Expect a QIP by month-end: SKS Microfinance

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Expect a QIP by month-end: SKS Microfinance

PH Ravikumar, non- executive chairperson - interim, SKS Microfinance says, loan securitisation is a part of ongoing fund raising exercise. He expects a qualified institutional placement (QIP) by month-end.

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Yesterday, micro-lender SKS Microfinance announced that it has securitised Rs 243 crore of receivables from borrowers outside of Andhra Pradesh. PH Ravikumar, non- executive chairperson - interim, SKS Microfinance says, loan securitisation is a part of ongoing fund raising exercise.

He expects a qualified institutional placement (QIP) by month-end. He says, disbursals have picked up. "This quarter we expect to do as much, if not more than what we did in the second and third quarters," he adds.

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: Could you just walk us through the details of this securitisation and whether any more such moves are underway for SKS?

A: This is a part of our on going resource raising effort. During the last year, almost Rs 1,600 crore fresh funds have been dispersed to us. Probably we are the only micro finance institution in the country who received fresh funds from banks.

I would see this is apart of an on going effort. I don't see anything special happening. For some reasons market did not take note of earlier and has begun taking note of it now.

Q: You have already done six such transactions in the last year. Do you see the potential of raising much more money through the securitization route?

A: Yes, it's an important vehicle for us for raising resources for the company. We would work to see more is done.

Q: You are going into the gold loan business in a much bigger way. In that, does RBI ban on Manappuram to raise any further deposits shake you at all?

A: No because we are not a deposit accepting institution. We have very firmly remained within the RBI guidelines. Gold loans, the pilots have happened, the roll out will be done cautiously because there are issues when we are handling a customer segment which is vulnerable. We need to think through some of the issues, when there are defaults and those discussions are currently underway.

But more than gold loans equally important for us would be the product of Sangam Stores what we call as kirana store funding in rural areas, supply chain funding in rural areas. That we see as a big opportunity. Second is distribution of life and health insurance products. Those two I would say are equally and maybe more important.

Q: There have been indications that SKS may look at switching into becoming a rural financial services company, some kind of intermediary between the banks and the rural community. Is there any headway because you were part of the courting on ICICI Bank? Can we expect to see any moves in that front?

A: No, there are some regulatory hurdles. You are aware that we can be a DSA (Direct Selling Agents) for banks. That is a route we will definitely explore, given the strengths that we have a network of close to 1,900 branches currently and all these branches are in tiers below the rural branches of nationalised bank or a national level bank.

We believe there is a huge synergy between our branches and the closest hub rural branch of a national level bank. Those discussions definitely are something we would take forward. We are not allowed currently by RBI regulations to be a business correspondent. So, we need to work around that. But as a DSA is an opportunity definitely available to us and we would pursue that.

Q: The last we spoke you had also indicated that QIP remains your preferred route. Are you working with any timeline? How soon would you want to raise that money?

A: By the end of this month.

Q: Any improvement in the basic business since we last spoke that you can share with us?

A: Like I mentioned, three weeks back, our disbursals have picked up. This quarter we expect to do as much, if not more than what we did in the second and third quarters. At the macro level, the mood has changed, the mood is more optimistic now. I can say even for the sector the mood has changed.