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SKS Microfinance rallies as Microfinance bill passes muster

11 May 2012 Evaluate

Stocks of SKS Microfinance’s, a non-banking finance company (NBFC), rallied  after Union Cabinet approved a bill to regulate the micro finance industry on Thursday, overriding state legislations on microfinance institutions and thereby bringing the micro lenders under the purview of the Reserve Bank of India. The bill, which was drafted in the backdrop of problems faced by borrowers of micro finance institutions (MFI) in Andhra Pradesh and other states, would now be introduced in Parliament for becoming a law.

The draft Bill, which was circulated for public comments in July last year, had proposed making RBI the regulator for the sector. As per the draft, it would be mandatory for MFI to be registered with the Reserve Bank and have a minimum net-owned fund of Rs 5 lakh.

In addition, a Micro-Finance Development Council will be set up to advise the government on formulation of policies, schemes and other measures required in the interest of orderly growth and development of the sector with a view to promote financial inclusion.

SKS Microfinance is currently trading at Rs 99.20, up by 10.45 points or 11.77% from its previous closing of Rs 88.75 on the BSE.

The scrip opened at Rs 91.20 and has touched a high and low of Rs 105.70 and Rs 91.20 respectively. So far 362493 shares were traded on the counter.

The BSE group 'B' stock of face value Rs 10 has touched a 52 week high of Rs 608.65 on 13-Jul-2011 and a 52 week low of Rs 75.85 on 08-May-2012.

Last one week high and low of the scrip stood at Rs 105.70 and Rs 75.85 respectively. The current market cap of the company is Rs 650.21 crore.

The promoters holding in the company stood at 36.84% while Institutions and Non-Institutions held 20.56% and 42.61% respectively.

The draft Bill also proposes that any MFI, which is not a company registered under the Companies Act, 1956, and which becomes a systemically important micro-finance institution, shall convert its institution into a company registered under the Companies Act, 1956, with or without a licence, under Section 25 of the Act.

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