SKS Microfinance on Wednesday decided to reduce the interest rate to 24.55 per cent from 26.69 per cent.
Chief Financial Officer (CFO) Dilli Raj told Business Standard the new rates would apply to new loans. “There is no provision to change the rates of the existing loans, as the tenure, the interest and the principal payable are prefixed,” he said.
SKS founder Vikram Akula had earlier said the company could cut rate by two percentage points due to economies of scale.
Around 17 people who borrowed from SKS in Andhra Pradesh are said to have committed suicide. The deaths were not due to loan defaults, Akula had said, adding there were also non-defaulters among those who committed suicide.
In view of the current situation, SKS has deferred the payment schedule by a week to 51 weeks. “There is no possibility of restructuring,” Raj said.
Venture capital firm Catamaran founder and Infosys mentor N R Narayana Murthy, in a release on Tuesday, had advised Akula it was best for the management and the board to be open, honest and fair in all matters dealing with every stakeholder of the company. Catamaran has invested Rs 28.1 crore in SKS for 937,770 shares with a two-year lock-in period.
The industry body, Microfinance Institutions Network, had said earlier that five of its members – Basix, Spandana, Sphoorty, Trident and Share – had agreed to slash interest rates.
Microfinance units re-started their activities this week after suspending recoveries for two weeks due to the ordinance issued by the Andhra Pradesh government to regulate their lending and recovery practices. However, they say it will take two-three weeks for the recoveries to come to the earlier levels.
PTI adds: The move is seen as a damage control exercise by the Hyderabad-based company, given the controversy surrounding the sacking of CEO S Gurumani and a spate of suicides by borrowers. However, SKS has maintained they were unrelated.
According CFO Raj, the rate reduction was “voluntary”.
“This is a voluntary action from our side. We were able to reduce the interest rate in Andhra Pradesh considering the scale of operations (in the state),” he said.
