The shares of the company surged 19% to touch intra day high of Rs 105.70 in morning trade. At 10.50 am IST the shares were seen trading at Rs 99.80 higher by 12.45%.
This move will be beneficial for SKS and will override the Andhra Pradesh MFI Act. Also as per the draft, it would be mandatory for micro finance institutions (MFI) to be registered with the Reserve Bank and have a minimum net-owned fund of Rs 5 lakh.
The company further reported a sacking of 1,200 employees and close down 78 branches in Andhra Pradesh. SKS presently employs 3,400 employees across 180 branches in Andhra Pradesh.
“Closing down branches and reducing headcount are extremely painful decisions for us, but these have become urgent in view of the present financial situation,” said Mr M R Rao, Managing Director and CEO, SKS Microfinance Limited.
On account of the situation prevailing in Andhra Pradesh for the microfinance sector in the past 18 months, we have incurred a loss of Rs 1,360 crore during the Year ending March 2012, further added.