SKS secures A, A1 ratings for Rs 2k-cr loan

Hyderabad: SKS Microfinance Limited, India’s only listed microfinance company, on Tuesday said a leading rating agency had assigned ‘A’ for its long-term and ‘A1’ for its short-term bank facilities for an aggregate sum of Rs 2,000 crore. However, the micro lender did not disclose the name of the agency that accorded the rating.

Accordingly, instruments with ‘A’ rating are considered to have adequate degree of safety regarding timely servicing of financial obligations and carry low credit risk. Instruments with ‘A1’ rating are considered to have very strong degree of safety regarding timely payment of financial obligations and carry lowest credit risk.

"The ratings would help to reduce the risk weights assigned to banks’ exposure on SKS Microfinance Limited from the present 100 per cent to 50 per cent in the case of long-term facilities and 30 per cent for short-term facilities,” said S Dilli Raj, Chief Financial Officer, SKS Microfinance. The ratings are likely to enhance credit availability and reduce the cost of borrowing as they will free up capital allocation for banks in the case of SKS Microfinance's borrowings. We are unable to quantify the gains at this juncture, but expect the impact will be positive, he added. SKS Microfinance's total borrowings stood at Rs 1,675 crore, as on August 31.