Entrepreneur gets big banks to back very small loans
Monday, May 15, 2006
Microlending-for-Profit Effort In India Draws Business From Citigroup, HSBC
By ERIC BELLMAN SHIVNOOR, India?
Vikram Akula runs a company that doles out loans of $100 or less to desperately poor villagers so they can buy a water buffalo or a bicycle. But he’s hardly a typical do-gooder.
Mr. Akula, the 37-year-old founder of SKS Microfinance Pvt. Ltd., is at the forefront of the latest trend in “microlending,” or making tiny loans that help entrepreneurs lift themselves up from the lowest rungs of poverty. Long the province of charitable institutions, microlending is starting to attract the attention of big business. Intrigued by India’s red-hot economy and potential market of more than a billion consumers, financial giants such as Citigroup Inc., ABN Amro Holding NV and HSBC Holdings PLC have already provided millions of dollars for SKS to lend out. SKS, in turn, says it has notched up healthy profits for the past three years.
“This can work driven only by greed,” says Mr. Akula, a one-time McKinsey & Co. consultant who was born in India and grew up in Schenectady, N.Y. “That’s the magic of it.”
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