SKS to raise Rs 200 cr through securitisation

The country's only listed microfinance entity SKS Microfinance today said it plans to raise around Rs 200 crore through securitisation from two different banks.

The company has received sanction for two rated pool assignment transactions worth Rs 100 crore each from two different banks totalling Rs 200 crore, SKS said.

Under the pool securitisation, bundling micro loans made to borrowers like micro-entrepreneurs are sold to investors such as banks to raise funds.

SKS Microfinance further said that it has drawn down Rs 162.1 crore as the second tranche of the recent Rs 354 crore sanction, obtained from a public sector bank. SKS has already drawn down the first tranche of Rs 78.7 crore.

Shares of SKS were trading at Rs 138.75, higher by 1.98% at 1201 hrs on the BSE.

The rated pool assignment transaction of Rs 162.1 crore is rated CARE A1+ (SO) by CARE.

Instruments with a CARE A1+ (SO) rating are considered to have a strong capacity for timely payment of short-term debt obligations and carry the lowest credit risk.

The pool comprises receivables from 1,55,579 micro women borrowers from the weaker section as defined by the RBI and are identified from 18 non-Andhra Pradesh states where SKS Microfinance operates, a statement from SKS said.

Commenting on the transaction, SKS Microfinance Chief Financial Officer S Dilli Raj said, "the recent closures, happening in quick succession, demonstrate the increasing confidence of the financial world in the MFI model, in general, and SKS, in particular."

Raj further noted that the tabling of the MFI Bill in the ongoing Budget Session is another significant milestone in the MFI history.

"The Rs 200 crore sanction from two different entities are SKS Microfinance Ltd's 10th and 11th assignment/ securitisation transactions post the AP MFI Act," the statement added.

All rated papers have shown robust collection efficiency of more than 98% and credit enhancement has not been utilised in any of these structures, SKS claimed.