Indian microfinance institution SKS Microfinance, which is listed on India’s National Stock Exchange and the Bombay Stock Exchange, announced recently that it would reduce its microloan interest rates from 23.55 percent to 22 percent as of July 1, 2015. Per a statement released by the company, the move is “consistent with the company’s policy of passing on the cost advantages accruing from reduction in the cost of borrowing, economies of scale and operational efficiency to its borrowers.” The company further reports that its “sustained turnaround, improved profitability in [financial year ending March 2015], capital raise in May 2014, rating upgrade and issuance of commercial papers and non-convertible debentures” led to a reduction in borrowing costs. In October 2014, the company had reduced its interest rates by 1 percent .
As of March 2014, SKS reported a gross loan portfolio of USD 518.3 million, approximately 5 million borrowers, return on assets (ROA) of 2.88 percent and return on equity (ROE) of 16.52 percent. SKS offers microinsurance but does not accept deposits.
By Arpita Sarkar, Research Associate
About SKS Microfinance Limited:
SKS Microfinance is a for-profit microfinance institution that was launched in 1998 in India. SKS Microfinance converted into a public limited company in May 2009 and launched an initial public offering on July 28, 2010. It has since diversified into offering gold loans and microinsurance services but does not accept deposits. As of March 2014, SKS reported a gross loan portfolio of USD 518.3 million, approximately 5 million borrowers, return on assets (ROA) of 2.88 percent and return on equity (ROE) of 16.52 percent. SKS Microfinance shares trade on the Bombay Stock Exchange and India’s National Stock Exchange.
Sources and Additional Resources:
 Times of India: “SKS Microfinance Cuts Interest Rates,” http://timesofindia.indiatimes.com/business/india-business/SKS-Microfinance-cuts-interest-rates/articleshow/47573438.cms
MicroCapital, June 5, 2014, SKS Trust Advisors Sells 7.6% of SKS Microfinance, Decreasing Stake to 4.8%
MicroCapital, September 20, 2013, Indian SKS Trust Advisors Buys 2.7% of SKS Microfinance for $2m, Increasing Stake to 12.6%
MicroCapital, June 7, 2011, Paper Gains on Early Investment in SKS Microfinance Largely Evaporate For Sequoia Capital
MicroCapital, February 7, 2011, Microfinance Institutions Network (MFIN) of India to Investigate Claims of Improper Handling of Mutual Benefit Trusts (MBTs) by SKS Microfinance, SHARE Microfin and Spandana Sphoorty
MicroCapital Universe Profile: SKS Microfinance
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