Mumbai, May 11
SKS Microfinance’s scrip gained as much as 19 per cent over Thursday’s close in intra-day trade. This handsome gain comes a day after the Union Cabinet gave its nod to the Micro Finance Institutions (Development and Regulation) Bill.
SKS shares rose to Rs105.70 in intra-day trade. At 2.25 p.m., shares of the company were up 13 per cent at Rs 100.30.
The proposed Bill, if it becomes a law, will provide critical life support that micro- lenders have been yearning for. The Bill proposes to bring microfinance institutions under the Reserve Bank of India's oversight, while freeing them from the clutches of state-level legislations.
Coercive practices used by these institutions to recover debts led states like Andhra Pradesh (where the maximum number of Micro Finance institutions are based) to legislate new laws to protect borrowers. Subsequently, borrowers defaulted on loans and banks stopped lending to micro-finance institutions.
SKS’ shares, the only microfinance institution to be listed, have taken a hammering over the past year. The company’s shares have lost about 83 per cent of their value in the past 10 months.