The lacklustre performance of the benchmark Sensex of the Bombay Stock Exchange failed to have any impact on the re-charged SKS Microfinance as the scrip hit the upper circuit for the second consecutive day and rose by another 20% to close at Rs 493.2 on Friday.The pronounced jump is on the back of the draft micro finance bill posted on the finance ministry’s website on Wednesday that plugs regulatory gap by proposing the Reserve Bank of India (RBI) as a sole regulator for the micro finance sector.
The company had gone through a rough patch after its initial public offering (IPO ) when the company sacked chief executive officer and managing director Suresh Gurumani in October 2010, and the Andhra Pradesh government promulgated an ordinance a month later to control microfinance institutions after a spate of suicides in Andhra Pradesh. This led to a rate reduction by SKS and its share price fell from a high of R1,402 on September 28, 2010 to a low of R270.8 on May 9, 2011.
The draft MFI bill would empower the RBI to set margin caps, repayment schedules and maximum interest rates charged by microlenders, and allow it to issue directions on income recognition, provisioning for bad and doubtful debts and governance.
It also seeks to make it mandatory for all microfinance institutions to be registered with the central bank.