Microfinance Focus, February 29, 2012: In his speech at the Social Enterprise Conference at Harvard on Sunday, Vikram Akula, the former Chairman of SKS Microfinance, broke his silence about the mistakes he made in his social venture.
“Professor Yunus was right” Akula said. “Bringing private capital into social enterprise was much harder than I anticipated.”
Akula, who stepped down from SKS in November last year acknowledged the legitimacy of the criticism he had received from Mohammad Yunus, 2006 Nobel Peace Prize Laureate Professor and Founder of Grameen Bank, who had long taken issue with SKS’s deployment of private capital in microfinance and its profit orientation.
Akula also stated tonight that he had focused on scaling SKS’ model and had not fully anticipated the potential downside of accessing the public market for social enterprise.
At the end of his speech, Akula expressed hope that future social entrepreneurs would learn from his experiences. “The mistakes I’ve made can help the rest of you” said Akula.
A recent report by Associated Press shows that SKS officials had information implicating company employees in some of the suicides by microfinance borrowers in Andhra Pradesh in 2010. SKS loan officers have reportedly used coercive loan recovery practices and harassed over-indebted borrowers.
According to the report, SKS launched a massive sales drive in December 2009. The "Incentives Galore" program ran through February 2010 — just one month before the company filed its IPO prospectus.
Agents won prizes worth up to 10 times their average monthly salary for signing huge numbers of new borrowers. One loan officer signed up 273 groups in a month. Under training protocols, the ideal number of groups formed per month is 12, the maximum is 36, according to field agents and reports written by Akula.
Six current and former SKS staffers with experience in the field told the AP they no longer had time to check a borrower's assets or follow up and make sure a loan was put to productive use. They said that they were pressured to push more debt onto people than they could handle and that the number of days devoted to borrower training was cut in half.
“Professor Yunus was right” Akula said. “Bringing private capital into social enterprise was much harder than I anticipated.”
Akula, who stepped down from SKS in November last year acknowledged the legitimacy of the criticism he had received from Mohammad Yunus, 2006 Nobel Peace Prize Laureate Professor and Founder of Grameen Bank, who had long taken issue with SKS’s deployment of private capital in microfinance and its profit orientation.
Akula also stated tonight that he had focused on scaling SKS’ model and had not fully anticipated the potential downside of accessing the public market for social enterprise.
At the end of his speech, Akula expressed hope that future social entrepreneurs would learn from his experiences. “The mistakes I’ve made can help the rest of you” said Akula.
A recent report by Associated Press shows that SKS officials had information implicating company employees in some of the suicides by microfinance borrowers in Andhra Pradesh in 2010. SKS loan officers have reportedly used coercive loan recovery practices and harassed over-indebted borrowers.
According to the report, SKS launched a massive sales drive in December 2009. The "Incentives Galore" program ran through February 2010 — just one month before the company filed its IPO prospectus.
Agents won prizes worth up to 10 times their average monthly salary for signing huge numbers of new borrowers. One loan officer signed up 273 groups in a month. Under training protocols, the ideal number of groups formed per month is 12, the maximum is 36, according to field agents and reports written by Akula.
Six current and former SKS staffers with experience in the field told the AP they no longer had time to check a borrower's assets or follow up and make sure a loan was put to productive use. They said that they were pressured to push more debt onto people than they could handle and that the number of days devoted to borrower training was cut in half.
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