SKS Microfinance hits 5% upper circuit

SKS Microfinance' hits 5% upper circuit, touching the monthly high of Rs112.95, as the company is planning to launch a wholly-owned subsidiary for non-microfinance businesses. Seven months ago, the company diversified into new businesses like Sangam Stories, mobile handset loans and gold loans.

The company plans to invest Rs15 crore in the next three years in order to align its customer grievance redressal and client protection practices with globally recognised benchmarks. “The investment will drive a five-pronged customer protection strategy, which includes privacy of client data, transparent and responsible pricing, mechanism for redressal of grievances, avoidance of over-indebtedness among borrowers and appropriate collection practices,” it said in a statement.



SKS is looking to appoint a social sector veteran as its ombudsman by the end of December 2011 for customer grievance redressal and customer protection in the microfinance industry. An ombudsman is a trusted intermediary between the company and the customer.

“SKS is planning to cap return on assets at 3% for the microfinance business in a bid to protect clients by integrating customer grievance redressal into the business plan,” the statement added.

“The old paradigms of MFI business are changing,” says S Dilli Raj, Chief Financial Officer, SKS Microfinance. “Value is migrating from competition centricity to customer centricity, scale to efficiency and growth to profitable growth,” Dilli Raj added.

Over the past one year, the company’s shares fell 84%. Last month, Vikram Akula, the founder, stepped down. Since then, the new management has decided to grow businesses other than micro-finance. The company reported a net loss of Rs 384 crore for the second quarter ended September 30, 2011, on account of lower income and higher provisioning. The company had a profit of Rs80.55 crore in the July-September quarter of the previous fiscal.

At 1.24 pm, SKS Microfinance was trading at Rs112.95, up by 4.97%, with a volume of 2.47 lakh shares on the BSE.