Spandana Sphoorty Financial Limited is primarily engaged in the business of microfinance, providing small value unsecured loans to low-income customers in semi-urban and rural areas. The company was founded in 1998 and is based in Hyderabad, India. Its micro-credit program began when Spandana operated as a Society (Spandana Urban and Rural Development Organisation – SURDO) and later formalized itself into an NBFC (SSFL).
Spandana Sphoorty Financial Limited (SSFL) operates as a Non-Banking Finance Company (NBFC) incorporated under the Companies Act, 1956, and licensed by the Reserve Bank of India under the Reserve Bank of India Act, 1934. With the release of NBFC-Micro Finance Institution (NBFC-MFI) as a new category of NBFCs, the company has been reclassified as an NBFC-MFI effective April 13, 2015.
The company is one of the largest microfinance institutions (MFIs) in India focusing on rural markets. Spandana's business lines include joint liability group (JLG)-based microfinance and Loan Against Property (LAP), offering income-generating loans under the joint liability group (JLG) model (Chetana), predominantly to women from low-income households in rural areas.
Its Chetana product offers flexible repayment (weekly/monthly with no prepayment penalty), loan tenure (12 to 30 months), and an interest rate of 25% per annum. Its LAP product is offered through its subsidiary, Criss Financial Ltd. This LAP is designed to fulfill the diverse needs of small entrepreneurs, which includes acquiring equipment, renovating or expanding office space, or utilizing funds for working capital.
Spandana's lending program is committed to strengthening the socio-economic status of low-income households – particularly women – in rural and urban areas by providing financial services on a continual basis in order to improve livelihoods, establish identity, and enhance self-esteem. It has a network of 940 branches spread across 12 states and 187 districts and has an outstanding loan portfolio of $350 million.
The company's financial performance has seen significant fluctuations recently.
Spandana Sphoorty Financial Ltd faced severe operational challenges in FY25, reporting a net loss of ₹434 crore for Q4 FY25 and an annual loss of ₹1,035 crore. Consequently, Crisil downgraded Spandana's bank loan rating to BBB+/Stable due to asset quality issues and the substantial loss.
* Revenue: ₹418.92 Crore as on March 2025
* Net Profit: ₹-434.30 Crore as on March 2025
* AUM Decline: Spandana's total Assets Under Management (AUM) dropped 43% year-on-year, from ₹11,973 crore to ₹6,819 crore.
* Loan Disbursements: The company also reported a 48% decline in loan disbursements, which fell from ₹10,688 crore to ₹5,605 crore in FY25.
* Gross NPAs: Gross Non-Performing Assets (GNPA) stood at 4.85%, and Net NPA (NNPA) was at 0.96%.
For the year ended 2024, Spandana Sphoorty Financial Ltd had posted a profit of Rs 500.72 crore on a total income of Rs 2,423.71 crore. Net interest margins (NIM) witnessed growth and stood at 13.4% in FY24 as against 11.8% in FY23. Net profit for the year increased by 3967.1% YoY, indicating strong performance prior to the challenges of FY25.
The microfinance industry in India has been going through a challenging phase in the current financial year. A wide set of challenges including borrower leverage, dilution of the Joint Liability Group (JLG) model, poor center meeting attendance, and high attrition continue to impact the sector. Being one of the large players, Spandana has not been immune to these challenges.
In Q4 FY25, Spandana Sphoorty Financial Limited faced significant operational challenges, including high borrower leverage and attrition among loan officers, which impacted productivity and collections. A forensic audit is underway amid concerns of potential fraud and asset quality deterioration, with gross NPAs rising significantly.
Spandana Sphoorty Financial Ltd currently has a Market Capitalization of ₹2,053 crore (down -61.4% in 1 year as per current data). Promoter holding in Spandana Sphoorty Financial Ltd has decreased to 48.13 per cent as of March 2025 from 56.86 per cent as of June 2024.
With a net worth of Rs 3,082 crore and a capital adequacy of 35.7 per cent at the end of Q3 FY25, the lender is well capitalized to navigate the current times. The company is enhancing operational efficiencies through strategic initiatives like increasing loan officer numbers and implementing an e-KYC system, while also securing shareholder approval for a Rs. 750 crore capital raise to bolster liquidity.
The board announced the resignation of Managing Director and CEO Shalabh Saxena, effective immediately. Saxena, who led the microfinance firm for over three years, stepped down to pursue other career opportunities. Spandana Sphoorty Financial has also received a downgrade in credit ratings for non-convertible debentures and bank loans to IND A-/Negative from IND A/Negative.
Despite reporting a net loss of Rs. 1,035 crores due to increased provisions and a shrinking loan book, management remains optimistic about a potential recovery in the microfinance sector, projecting a 20% growth in assets under management. The company is working towards recovery with a strong focus on improving borrower discipline and collection efficiencies, positioning itself for future growth amid a supportive market environment.
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