Hyderabad: Amid reports of suicides by small loan borrowers and talk of a regulator to monitor the microfinance industry, market leader SKS Microfinance on Wednesday announced that it has “voluntarily” slashed interest rates.
In full-page advertisements issued in vernacular dailies today, the company said it has reduced interest rate from 26.69% to 24.55% (depreciating) or a flat 12.55% per annum.
The move is seen as a damage control exercise by the Hyderabad-based company given the negative publicity starting from the sacking of SKS Microfinance CEO S. Gurumani and a spate of suicides by borrowers, although SKS has mainatined they were unrelated.
Earlier this month, the Andhra Pradesh government promulgated an ordinance to check coercive recovery methods employed by MFIs.
According to Dilli Raj, chief financial officer, SKS Microfinance, the interest rate reduction was a “voluntary” action.
“This is a voluntary action from our side. We were able to reduce interest rate in AP considering the scale of operations (in the state),” he told PTI.
“We are willing to reduce our rate of interest (rate) if the RBI or finance ministry asks us to do so. We had reduced rate of interest in the past, voluntarily. We are ready to lend at 24%,” SKS Microfinance founder and executive chairman Vikram Akula had said earlier.