SKS Microfinance share price up 20% on new microfinance Bill

Shares of SKS Microfinance, the country's largest microfinance player, surged 20 per cent to hit the upper circuit limit on the bourses on Thursday after the government unveiled a new draft Bill to regulate the microfinance sector.

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The stock opened on a weak note at Rs 333.50 on the Bombay Stock Exchange, but soon regained lost ground and rallied to a high of Rs 411, up 20 per cent from its previous closing price.

The stock of SKS Microfinance has been under pressure ever since its listing on account of various issues, ranging from the exit of its CEO Suresh Gurumani to cash embezzlement reports, among other things.

In a similar manner, the stock, after opening at Rs 335.10 on the National Stock Exchange, surged to a high of Rs 411.80.

The government on Wednesday released the draft Micro Financial Sector (Development and Regulation) Bill, 2011, which seeks to make it mandatory for all microfinance institutions to be registered with the Reserve Bank of India, making it the sector regulator.

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The Bill, in its earlier avatar, had proposed that the National Bank for Agriculture and Rural Development (NABARD) will be the regulator of the sector.

The latest draft Bill proposes that a microfinance institution has to be registered with the Reserve Bank with a minimum net-owned fund of Rs 5 lakh.

Besides, a Micro Finance Development Council will be set up to advise the government on formulation of policies, schemes and other measures required in the interest of orderly growth and development of the sector and microfinance institutions and to promote financial inclusion.