Exactly a decade after starting SKS Microfinance, its founder and chief executive, Vikram Akula, is getting out of day-to-day management of the institution which he steered to become the largest microfinance institution in the country. He is handing over this responsibility to Suresh Gurumani from Barclays Bank, who has been appointed as the chief executive officer.
Akula, one of Time magazine’s ‘100 most influential people of the year’ in 2006, will now take on the role of a full-time director on the SKS board next month. This new role, according to Akula, will enable him to focus on steering the future strategy of the company.
“We are innovating in terms of providing a full range of financial services such as microfinance and even investment products. We are also pioneering new technologies such as mobile banking that will help lower costs. This new role will enable me to focus on these and other strategic areas,” Akula says.
In fact, it was a long and focused journey of hard work and passion which led Akula to set up the Swayam Krishi Sangam (SKS) which now has a membership base of 3.3 million persons across 18 states in the country.
As to what led to the creation of SKS, Akula often narrates an incident from his childhood that had a lasting impression on him. It is about a street hawker whom he saw at his aunt’s house during one of his visits to Hyderabad when he was about seven years old. His aunt bought pots from the hawker and paid her in the form of rice. In the process, some grains of rice dropped on the floor and the hawker, dressed in a torn sari, kneeled down to press her finger to pick up those grains one by one.
At that instant, Akula realised what poverty was and many years later started SKS, he said, “Because I was overwhelmed by the poverty I saw in India and was looking for a way to catalyse rapid economic development for the poor.”
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Though born in Hyderabad, Akula moved to the US when he was three years old. The Tufts University graduate obtained a master’s degree from Yale and a doctorate in microfinance from the University of Chicago. As a Fulbright scholar in India, he coordinated an action-research project on providing microcredit for food security. He also worked as a management consultant with McKinsey & Company.
Did the stint with McKinsey help him in his microfinance foray? Of course, Akula says. It exposed him to Fortune 500 companies and made him realise that the operations of scale were important to make an impact on the lives of the poor people.
Akula started SKS in 1998 by raising Rs 20 lakh as donations from friends and family. He was able to raise a loan of Rs 15 lakh only in 2001, and that too from the US-based Friends of Women’s World Banking. He secured the next loan of Rs 20 lakh in the same year from Sidbi. Later, raising capital became “easier”.
This month, the Hyderabad-based non-banking financial company received $75 million (about Rs 366 crore) in a fourth round of equity funding from Sandstone Capital and two other private equity funds, taking SKS’ total equity base to Rs 650 crore. Akula says the fresh round of equity raised will be used to expand the company’s membership base to eight million over the next two years.
Akula’s long-term plan is to serve 50 million out of the estimated 150 million poor households in India. He wants to extend credit to the tune of Rs 80,000 crore. Though it looks ambitious, Akula is confident of achieving his targets. And, given his track record, he might just manage.