Close on the heels of closing Rs. 60-crore securitization deal with a non-banking financial company (NBFC), SKS Microfinance — the largest microfinance institution in the country — has completed another deal worth Rs. 550 crore with two banks. These tranches, however, do not include receivables from Andhra Pradesh, where the company’s portfolio currently stands at about Rs. 1,250 crore.
Andhra Pradesh accounts for over 25% of the company’s outstanding loan portfolio. The transactions will further augment the liquidity position of SKS Microfinance. Securitization is a practice by a bank to combine and buy out the outstanding loans of an issuer. Securitization volumes have dropped considerably after the Andhra Pradesh government introduced a law last year to clamp down on the coercive methods adopted by MFIs to collect money from borrowers.
SKS’ latest securitization deal comprises two transactions of Rs. 310 crore and Rs. 240 crore. The securitization is of receivables from 750,000 micro borrowers as defined by the Reserve Bank of India (RBI). Pool receivables are identified from 18 states including Karnataka, Maharashtra, Orissa, Madhya Pradesh, Bihar, Uttar Pradesh, Rajasthan, Uttaranchal, Himachal Pradesh, Haryana, West Bengal, Jharkhand, Chhattisgarh, Gujarat, Kerala and Tamil Nadu.
| Company Name | CMP |
|---|---|
| Bajaj Finance | 918.55 |
| Shriram Finance | 1045.05 |
| Aditya Birla Capital | 341.30 |
| Chola Invest & Fin. | 1568.80 |
| Tata Capital | 335.25 |
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