SKS Microfinance, the only listed non-banking finance company-microfinance institution in the country, has warned that it may incur a loss of Rs 30-50 crore in April-June and continue the adverse financial performance the entire year.
The company has attributed the loss to a non-redeployment of Rs 690 crore which has been maintained as cash and bank balances.
“An increase in the amount of loans assigned by SKS Microfinance Limited towards the end of the quarter ended March 31, 2012 resulted in increased levels of cash and bank balances of about Rs. 6,899.8 million as of March 31, 2012,” the company said in a stock exchange filing today.
Reuters
This resulted in a relatively lower outstanding portfolio of loans, it said.
“These and other factors resulted in our operational income being insufficient to meet the finance costs, personnel expenses and operating expenditure of the company, which remained relatively unaffected by the factors discussed above,” the notice said.
Shares of the company tanked and ended down more than 7 percent at Rs 84.30 on the Bombay Stock Exchange.
The shares had rallied over the last one week after the Reserve Bank of India governor D Subbarao said a relaxation norms on NBFC-MFIs was under consideration.
“Small MFIs are also not able to meet the Rs 5 crore entry point capital to be eligible to register as NBFC-MFI. In particular, the Andhra Pradesh-based MFIs, saddled with huge losses, large NPAs (non-performing assets) and eroded capital, are facing acute problem in complying with the capital and provisioning norms. RBI is working on resolving these issues so that MFI operations can get back on track,” Subbarao had said.
As per the guidelines, NBFC-MFIs are required to make 100 percent provisions on loan repayments that overdue for 180 days or more.
These institutions had come under pressure after Andhra Pradesh government introduced a bill restricting their operations in the state.
The company has incurred losses for the last three straight quarters.
It had attributed the loss to the provisioning and write-offs in Andhra Pradesh.
