SKS Microfinance that has been going through some rough time after its IPO said that it will bring down the lending rate to 24% across states. This has been done after the Andhra Pradesh government came out with an ordinance to control the micro finance companies.
“In AP, the company... shall take steps to further reduce it to effectively 24%. The company is also planning to reduce interest rates in other states to effectively 24% in due course,” said, SKS in a filing to the Bombay Stock Exchange.
While Andhra Pradesh accounts for 27% of the total portfolio of the company, SKS said that it could not immediately quantify the potential impact of the ordinance. It, however, said that this will have a material impact of the company’s revenues and profitability.
“The proposed change in operating model, disruption in customer connectivity at the field level, the resultant reduction in collection in AP and interest reduction... are likely to have a material impact on the company’s revenues, profitability and asset quality of AP portfolio,” said SKS.
The share price of SKS tumbled further and closed with a fall of 3.9% at R960.9 per share on Tuesday.