Monday, September 10, 2012

M. R. Rao, CEO, SKS Microfinance Ltd.

Launched in 1998, SKS Microfinance is one of the fastest growing Micro Financial Institutions (MFIs) in the world, which has served more than 5 million women members in poor regions of India till date. Of course, the company has been in the news for the wrong reasons following the unceremonious exit of its ex-CEO Suresh Gurumani. Current CEO M. R. Rao talks about the company’s business model and challenges it faces: 

B&E: What is the maximum amount of loan that can be availed and repayment options available?
MR: All members (clients) are eligible to borrow Rs.12,000 depending upon the activity which the member undertakes in the first year of joining SKS Group. From the second year onward, the loan size is increased by Rs.4,000. Loan repayments follow a weekly repayment schedule. All repayments and fresh disbursements happen during the centre meeting, which is held every week at every center. Our loans are given for a period of 50 weeks.

B&E: What kind of problems do you face while repayment of loans?
MR: SKS enjoys a very strong repayment record and our NPAs are negligible. If a member is unable to repay an instalment, the other members in the group/center share the responsibility for the repayment. The few cases of defaults are usually due to migration or due to some natural calamity.

B&E: What are the rates of interest charged by SKS?
MR: SKS works in 19 states. In Andhra Pradesh, Karnataka and Orissa, we charge a flat rate of interest at 12.5% and in rest of the states, the flat rate is set at 15% currently. In the newer states where we have started, our rates are a little higher at 15% flat and 26% diminishing. We also charge a loan cover fee of 1% that helps us offer insurance for the loan period.


Source : IIPM Editorial, 2012.
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