SKS Micro Finance SKS Microfinance is India’s largest and one of the world’s fastest-growing microfinance organizations. It claims that its mission is to empower the poor by providing them collateral-free loans for income generation. SKS Microfinance has 5.8 million clients (2010)  in 1,627 branches in 19 states across India and total assets worth $897.9 million (Sept.'09.) SKS charges an annual effective interest rate ranging from 26.7% to 31.4% (Mix Market.) Operations Borrowers (who are all women) take loans for a range of income-generating activities, including livestock, agriculture, trade (such as vegetable vending), production (from basket weaving to pottery) and new age business (photography to beauty parlours). SKS also provides members with interest-free loans for emergencies as well as life insurance and loan cover insurance to borrowers. SKS has been a sector leader in sourcing capital. In July 2009, Bajaj Allianz made a strategic investment of $ 10 million(INR 50 crore) in SKS Microfinance which was the first-ever investment by an insurance company in an Indian microfinance institution. In November 2008 SKS raised equity worth $ 75 million(Rs 366 crore), the largest equity raised by an MFI in the world. The third round of equity worth Rs 147 crore was raised in January 2008. In March 2006, SKS closed its first round of equity investment; the largest microfinance investment in India to date - $ 3.2 million from some of the world’s leading microfinance investors, and then eclipsed this accomplishment with a second round equity investment of $11.5 million in March 2007. It leverages its equity to raise debt from public sector, private sector and multinational banks operating in India. This capital has helped the organisation scale up operations and reach out to millions of poor households across the length and breadth of India. In addition to rapid expansion, SKS leads the industry in technology innovation and transparency. It is one of the first MFIs in the world to have a fully automated MIS that streamlines operations and helps reduce transaction costs. It is setting up an ERP system that will ensure quick data transfers, data mining, data recovery facilities which will improve operational efficiencies and response times. It also has set global standards for transparency, having twice received recognition in CGAP’s worldwide microfinance transparency competition. It has a large team of internal auditors who monitor branch level activities on a monthly basis. Since microfinance is not suitable for the destitute in society who need not just access to finance but livelihood training, social and health inputs, SKS has a unique Ultra Poor programme for this section of society. Under the programme, the beneficiaries receive training to run an income- generating enterprise, financial education and an asset. Over an 18-month period these beneficiaries are trained to become self-sufficient and graduate into regular microfinance. The first phase of the Ultra Poor programme was conducted in Medak district of Andhra Pradesh where nearly 500 women were covered. In all, 426 women have successfully graduated from this programme. In the next phase, the Ultra Poor Programme is being planned in some of the poorest districts of Odisha and Jharkhand. Awards SKS was ranked as the Number 1 MFI in India and number 2 in the world by MIX Market. Business Week has rated SKS as one of the most influential companies. SKS has received numerous awards including the CGAP Pro-Poor Innovation Award, the ABN-Ambro/Planet Finance Process Excellence Award, Citibank Information Integrity Award, the Digital Partners SEL Award, SHG Foundation funding and the Grameen Foundation USA Excellence Award. SKS is the only MFI in India to receive the MIX Transparency Certification. SKS was selected by Unitus as the most promising microfinance organization in India. The IPO Controversy On July 28, 2010, SKS Microfinance, India's biggest Microfinance Institution (MFI), made its debut on Bombay Stock Exchange, offering its shares to the general public. SKS's Founder and CEO, Vikram Akula, claimed that Initial Public Offering (IPO) has been made to raise more funds so that SKS could reach out to a larger number of poor people. However, others, most notably the father of microfinance Muhammad Yunus, expressed doubt that Akula will be able to juggle SKS's social mission with the demands of a traditional profit-maximizing business. The main obligation of any public company is to make dividends for its shareholders, while the main obligation of an MFI is to serve the poor. Yunus is afraid that in the end SKS will have to put its shareholders' interests above the ones of the poor. "By offering an IPO, you are sending a message to the people buying the IPO there is an exciting chance of making money out of poor people. This is an idea that is repulsive to me. Microfinance is in the direction of helping the poor retain their money rather than redirecting it in the direction of rich people," Yunus said. In their face-to-face debate at 2010 Clinton Global Initiative, Akula insisted that going public is the only way for an MFI to raise sufficient funds to provide micro-loans for 3 billion people in need worldwide. Yunus contradicted Akula by saying that micfofinance is, first of all, banking. Therefore, Yunus continued, MFIs need to work towards obtaining banking licenses, which will enable them to take deposits from the public and, thus, become self-sustaining. On Oct 4, 2010 SKS Microfinance said that its board has passed a resolution terminating the appointment of its managing director and CEO Suresh Gurumani, without giving any specific reason.SEBI has asked the board to justify the reason for terminating its CEO. Slide in Share Price Share price of SKS slides by 20% on 18-Nov-2010, because of a move to monthly collections from weekly to comply with new regulations, sending its shares to an all-time low.
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