Vikram Akula, founder of SKS Microfinance (SKS ), has announced plans to step down from the role of CEO after 10 years. Mr. Akula says that this change will allow him to focus on a new initiative – microinsurance. As MicroCapital reported earlier this year, SKS partnered with Bajaj Allianz Life Insurance Company to offer insurance products toclients. This announcement comes amid rapid growth in the company. Suresh Gurumani, Director, Barclays Bank, will take over as SKS Microfinance’s CEO. An official transition date was not given.
Mr. Akula started SKS in 1998 because, he says, he was overwhelmed by the poverty that he saw in India and was looking for a way to catalyze rapid economic development for the poor. Born in Hyderabad, India, Akula moved to theU.S. when he was just three years old. After receiving his B.A. from Tufts University in 1990, he obtained a master’s degree from Yale and a doctorate in microfinance from the University of Chicago. His Ph.D. dissertation focused on the impact of microfinance. As a Fulbright scholar in India, he coordinated an action-research project on providing microcredit for food security. As a researcher with the Worldwatch Institute, an independent research organization, he wrote articles focused on poverty and development. He has also worked as a community organizer with the Deccan Development Society in India. Mr. Akula has also worked as a management consultant with McKinsey & Company, a global management consulting firm. He started SKS in 1998 with Rs 20 lakh, USD 40,832 today, which he raised from friends and family. Ten years later, SKS Microfinance provides over USD 260 million in credit to 1.6 million borrowers and Mr. Akula has been named one of TIME Magazine’s 100 Most Influential People.
Mr. Akula has set ambitious goals for SKS and during this fiscal year the company has made significant strides toward achieving them. As discussed in this June 2008 MicroCapital Story, SKS experienced exponential growth in 2007 as its loan portfolio grew 300 percent. In 2008, this trend has continued. As of March 31, 2008, total borrowers had grown year over year by 218 percent to 1.6 million. The loan portfolio grew 314 percent to USD 261.7 million over the same period. SKS has a presence in over 20,000 Indian villages across 15 states in India with an employee base of 5,800. The company is targeting 15,000 employees and 5 million borrowers by mid-2009. During a recent conference call, Mr. Akula said that SKS seeks to have USD 1.8 billion in loans outstanding by March 2011. Akula estimates that in order to accommodate this level of growth, the company would need to expand to 24,000 employees and 2,400 branches.
Suresh Gurumani, who will be taking over as CEO of SKS Microfinance, has worked in the past with Standard Chartered in India. In 2007, he led Barclays Bank’s entry into retail banking in India. As Director of Retail Banking inIndia, Mr. Gurumani placed a significant amount of importance on the role that technology plays in retail banking. Under his leadership, Barclays rolled out Hello Money, a mobile banking service that allows customers to transfer funds, pay bills, and make account inquiries using their cell phones. This is one way in which Mr. Gurumani is a good fit for SKS Microfinance. One of the company’s three principles is to deploy technology in an effort to decrease high delivery costs.
SKS plans to raise funds through more private placements before it eventually has an initial public offering when market conditions improve.
By Iyanna Holmes, Research Assistant
Business Standard: Scaling Up
The Hindu: Barclays Offers Mobile Banking Service
MICROCAPITAL STORY: April 17, 2008, SKS Microfinance Looks to Offer Microinsurance Products with Bajaj Allianz Life; June 18, 2008, Indian SKS Plans to Raise $30m in Equity; Possible Future IPO
MIX Market: SKS Microfinance
MoneyControl.com: Vikram Akula to Step Down as CEO of SKS Microfinance
Rediff India Abroad: Barclays Bank Has Exciting Plans in India