SKS Microfinance Limited, the only listed microfinance institution (MFI) in the country, said a leading rating agency had assigned A for its long-term and A1 for its short-term bank facilities for an aggregate sum of Rs 2,000 crore. The company did not disclose the name of the rating agency citing "non-disclosure agreement".
"The ratings would help to reduce the risk weights assigned to banks exposure on SKS Microfinance Limited from the present 100% to 50% in the case of long-term facilities and 30% for short-term facilities," SKS chief financial officer, S Dilli Raj, stated in a press release on Tuesday.
According to Raj, the ratings are likely to enhance credit availability and reduce the cost of borrowing as they will free up capital allocation for banks in the case of SKS borrowings. "We are unable to qualify the gains at this juncture, but expect the impact will be positive," he added.
As of August 31, 2013, SKS borrowings stood at Rs 1,675 crore.
