SKS Microfinance Ltd's income from distribution of insurance products to its clients has come down by half, thanks to the microfinance crisis in Andhra Pradesh.
The only-listed MFI in the country earned a commission of Rs 7.52 crore during April-September 2010. The same fell to Rs 3.03 crore between October-2010 and March-2011, a spokesperson of SKS told Business Line in response to a query.
It may be noted that AP Government had put in place a regulation to curb ‘excesses' of microfinance institutions in October 2010.
Since then, SKS has been faced with an almost complete halt of fresh disbursals of loans and collection of outstanding loans of over Rs 1,000 crore.
The crisis has apparently hit the fee-based income as SKS which has partnerships with multiple insurers handling huge sums as premiums.
For instance, for two-and-a-half years preceding October 2010, SKS had collected Rs 347 crore from over 28 lakh clients for an insurance product called ‘Swyam Shakti Suraksha' of Bajaz Allianz Life Insurance Company.
Similarly, between November 2009 and November 2010, it dealt with Rs 10,143 crore sum assured under some schemes, including Group Level Term Assurance Plan for which it was the Master Policy Holder.
IRDA SCANNER
The handling of clients' insurance by SKS has also come under the scanner of Insurance Regulatory and Development Authority (IRDA).
According to reliable sources, the IRDA is now in the process of examining a reply submitted by SKS in response to a notice by the regulator on some ‘irregularities'.
The company has also been ‘found' to be receiving cheques of death claims on its name, which is illegal.
When asked on IRDA's reaction to the submission by SKS, its spokesperson only said: “We have submitted a detailed response to all the points raised by the regulator within the stipulated time.”