SKS Microfinance Surges as RBI Increases Loan Disbursal Limit

SKS Microfinance shares surged as much as 8 per cent on Friday after the Reserve Bank of India eased loan norms for non-banking financial companies (NBFC) microfinance lenders.

The RBI increased the loan limit for these lenders to Rs 30,000 from Rs 15,000 earlier for loans of less than 24 months maturity.

Microfinance companies were earlier allowed to give loans above Rs 15,000 only for tenures of more than 24 months. "This is positive for the microfinance sector as MFIs will be able to give higher short duration loans," said Parag Jariwala of Religare Capital Markets.

SKS Microfinance today cut its interest rates by 100 basis points to 19.75 per cent with effect from December 7, 2015. This is the fourth interest rate reduction, aggregating 4.8 percentage points, announced by the company since October 2014.

Religare said that the interest rate cut augurs well for growth and market share gain for SKS as compared to competition.

SKS Microfinance shares closed 7.2 per cent higher at Rs 454.60 apiece compared to 0.75 per cent gain in the broader Nifty.