SKS Microfinance gets Rs 2K-cr lifeline

“We have not asked for any restructuring of loans from banks. We are current on all our repayments. We have a strong sanction of Rs 2,000 crore in the pipeline. We have been disbursed an incremental loan of Rs 400 crore ever since the ordinance was implemented by the State Government,” he told media-persons here.

Dilliraj said the RBI very clearly put the banks on notice for the need to resume funding MFIs to original scale and even if it has to be restructured it would be a standard asset.

Welcoming the Malegam committee recommendations,he said putting a cap on interest rate of the MFIs needs to be looked into in a holistic manner.

“Philosophically,one may oppose the cap on interest rate or regulatory interest regime. But we need to take things in balance and holistic manner. Now what you need to do is to go back and reinvent your operational models and bring in lot of financial efficiency,reduce operating costs to maintain the ROI,” the CFO said.

Dilliraj said the state government,which enacted the ordinance on microfinance in the last winter session of the Assembly,should withdraw the Act as per the Malegam committee recommendations.

“As a responsible citizen,the state government should withdraw. That’s our prayer. The Malegam committee’s specific request to withdraw the Andhra Pradesh Microfinance Institutions Act on seven merit-based arguments provides much-needed relief to the industry. It clarifies that the RBI regulates MFIs that are non-banking financial companies (NBFCs) and that there is no “regulatory void” for the State government to fill,” Dilliraj said.

To a query,he said SKS Microfinance will withdraw the petition filed against the Andhra Pradesh government in the state High Court challenging the Ordinance once the Act is repealed.

He said the loan recovery rate is still lower than the normal in AP.