When private capital jockeys for profits, it is hard to listen to the poor village woman. Vikram Akula grapples with the biggest dilemma in his microfinance enterprise
Name: Vikram Akula
Age: 41
WHO: Founder of SKS Microfinance. The man who took the benefit of banking to 4.7 million poor families. Named by TIME as one of the world’s 100 most influential people.
His Legacy: Showed microfinance can attract private capital and build large scale.
His Big Moment: SKS is on the verge of becoming the largest MFI in the world, overtaking Grameen Bank, promoted by Nobel Prize winner Muhammad Yunus.
Next Milestone: Looking at a big bang IPO in the first quarter of 2010; to become the first Indian MFI to do a public listing.
His Dilemma: To find the golden mean between profit motive and social commitment.
Growth reached heady pace. In 2007 and 2008, SKS grew in excess of 200 percent. By all reckoning, Akula seemed to have served the purpose of his return. It was then the company began the hunt for a different sort of leadership for the surge into the next level. Sequoia Capital, the largest shareholder, led the search. “We have played an active role in building the company that goes beyond being a financial investor,” says Sumir Chadha, Sequoia’s MD. Akula also understood what his company needed. In December 2008, he formally relinquished control to the new CEO, Suresh Gurumani.
“Sometimes the strength of my personality also gets in the way a little bit — the founder has quite a bit of gravitas,” Akula says chuckling. Today, there is a clear division between the roles of both men. Akula handles the broader public and policy matters and helps management devise strategy. Gurumani looks after daily operations and is the investor interface.
Some MFIs such as BASIX feel high growth rates do not qualify as poverty alleviation. It is for this reason that it has chosen to go beyond micro credit and engage in other aspects of its customers’ needs. Livelihood creation has meant BASIX is much smaller in size and is more focussed on meeting the broader needs of the poor.
Breach of Trust
When SKS formed a non-banking finance company as part of its commercialisation, as many as 30,000 borrowers came together and contributed Rs. 4.55 crore to its equity. They gained a 40 percent stake in the company. They were pretty much the safe keepers of SKS’ commitment to put above everything else the interests of the poor women it served.
(This story appears in the 25 September, 2009 issue of Forbes India. To visit our Archives, click here.)