SKS to reduce interest rates to 24%

SKS Micro finance, the largest and the only listed microfinance institution (MFI) in the country, on Tuesday said it was planning to further reduce interest rates to 24 per cent in Andhra Pradesh and 18 other states.Last month, it had reduced rates from 26.69 per cent to 24.55 per cent in Andhra Pradesh, following the promulgation of the Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Ordinance 2010.
“The ordinance and its implementation will have material impact on the company’s operations in Andhra Pradesh,” SKS told the stock exchanges on Tuesday.The state accounts for 27 per cent (Rs 1,417 crore) of the company’s portfolio of Rs 5,600 crore. SKS, however, said it was not in a position to quantify the potential financial impact.The company said interest reduction would have an impact on interest income and profitability not only in Andhra Pradesh but also in other states. Its stock price on Tuesday fell by Rs 39.05 (3.91 per cent) to Rs 960.90, as against yesterday’s close of Rs 999.95.SKS said its field operations in the state had been disrupted and it was unable to hold village centre meetings in 54 per cent of the centres for the week ended October 29 “due to lack of legal and political support.”

For the week ended November 5, the company decided not to hold any centre meetings, “both due to impediments in conducting such meetings and because of two holidays during the week.”