SKS Microfinance assigns $72M in two securitisation transactions

SKS Microfinance Ltd has concluded two microfinance securitisation transactions aggregating to Rs 390 crore ($72 million), taking its total completed securitisation transactions to Rs 803 crore (around $148 million) in FY13.

SKS has downloaded the receivables from the microloans extended to rural women entrepreneurs to a special purpose vehicle (SPV) and pass through certificates (PTCs) have been purchased by a major public sector bank, as well as a private sector bank.

Such packaged loan pool qualifies for priority sector lending (PSL) in the books of the banks as per the Reserve Bank of India guidelines. For the MFIs, such assignments help meet its immediate working capital requirements.

“The present transactions generate liquidity of Rs 370 crore for SKS and also bring in the concomitant capital relief,” said S Dilli Raj, chief financial officer of SKS Microfinance.

“Notably, 26 per cent of the pool is from Scheduled Caste and Scheduled Tribe entrepreneurs, 18 per cent from minorities, 3 per cent from Backward Castes and the remaining 22 per cent from women belonging to other castes. The transactions have helped us provide working capital access to 5,00,000 rural women entrepreneurs while enabling the purchasing banks to achieve their priority sector loan obligations,” he added.

The pools are structured with geographical diversity as these comprise receivables from 14 states (excluding Andhra Pradesh) after capping the maximum pool exposure of around 23.50 per cent for any state. Also, around 35 per cent of the clients have completed three loan cycles.

SKS has completed 22 assignments/securitisation transactions worth Rs 2,481 crore ($459 million) since October 2010 when Andhra Pradesh promulgated the Andhra Pradesh Micro Finance Institutions (Regulation of Money-lending) Ordinance, 2010 (which became an Act in December 2010).

In the quarter ended December 2012, the company saw a turnaround in its bottom line as it swung into a net profit after seven straight quarters of losses. While income from operations showed a modest decline, the gains came from a sharp fall in provisions and write-offs – down to just Rs 28 lakh as against Rs 358.6 crore in Q3 FY12.

As for its Andhra operations, the MFI has reduced its portfolio in that state to nil in Q2 FY13 from Rs 1,491 crore at the start of the AP microfinance crisis in October 2010.

Share of SKS closed at Rs 145.75 a unit, up 10 per cent in a weak BSE market on Monday.

(Edited by Sanghamitra Mandal)

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