The Hindu Business Line : SKS Microfinance in expansion mode

The Hyderabad-based microfinance institution, probably the country’s largest with operations across 15 States, is in talks with some banks including ABN Amro, HDFC and SIDBI.

We have already got informal commitments from some banks for over Rs 1,000 crore and are in the process of firming up other arrangements,” Mr S. Dilli Raj, Chief Financial Officer, SKS Microfinance, told Business Line here.

With a debt-equity ratio of 3.39, the company has a lot of financial flexibility and can exercise many options to pool in Rs 3,200 crore, he said.

The fund raising has to be completed in a speedy manner as SKS wishes to put in place a massive expansion by the end of next financial year. “We will be doubling all aspects of our business – number of branches, distribution and disbursals,” Mr Raj said.

By the end of 2008-09, SKS would add 770 new branches to its existing 696 branches to increase its members from present 1.8 million to 4.2 million and the gross disbursement from Rs 1,200 crore to Rs 5,000 crore, he said.

While a good number of new branches would come up in the 20,000-odd villages where SKS is present, special focus would be laid on tapping new rural markets.

The non-banking finance company would also take up sale of some select fast moving consumer goods, including mobile handsets. “We ran a pilot programme in sale of mobile handsets in Nalgonda district of Andhra Pradesh which was successful. We are now extending it to entire Andhra Pradesh to be followed by Orissa. Over a period of time all our centres will be involved,” Mr Raj said.

On the interest rates, Mr Raj said at a macro level the interest rates being charged by MFIs could soften over next six months by 25-50 basis points. The lending interest of SKS is in the range of 23-27 per cent (about 12.5 to 15 per cent on flat rates), he said.

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