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WORK TITLE: Micro-Meltdown: The Inside Story of the Rise, Fall, and Resurgence of the World’s Most Valuable Microlender
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PSEUDONYM(S):
BIRTHDATE:
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CITY:
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NATIONALITY: Indian
RESEARCHER NOTES:
PERSONAL
Born Ryakal Village, Telangana, India; son of Akula V. (a surgeon) and Padma Krishna; married Malini Byanna (divorced).
EDUCATION:Tufts University, graduated 1990 (with honors); Yale University, M.A.; University of Chicago, Ph.D., 2004.
ADDRESS
CAREER
Banker and writer. Worked with the Deccan Development Society, India; then for the Worldwatch Institute, Washington DC; SKS Microfinance (later renamed Bharat Financial Inclusion Ltd.), founder and chairperson, c. 2004-2011, then chairperson emeritus; VAYA Finserv Private Limited, Hyderabad, Telangana, India, chairperson, 2014–. Also a founding investor and a director of AgSri, Hyderabad, Telangana, India, and a director for Bodhi Educational Society.
AWARDS:Fulbright scholarship, 1994-95; Karmaveer Puraskaar Noble Laureates, 2006-2007; Young Global Leader award, World Economic Forum, 2008; Godfrey Phillips National Bravery Award, 2010; Ernst & Young Entrepreneur of the Year in India (Business Transformation), 2010; 100 Most Influential People of the Year, Time magazine, 2006; Social Entrepreneur of the Year in India, 2006.
WRITINGS
SIDELIGHTS
Vikram Akula is the founder of SKS Microfinance, later renamed Bharat Financial Inclusion Ltd. The organization was a microfinance company that provided small loans and insurance to poor women in India. Akula also founded a sustainable agriculture company called AgSri, which focuses on reduced water usage among small sugarcane farmers in India. He also served as a director of an organization that creates schools for poor children in India. Time magazine named Akula one of the 100 most influential people in the world in 2006 for his microfinancing efforts.
A Fistful of Rice
In his book titled A Fistful of Rice: My Unexpected Quest to End Poverty through Profitability, Akula details his work with SKS Microfinance, which was one of the first organizations to make microfinancing a substantial effort to combat poverty through its scale, scope, and profitability. (SKS is short for “self-help society” in Sanskrit.) In a personal narrative, Akula describes how he went to India to fight poverty and was able to combine philanthropy with capitalism to help primarily poor women in India work their way out of poverty by becoming business owners.
Akula details how he used fundamental business principles to help India’s poor. In the process, he faced numerous obstacles, both from bureaucrats and from gangsters who specialized in extortion. Eventually, Akula was able to raise capital to finance small loans to help rural women in India rise out of poverty. Akula also presents a strong defense of accusations that he used his microfinancing efforts to make a profit. “Akula … argues that not only is it ethical for microfinance institutions (MFIs) such as his to earn high profits, it’s more ethical than practicing non-profit microfinance,” wrote Michelle Archer in USA Today. Akula’s defense includes his believe that drawing in capital helps provide credit to more people and that charging an interest rate of 28 percent helps cover costs.
In addition to detailing the various events that led to the creation of SKS Microfinance, Akula also provides insights into his early life and what led him to try and help India’s poor. A Fistful of Rice “is … an inspirational story of a person who works toward helping the poor and succeeds ,” wrote Lucy Heckman in Library Journal. Richard N. Cooper, writing in Foreign Affairs, called the book “an inspiring autobiographical story.”
Micro-Meltdown
In his memoir titled Micro-Meltdown: The Inside Story of the Rise, Fall, and Resurgence of the World’s Most Valuable Microlender, Akula primarily focuses on the political backlash in India that began in 2010 when people began accusing microfinancers as a new type of loan sharks who preyed on the poor. These accusations largely seemed from the fact that at least 200 borrowers, including some who had borrowed from Akula’s organization, had faced so much pressure to repay loans from lenders that they ended up committing suicide. As a result, Indian politicians began telling poor borrowers not to repay their loans, resulting in SKS Financing writing off $280 million in loans and laying off 10,000 employees. The turnaround for micro financing was swift, going from a touted solution to global poverty to a villain in the financial world.
Akula ended up resigning from the firm he founded in 2011. He writes about the failures of microfinancing, detailing who he perceives as the primary villains who ruined microfinancing’s reputation. He also provides an impassioned defense of microfinancing. Akula throughout stresses his belief that helping the poor through small loans and making a profit as well is a sound approach to fighting poverty. “Microfinance watchers will devour this sobering cautionary tale,” wrote a Publishers Weekly contributor. Writing in the Economic Times Online, Sugata Ghosh remarked: “Though it has been a while since he left India’s largest micro-lender SKS Microfinance, Akula could never forget the bitter feud or forgive the men he blames for driving him out of the company.”
BIOCRIT
PERIODICALS
Foreign Affairs, March-April, 2011, Richard N. Cooper, review of A Fistful of Rice: My Unexpected Quest to End Poverty Through Profitability, p. 171.
