Malegam report: SKS to appeal against income threshold to RBI

Written by: Pti
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Mumbai, Feb 3 (PTI) SKS Microfinance, the country''sfirst listed micro-lender, today said it will request theReserve Bank not to implement the Malegam Committee''srecommendation on setting income limit for lending; fearing awipe-out of half its client base.

The Malegam sub-committee (formed to look into theproblems of the once-sunrise Microfinance sector), hasrecommended that MFIs should not lend to families havingannual income of over Rs 50,000, and there should be a cap ofRs 25,000 for a loan to a single borrower.

The suggestions are to be implemented from April 1.

If the suggestions are implemented without changes,the Hyderabad-headquartered firm may lose over 50 per cent ofthe borrowers, said its Founder and Chairperson Vikram Akula.

"I cannot imagine they would do that (implement therecommendation)...all depends on whether they look at theincome limits at the time of joining or at the time oflending," Akula told reporters, adding the otherrecommendations were welcome, and would help the industry growin a "measured yet healthy" way.

The firm will not get affected by the single borrowerlimit as its average loan size is only Rs 11,900, he added.

The Malegam committee was constituted in the wake ofcontroversy following suicides by some borrowers in AndhraPradesh (AP), blamed on coercive tactics used by MFI''srecovery agents. MFIs also faced criticism over high interestrates, which were as much as 30 per cent in some cases.


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