Originally an NGO formed in 1997, SKS Finance became a for profit company in 2005 when it was incorporated as an non-banking finance company (NBFC). Its mission is to provide low-income households with financial services, primarily in India, but potentially across the globe. Here are five facts about the company:
1. The company’s goal is to use microfinance as a tool for reducing poverty and increasing economic opportunity by providing access to insurance and credit. Loans start at about Rs. 2,000 to Rs. 12,000, or about $44-$260. These loans are typically given to poor women in order to help them expand their businesses. Poor women act as guarantors on each other’s loans, using a group lending model. According to SKS Finance, the loans are collateral-free and have a 99% repayment rate.
2. A variety of financial companies including Axis Bank, Barclays, BNP Paribas, CitiBank, HSBC, South Indian Bank, and ING Bank Vysvya have invested in and partnered with SKS Finance.
3. SKS Finance core values are: customer first, ethics always, and consistent quality. This involves transparency with customers, not offering bribes, and fostering innovation without cutting corners. Currently, the company is in the process of rebranding itself. SKS Finance is focusing on removing ambiguities about the company rather than making many specific changes. This need for rebranding came after founder Vikram Akula’s departure from the company and the upheaval that came with legislation passed in 2010. In the recent legislation, the Andhra Pradesh government sought to regulate the micro finance sector’s practices in terms of loan recovery and interest rate charges.
4. As of June 30 of this year, SKS has 51 LAKHS, and 1255 branches in India. The company has helped people like Ameena Bi set up a small mattress selling shop with her husband and a flower shop with the aid of her father. Currently Ameena earns INR 300 or $6 a day and her husband, Abdul, earns between INR 300 and INR 400, or $8.50, a day, whereas just three years before they were making INR 120 or $2 a day.
5. In 2011, Vikram Akula, the founder of SKS Microfinance, left the company amidst much turmoil. In hopes of an impending return, Akula suggested in September that the company had lost its way again. His statements were similar to the narrative that forced his departure two years ago. While current leadership at SKS is more than reluctant to give Akula any role in the company, he has ties with Biksham Gujja, chairperson of SKS Trust. SKS Trust, the largest shareholders in SKS Finance, nominated Akula for the seat now in dispute. SKS Trust is meant to serve SKS borrowers and acts as the largest shareholder in the company. Various people in the company have different attitudes regarding Akula’s possible return. Some say Akula has not made any attempts to return on his own, others that he has no support, and still others believe Akula’s actions are hostile in nature. Some have said there is a lot of support for Akula, otherwise he wouldn’t have received SKS Trust’s nomination. The effect of this public squabbling on SKS borrowers has yet to be fully realized, but doubts are being raised, especially by those worried about the interests of SKS Finance’s beneficiaries.
– The Borgen Project