Father of micro-lending Akula is ’Social Entrepreneur 2006’

Thursday, November 30, 2006

Author of the Indian microfinance success story Vikram Akula, founder of SKS Microfinance Pvt Ltd, believes that even though microfinance is not an answer to the agriculture crisis in Vidarbha, it can supplement incomes for farm families. After 150 branches all over the country, he moved into Vidarbha recently. His three branches have 1,000 borrowers in 21 villages.

It is this pragmatism that has made him India’s most successful micro-financer. On Monday, he was honoured as ’Social Entrepreneur of the Year 2006 in India’. The Schwab Foundation and the Nand & Jeet Khemka Foundation collaborated with the Confederation of Indian Industries and UNDP to select the awardee.

Akula finds the idea of 2-3 acre farms going into capital-intensive crops like cotton risky. His total agriculture lending is just 6% with SKS focusing on non-farm activity. “There has to be a regular cash flow for microfinance to succeed,’’ he says. He lends to women’s groups sums as little as Rs 1,000 for starting a shop, rearing livestock and starting a small enterprise like bicycle repair.

His profits will put best corporations to shame – SKS was the fastest growing microfinance institution from 1998 to 2004 with 300% growth rate. SKS has lent over 3.2 billion rupees in income-generating loans and has benefited approximately 1.5 million individuals. Their loan members improve their economic well-being by 11% yearly.

Though he has operations in Bihar and Punjab, he believes southern India lends itself better to microfinance – there is more non-farm activity there. “There was a recent study that dhobis, tailors and barbers contribute more to Andhra’s GDP than IT,’’ he says pointing to the untapped credit market in India.

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Source: Indian Express (link opens in a new window)