India: SKS Microfinance Oct-Dec Net Down 38.41 pct
Mumbai, India, January, 24 2011 -
SKS Microfinance, India's largest and only listed microfinance lender, said on Monday it posted a 38 percent drop in net profit for Oct-Dec to 341.55 million rupees on total income of 3.85 billion rupees.
The firm, which lends to poor borrowers, mostly women, has raised it provisions and write-offs in the quarter to 1 billion rupees from 116.1 million rupees a year ago, it said.
The provision includes 587.4 million rupees relating to the Andhra Pradesh (AP) portfolio and 269.8 million rupees in accordance with guidelines for the microfinance sector provided by a panel appointed by India's central bank.
"The company continues to assess the adequacy of provision on the AP portfolio due to the continued evolving environment, with no precedence, following the enactment of AP(MFI) Act and the resultant impact on the field operations in AP."
There is a suit pending before the Andhra Pradesh High Court challenging the state's microfinance law, it added.
The fast-growing Indian microfinance sector suffered a setback in October last year when Andhra Pradesh, which had the largest microfinance market in the country, approved legislation to regulate the industry following complaints about high interest rates, aggressive recovery practices and overextended borrowers.
The RBI formed a panel in late October in response to the Andhra Pradesh rules, which severely curtailed microfinance activities in the state, curbed collections and hurt new business.
Shares of SKS, which is based in Hyderabad have fallen about 30 percent since October when the state's new microfinance rules came into effect.
On Monday, shares closed down 1.03 percent at 684.10 rupees in a firm Mumbai market.