SKS Microfinance shares surge nearly 9%

Shares of SKS Microfinance soared nearly 9 per cent today after RBI decided to increase the maximum amount that can be loaned by financial institutions to low-income households.
SKS Microfinance stocks surged 8.61 per cent to Rs 513.95 on the BSE. During the day, it climbed 9.55 per cent to Rs 518.40 -- its 52-week high.
At the NSE, it jumped 8.56 per cent to Rs 513.60.
The Reserve Bank of India (RBI) today announced that borrowing limits would be increased for entities living in rural and semi-urban areas, among others.
The move is expected to benefit micro finance institutions, including SKS, as they would now be able to lend more amounts.

RBI's decision has come after it took into consideration the improvement seen in the micro-finance institutions sector as well as recommendations by the Nachiket Mor-chaired panel related to comprehensive financial services for small businesses and low income households.

According to the central bank, there is a need to revise upwards the limit relating to total indebtedness of the borrower, eligible rural and semi-urban household annual incomes and loan amounts to be disbursed in the first cycle and in subsequent cycles.
In this regard, the central bank said that loans up to Rs 60,000 can be disbursed in the first cycle, compared to the earlier limit of Rs 35,000.

Further, financial institutions can lend up to Rs 1,00,000 in subsequent cycles whereas the previously the limit was set at Rs 50,000.