SKS Microfinance cuts 1,200 jobs in Andhra Pradesh
Crisis-hit SKS Microfinance will slash 1,200 jobs and shut down 78 branches in Andhra Pradesh where micro lending is going through a tough patch.
Hyderabad: Crisis-hit SKS Microfinance will slash 1,200 jobs and shut down 78 branches in Andhra Pradesh where micro lending is going through a tough patch.
The country's only listed MFI, SKS at present has a headcount of 3,400 in Andhra Pradesh, once considered the micro finance capital.
SKS Microfinance managing director M R Rao said the "painful" decision was taken considering the situation prevailing in Andhra Pradesh for the micro finance sector in the past 18 months.
"We have incurred a loss of Rs 1,360 crore during the year ending March 2012," he said.
"We are offering two months notice period as salary and 15 days of salary for every year service completed. It will take at least a week for us to know how many employees will take this offer", Rao said.
Once the company knows how many employees are accepting this offer, only then can it say how much are the costs and the future savings in terms of operational costs, he added.
The company had to write off Rs 1,120 crore in the last fiscal after Andhra Pradesh government came out with a stringent law to regulate micro lending. This followed a spate of suicides of borrowers allegedly due to coercive recovery practices by micro finance institutions' (MFI) agents.
The state government had come out with AP Microfinance Ordinance in October, 2010, and subsequently made it into an Act. The Act crippled the activities of all MFIs including SKS.
Barely a few months before the crisis hit the sector, SKS became the first micro finance firm to go public in South Asia and raised over Rs 1,650 crore. The company was founded by Vikram Akula, who in November 2011 resigned from the board in wake of the huge losses suffered by the Hyderabad-based firm.