Hyderabad: SKS Microfinance Ltd, India’s only listed microlender, said Friday it has completed two more securitization transactions worth Rs.115 crore.
“The company has completed two securitization transactions aggregating Rs.115 crore, rated A1+(SO). With this, the company has completed 10 securitization transactions aggregating Rs.981 crore in FY13 (YTD),” SKS said in a filing. Securitization is the process of pooling loans and turning them into marketable securities that can be sold to investors.
Shares of SKS rose 3.64% to close at Rs.123.95 on BSE, while the benchmark Sensex dropped by 0.3% to end at 18,735.60 points.
The securitization deals were reached with two banks on receivables outside Andhra Pradesh, said Dilli Raj, chief financial officer of SKS. He said SKS will be closing two more securitization transactions amounting to a total Rs.250 crore before the end of this financial year.
Banks need to lend 40% of their loans to agriculture, small and medium enterprise and other weaker sections to meet their so-called priority sector lending target. Certain securitization transactions also qualify as priority sector lending for banks. Typically, banks seek out such transactions towards the end of a fiscal year in order to meet their targets.
SKS said it expects to expand its loan book by 25% on a sequential basis in the last quarter of this financial year.
Loans to borrowers outside Andhra Pradesh stood at Rs.1,496 crore on 31 December.
The microlender expects to increase its disbursements by 50% to Rs.1,200 crore in the last quarter on a sequential basis.
On Monday, SKS got an interim order from the apex court allowing it to resume operations in Andhra Pradesh, where its business had suffered when the southern state enacted a controversial law in 2010 barring microfinance institutions (MFIs) from doing doorstep business and making it mandatory for them to secure government approval to issue new loans to borrowers.
Raj said the interim order paves the way for SKS to resume operations in Andhra Pradesh.
The state government has said it will appeal the interim order.
SKS had a total of 1.8 million borrowers in Andhra Pradesh before the law was passed in October 2010, of which around 200,000 borrowers have repaid their loans, the company said.
“To incentivize the right behaviour we plan to start our operations by resuming lending to those borrowers who repaid their loans,” Raj said.
Raj said the company may recover Rs.300 crore from Andhra Pradesh in the next three years.
SKS reduced its portfolio in Andhra Pradesh to nil in the quarter ended September from a high of Rs.1,491 crore at the start of the microfinance crisis. SKS has written off loans totalling Rs.1,362 crore and pared its staff in the state to 1,200 from around 7,000 prior to the crisis. SKS has also scaled down the number of branches in Andhra Pradesh to 120 from 550.
“Recovering money from Andhra Pradesh could be challenging for SKS, as operating conditions in that state continues to be difficult with a hostile government,” said Shadab Rizvi, an analyst tracking microfinance at the investment banking division of Mumbai-based securities house Darashaw and Co. Pvt. Ltd.