MICROCAPITAL BRIEF: SKS Microfinance Completes Securitization Deals Totaling $122m

SKS Microfinance Limited (SKS), a non-banking finance company (NBFC) regulated by the Reserve Bank of India (RBI), reportedly has raised INR 354 crore (USD 72 million) from an undisclosed public-sector bank and INR 243 crore (USD 49.6 million) from an undisclosed source. Both have been rated “Highest Safety” by CARE Ratings, an Indian credit rating agency, indicating the securities are “considered to have a strong capacity for timely payment of short-term debt obligations and carry the lowest credit risk.” SKS expects to complete another deal of INR 250 crore (USD 51 million) in March [1] [2].

According to 2010 data from the US-based nonprofit Microfinance Information Exchange (MIX), SKS Microfinance holds total assets of USD 1.2 billion, a gross loan portfolio of USD 1.2 billion, approximately 6.6 million borrowers, return on assets (ROA) of 6.3 percent and return on equity (ROE) of 22.4 percent.

By Brendan Millan, Research Associate

About SKS Microfinance: SKS Microfinance is a microfinance institution (MFI) that was launched in 1998. It delivers gold loans and group microloans to impoverished women inIndiaas a for-profit, non-banking finance company. SKS converted into a public limited company in May 2009 and launched an initial public offering on July 28, 2010. Its equity investors include Quantum Hedge Fund, Sequoia Capital, Vinod Khosla, Small Industries Development Bank of India, Bajaj Allianz, Yatish Trading, Kismet Capital, Sandstone Capital, Silicon Valley Bank and Unitus. SKS currently trades on the Bombay Stock Exchange. According to 2010 data from the US-based nonprofit Microfinance Information Exchange (MIX), SKS Microfinance holds total assets of USD 1.2 billion, a gross loan portfolio of USD 1.2 billion, approximately 6.6 million borrowers, return on assets (ROA) of 6.3 percent and return on equity (ROE) of 22.4 percent.

About the Reserve Bank of India (RBI): Established in 1935, the Reserve Bank of India (RBI) undertakes consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies (NFBCs). The current focus of RBI is to supervise financial institutions, consolidate accounting standards, resolve legal issues in cases of banking fraud, monitor non-performing assets and supervise the rating model for the banking sector. In 1979, the National Bank for Agriculture and Rural Development (NABARD) was formed at the behest of RBI to provide regulatory oversight to regional rural banks (RRBs) and to promote the development of agricultural lenders: tasks that had been the responsibility of RBI. While all microfinance institutions (MFIs) and non-banking financial companies still operate under RBI regulations, the responsibility for inspecting nonprofit MFIs, agricultural lenders, RRBs, state cooperative banks, district central cooperative banks and state cooperative agricultural and rural development banks was transferred to NABARD. RBI maintains these responsibilities for for-profit MFIs. Although RBI was originally the parent organization of NABARD and until October 2010 held a 72.5 percent stake in the outfit, RBI owns a one-percent stake in NABARD as of 2011.

About CARE Ratings: Founded in 1993, CARE Ratings offers credit research, analysis and ratings information forIndia’s capital market. Domestic companies and banks control the majority of the shares on the firm. As of June 30, 2011, CARE Ratings rates debt of about INR 33.1 trillion (USD 671 billion).

Sources and Resources:

[1] Live Mint: “SKS Microfinance raises Rs.354 cr through securitization deal” by Viswanath Pilla. http://www.livemint.com/2012/02/27223640/SKS-Microfinance-raises-354-c.html?atype=tp

[2] Live Mint: “SKS raises Rs243 cr via securitization”, by Viswanath Pilla. http://www.livemint.com/2012/02/06122320/SKS-raises-Rs243-cr-via-securi.html

MicroCapital.org Article, February 21, 2012, “SKS Suffers $85m Loss as Norway’s Government Pension Fund – Global Buys at 1% Stake”, https://www.microcapital.org/microcapital-brief-sks-suffers-85m-loss-as-norways-government-pension-fund-global-buys-1-stake/

MicroCapital.org Article, January 23, 2012, “MICROCAPITAL BRIEF: SKS Microfinance to Further Downsize Workforce Cap Return on Assets at 3 percent”, https://www.microcapital.org/microcapital-brief-sks-microfinance-to-further-downsize-workforce-cap-return-on-assets-at-3/

MicroCapital.org Article, December 12, 2011, “MICROCAPITAL BRIEF: Vikram Akula Resigns from Board of India’s SKS Microfinance”, https://www.microcapital.org/microcapital-brief-vikram-akula-resigns-from-board-of-india%E2%80%99s-sks-microfinance/

MicroCapital.org Article, November 12, 2011, “MICROCAPITAL BRIEF: Shares of India’s SKS Microfinance Fall 10% Following Announcement of $78m Loss During Quarter Ending September 2011”, https://www.microcapital.org/microcapital-brief-shares-of-indias-sks-microfinance-fall-10-following-announcement-of-78m-loss-during-quarter-ending-september-2011/#more-15553

MicroCapital.org Article, August 29, 2011, “MICROCAPITAL BRIEF:India’s SKS Microfinance Scaling Up Non-Core Businesses of Financing Grocery Stores, Gold Lending”, https://www.microcapital.org/microcapital-brief-india%E2%80%99s-sks-microfinance-scaling-up-non-core-businesses-of-financing-grocery-stores-gold-lending/

MicroCapital.org Article, November 8, 2011, “MICROCAPITAL BRIEF:India’s SKS Microfinance to Raise $184m via Share Sale”, https://www.microcapital.org/microcapital-brief-india%E2%80%99s-sks-microfinance-to-raise-184m-via-share-sale/

MicroCapital Universe Profile: SKS Microfinance (SKS), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SKS+Microfinance

MicroCapital Universe Profile: Reserve Bank of India (RBI), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Reserve+Bank+of+India+%28RBI%29

MicroCapital Universe Profile: CARE Ratings, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=CARE+ratings

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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