SKS Microfinance up 3% as RBI relaxes norms

Shares of SKS Microfinance were up 3.4 percent after Reserve Bank of India Governor D Subbarao said the central bank is likely to relax some of the guidelines for non-bank finance company-microfinance institutions (NBFC-MFIs).

SKS Microfinance is the only listed NBFC-MFI in India.

At an event in Chennai on Wednesday, Subbarao accepted that there are some bottlenecks as far as implementation of the new guidelines are concerned.

“In particular, Andhra Pradesh-based MFIs, saddled with huge losses, large NPAs (non-performing assets) and eroded capital, are facing an especially 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,” he was quoted as saying in a report in the Business Standard.

[caption id=“attachment_368253” align=“alignleft” width=“380”]  DRDA had cancelled the registration of SKS Microfinance in Mahabubnagar for allegedly not following rules. Reuters[/caption]

According to the guidelines, NBFC-MFIs have to ensure 100 percent provisioning on aggregate loan installments overdue for 180 days or more. The norms are to become effective from 1 April 2013.

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The Andhra Pradesh High Court had recently issued an interim order suspending the notice issued by District Rural Development Agency (DRDA) which cancelled SKS Microfinance’s registration in Mahabubnagar district, PTI reported earlier.

DRDA had cancelled the registration of SKS Microfinance in Mahabubnagar for allegedly not following rules.