New Delhi: India's only listed micro lender SKS Microfinance Ltd Thursday announced its decision to lay off 1,200 workers and shut down 78 branches in Andhra Pradesh state, saying that the micro lending business in the country's largest micro-finance market has "come to a standstill".
"Closing down branches and reducing headcount are extremely painful decisions for us, but these have become urgent in view of the present financial situation ," M R Rao, managing director and CEO of the company, said in a statement filed with the exchanges.
SKS Microfinance, founded in 1998, currently, has 3,400 employees across 180 branches in Andhra Pradesh.
"We recognize the invaluable contributions made by our colleagues... However, the micro-finance business in Andhra Pradesh has come to a standstill," Rao added.
However, SKS Microfinance is not planning to close its operations in the state and neither is it facing any solvency or liquidity issues, he said.
SKS Microfinance, along with other micro lenders saw its fortune dip in Andhra Pradesh, after the state government passed a strict legislation in October 2010 preventing coercive recovery of loans which led to massive cases of defaults.
Earlier Monday, SKS Microfinance Ltd posted a net loss of Rs 3.3 billion during the fourth quarter (Jan-Mar) of the last financial year 2011-12 as compared to a net loss of Rs 697.6 million in the same quarter a year ago, as provisions for bad loans more than doubled.
A huge portion of provisions and write offs incurred by the company was on account of the deteriorating quality of the company's loan portfolio in Andhra Pradesh state -- the largest micro-finance industry in the country.
Shares of SKS Microfinance Thursday ended at Rs 88.75 on the Bombay Stock Exchange (BSE), up 0.06% from the previous close.