SSK Microfinance gets Rs 50.6 cr of capital infusion

Mumbai, Mar 29 | Updated: Mar 30 2007, 06:55am hrs
The Hyderabad-based microfinance institution (MFI) SSK Microfinance has announced the second round of capital infusion worth Rs 50.6 crore from a consortium of venture investors led by Sequoia Capital India. The other investors in the consortium are Unitus Equity Fund, Vinod Khosla, Ravi Reddy, Odyssey Capital and SIDBI.

With this investment, SKS will be able to add 50 lakh poor households into its client base, said Vikram Akula, founder and chief executive officer, SKS MicroFinance. On any further round of equity investment, he said, In the next 6-9 months we shall aim to raise our capital base to ten times what it stands today.

In the next fiscal, SKS will resort either to bond issue or securitisation of assets for generating resources, he added.

We on average charge 25% interest on the micro credit loans and our profit margin is just 2%, said Akula. When asked about the cap on the interest charged by MFIs, he said, Any cap will do nothing but hurt the poor because MFIs will not be able to cover their costs and have to shut down. It will prohibit and discourage the MFIs from lending to the poor and poor people will end up moving to the money lenders, he added.

On the proposed Bill to regulate MFIs, he said it is good that there is an attempt to regulate them, but it among other things does not cover non-banking finance companies (NBFCs) in the MFI businesses, which control about 70% of the market.