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The programme will deliver loans ranging from Rs 5,000 to Rs 20,000 in over 7,000 un-banked villages in the country where SKS is present through its 49 branches. For providing Rs 180-cr micro credit in rural areas

MR ROBERT A. ANNIBALE (left), Global Director of Microfinance, Citi Group, with Mr Vikram Akula, Founder and Chief Executive Officer of SKS, announcing the Rs 180-crore micro-finance programme in Hyderabad on Wednesday. — Mohammed_Yousuf

Hyderabad May 9 Citibank and SKS Microfinance Pvt Ltd have tied up to launch a Rs 180-crore programme to extend micro credit in rural areas.

As per the tie-up, each individual loan generated by SKS would be purchased by Citibank, which shares credit risk in the transaction. "The deal would add 2.5 lakh clients to our existing clientele of 6.5 lakh. This is the single largest investment in micro-finance by a global player," Mr Vikram Akula, Founder and Chief Executive Officer, SKS Microfinance, told newspersons here on Wednesday.

The programme would deliver loans ranging from Rs 5,000 to Rs 20,000 in over 7,000 un-banked villages in the country where SKS was present through its 49 branches, he said.

Interest rate

The Grameen Foundation, a global non-profit organisation, would offer a limited guarantee to SKS in the programme.

An interest of 24 per cent would be charged on the loans advanced under the programme in Andhra Pradesh while it would be at 28 per cent in other parts of the country.

The origination and servicing of loans would rest with SKS while Citibank would extend the funds and would have it reflected in its balance sheet, Mr Robert Annibale, Global Director of Microfinance, Citi Group, said.

"The programme is an innovative model and can be scaled up further," he added.

Service fee

On each loan advanced, SKS would be given a service fee that would be inclusive in the interest rate, according to Mr Akula.

Citing a recent World Bank report, he said the potential for micro finance in India was Rs 2,40,000 crore ($55 billion). "Currently, Rs 20,000 crore is under micro-finance and there is a huge scope for further growth," he added.

SKS currently has 304 micro-finance branches and had provided Rs 770 crore loans to women in 11 States in the country.

More Stories on : Foreign Banks | Alliances & Joint Ventures | Rural Development | Credit Market

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