SKS Microfinance plans to prune micro-lending exposure

HYDERABAD: SKS Microfinance, India’s only listed microfinance lender, has announced a derisking strategy wherein it plans to significantly prune down exposure, over the years, to the microfinance sector that has plunged into crisis over the past year or so.

The micro lender has decided to reduce its exposure to microfinance in terms of assets, revenues and profits, said chief executive officer MR Rao and CFO Dilli Raj at a media conference in Hyderabad on Wednesday . The company will launch a wholly-owned subsidiary for its non-microfinance business.

It expects this business, which would largely focus on meeting the needs of existing microfinance borrowers, to help derisk operations from microfinance. “By March 2013, we expect to bring down our exposure to microfinance in terms of assets to 90% from nearly 100% now.

In terms of revenue, the exposure will come down to 80% and in profit terms, it will come down further to around 70%,” said Dilli Raj.