The loan is raised for three years and three months tenure and benchmarked to a three-month term SOFR (Secured Overnight Financing Rate) with a margin of 2.85%. The cost comes to 9.58% a year, lower than lender s incremental cost of 10.41% for the past none months, Muthoot Microfin chief executive Sadaf Sayeed told ET.
Muthoot Microfin has decided to reduce lending rates by up to 55 basis points on fresh loans to existing customers. This move comes after nearly two years of upward movement in loan rates. The reduction in rates will not affect the lender s net interest margin, which rose to 12.6% for the December 2023 quarter.