Vikram Akula's SKS Microfinance Pvt. Ltd.: The Making of a Successful Microfinance Institution
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Themes: Entrepreneurship
Pub Date : 2006
Countries : India
Industry : Banking
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Case Code : SEP0014
Case Length : 19 Pages
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SKS has developed an online data transfer systemthat daily sends the data summary fromthe branch to the head office
[Exhibit XVIII]. Since the operations of SKS is in rural areas where electronic communication infrastructure is sparse and
electricity is available for hardly two hours everyday, the branch level transactions are consolidated and compressed to
send over a dial-up connection in less than two minutes. To further increase its delivery efficiency, SKS has initiated a
pioneeringSmartCard PilotProject.56 The Project provides clients with magnetic SmartCards instead of paper passbooks
for recording of loan and repayment and use PalmPilots to record transactions , thus automating the processes
at the village level. The Project has won the CGAP Pro-Poor InnovationAward, and according to SKS, “the pilot phase of
the project showed the potential to lower the cost of delivery, reduce the scope for error and fraud, and enhance the
efficiency of theMIS.”57 Being one of the firstMFIs in the world to have a fully automatedMIS, SKS is recognised for setting
standards of transparency and has been recognised twice inCGAP's worldwidemicrofinance transparency competition.
President and CEO of Unitus, Geoff Davis said, “SKS is an industry leader in financial transparency, innovation and
rapid growth- they are exactly the type of partner we want to build strong relationships with.”58 Though SKS ranks 106th in
size worldwide,59 it plans to grow rapidly at the rate of 400%per annum and by the end of 2007, it aims to have 700,000
clients, 360 branches, and a portfolio outstanding of $ 117million.60 Akula said, “We have seen how (micro)finance enables
the poor to overcome the vicious cycle of poverty and we are determined to bring this opportunity to the poor throughout
India. Now we aspire to scale up even further, and pursue an aggressive growth strategy that will reach over onemillion
poor families by 2010”61 . To attain its goals, SKS is recruiting personnel to expand across the country. It plans
to add newproducts to its current offering tomeet the total household demand of the poor through loan products for housing,
auto and education, newinsurance schemes for health, life and assets and unique services like remittances.62 Akula said,
“We're bound to have some growing pains along the way, but strongly believe that in order to have an impact on poverty
in India we need to reach asmany poor families as possible.”63
56] The SmartCard Pilot of SKS has been awarded winner: CGAP Pro-Poor Innovation Award ( 2002, Winner : Digital Partners SEL Award ( 2001), Finalist : Stockholm Challenge
(2002), Finalist : Haas School of Business (UCB) Social Venture Competition (2002)
Vikram Akula's SKS Microfinance Pvt. Ltd.:
The Making of a Successful Microfinance
Institution
57] http://www.sksindia.com/technology/smartcard.htm
58] “Vinod Khosla Leads Historic Rs. 11 crores ($2.5 million) Investment in SKS Microfinance”, http://www.prweb.com/releases/2006/3/prweb364630.htm, March 28th 2006
59] “Microfinance Invests in India's Top Minds”, http://www.microcapital.org/cblog/index.php?/archives/145-Microfinance-Invests-in-Indias-Top-Minds.html, January 24th 2006
60] “Message from Founder & CEO – Vikram Akula”, http://www.sksindia.com/SKSMarch06eNews.htm, March 2006
61]"Grameen Foundation USA Announces 2005 Microfinance Practitioner Award Winners”, http://www.emediawire.com/releases/2005/10/emw304032.htm, October 28th 2005
62] “Message from Founder & CEO – Vikram Akula”, op.cit.
63] Ibid.