SKS Microfinance Limited has concluded two microfinance securitisation transactions aggregating Rs 226 crore ($41.6 million) to close FY13 with total securitisation worth Rs 1,207 crore, as per a stock market disclosure.
Non-banking finance companies (MFI) see an increase in its assignments towards the end of the financial year, when the banks scramble to buy the pooled loan book of NBFCs to achieve the priority sector lending target mandated by the Reserve Bank of India. For the MFIs, such assignments help meet its immediate working capital requirements.
Typically, it involves moving the receivables from the microloans extended to borrowers to a special purpose vehicle (SPV) with pass through certificates (PTCs) which are purchased by those backing the securitisation transaction.
SKS has completed 12 securitisation transactions with seven funding partners aggregating Rs 1,207 crore ($223.5 million) for FY13. In addition, the MFI has also raised incremental debt of Rs 1,680 crore ($311 million) for FY13 and raised fresh equity of Rs 263.5 crore ($48.7 million) taking the total incremental funding inflow for FY13 to Rs 3,150 crore ($583.3 million), which is more than double the Rs 1,434 core raised for FY12.
The 12 securitisation transactions last fiscal helped the MFI to fund around 16 lakh micro loans extended to borrowers belonging to economically weaker sections, said the company.
“Securitisation is emerging as the preferred instrument of confluence for financial inclusion as it amalgamates the funding capability of banks with the credit delivery skills of Non-Banking Financial Company-Micro Finance Institutions like SKS Microfinance Ltd,” said S Dilli Raj, chief financial officer, SKS Microfinance.
"Also, the most satisfying aspect of these transactions is the community break-up of the beneficiaries, where 22 per cent of the borrowers are Scheduled Castes, 5 per cent Schedule Tribes and another 17 per cent are minorities,” he added.
In the quarter ended December 2012, the company saw a turnaround in its bottom line as it swung into a net profit after seven straight quarters of losses. While income from operations showed a modest decline, the gains came from a sharp fall in provisions and write-offs – down to just Rs 28 lakh as against Rs 358.6 crore in Q3 FY12.
WestBridge Capital, Sequoia Capital and Unitus Equity Fund are some of the existing investors in the firm.
(Edited by Prem Udayabhanu)