SKS Microfinance today said it would close down 78 branches in Andhra Pradesh and reduce headcount by 1,200 employees in the state. The company presently employs 3,400 employees across 180 branches in Andhra Pradesh.
It said that it had not retrenched a single employee on account of the situation prevailing in state for the microfinance sector in the last 18 months.
''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 M R Rao, managing director and CEO, SKS Microfinance Limited. ''However, the microfinance business in Andhra Pradesh has come to a standstill."
Rao said SKS had brought down its net residual exposure in Andhra Pradesh to Rs236 crore from a high of Rs1,491 crore in October 2010 by writing off Rs1,120 crore.
and incurred a loss of Rs1,360 crore during the year ending March 2012.
He said the company's operations in 17 other states had been subsidising the Andhra Pradesh operations for 18 months since the AP MFI Ordinance/ Act was passed.
"Going forward, in view of the present financial situation, it is imperative that the AP operations remain cash neutral in the interest of fairness to all stakeholders. Also, bank funding is restricted to operations in 17 other states,'' he said.