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Saturday, February 09, 2008

Shahrukh Khan portrayed him in Swades

CEO and Founder, SKS Microfinance, Vikram Akula believes that business should always have a soul and should make a real difference to the life of people and not just its shareholders. Let's catch up with Vikram Akula, who made it to the Time magazine's list of people who will shape our future.

Reel life does sometimes imitate real life. Remember Shahrukh Khan's character in Swades? He does what Vikram Akula did with his life - give back to the country and make opportunities available to the last man or woman - often the most-neglected.

Vikram Akula decided to make his matrabhoomi his karmabhoomi, which may sound like pop-patriotism. After all, how often does one see a graduate from Yale, a scholar who gave up on the American dream for an Indian one. But that's exactly what Vikram did; he first came to India in the early 1990s and worked with an NGO and finally in 1998 launched Swayam Krishi Sangam or SKS - an NGO to provide economically underprivileged women in the Telangana region an entrepreneurial opportunity.

So, how did his NGO really start and what gave him the impetus to do something in India. He told CNBC-TV18, "There are images from my experience in India that will forever stay with me and there is one story in particular, I was about seven years old at that time, visiting my aunt and my aunt bought pots from a woman. She was dressed in a torn sari and she had a child of about my age."

"So, as children we did make a connection, while this sale was going on and after my aunt bought the pots, she then gave rice to this woman and the woman put out her sari and my aunt poured the rice into it and then my aunt left. About 20-30 grains of rice fell on the floor and then she pressed her fingers on the floor and literally picked up each grain and for me that was the first time in my life, that I really understood what it means to be hungry. For them 20 grains of rice really made a difference. Although, that was at a particular moment but images like that stayed with me and somehow said to me, that at a certain point I need to go back."

That's when he realized that something needed to be done for Indians. He says, that charity is not what people want but an opportunity to make things happen for themselves, and that has been his career's work. So that is really how is started his micro-finance business.

He explains, "My first experience with a traditional NGO was one that was doing a number of different activities - education, health, environmental work. So, I had enough to do – it was a kind of a learning in different aspects of the work and after that experience, the key takeaway for me was that economic development was the single most important thing needed. Not that it is the end of development, but it was the anchor on which everything else hinged. So, that was when I decided after that first year and a half, that this is the piece that I like to focus on."

"Then I came back again and this time I was working in micro-finance and the key takeaway from that experience was that micro-finance is important, but the way the NGOs were doing micro-finance was incredibly slow and inefficient and that is when I said, that there is got to be a better way to do micro-financing, and then I founded SKS in 1998."

Then in 2005, he converted it from an NGO into an NBFC. But how was his first sales pitch, when he had to get bankers on board, to participate in his vision? He says, he was rejected by many as no one would give them the time of the day. And these were the very same regional rural banks, who were in business to lend money to the rural people.

Akula says he was laughed at and these bankers called him a foolish American and this was not how business was done. But, today he has 2, 30,000 lakh clients and Rs 50 crore has been disbursed so far and he's looking to scale this up to 7 lakh clients and give away Rs 700 crore across 10 states, in 2007.

Vikram's dream is ambitious but he is confident because he believes in what he's doing, which is empowering women – he is not lending to men – because "women tend to invest profit back into their households. So, if you are looking to make an impact on a household, they are the ones who bring money back, invest it in their household and women atleast in rural areas, tend to be better entrepreneurs. They are slightly more risk averse than men are, they are slightly more careful with how they manage money. So, their projects tend to succeed more often than not."

"We have disbursed about Rs 436 crore in the last year. We have got about 163 different activities that women are involved with. One popular one is lifestock - selling milk at the weekly market and repaying a loan at the end of it – so, having a buffalo is an asset. Other activities are small kirana stores - they will buy stock from the local town and sell it at fairly high margins – so, they can earn a significant return on their investment."

Akula's policy of only lending to women also works out in another way, as SKS has seen a 98% repayment rate. He claims that SKS provides the lowest cost financing to the poor, with the exception of a subsidized government loan. For a loan of Rs 10,000 the borrower will end up paying Rs 200 a week on the principle and Rs 25 as the interest.

He's on the Time magazine list and he sees it as an affirmation of his work and says, "This is the right way to help our country get out of poverty. I very much feel in the end that I love this country and love the work that I do. This country has tremendous potential and this is one way to release that potential."

Written for moneycontrol.com

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