A recent press report said that SKS Microfinance is likely to approach the Reserve Bank for a banking licence, according to sources.
Reports said that the company may approach the RBI for licence after the Board of Directors approval. Mr. M R Rao, CEO and Managing Director, SKS Microfinance said that the company does not see any major issue in meeting the eligibility criteria set by the Reserve Bank of India (RBI). He said that the net worth is Rs 1,563 crore and it is already meeting the capitalisation norm. According to the RBI’s guidelines 25 per cent of the branches should be located in rural/unbanked areas, and as far as the company is concerned ninety per cent of its branches will qualify for the same.
Mr. Rao said the composition of the board also meets the eligibility criteria with 50 per cent of the positions being held by independent directors. He said that the company processed funding capability and access to low-cost funds which will help reduce interest rates for borrowers. According to Mr. Roa the company will be able to offer loans at lesser interest rates.
The average cost of funds is currently at 12.75 per cent, and the company has Rs 1,135 crore outstanding loan amounts in the state, leading to severe pressure on company’s financials.
Analysts, however, feel that the RBI will have to check financial stability of the company before taking a decision.