SKS Microfinance bounces 16% after initial fall

SKS Microfinance is trading higher by more than 16% at Rs 399, bouncing back 27% from intra-day lows of Rs 314, on reports that the Union ministry of finance has readied the Micro Finance Institutions (Development and Regulation) Bill, 2011, to be placed before Parliament for approval.

“The micro-finance industry, which was crippled badly after the Andhra Pradesh government promulgated an Act to rein in MFIs, will now be regulated by the Reserve Bank of India (RBI), overriding the AP Act,” the newspaper report suggests.

According to the proposed Act, the union government will constitute a micro-finance development council at the national level and states will establish state advisory councils for micro-finance at the state level, considering the extent of micro-finance activities in the states.

The stock had plunged 11% to Rs 314 in early morning trades on reports that the company's auditors had identified 408 cases of alleged cash embezzlement and frauds by some employees, to the tune of nearly Rs 7.50 crore, during FY11.

The trading volumes on the counter surged more than eight times, with 2.16 million shares changing hands till 0955 hours, against an average 260,000 shares traded daily in the past two weeks.