SKS Microfinance Posts Third Straight Quarterly Loss

SKS Microfinance, the only public microfinance company in India, posted a third-quarter loss of Rs 428 crore, reflecting the sliding fortunes of the country's beleaguered microfinance sector.

The loss is its third in a row following a net loss of Rs 384 crore in the July-Sept quarter and a net loss of Rs 219 crore before that.

SKS has been beset with bad loans, boardroom struggles and a plunging stock price since a successful public offer last August, when it raised $358 million.

India's microfinance sector came under severe stress after Andhra Pradesh, the industry hub at the time, imposed a set of restrictive laws in October 2010 curtailing microfinance activity in the state, scaring away banks and investors and prompting many small to mid-sized lenders to the poor to shut shop.

SKS saw its total income plunge 78 per cent to Rs 0.84 billion in the Oct-Dec in the wake of the turmoil, which saw the exit of its high-profile founder Vikram Akula in November 2010.

The sector is now awaiting passage of a federal law that would make the central bank the sole regulator of the sector, overriding the restrictions imposed by Andhra Pradesh state.

Last December, cash-strapped SKS said it would raise up to Rs 500 crore through a share sale to institutional investors by March 2012, and raised the investment limit of foreign institutional investors in the company to 74 per cent from 24 per cent.

On Thursday, the company's stock ended the day up 0.7 per cent in a firm Mumbai market that closed up 1.2 per cent. In 2011, the stock lost a whopping 88 per cent of its value.

(Reuters)