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SKS to revamp business model, raise Rs 4,000 cr

11 May 2011 Evaluate

SKS Microfinance plans to revamp its business model. It plans to raise Rs 4,000-5,000 crore in 2011-12. It will focus on gold loans and enter other non-core streams, even if it it means setting up a subsidiary. The plan for 2011-12 included giving more gold loans, lending to kirana stores and providing loans for buying mobile phones. The company has already tied up with Metro Cash & Carry and Nokia for the latter two initiatives. Microfinance loans account for 73 per cent of SKS’ total portfolio.

A part of the funds raised would be used to expand the network. For example, Rs 150 crore would be invested to transform 400 branches into gold loan branches. SKS has just five gold loan branches at present. SKS plans to increase the number of kirana stores it finances to 20,000 from 3,800 and sell one million mobile phones by the end of the financial year. It would also offer larger loans to reduce operational costs. In the last quarter, SKS wrote off Rs 38 crore in the state, where the recovery rate fell to 10.5 per cent.crackcrack

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