SKS to raise Rs500 crore through QIP route this fiscal

“We are planning to raise Rs500 crore. The price of the issue will be decided at the time of issue. Before March we want to complete the issue. We are talking to the merchant bankers,” MR Rao told reporters

Hyderabad: SKS Microfinance, the only listed micro lender, on Wednesday said it would raise Rs500 crore through qualified institutional placement (QIP) route in the current fiscal, reports PTI.

The company’s board had given its approval for raising up to Rs900 crore, a top official of the company said here.

Qualified institutional placement is private placement of shares with institutional investors.

SKS Microfinance MD and CEO MR Rao said it is facing problems in West Bengal and Gujarat which resulted in a drop in collections in those states.

“We are planning to raise Rs500 crore. The price of the issue will be decided at the time of issue. Before March we want to complete the issue. We are talking to the merchant bankers,” Mr Rao told reporters.

Replying to a query, Dilli Raj, CFO of SKS, said the net risk exposure of the company on account of poor collection from Andhra Pradesh is Rs337 crore and according to RBI guidelines it has time till March 2012 to decide about the writing off the risk exposure.

Due to local and process-related issues, collections in West Bengal and Gujarat have dropped to about 86% and 80.9% respectively in the second quarter, Rao said.

Barring Andhra Pradesh, the average collection efficiency stood at nearly 97% in the second quarter.

West Bengal is the third largest market after Andhra Pradesh and Karnataka for the Hyderabad-based company which operates in 18 states.

On projections, Mr Raj said the company expects microfinance portfolio outstandings of Rs3,000 crore and revenues of Rs900 crore by FY 12-13 with a net profit of Rs50 crore.

The company reported revenues of Rs308 crore for the first half of the current fiscal, down by 55% Y-o-Y.

Going forward, the company will adopt a strategy to ensure that its net exposure of in state will not be more than 10% of the total exposure, a company official said.

Mr Rao said the company will invest Rs15 crore over the next three years for strengthening customer grievance redressal and client protection programmes.

The company also plans to cap the return on assets of its micro-finance business at 3%.

SKS Microfinance said it is also looking at expanding its Sangam stores, mobile handset loans and gold loans.

“Pursuing the cross sell route, we plan to service 15,000 Sangam Stores (present number: 4,000) and extend loans for the purchase of 5.5 lakh mobile handsets this year (2.8 lakh loans advanced so far),” Mr Rao said

He said SKS Microfinance will offer gold loans from 50 branches this fiscal.

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IRDA slaps Rs5 lakh fine on National Insurance

IRDA observed that the Kolkata-based company should have exercised greater professional care, skill and diligence which they failed to do. The customer was not properly guided at proposal stage and initially claim was declined on grounds that shopkeeper policy does not grant cover for godown

New Delhi: Insurance sector watchdog Insurance Regulatory and Development Authority (IRDA) has imposed a penalty of Rs5 lakh on state-owned National Insurance Company (NIC) for violation of norms, reports PTI.

The regulator fined the insurer for violation of protection of policyholder’s interest regulations, 2002, in a case related to one Abhinav Traders.

In the order, IRDA observed that the Kolkata-based company should have exercised greater professional care, skill and diligence which they failed to do.

The customer was not properly guided at proposal stage and initially claim was declined on grounds that shopkeeper policy does not grant cover for godown, the order said.

IRDA directed the company that the penalty amount of Rs5 lakh shall be paid by NIC within 10 days from the receipt of the order.

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COMMENTS

VINOD

5 years ago

I wonder..one in a million victims of insurance companies get justice..!! At least this exemplary action will pave the way for more victims to get justice..!!

IRDA guidelines for corporate agents of non-life insurance companies

IRDA had in February this year asked non-life insurers to lay down minimum business requirements for agents, which would be monitored on a regular basis. It had said that insurers shall monitor the compliance of these guidelines by agents through appropriate software

New Delhi: The Insurance Regulatory and Development Authority (IRDA) on Wednesday said corporate agents of non-life insurance companies would also come under the guidelines for the minimum business requirements for general agents, reports PTI.

“The said provision of Minimum Business Requirements is now being extended to all corporate agents engaged with non-life insurance companies for soliciting the insurance business,” IRDA said in a circular.

IRDA had in February this year asked non-life insurers to lay down minimum business requirements for agents, which would be monitored on a regular basis.

It had said that insurers shall monitor the compliance of these guidelines by agents through appropriate software.

The regulator had at that time also said that employees of non-life insurance companies cannot engage their relatives as agents.

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