SKS Microfinance may raise up to Rs 5,000 cr in FY12

SKS Microfinance, India's only listed micro lender, may raise up to Rs 5,000 crore before the end of the current fiscal, a top executive said today.

The business plan for the current fiscal is ready and may raise Rs 500 crore by the end of June, SKS Microfinance CFO Dilli Raj told media persons here.

"We may raise Rs 4,000 crore to 5,000 crore in this fiscal, 30% of it will be by securitisation and the rest will be term loan. Forty-three per cent of the fund requirement will be from public sector banks, 8% by foreign banks, 33% by private banks and 16% by other lenders like developmental financial institutions," he said.

The company is awaiting the Malegam Committee report to be notified which will enable the micro lender to make provisions for bad debts and write-offs for the current fiscal, Raj said.

SKS Microfinance has shown Rs 236 crore as provision and write-off for FY11.

Raj expects that the provisioning will be in the range of Rs 125 crore in the current fiscal as far as outstanding from Andhra Pradesh, a key market, is concerned.

The outstanding in Andhra Pradesh stood at Rs 1,285 crore largely due to a slowdown in extending fresh loans, thereby disturbing the loan cycle, he said.

According to Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Act, 2011, every loan application has to be approved by the state government officials before extending loan to the borrower.

As per the RBI norms, the NBFCs should make provisions of 0.25% of the total loan amount if the loan due is less than 180 days, 10% if the due is more than 180 days and less than 720 days and 100% if the loan due is more than 720 days.

"Rs 620 crore (of the total Rs 1,285-crore outstanding in AP) will fall under the first bucket of over dues (0.25%). The remaining is future receivables. By FY12-end, according to RBI norms, 10% of the Rs 1,285 crore outstanding has to be made as provision even if we do not take collections into account," Raj explained.

He, however, hoped the report of the RBI-appointed Malegam Committee will be notified soon and the norms may be changed.

JP Morgan has said it expected the troubled SKS Microfinance to post a loss of Rs 700 crore for the current financial year.