Financing kiranas

Although SKS Microfinance has maintained a studied silence over the exit of its promoter Vikram Akula, it does appear the idea is to break free from the controversies associated with Akula as well as the fact that the existing model has probably run its course. While there is no evidence that SKS was scalping its customers—if it was as easy as borrowing from banks at 12% and lending at 25%, the banks would have got into the business themselves—there is little doubt that Akula’s stunningly successful IPO, which was over-subscribed 14 times and created 700 crorepati employees, played a crucial role in the events that followed. This, in an industry that was supposed to be serving the poor, is what made politicians, such as in Andhra Pradesh, want to ban what they called exploitative lending.

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