Hyderabad: Amid reports of suicides by small loan borrowers and talk of a regulator to monitor the microfinance industry, market leader SKS Microfinance today announced that it has "voluntarily" slashed interest rates, reports PTI.
In full-page advertisements issued in vernacular dailies today, the company said it has reduced interest rate from 26.69% to 24.55% (depreciating) or a flat 12.55% per annum.
The move is seen as a damage control exercise by the Hyderabad-based company given the negative publicity starting from the sacking of SKS Microfinance CEO S Gurumani and a spate of suicides by borrowers, although SKS has maintained they were unrelated.
Earlier this month, the Andhra Pradesh government promulgated an ordinance to check coercive recovery methods employed by microfinance institutions (MFIs).
According to Dilli Raj, chief financial officer, SKS Microfinance, the interest rate reduction was a "voluntary" action.
"This is a voluntary action from our side. We were able to reduce interest rate in AP considering the scale of operations (in the state)," he told PTI.
"We are willing to reduce our rate of interest (rate) if the Reserve Bank of India (RBI) or the finance ministry asks us to do so. We had reduced rate of interest in the past, voluntarily. We are ready to lend at 24%," SKS Microfinance founder and executive chairman Vikram Akula had said earlier.
Replying to a query, Dilli Raj said the rate reduction will not have any impact on topline or bottom line of the recently-listed firm.
Data received from most of the SKS centres indicated that loan collection is in the range of 90%, he said.
"Even in the past two weeks we have conducted meetings wherever it is possible. The information clearly says the customers are with us."
The state government ordinance had affected MFIs' day-today operations, but the companies later secured relief from the Andhra Pradesh High Court.
The court directed the firms to register themselves with the government within a week as mandated by the ordinance.
About 30 persons have died in the state in the last few weeks reportedly due to the harassment by MFIs, official sources have said.
Kuala Lumpur: Prime Minister Manmohan Singh today said the Reserve Bank of India (RBI) should look at Islamic banking practices in Malaysia, in the context of suggestions from some quarters that the central bank should introduce such a system in India.
“There have been from time to time demands for experimenting (with) Islamic banking. I would certainly recommend to the RBI, which is looking into the question, to look at what is happening in Malaysia in this regard,” Dr Singh said, when asked whether India would like to learn something about Islamic banking from Malaysia.
Earlier in the day, the Indian prime minister held wide-ranging talks on economic and strategic issues with his Malaysian counterpart Mohammad Najib Tun Abdul Razak, PTI reports.
There has been pressure on the RBI to introduce Islamic banking, a kind of interest-free banking system, in India. It is felt that this could attract billions of dollars in investments from countries in West Asia.
Today, there are between 400 and 500 Islamic banks worldwide that together managed close to $1 trillion. That figure is expected to swell to $4 trillion by 2020. According to global consultant McKenzie, the investment surplus in West Asia is expected to be around $9 trillion by 2020. Currently, it is about $1.5 trillion.
Earlier this month, Muddassir Siddiqui, partner and head of Islamic finance, Middle East, SNR Denton, said India should be open to interest free banking through banks as a pilot project. “We held close interactions with the finance ministry and RBI officials. We hope the ice is breaking. There was no time-frame for setting up Islamic banking. We are hopeful permission would be granted very soon,” Siddiqui had said, on a visit to India.
The judiciary, it seems, is not favourably disposed to Islamic banking. In one instance, in April this year, the Kerala High court directed the state government and its institutions not to participate financially or otherwise in a financial company modelled on the lines of an Islamic bank.
We are halfway through our analysis of BSE A group companies’ shareholding patterns and have come up with some interesting observations. FII share is going up, while DII share is decreasing
A lot of companies have seen a huge rise in y-o-y and q-o-q FII share and an equally large number of companies have seen a q-o-q and y-o-y fall in DII share. Very few companies have seen y-o-y and q-o-q FII share fall while very few companies have seen DII share rise dramatically.
In some companies, ownership has clearly shifted in the quarter from DII hands to FII - such as ACC, SBI, Adani Enterprises, Allahabad Bank, Andhra Bank, Ashok Leyland, Aurobindo Pharma, Dabur, Divi's Lab, Exide, Godrej Ind, and Indraprastha Gas.
Sharp q-o-q FII rise: Dish TV, Tech Mahindra, Crompton Greaves, ACC, NTPC, ONGC, SBI, Tata Power, Adani Enterprises, Allahabad Bank, Alstom, Andhra Bank, Ashok Leyland, Aurobindo Pharma, BGR Energy, BPCL, Bhushan Steel, Biocon, Cadila, Castrol, Century Textiles, Coromandel Int, Dabur, Divi's Lab, Engineers India, Exide, Godrej Ind, Grasim, GTL Infra, HDIL, Idea, IFCI, IOB, Indraprastha Gas, Indusind Bank.
