HYDERABAD: SKS Microfinance Ltd, which has been fishing in troubled waters due to a tighter regulatory environment and a shrinking loan book, is planning to seek a banking licence to mitigate risks. Company officials said they would approach the Reserve Bank of India (RBI) for necessary permits after seeking consent from the board of directors shortly. Analysts, however, are doubtful if such a permit would help reinvent the ailing company. “Seeking a banking licence is a strategic option for us. The economic rationale behind this proposal is to mitigate risks, gain access to funds and reduce the cost of funds. We will present the proposal to the board during the forthcoming meeting. Once we get the approval, we will approach RBI for its nod,” Dilli Raj, CFO of SKS told Express. The board members are likely to meet sometime early next month to approve second quarter results. The Central Bank, which released draft guidelines for new banking licences last week, noted that corporates meeting a specific criteria such as a minimum capital of `500 crore besides other aspects are entitled to set up its own banking arm. SKS’ paid up equity share capital as of March, 2011 stood at `72.32 crore. “We can meet primary entry barriers set by RBI. More than 90 per cent of our branches are located in rural areas as against the RBI’s norm of a minimum 25 per cent rural presence,” Raj said. According to him, a banking licence will help in reinventing the company by offering the entire gamut of banking-related services to both existing and new customers. “Primarily, by entertaining deposits and savings from our members and non-SKS members, we will gain access to funds,” he said. Typically, any bank would generate deposits of about `15,000 crore per annum.
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