SKS Microfinance, the only listed micro finance institution in the country, has reduced the interest rate charged to borrowers by one per cent to 19.75 per cent from 20.75 per cent with effect from December 7, 2015. With this, the company said, it became the first MFI to charge a sub-20 per cent interest rate on its core income generating loans, which are unsecured. Interest rate of 19.75 is also stated to be the lowest rate charged by any private sector MFI in the world. This is the fourth interest rate reduction, aggregating 4.8 per cent announced by the company since October 2014. The reductions are consistent with the company’s policy of passing on the cost advantages accruing from reduction in the cost of borrowing and economies of scale to its borrowers. SKS stated in a press release on Friday that it could reduce its marginal cost of borrowing to 11.3 per cent in Q2-FY16 from 13.6 per cent in FY14 on account of downward adjustments in risk premium.
