UPDATE 1-India's SKS Microfinance IPO to raise up to $353mln

* Price band for the issue fixed at 850-985 rupees/share

* Retail investors to get 50 rupees discount on final price

* SKS to use proceeds to augment capital base as demand rise

(Adds details)

MUMBAI, July 26 (Reuters) - India’s SKS Microfinance aims to raise as much as $353 million through an initial public offering of shares, as the company bets on demand for loans by poors in in Asia’s third-largest economy.

The SKS Microfinance IPO, a first in India and one of only a handful by microfinance institutions around the world, will open on Wednesday and close on August 2.

The for-profit company, which has drawn investors including Sequoia, Kismet Capital, Unitus, venture capitalist Vinod Khosla and Infosys Technologies INFY.BO founder N.R. Narayana Murthy, is India's biggest microfinance institution.

SKS, which gives small loans to poor borrowers, has fixed the price band for the offering at 850-985 rupees per share, the company said in newspaper advertisement. Retail investors will get a 50 rupees discount on the final price, the company said.

Citigroup C.N, Kotak Mahindra KTKM.BO and Credit Suisse CSGN.VX are the arrangers for the offering.

SKS Microfinance plans to use the share sale proceeds to augment its capital base to meet future capital requirements that is likely to be fuelled by growth in the business, the company said in its offering prospectus.

There are more than 400 active microfinance institutions in India serving about 70 million poor people, as per industry estimates. With a potential base of 120 million unbanked homes, microcredit demand in India is likely to surge rapidly.

While microfinance has existed in many forms for decades, the sector has burgeoned into a large market since Muhammad Yunus, a Bangladeshi economist, was awarded the Nobel Peace Prize in 2006 for increasing access to finance for the poor.

The company was founded by Vikram Akula, a former McKinsey consultant and has been named one of the most influential people by Time magazine.

The SKS IPO has drawn keen interest from countries with major microfinance industries such as Bangladesh, Mexico and South America, as well as the private equity firms who have recently piled into the sector.

($1=46.9 rupees)

(Reporting by Sumeet Chatterjee; Editing by xxxxxxxxxx)

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