Why Did Fusion Finance Shares Crash 10% Today?

Synopsis:- Shares fell nearly 11% to ₹187.75 after Bihar introduced stricter MFI regulations, capping interest at 100% of principal and limiting borrowers to two lenders. With 19% exposure to Bihar and AUM at ₹6,876 crore, rising delinquencies similar to Karnataka’s spike have heightened investor concerns.

The shares of the Non-Banking Financial Company plummeted up to 11 percent in today’s trading session after the Bihar government introduced a new law to regulate microfinance institutions (MFIs) and small lenders.

With a market capitalization of Rs 3,015.93 per share, the shares of Fusion Finance Ltd were trading at Rs 187.75 per share, decreasing around 7.76 percent as compared to the previous closing price of Rs 203.55 apiece.

Regulation for Microfinance Institutions

The shares of Fusion Finance Ltd have seen bearish movement after the Bihar government introduced a new law to regulate microfinance institutions (MFIs) and small lenders. The rules are similar to or even stricter than the Karnataka MFI law introduced in 2025. While RBI-regulated entities are partly exempt, they must still follow strict borrower protection and fair recovery rules.

The bill requires mandatory registration, caps total interest at 100% of the principal (you can’t charge more than double the loan amount), and limits each borrower to loans from only two MFIs. Bihar is very important for the MFI industry, accounting for 15% of total exposure. Also, 13% of borrowers already have loans from two or more lenders, which increases risk. Fusion Finance has 19% exposure to Bihar.

IIFL warns that 5% to 45% of loans in Bihar could see rising defaults. In Karnataka, after a similar law, bad loans (PAR 30+) more than tripled within two quarters. Because of this risk, IIFL is cautious about lenders heavily dependent on MFI loans, as growth and profitability could slow down.

Business Highlights

Fusion Finance’s Q3 FY26 snapshot reflects steady scale but margin pressure. AUM stands at ₹6,876 crore, with disbursements of ₹1,594 crore and total income at ₹424 crore. However, profitability remains modest with PAT at ₹14 crore despite a healthy 11.32% NIM. Asset quality shows stress, with GNPA at 4.38%, though NNPA is contained at 0.63%.

Fusion Finance maintains a presence across 22 states, with a stable geographic footprint through FY24 to Q3 FY26. However, districts declined from 497 in FY25 to 489 in Q3 FY26, while branches reduced from 1,571 to 1,537. AUM has steadily moderated from ₹11,476 crore in FY24 to ₹6,876 crore in Q3 FY26, reflecting portfolio contraction.

Fusion Finance is a non-banking financial company focused on providing microfinance loans to underserved and low-income households, particularly women entrepreneurs in rural and semi-urban areas. The company operates through a wide branch network across multiple states, aiming to promote financial inclusion while maintaining disciplined underwriting and sustainable growth.

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