SKS Micro slumps on disappointment
There was a lot of illogical build up on the counter of SKS Microfinance over the past few days on hopes that it may get a banking license. We say illogical because the memory of its troubled past as a micro finance company is yet to be completely erased. Our Editor, Mr.SP Tulsian has been very candid and said categorically that the company would not the license. And that is what precisely happened.
Yesterday, the RBI granted in-principle license for small finance banks to 10 companies. Out of these 10, eight were microfinance companies but SKS was denied.
Names of selected applicants
- Au Financiers (India) Ltd., Jaipur
- Capital Local Area Bank Ltd., Jalandhar
- Disha Microfin Private Ltd., Ahmedabad
- Equitas Holdings P Limited, Chennai
- ESAF Microfinance and Investments Private Ltd., Chennai
- Janalakshmi Financial Services Private Limited, Bengaluru
- RGVN (North East) Microfinance Limited, Guwahati
- Suryoday Micro Finance Private Ltd., Navi Mumbai
- Ujjivan Financial Services Private Ltd., Bengaluru
- Utkarsh Micro Finance Private Ltd., Varanasi
The “in-principle” approval granted will be valid for 18 months to enable the applicants to comply with the requirements under the Guidelines and fulfil other conditions as may be stipulated by the RBI. On being satisfied that the applicants have complied with the requisite conditions laid down by it as part of “in-principle” approval, the RBI would consider granting them a licence for commencement of banking business under Section 22(1) of the Banking Regulation Act, 1949.
Until a regular licence is issued, the applicants cannot undertake any banking business.
Naturally, the market is disappointed and the stock sunk to the day’s low point of Rs.376.55 vis-à-vis yesterday’s close of Rs.450.30.