Shares of SKS Microfinance, India's largest and only listed micro finance company, surged by 20% on Thursday to hit the upper circuit limit in the early trade on the Bombay Stock Exchange (BSE) after the finance ministry posted the draft of micro finance bill on its website late on Wednesday. The draft proposes the Reserve Bank of India (RBI) as a sole regulator for the micro finance sector.
"This gives us the impetus and the strength which we require," said Dilli Raja, chief financial official, SKS Microfinance.
The stock opened at Rs 333.50 on the BSE, but soon gained momentum and rallied to a high of Rs 411. The 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.