SKS Microfinance bounced back today and closed with a gain of nearly 3 per cent on the BSE,after the country's largest microfinance firm slashed interest rate in Andhra Pradesh by 12.55 per cent. The Hyderabad-based company today reduced interest rate from 26.69 per cent to 24.55 per cent or flat 12.55 per cent per annum in Andhra Pradesh and said the move is voluntary. Following the announcement,market reacted positively and the scrip zoomed nearly 4 per cent to hit an intra-day high of Rs 1,028 on the Bombay Stock Exchange. The stock settled the session at Rs 1,018.60,up 2.96 per cent. The rise in SKS shares is significant because broader market was under pressure. The BSE benchmark Sensex today fell 216 points to close at 20,221.39. Analysts said investors cheered the rate reduction move by the company as it helped the stock snap its losing streak. Besides,Finance Minister Pranab Mekherjee's comment that the Centre is not mulling a regulator for microfinance institutions (MFIs) also came as a relief for the counter. SKS counter has been under pressure ever since the company CEO Suresh Gurumani was sacked. It was further exacerbated on account of heightened regulatory scrutiny into the operations of microfinance institutions due to high interest rates and coercive loan recovery methods. On Monday,SKS had tanked by 15 per cent to an intra-day low of Rs 894.70 - the lowest level since the Hyderabad-based firm was listed on the bourses in August - before recovering some ground. It closed with a loss of 4.61 per cent on that day. Yesterday,the scrip went down 1.57 per cent to close just above their IPO issue price of Rs 985 a piece on the BSE. At Economic Editors' Conference in New Delhi yesterday,Mukherjee said the government is not mulling a regulator for MFIs,but wanted them to evolve a code for themselves,even as these lenders draw criticism over their exorbitant interest rates and coercive recovery methods. Mukherjee also said he has suggested to the AP Government to address some stringent provisions of its recently promulgated ordinance to rein in MFIs.
