SKS Microfinance trims its loan book by Rs 243 crore

HYDERABAD: Troubled microlender SKS Microfinance has sold 243 crore off its loan book to a bank, enabling it to deploy the proceeds for fresh loans to the poor.

SKS, India's only listed microfinance institution (MFI), concluded a rated pool assignment of 243 crore, which was rated CARE A1+ (SO) by rating agency CARE, indicating highest safety and lowest risk.

SKS chief financial officer S Dilli Raj, while calling it the largest rated pool assignment by any MFI in the country in this fiscal year, said the rating indicated a strong capacity for timely payment of short-term debt.

"The benefits to us are two-fold. We will have funds inflow and we can augment the credit flow to micro borrowers," Dilli Raj told ET.

SKS is among the microlenders to be hit by a legislation by Andhra Pradesh in October 2010 to rein in MFIs. Its recoveries in AP fell to a dismal 5% and overall loan book shrunk by over 60% from 5,000 crore in September 2010 to 1,800 crore by December 2011.

While the said loan book of 243 crore goes off SKS' balance sheet, the buyer bank benefits by meeting the targets prescribed under priority sector lending in general and lending to weaker sections in particular.

Dilli Raj said all the rated papers had shown robust collection efficiency.