SKS Micro rallies on cost-cutting steps, cabinet nod for MFI bill

Reduced headcount by 1,200 employees and close down 78 branches in Andhra Pradesh

SKS Microfinance has rallied 19% to Rs 106 after India's largest micro-lender announced its decision to reduce headcount by 1,200 employees and close down 78 branches in Andhra Pradesh. The company presently employs 3,400 employees across 180 branches in Andhra Pradesh.

“Closing down branches and reducing headcount are extremely painful decisions for us, but these have become urgent in view of the present financial situation,” said Mr M R Rao, Managing Director and CEO, SKS Microfinance Limited

On account of the situation prevailing in Andhra Pradesh for the microfinance sector in the past 18 months, the company has incurred a loss of Rs 1,360 crore during the year ending March 2012, it added.

Meanwhile, the Cabinet on Thursday approved a Microfinance (MFI) bill with proposals to set up a development council and appointing the Reserve Bank of India (RBI) as regulator, the report suggests.

As many as a combined 859,803 shares have already changed hands on the counter in opening trades, against an average sub 350,000 shares that were traded daily in past two weeks on both the exchanges.