The chief financial officer of SKS Microfinance has said on Wednesday that the company is planning to raise Rs. 5 billion through a share sale to institutional investors by March 2012.

Dilli Raj said, "The idea is not to raise the entire 900 crore. We really don't need it, because this is not for capital adequacy purpose. This is to be looked at as growth and I would even say opportunity capital raised."

The country’s largest micro lender also said that it is planning to limit the return on assets at 3 percent for its microfinance business. The company’s return on average assets was 2.35 percent in the previous fiscal year.

Analysts say that the move will put pressure on their margins and the company will have to reduce their lending rates affecting their profitability. The company has suffered bad loans and has also seen changes in the senior management recently. Its stock prices has also fallen in recent times following a successful public offer in August 2010 when it raised $358 million.

SKS Microfinance recently replaced founder Vikram Akula in November and named an independent director as its interim chief. SKS is the only listed microfinance firm in the country and is seen as the image of the industry in India.