First Securitization transaction in India to receive Highest Safety rating by CRISIL.
SKS Microfinance, India’s largest and world’s fastest growing microfinance institution has recently completed a unique securitisation deal worth Rs.100 Crore with YES Bank. The transaction – the first securitization deal in India to get CRISIL’s highest safety rating - allows the bank to purchase 1, 48,950 micro loans extended to unbanked SC, ST and minorities’ families identified by the RBI as ‘weaker sections’ and hence a priority.
Announcing this landmark transaction, Mr. S. Dilli Raj, CFO of SKS Microfinance said, “With this transaction, a new ‘asset class’ is born. For the first time in the Indian MFI history, a securitised pool is rated P1+ (SO) which is the best possible rating and showcases SKS’s structuring and financial innovation skills.“
The transaction has been assigned with a rating opinion of P1+ SO (Very Strong Safety) by CRISIL (a Standard & Poor’s company) following an analysis of over 1 million loans extended by SKS. The assignment transaction is credit enhanced with extra collateralisation and Cash margin which are subordinated to payouts to YES Bank. The Pool is geographically diversified across more than 10 states. The Pool has net seasoning of 6.5 weeks and the average ticket size is Rs.8, 900/. SKS will service the pool contracts as the servicing agent.
“This is yet another step forward in financial inclusion and is indicative of the excellent ‘asset quality’ of SKS. Structured products like securitisation will enhance access to capital and accelerate social benefits,” commented Mr. Suresh Gurumani, CEO & MD of SKS Microfinance.
Unitus Capital acted as Advisor for the transaction. SKS Microfinance has in recent times announced a series of innovations in fund raising including many firsts like ‘Weaker section’ Pool securitization deal with ICICI, Non Convertible Debentures and Commercial Papers worth Rs.250 Million each. All of these are aimed at expanding the funding options available to MFIs.
SKS Microfinance currently has a member base of 4 million and has cumulatively disbursed loans worth Rs.6, 500 crore. It has 1373 branches across 18 Indian states.
About SKS Microfinance
SKS Microfinance is a non-bank finance company (NBFC) whose mission is to eradicate poverty by providing financial services to the poor. Established in 1998, SKS Microfinance is India’s largest and one of the world’s fastest growing microfinance organizations with an annual growth rate of 200 per cent. It currently serves 4 million clients across 60,000 villages and slums in 18 states and has disbursed Rs. 6,500 crore in loans with a 99.5 % repayment rate. SKS also provides life and health insurance to its clients.
SKS has received numerous awards including the Young Global Leaders by World Economic Forum, CGAP Pro-Poor Innovation Award, the ABN-AMRO/Planet Finance Process Excellence Award, Citibank Information Integrity Award, the Digital Partners SEL Award and the Grameen Foundation USA Excellence Award. It was founded by Vikram Akula, who was named by TIME magazine as one of the 100 Most Influential People in the World (2006).