When Vikram Akula made it to Time magazine’s ‘People Who Shape Our World’ list in 2006, David Schappell of non-profit venture-capital firm Unitus, likened SKS MicroFinance to the little coffee shop that became Starbucks.
The comparison was to prove prophetic. SKS MicroFinance, which derives the name from its origins as the non-profit Swayam Krishi Sangam in 1997, has seen gross revenues rise at a compounded annual growth rate of 176 per cent for the past four years.
Its recent public offer was subscribed more than 13 times and the price offered to investors was almost three times what Narayan Murthy-backed venture capital fund Catamaran paid for SKS shares in January this year.
Akula says his association with microfinance took root when, as a young man working for an American NGO in Andhra Pradesh, he was forced to refuse a loan to a poor woman due to lack of funds. “Why? Am I not poor, too?” the woman had asked him.
Stung by the remark, Akula returned to the US. He then came home armed with a doctorate in microfinance from the University of Chicago and set up Swayam Krishi Sangam in 1997. Over the past 13 years, SKS has transformed itself from an obscure non-profit venture to India’s largest microfinance institution.
However, its explosive growth has attracted as much criticism as praise. Among its detractors is the Nobel Prize-winning founder of Grameen Bank, Mohammad Yunus, who lambasted SKS MicroFinance for seeking profits at the cost of its social objectives.
However, Akula is unfazed. “Professor Yunus’ view is that microfinance should be a social business—no profit, no loss. We have a different view. My view is that if you are trying to raise $50 billion in the Indian market, even if you have the charisma that Yunus has, you still can’t raise that kind of capital from social investors,” he says.
Vikram Akula, CEO & Founder, SKS MicroFinance
