Mumbai: SKS Microfinance said on Tuesday it plans to charge a processing fee of 1% of the loan amount on all microloans across India.
The credit shield insurance premium will be collected from the borrowers on actual basis without any administrative charges, it added.
India’s once-thriving microfinance sector has been reeling since Andhra Pradesh, its largest market, clamped down on business practices such as high interest rates and aggressive loan recovery practices last October.
India’s central bank last week set an interest rate cap of 26% on micro loans and announced measures that were broadly perceived as being friendly toward an industry that has had trouble collecting loans under the Andhra Pradesh state rules and has in turn lost access to funding.
SKS, India’s biggest and only listed microlender, swung to a big fourth-quarter net loss this month, weighed down by provisions and write-offs of Rs 106 crore.