SKS Microfinance, the country’s biggest microfinance entity, is drawing up ambitious plans to bolster its presence in north Indian, especially in Uttar Pradesh.
By the end of 2009, SKS wants to increase its UP client base to 5 lakh from the existing 75,000 and increase its presence to 40 districts in the state from the current 18.
“Uttar Pradesh has a population of about 10 crore, of which nearly 2 crore are below the poverty line. Moreover not many microfinance institutions (MFIs) operate in this region,” K V Rao, vice president, operations at SKS Microfinance, said.
“Later we will move ahead to Haryana, Himachal Pradesh, Punjab and Delhi, which would be lending to the urban poor,” Rao added.
The firm’s operations in the northern states of UP, Bihar and Rajasthan were initiated toward the end of 2006. The repayment rate has been 99.5% in these areas, Rao said.
Other MFIs present in the north, such as Cashpore, have complained of the hazards of operating in UP. There have been incidences where MFI agents have been robbed while on their way to transfer cash from the borrowers to the banks.
However, SKS doesn’t find the northern region a difficult terrain. “As long as our process remains the same, there is no problem. We spend four days training the women before lending. Everyday, there are meetings at 7 am, which are also held in all other regions,” Rao said.
SKS, he said, felt no need to adopt a different strategy in the northern region. But there is one small tweak - SKS is offering solar lamps to its clients in Bihar, Maharashtra and other states where the villages are not provided electricity. “In the south there is no need to offer solar lamps as the power surplus is good,” Rao said.
Asked whether the push north was coming at the behest of investors, who have infused money in more than three rounds of fund raising, Rao said, “It was our own decision and there was no demand from the investors. If the expansion helps SKS to grow, then it is in the interest of the investors as well.”
But that doesn’t mean that the inclination towards the south that the Hyderabad-based SKS Microfinance has traditionally been having would end. “About 40% of our revenues still come from the south and the balance comes from Orissa, Maharashtra, etc. We are adding new products to the southern areas. We have started mobile banking in Andhra Pradesh. There is introduction of market linkages, health insurance, grocery dealings and we would rope in an insurance partner to offer a structured livestock insurance product,” he said.