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• Interest rate reduced to 24.5% in AP only.
• SKS Microfinance has had 99% collection efficiency in the 2,09,000 centers in the rest of 18 states in which it works
• In AP, centre meetings conducted increased, from 47% to 97% last week.

Hyderabad, November 19, 2010: SKS Microfinance Limited, is confident that the regulation will actually strengthen the industry and benefit well funded ethical lenders like SKS.

Vikram Akula, Executive Chairperson, SKS Microfinance, said, “We welcome the regulation. Large, well established institutions like SKS will also benefit from regulations that bolsters ethical lending, the type of lending that we have been engaged in for the last 13 years.”

He also added, “We have dropped the interest rate to 24.5% from 26.7 % (Base rate) in AP. We have dropped our interest rates as and when we have benefitted from the economies of scale. The 2% of the interest rate, which has been dropped, was for insurance that the borrower was earlier paying. Now the company will absorb the insurance cost. ”

Though the Ordinance had some onerous provisions, it has not impacted the robust business model of SKS Microfinance. After the intervention from the Finance Minister the onerous provisions will also be addressed. AP comprises of only 27% of its portfolio mix. The company has maintained 99% collection efficiency in the 2,09,000 centers in the rest of 18 states where it has its operations.

In AP, over the last few weeks the situation has improved as legal and extra legal pressure has eased off. The percentage of center meetings has increased from 47% as of last week to 97%, indicating the support and trust of our borrowers.

SKS Microfinance in Andhra Pradesh will comply with the ordinance by changing the repayment from weekly to monthly. In the past, SKS Microfinance has had Individual loan product on a monthly basis, which has had good credit quality as they are from the same portfolio mix.

SKS Microfinance manages liquidity through well defined metrics whereby the cash & cash equivalents should be sufficient for meeting all corporate obligations and asset growth for next 3 months.

Dilli Raj, CFO, SKS Microfinance said, “ Our AP exposure is a mere 26% of our portfolio and in it is a fraction of our Net worth and not a multiple . We have not asked for any emergency funding. We have sufficient support from banks and enough liquidity 8 banks released Rs.367 Crs since the AP Ordinance to us. Our Capital Adequacy is 33 %. We have sufficient cash & capital to meet our business growth requirements.”

SKS Microfinance has reaffirmed that it does not use any strong arm tactics to collect repayments. The company does not incentivize its staff for collection nor loan size. SKS Microfinance has been practicing the ethical way of Microfinance for the past 13 years, and will continue to do so.

About SKS Microfinance Limited:

SKS Microfinance Limited (SKS) is a non-banking finance company (NBFC), registered and regulated by Reserve Bank of India, whose mission is to eradicate poverty by providing financial services to the poor.

SKS operates across 19 states of India. They include: Andhra Pradesh, Karnataka, Maharashtra, Orissa, Madhya Pradesh, Bihar, Uttar Pradesh, Rajasthan, Uttaranchal, Himachal Pradesh, Haryana, West Bengal, Jharkhand, Chhattisgarh, Gujarat, Kerala, Tamil Nadu, Punjab and Delhi.

SKS has been recipient of many received awards, which include Social and Corporate Governance Award by BSE, NASSCOM Foundation for Best Corporate Social Responsibility Practice (2007), Social Performance Reporting Award (MFIs) - Silver Category for Social Performing rating conducted by MIX market (2009) etc. SKS was founded by Dr Vikram Akula, who has been conferred the award of Young Global Leader by World Economic Forum and Business Transformation Entrepreneur of the Year by Ernst & Young (2010).  He was named by TIME magazine as one of the 100 Most Influential People in the World (2006).