SKS Microfinance has reduced interest rates from 26.69% to 24.55% with immediate effect on all new loans. The revised rates are however applicable only to borrowers in Andhra Pradesh.
The firm seems to be in a major image building drive after the sudden exit of its CEO Suresh Gurumani.
Other MFIs are also planning to reduce interest rates after the AP governement strictened lending and deposit norms. "We have set a benchmark of 24% in the view of current situation. Most of members are moving towards offering the same interest rate. Every institution, however, needs to assess its ability to do so," said Alok Prasad, CEO, MFIN (Microfinance Institutions Network).
"We are in continuous dialogues with the government and we believe they cannot mandate it. It is up to the borrower to choose between a weekly or a monthly repayment structure," Mr Prasad said.