Exiting investment in SKS not legally possible: Murthy

In a suo-moto statement from his office, Murthy said that Catamaran's Rs 28.1 crore investment for 1.3 per cent stake in SKS was locked in for two years and involvement was prompted by the belief that transparent micro finance business would help the poor.

"There have been several queries on the investment of Catamaran in SKS Microfinance and extent of N R Narayana Murthy's involvement in the company and the document answers these queries," the statement said.

SKS Microfinance had been in news for summery removal of its CEO Suresh Gurumani shortly after a successful IPO to raise Rs 1600 crore and later action by the Andhra Pradesh government to discipline microfinance firms in the state.

Detailing the terms of investment, the statement said that Murthy, "advised Vikram Akula (founder and Chairman of SKS) that it is best for the management and the Board to be open, honest and fair in all matters dealing with every stakeholder."

Murthy's venture capital fund Catamaran invested in SKS Microfinance in January, 2010, before the company's maiden public issue. As per the terms of the investment by Murthy in SKS, Catamaran shares would be locked in for a period of 24 months. "...These shares are also subject to a concurrent statutory lock-in imposed by Sebi on all pre-IPO investors for a period of 12 months post IPO.

"Therefore exit is currently not possible as per law. Catamaran will take that decision solely based upon data and facts at an appropriate time," Murthy said. Further, he exuded confidence that the current high rate of interest charged by the microfinance industry, where he is an investor, will come down due to competitive pressures.

"...During the next few few years, the competition in the microfinance marketplace will improve efficiency, bring down interest rates and create easy access to loans to the poor," Infosys said in a statement.

The term of Catamaran's investment mandated that Murthy would chair an Advisory Council to be formed by the company to advice on the issued brought before the Council. "This Council has not been identified so far and therefore has not met as of today," it said.