SKS Microfinance, India's
only listed microfinance institution (MFI), has sold another Rs 354 crore off its loan book to a leading public sector bank, paving the way for deploying the proceeds for fresh loans to the poor.
The Hyderabad-based company on Monday said it has
obtained sanction for assignment of a rated pool of Rs 354 crore from a major public sector bank.
This is the largest rated pool assignment transaction in the Indian microfinance history, it said.
SKS has already drawn the first tranche of Rs 78.7 crore comprising receivables from micro women borrowers from the weaker sections, as defined by the Reserve Bank of India.
MUST READ: Social enterprises in Microfinance The pool is rated as A1+(SO) (highest safety) by credit rating company Care.
Instruments with a CARE A1+ (SO) rating are considered to have a strong capacity for timely payment of short-term debt obligations and carry the lowest credit risk, SKS said in a statement in Hyderabad.
Pool receivables are identified from 18 states other than Andhra Pradesh. The pool is well diversified with a single branch accounting for less than one per cent of the pool, with the average loan amount being Rs 10,717.
MUST READ: Will Akula's exit help SKS Microfinance? "Our ability to consummate the largest rated pool assignment in the Indian microfinance history clearly demonstrates that funding concerns raised post the AP MFI Act are behind SKS Microfinance," said S. Dilli Raj, chief financial officer, SKS Microfinance.
This transaction is SKS Microfinance's eighth assignment/securitisation transaction
post the Andhra Pradesh MFI Act.
Earlier this month, SKS completed another rated pool assignment transaction for Rs 243 crore.
SKS was among microfinance institutions hit by a crisis after Andhra Pradesh passed MFI Act in 2010 to rein in lending by MFIs to poor borrowers following allegations of harassment.
Following the enactment, SKS' recoveries in the state fell to 5 per cent and overall loan book shrunk by over 60 per cent from Rs 5,000 crore in September 2010 to Rs 1,800 crore by December 2011.
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