Microfinance has been touted as an instrument that can raise the incomes of those living below the poverty line. But, can the Microfinance Institutes (MFIs) also make profit while �doing good?� Professor Krishnamurthy Subramanian compares the nonprofit and for-profit MFIs to examine whether profit maximisation by an MFI compromises on its social objectives
In August 2010, Swayam Krishi Sangam better known as SKS Microfinance, a non-deposit-taking finance company, which is into the business of serving the financing needs of the poor in rural India, emerged as one of the most successful recent stories in the IPO market. Its public issue of stock amounting to INR 1653 crores, or $350 million was oversubscribed by about 14 times. The IPO's claim to importance stemmed from its clients – not from their elite status, but rather the opposite. SKS was set up as what philanthropists call a "social enterprise" – a business based on the concept of doing well by doing good.
Profit vs. Non Profit: A Comparison
[This article has been reproduced with permission from the Indian School of Business, India]