SKS Microfinance to cap RoA at 3%

SKS Microfinance Limited today reiterated its commitment to client protection by integrating customer grievance redressal into the business plan and by capping the Return on Assets at 3 per cent for the microfinance business. The Company plans to appoint a social sector veteran as its Ombudsman by the end of December 2011 to herald a new chapter in customer grievance redressal and customer protection in the microfinance industry. SKS Microfinance, which has been demonstrating its business agility in inventing innovative solutions with quickest implementation time-frames, also unveiled its plans to launch a wholly owned subsidiary for its non-microfinance business, seven months after diversifying into Sangam Stores, Mobile Handset Loans and Gold Loans. The Company plans to invest Rs. 150mn 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: 1. privacy of client data; 2. transparent and responsible pricing; 3. mechanism for redressal of grievances; 4. avoidance of over-indebtedness among borrowers; and 5. appropriate collection practices. In order to achieve the above-mentioned client protection objectives, SKS will implement the following in a time-bound manner: 1. appointing a panel of national and international experts who will oversee all key customer grievance redressal and customer protection initiatives; 2. upgradation of systems, processes and human resource training; 3. seeking external validation for key client protection practices including pricing transparency, customer grievance redressal and ethical staff behaviour among others; 4. realigning the employee incentive system by integrating customer grievance redressal and customer protection into the KRAs; and 5. appointment of dedicated talent.