Vikram Akula, the founder of Indian for-profit microfinance institution (MFI) SKS Microfinance Limited, reportedly acknowledged that Dr Muhammad Yunus was “right” about the challenges of “bringing private capital into social enterprise.” Dr Akula told participants at the recent 13th Annual Social Enterprise Conference at Harvard University that he “focused on scaling SKS’s model…not…the potential downside of accessing the public market….” [1] [2].
SKS and other MFIs in the Indian state of Andhra Pradesh came under government scrutiny in 2010 following reports that 200 MFI borrowers committed suicide because they could not repay their microloans [2]. After Andhra Pradesh passed a law requiring government approval of each microloan, microfinance business in the state fell by 66 percent [3]. Last year Dr Yunus wrote: “I never imagined that one day microcredit would give rise to its own breed of loan sharks. But it has” [2]. This year Dr Yunus has been quoted as saying, “The key is that the whole thing was triggered by SKS. They…overdid things in a big way…. And then [Dr Akula] made personal money out of it” [2].
By Courtney Snelling, Research Associate
About SKS Microfinance: SKS Microfinance is a microfinance institution (MFI) that was launched in 1998. It delivers microfinance products through a group-lending model to impoverished women inIndiaas a for-profit, non-banking finance company. SKS converted into a public limited company in May 2009 and launched an initial public offering on July 28, 2010. Since 2011, it has expanded into other services such as gold loans and financing small grocery stores. Its equity investors include Quantum Hedge Fund, Sequoia Capital, Vinod Khosla, Small Industries Development Bank of India, Bajaj Allianz, Yatish Trading, Kismet Capital, Sandstone Capital, Silicon Valley Bank and Unitus. SKS currently trades on the Bombay Stock Exchange. According to 2010 data from the US-based nonprofit data provider Microfinance Information Exchange (MIX), SKS Microfinance holds total assets of USD 1.2 billion, a gross loan portfolio of USD 1.2 billion, approximately 6.6 million borrowers, return on assets (ROA) of 6.3 percent and return on equity (ROE) of 22.4 percent.
Sources and Additional Resources:
[1] MicroCapital.org Event, “MICROFINANCE EVENT: Harvard Business School, Kennedy School of Government Host “13th Annual Social Enterprise Conference,” Boston, Massachusetts, USA, February 25 – February 26, 2012”, https://www.microcapital.org/microfinance-event-harvard-business-school-k…
[2] India.blogs.nytimes.com, “”Yunus Was Right,’ SKS Microfinance Founder Says”, February 27, 2012, http://india.blogs.nytimes.com/2012/02/27/yunus-was-right-sks-microfinan…
[3] MicroCapital.org Article, December 20, 2011: “MICROCAPITAL BRIEF: Stymied by Local Regulation, Microfinance Institutions (MFIs) based in India’s Andhra Pradesh Expand Into Northern States”, https://www.microcapital.org/microcapital-brief-stymied-by-local-regulati…
MicroCapital.org Article, February 29, 2012: “MICROCAPITAL BRIEF: SKS Microfinance Completes Securitization Deals Totaling $122m”, https://www.microcapital.org/microcapital-brief-sks-microfinance-complete…
MicroCapital.org Article, February 28, 2012: “MICROCAPITAL BRIEF: 76 Criminal Cases Pending Over Alleged Role of Microlenders in Borrower Suicides in India’s Andhra Pradesh”, https://www.microcapital.org/microcapital-brief-76-criminal-cases-pending…
MicroCapital.org Article, February 21, 2012, “MICROCAPITAL BRIEF: SKS Suffers $85m Loss as Norway’s Government Pension Fund – Global Buys at 1% Stake”, https://www.microcapital.org/microcapital-brief-sks-suffers-85m-loss-as-n…
MicroCapital.org Article, January 23, 2012, “MICROCAPITAL BRIEF: SKS Microfinance to Further Downsize Workforce Cap Return on Assets at 3 percent”, https://www.microcapital.org/microcapital-brief-sks-microfinance-to-furth…
MicroCapital.org Article, December 12, 2011, “MICROCAPITAL BRIEF: Vikram Akula Resigns from Board of India’s SKS Microfinance”, https://www.microcapital.org/microcapital-brief-vikram-akula-resigns-from…
MicroCapital.org Article, November 12, 2011, “MICROCAPITAL BRIEF: Shares of India’s SKS Microfinance Fall 10% Following Announcement of $78m Loss During Quarter Ending September 2011”, https://www.microcapital.org/microcapital-brief-shares-of-indias-sks-micr…
MicroCapital Universe Profile: SKS Microfinance (SKS), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SKS…
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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