Net profits of India's largest microfinance institute SKS Microfinance shrunk by more than a third for the quarter ended December 31 over the last period due to reasons of higher provisioning as published by the company's report.
SKS' net profit declined to Rs 34.15 crores ended at December 31st compared to Rs 55.45 crore reported for the corresponding quarter of the previous fiscal. The total provisioning and write off for the third quarterly was Rs 100.75 crores, including an additional provisioning of Rs 26.98 crores to meet the requirements of the recommendations in the sub-committee's report of the Central Board of Directors of Reserve Bank of India.
The provisioning and write off also includes Rs.58.74 crores of its portfolio loans related to the state of Andhra Pradesh.
A report issued by the company said that it would continue assessing the adequacy of provision on the Andhra Pradesh portfolio due to the continued evolving environment, with no precedence, following the enactment of AP (MFI) Act. The resultant impact on the field operations in AP and based on the outcome of the legal suit pending before the AP High court challenged the AP MFI Act.