SRINAGAR: SKS Microfinance Limited on Tuesday slashed the interest rate by 1.25% to 20.75%.
“The rate cut will come into effect from October 1 for all future disbursals,” it said in a release issued here. With this third interest rate cut since October last year, SKS Microfinance Limited “now charges what is considered the lowest rate among global Micro Finance Institutions on its core Income Generating Loans (IGL), which are unsecured micro loans”, it said.
The company said it has been charging the lowest interest among Indian MFIs since July 2015, with a reduction of 1.55% in July itself, in addition to the 1 % reduction in October 2014.
The reductions, it said, are consistent with the company’s policy of passing on the cost advantages to its borrowers.
SKS Microfinance Limited said it could reduce its cost of interest-bearing liabilities to 11.9% in Q1 of FY16 from 13.6% in FY14, on account of downward adjustments in risk premium.
The company’s sustained turnaround, improved profitability in FY15 and Q1-FY16, capital raise in May 2014, rating upgrade and issuance of Commercial Papers and Non-Convertible Debentures are the factors that drove the reduction in its cost of borrowing, it said, adding the company has a short-term credit rating of ‘A1+’ and a long-term rating of ‘A+’.
It said the creditor confidence in SKS Microfinance Limited has also been boosted by the “company’s spotless repayment” track record.