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Vikram Akula, founder of SKS Microfinance, has said he should have brought in people who understood the significance of balancing social impact and profitability, than merely those with banking and insurance experience, into the company when he was holding the reins.
Akula, once considered poster boy of the microfinance sector, was given an unceremonious exit from SKS in November 2011. “If I could do it over again, I would bring in more people like Vinod Khosla (a well-known investor)... Such people understand the importance of balancing social impact and profitability. If I had more such people as shareholders and board members, perhaps things would have been different,” Akula told PTI.
“I brought in a senior management team from mainstream banking and insurance. At the time, I thought it was the right thing to do... But, in retrospect, I know that microfinance is radically different from mainstream banking and requires a different skill sets,” he added.
More than two years after SKS Trusts, the largest shareholder in SKS Microfinance Ltd, was trying to nominate Akula as its representative in the board, the latter said he would take the company with a long-term view if given a berth. He said he will strive to ensure the company has a long-term outlook. Akula said he thought tapping capital markets was the best way to infuse funds in the business but lost control over affairs after the initial public officer.
The company’s former chairman further said he should have brought more people with a deep understanding of the microfinance ethics in senior management before he let go of the reins of SKS.
According to records, former chief executive officer (CEO) Suresh Gurumani was director, retail banking, Barclays, India, prior to joining SKS. Similarly, M R Rao, CEO and managing director of the company, had joined as a chief operating officer at SKS Microfinance. Prior to that he was heading alternative channels at ING Vysya Life Insurance. Gurumani had quit the Vikram Akula-led board in May 2011 and was succeeded by M R Rao. The move evoked strong criticism among corporate circles and later Akula himself had to step down from the board.
Akula said he will take the company with a long-term view if he is given a berth. "I am all for creating shareholder value, as long as it is done in a way that ensures borrowers receive high quality, transparent financial services.
"But if you try to manage for the short term, it can have negative unintended consequences. If I were to join the SKS Board, I would strive to ensure that SKS is taking this long-term view," he said.On tapping capital markets for funds into the microfinance industry, he said as donations were limited, the alternative way is to go for commercial model.
"I thought it (IPO) would be the best way to access the huge quantum of funds needed for financial inclusion. Having said that, I could have been more careful about the type of investors I brought in. I could have been more careful about the type of senior management I brought in. Somewhere along the road, I lost the ability to control the philosophical direction of SKS," Akula said.
SKS raised more than Rs 1,600 crore from IPO in 2010 and subsequently plunged into problems after the introduction of AP Microfinance Act in 2011.
