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SKS Microfinance breaks ground with Rs. 200 crore securitization transaction

06 Nov 2012 Evaluate

SKS Microfinance has made first substantial microfinance securitisation of Rs 200 crore post the issuance of revised securitisation guidelines for Non-Banking Finance Companies by Reserve Bank of India on August 21, 2012, stipulating Minimum Holding Period (MHP) of three months and Minimum Retention Requirement (MRR) of 5%.

SKS Microfinance has downloaded the receivables from microloans extended to more than 2,60,000 rural women entrepreneurs to a Special Purpose Vehicle, and Pass Through Certificates (PTCs) have been  purchased by a major public sector bank. Notably, the entire pool qualifies for the weaker section treatment as per RBI's priority sector lending guidelines.

The pool is rated CARE A1+ (SO) signifying 'Highest Safety' by CARE Ratings. The pool is structured with geographical diversity as the pool comprises receivables from 14 non-Andhra Pradesh states. SKS Microfinance has completed 16 assignment/ securitization transactions worth Rs. 1,850 crore since October 2010, when Andhra Pradesh promulgated its Andhra Pradesh Micro Finance Institutions (Regulation of Money-lending) Ordinance, 2010 (which became an Act in December 2010). 

In addition, the Company has accessed incremental debt of Rs 2,000 crore in the last 3 quarters.

SKS Microfinance has been attracting renewed credit on account of its steadfast policy of meeting all stakeholder commitments without any delay including gross repayment of over Rs 5,900 crore to the banking system during the two-year Andhra Pradesh crisis. The Company also completed Qualified Institutional Placement (QIP) of Rs. 230 crore and Preferential Issue of Rs. 33.5 crore in Q2-FY-13.

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