Sharp q-o-q DII fall: Marico, Patni Computer, JSPL, IRB Infra, United Spirits, ACC, HDFC Bank, SBI, ABB (buyback), Adani Enterprises, Adani Power, Allahabad Bank, Andhra Bank, Ashok Leyland, Asian Paints, Aurobindo Pharma, Axis Bank, Bajaj Auto, CONCOR, DB Realty, Dabur, Divi's Lab, Exide, Godrej Ind, Godrej Prop, HCC, IDBI Bank, Indiabulls Real Estate, Indraprastha Gas.
In case of Wipro, DIIs seem to have picked up where FIIs have sold q-o-q.
Sharp q-o-q FII fall: GESCO, IRB Infra, Wipro, Aban Offshore, ABB (buyback), Godrej Prop, IDBI Bank.
Sharp q-o-q DII rise: Godrej Consumer, DLF, Wipro, Engineers India, Fortis Healthcare, GSPL, GVK Power, HCL Tech.
Over a year, companies where FIIs have bought where DIIs have sold include Patni, Crompton Greaves, JSPL, United Sprits, ACC, Hero Honda, Allahabad Bank, Apollo Tyres, Ashok Leyland, Aurobindo Pharma, Axis Bank, Bajaj Auto, Cummins, Dabur, Divi's Lab, DRL, Exide, Godrej Ind, and HDIL.
Sharp y-o-y FII rise: Dish TV, Tech Mahindra, IDFC, OBC, MTNL, Patni Computer, Crompton Greaves, JSPL, United Spirits, ACC, Hero Honda, Hindalco, NTPC, SBI, Tata Motors, Adani Enterprises, Allahabad Bank, Apollo Tyres, Ashok Leyland, Aurobindo Pharma, Axis Bank, Bajaj Auto, BGR Energy, Bharat Forge, Biocon, Bhushan Steel, Cadila, Canara Bank, Castrol, Century Textiles, CESC, Colgate, Coromandel Int, Cummins, Dabur, Divi's Lab, DRL, Engineers India, Exide, Fortis Healthcare, GMR Infra, Godrej Ind, HCL Tech, HDIL, IFCI, Indusind Bank.
Sharp y-o-y DII fall: Marico, IDFC, ABNL, Patni Computer, Crompton Greaves, JSPL, BoI, IRB Infra, United Spirits, ACC, DLF, HDFC Bank, Hero Honda, Jaiprakash Associates, ABB (buyback), Allahabad Bank, Apollo Tyres, Ashok Leyland, Asian Paints, Aurobindo Pharma, Axis Bank, Bajaj Auto, CONCOR, Cummins, Dabur, Divi's Lab, DRL, Exide, Godrej Ind, GTL Infra, HCC, HDIL, IDBI Bank, Indiabulls Financial, Indiabulls Real Estate.
Over a year, companies where FIIs have sold where DIIs have bought include BHEL, Tata Steel, Wipro, and GVK Power.
Sharp y-o-y FII fall: BoI, BHEL, RCOM, Reliance Infra, Tata Steel, Wipro, Aban Offshore, ABB (buyback), Bharat Electronics, BPCL, Educomp, EIH, GVK Power, IDBI Bank, Indiabulls Financial, IOB.
Sharp y-o-y DII rise: Tech Mahindra, Godrej Consumer, GESCO, BHEL, Bharti Airtel, NTPC, Tata Steel, Wipro, Engineers India, Essar Oil, Fortis Healthcare, GSPL, GVK Power, Havells, HCL Tech, HDIL, IOB, Indusind Bank.
Quite a few changes have happened in promoter share as well. Marico, HDFC Bank, IDBI and Fortis saw increases while EIH, HDIL and Engineer's India saw falls.
Sharp q-o-q rise: Marico, HDFC Bank, ABB (buyback), Fortis Healthcare, IDBI Bank.
Sharp q-o-q fall: EIH, Engineers India, HDIL.
Sharp y-o-y rise: ABNL, Reliance Infra, Fortis Healthcare, GTL Infra, IDBI Bank, Indiabulls Real Estate.
Sharp y-o-y fall: Dish TV, Tech Mahindra, United Spirits, EIH, Engineers India, Essar Oil, HDIL
(This report is based on secondary research and is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security. Some of the opinions expressed in this article are the author's own and may not necessarily represent those of Moneylife).