Letters: NGOs vs MFIs

The Lunch with BS (“Accidental Tycoon”, October 12) by Kanika Datta got me thinking about the motives of former NGO employee Vikram Akula who is now the founder of SKS Microfinance, India’s largest microfinance institution (MFI). Is he into this for the greater common good or is he a smart businessman masquerading as a messiah of the masses? Well, he is in this for making money.

Period. He was in a hurry to scale up operations so that more and more people could “benefit” from quick finance options via SKS. And he has succeeded — SKS covers some 7.3 million families; double that of Muhammad Yunus’ Grameen Bank. Mr Akula has said that the poor just need timely finance irrespective of the steep interest rates. While Grameen Bank offers credit to the poor without a profit motive in mind, the SKS model does not see anything wrong in making profit at the cost of the underprivileged.

Had it not been for the controversy surrounding the departure of Mr Gurumani, former MD of SKS Finance, the hypocrisy of the organisation’s high-sounding mission would not have come to light. It is sad to see that thousands of helpless people fall into the trap of high interest debt and its painful repayment. Recently, suicide deaths have been reported in Andhra Pradesh. The Andhra Pradesh government had to rush in to stop the exploitation unleashed by the MFIs in the garb of providing help to the financially weak. Grameen Bank or NGOs may not have huge market shares but at least they do not drive poor people mad when it comes to repaying loans.

Dushyant Singh Panwar, New Delhi