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India’s central bank, the Reserve Bank of India, specifies that non-deposit-taking NBFCs have to have a Capital adequacy Ratio of 15%. SKS maintains a healthy Capital adequacy Ratio of 45.39% Ever since it transformed into a for-profit NBFC in 2005, SKS has established a reputation for raising equity and debt to keep pace with its ambitious growth plans. It has set new standards for the sector repeatedly on the amount of equity and debt raised. It has also been instrumental in introducing mainstream financial instruments into microfinance sector. While funding its growth, SKS has given top priority to maintaining the highest standards in financial transparency. It recently converted from a Private limited Company in order to comply with even more stringent accounting standards. It has won the CGAP award for Financial transparency thrice – in 2004, 2005 and again in 2006. Apart from financial audit conducted by external agencies, SKS also has a strong internal audit team of over 400 members who monitor operations on an on-going basis. 
 A strong Capital base, Impeccable Asset Quality and Experienced Management enables SKS to raise debt capital to fund its ambitious growth plans. Historically, the MFI sector has relied on priority sector funding from commercial banks. In addition to such funding, we are also able to fund the growth of our operations and loan portfolio through issuances of equity and private and publicly traded debt securities, loans with various maturities raised from domestic and international banks, and the securitization of components of our loan portfolio. We have also diversified our lenders among public sector domestic banks, private sector domestic banks, private sector foreign banks, and institutional investors. We have banking relationship with over 45 banks today. SKS has also demonstrated thought leadership in raising debt by introducing mainstream financial instruments into microfinance. These instruments are useful in not just increasing the options for raising debt but also give SKS the edge in smart management of its finances. Apart from fund raising from regular debt instruments, SKS has raised debt through some of the following avenues:
We believe that we are one of the first MFIs in India to complete a rated bond issuance, issue commercial paper, assign a rated pool, sell a “weaker section” portfolio, list debt instruments on the BSE, get a long term subordinated debt (Tier II) for a term of 8 years and complete an assignment of receivables with a public sector bank.  SKS is conscious of the fact that the funds required for alleviating poverty are available only with commercial funders. It accesses these funds to fulfill its social mission of empowering the poor. In its efforts to attract commercial funding into the microfinance sector, SKS has been in the forefront. It has raised equity from a wide range of investors – from Government-backed development funds from SIDBI to Angel Investors, Venture Capitalists, Private equity and recently from mainstream financial institutions. Significantly, Mutual Benefit Trusts representing the interests of the members have a significant share along with employees in SKS. By doing this, SKS ensures that its growth helps its members’ interests and also contributes to the well being of its employees. Sequoia Capital, Vinod Khosla, SIDBI, Bajaj Allianz, Yatish Trading, Kismet Capital, Sandstone Capital, Silicon Valley Bank and Unitus are among the existing equity partners of SKS Microfinance. SKS Borrowers represented by Mutual Benefit Trusts are also one of the largest shareholder groups in the Company. |
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