"Do it the right way (no short-cuts); Be innovative; Execute with discipline." - Vikram Akula, founder of SKS Microfinance

SKS Microfinance [4] empowers the poor to become economically self-reliant by providing financial services in a sustainable manner. Vikram Akula, the 37-year-old founder of SKS Microfinance, who was featured in Time’s list of 100 ‘People Who Shape Our World’, believes corporatising the NGO sector is a must for meaningful poverty alleviation programmes. “A for-profit business model is the fastest way to put more money into more poor hands,” he says [5].

Launched in 1998 [6], SKS Microfinance is one of the fastest growing microfinance organizations in the world, having provided over $ 92 million (Rs 425 crores) and has maintained loans outstanding of $38 million(170 crores) in loans to nearly 320,000 women clients in poor regions of India. Borrowers take loans for a range of income-generating activities, including livestock, agriculture, trade (such as vegetable vending), and production (from basket weaving to pottery). SKS also offers interest-free loans for emergencies as well as life insurance to borrowers. Its affiliate, SKS Education, provides education services to poor children, including running a government-funded school for girls who have dropped out of school.

SKS currently has 138 microfinance branches in the states of Andhra Pradesh, Karnataka, Maharashtra, Orissa and Madhya Pradesh, Bihar, UP, Rajasthan, West Bengal, Jharkhand, and Chhattisgarh. This year, SKS aims to reach 700,000 clients by March 2007. In the last year alone, SKS Microfinance has achieved nearly 161 % growth, with 98% on-time repayment rate.

For this American-educated Fulbright scholar, a for-profit business model is not about maximising profits. It’s about maximising resources. “It allows you to tap private funds, unlike NGOs, where you survive on grants. You are accountable to your shareholders and, thus, cannot develop bad habits. You become more client responsive and allow them to guide your business,” says Akula [7], echoing the thoughts expressed by Infosys CEO Nandan Nilekani, the only other Indian on the Time’s powerlist.

Set up in 1998 with a sum of Rs 20 lakh that Akula managed to raise from 360 individual donors, most of them friends and family in the US where he was brought up, today SKS has a capital base of Rs 13.9 crore.

It has private equity participation from Silicon Valley entrepreneurs like Vinod Khosla, Ravi Reddy and Sandeep Tungare. Sidbi, a public financial institution, holds 7% for a crore invested. However, its client community remains its largest shareholders.

Apart from having a fully-automated, proprietory management information system (MIS), it has pioneered the use of smart-card technology at the village-level. The MFI is currently working with VISA International on a pilot project to develop and deploy wireless POS devices that would automate field operations and reduce transaction costs.