The combined book in the two states was about Rs 600 crore, of which 3% was gross non-performing assets, or GNPA, while 96% remained in current status.

Spandana divided its roughly 127 Maharashtra branches into risk categories and classified 18 as critical branches requiring special focus. Management said its policy and risk teams developed the response after this categorisation, rather than introducing a statewide cessation of lending.

At stressed or critical branches, Spandana is avoiding onboarding customers new to credit, applying more stringent norms to customers new to Spandana, and requiring existing borrowers to have repaid on time before receiving a repeat loan. The measures distinguish between these three customer groups, which management said would guide sourcing in Maharashtra going forward.

Is Maharashtra stress affecting Spandana collections and growth?

Spandana said October business, disbursements and recoveries were steady as of October 30, although collection efforts had increased in parts of Maharashtra. Management said Andhra Pradesh, Telangana and Karnataka had not shown much of an issue at that point, while Maharashtra warranted a closer watch.

Management did not disclose an October collection-efficiency percentage or October disbursement total. It said growth was not being put into a slow or stop mode, but sourcing checks and balances would be more stringent in Maharashtra as it assesses weather-related conditions.

The company entered October with lower reported delinquency ratios than at the end of the previous quarter. Assets under management, or AUM, overdue between 31 and 90 days were 0.55% at September-end, compared with 0.73% at the end of June; GNPA was 2.5%, compared with 3.6%; and net non-performing assets, or NNPA, were 0.5%, compared with 0.68%.

Spandana also reported X-bucket collection efficiency of 99.6% in Q2 FY27. Management contrasted that figure with 96.2% at an earlier point over the past two years, while saying the 31-to-90-day delinquent bucket had declined to 0.4% from 9.8% over that earlier comparison.

How important are new customers to Spandana's growth?

New customers accounted for 54% of Spandana's Rs 1,481 crore Q2 FY27 disbursements, making the Maharashtra sourcing controls relevant to the growth mix. Another 11% went to reactivated dropout borrowers and 35% to existing customers that met the company's guardrail principles.

AUM reached Rs 5,364 crore in Q2 FY27, up 10% quarter on quarter and above Rs 5,000 crore for the first time in recent quarters. Spandana acquired 1.5 lakh borrowers during the quarter, compared with about 1.35 lakh in the preceding quarter and 1.13 lakh two quarters earlier.

Management said 96% of the microfinance portfolio had been originated under its new guardrails or strengthened underwriting framework. It also said customers new to Spandana or new to credit represented roughly 65% of acquisitions in the preceding quarter, a 4% increase over the prior quarter.

Operating measures moved alongside the expansion: borrowers per branch increased 8%, borrowers per loan officer rose 15%, and Spandana had 211 borrowers per loan officer. Average microfinance outstanding was Rs 45,000, compared with Rs 22,000 in the past, following a move toward loan ticket sizes in line with the market.

When will Spandana know the weather impact more clearly?

Spandana expects initial signals in November and greater clarity by December or January. Management said it needed one or two more months to establish whether weather-related conditions would have a material effect or a more limited impact.

Management did not give a forecast for Maharashtra collection efficiency, credit cost or delinquency. It said rains in Odisha, Andhra Pradesh and Telangana were too recent to assess on October 30, while Maharashtra had drawn greater attention and needed more collection effort.

Management cited the 2018 Kerala floods as an example in which borrowers took about three to four months to recover. It said natural calamities had generally not been a major industry issue over the past 10 to 15 years, but cautioned that the present outcome could not yet be predicted.

Spandana said its microfinance lending does not finance farming directly. Management described borrowers as having multiple income sources, including agriculture-linked and other activities, but did not provide a percentage of Maharashtra customers dependent on agricultural wages or other agri-linked income.

How do the Maharashtra measures fit Spandana's financial position?

Spandana reported profit after tax, or PAT, of Rs 18 crore in Q2 FY27, compared with Rs 12 crore in Q1 FY27. Pre-provision operating profit, or PPOP, including write-backs was Rs 79 crore, compared with Rs 40 crore in Q1, while stand-alone PAT was Rs 35 crore after a one-time Rs 7.9 crore deferred tax asset reversal related to the proposed Criss Finance Limited merger.

Yield rose to 24.9% in Q2 FY27 from 24.6% in Q1, while net interest margin, or NIM, increased to 13.6% from 12.5%. Management attributed the changes to the yield improvement and lower funding cost, with marginal cost of borrowing at 10.6%, down 260 basis points from 13.2% in Q3 FY26.

During Q2, Spandana raised Rs 1,622 crore, including Rs 995 crore under the CGS scheme, and ended September 30 with liquidity of Rs 1,379 crore. Management also said Rs 400 crore was infused through the partly paid rights issue, with 97% of first-tranche subscribers participating in the second tranche that raised Rs 194 crore.

The reported GNPA decline also reflected an asset reconstruction company transaction in a subsidiary, through which a GNPA book was sold. Management said GNPA would still have fallen from the prior quarter without that sale, although less steeply, and said gross GNPA rose by Rs 15 crore in absolute terms.

Conclusion

Spandana's Maharashtra action is a branch-specific risk response within a business that reported 10% quarter-on-quarter AUM growth and lower reported GNPA at September-end. The 18 critical branches are part of a roughly 127-branch Maharashtra network, while the Rs 600 crore combined Karnataka-Maharashtra book had 96% current accounts when management made its assessment.

The next indicators are November collection signals and management's expected December-to-January assessment of the weather impact. Management is also awaiting regulatory approval for the Criss Finance Limited merger and said on October 30 that it expected the approval process to conclude in the next three to four months.