Library Journal, October 15, 2010, Lucy Heckman, review of A Fistful of Rice, p. 87.
Publishers Weekly, April 23, 2018, review of Micro-Meltdown: The Inside Story of the Rise, Fall, and Resurgence of the World’s Most Valuable Microlender, p. 76.
USA Today, January 10, 2011, Michelle Archer, “Help Poor While Making a Profit?,” review of A Fistful of Rice, p. 05B.
ONLINE
Economic Times Online, https://economictimes.indiatimes.com/ (May 25, 2018), Sugata Ghosh, “Vikram Akula Makes Serious Allegations against Bharat Financial’s Top Officials,” review of Micro-Meltdown.
Live Mint, https://www.livemint.com/ (June 18, 2018), Tamal Bandyopadhyay, “Vikram Akula’s Inside Story of SKS Microfinance Will Remain Untold,” review of Micro-Meltdown.
Vikram Akula
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Vikram
Vikram Akula at the India Economic Summit 2008 cropped.jpg
Born Ryakal Village, Medak district, Telangana, India
Nationality American
Alma mater Tufts University
Yale University
University of Chicago
Occupation Founder, SKS Microfinance
Parent(s) Akula V. Krishna
Padma Krishna
Vikram Akula is an American banker and the founder of SKS Microfinance (now BFIL), a micro finance company and former chairperson of Bharat Financial Inclusion Ltd. SKS was an organization that offered microloans and insurance to poor women in India. He stepped down as SKS Chairperson in November 2011 and became Chairperson Emeritus.[1]
Akula is also a founding investor and a Director in AgSri, a sustainable agriculture company focused on helping small sugarcane farmers reduce water use, and a Director in Bodhi Educational Society, which establishes schools for underprivileged children in India.[2][3] In 2006, he was named by TIME magazine as one of the 100 most influential people in the world for his work in financial inclusion.[4]
Akula currently serves as Chairperson of VAYA Finserv Private Limited.[5] Founded in 2014, the India-based company markets financial services to low-income groups on behalf of partner banks.[6][7]
Contents
1 Early life and education
2 Career
2.1 SKS Microfinance
2.2 Influences
3 Controversy
4 Awards and recognition
5 References
6 External links
Early life and education
Akula's father, Akula.V. Krishna, was a surgeon who settled in Schenectady, New York, where Akula went to school.[8] Akula graduated from Niskayuna High School in 1986 and enrolled at Tufts University, where he graduated as a double major in philosophy and English with honors in 1990.[9] He went to Yale University for a M.A. in International Relations, and was awarded a Fulbright scholarship for an action-research microfinance project in India in 1994-95. He completed his Ph.D. in Political Science from the University of Chicago in 2004.[10]
Career
Upon graduating from Tufts, Akula returned to India for a short while in 1990 and worked with the Deccan Development Society, a small grassroots rural non-profit organization. He then returned to USA and worked for the Worldwatch Institute in Washington D.C. as a researcher, where he wrote articles about poverty and sustainable development. During his Fulbright, Akula returned to the Deccan Development Society, where he helped manage the organization’s microfinance program.[11] Akula saw the limitation of non-profit microfinance and proposed a more market-based approach. He outlines his philosophy in his book, A Fistful of Rice; My Unexpected Quest to End Poverty Through Profitability, published by Harvard Business Press in 2010.[2]
SKS Microfinance
In 1996, Akula completed his Fulbright and went to the University of Chicago to pursue his Ph.D, which he completed in 2004. As a Ph.D. student, he created a business plan for a for-profit microfinance company and in December 1997, Akula returned to India to set up Swayam Krishi Sangam (SKS) as a vehicle to implement the plan. Initially set up as a non-profit, SKS converted to the for-profit SKS Microfinance in 2005.[10] SKS Microfinance secured a round of equity investment of $11.5 million in March 2007, led by Sequoia Capital.[12] In November 2008, SKS raised an equity investment of $75 million, the largest equity investment raised by an MFI to that date.[13] SKS raised additional equity from Infosys founder Narayan Murthy and Bajaj Allianz, which represented the first-ever microfinance investment by an insurance company.[14][15]
In mid-August 2010, SKS Microfinance had an Initial Public Offering (IPO) on the Bombay Stock Exchange, which raised $350 million and was oversubscribed 14 times and which included anchor investors such as George Soros.[16][17] According to the company's website, SKS Microfinance has disbursed more than $7.5 billion in micro-loans.[18]
Akula resigned from the role of Executive Chairperson on November 23, 2011 and he relinquished his role as a promoter of SKS on May 3, 2014.[19][20]
Influences
When founding SKS, Akula drew inspiration from the work of Muhammad Yunus, the Nobel prize winner and founder of the Grameen Bank in Bangladesh, one of the world’s first microfinance organizations.[citation needed] In a face-to-face debate with Yunus at the 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 billions of poor people in need worldwide.[21]
Controversy
In late 2010, the state government of Andhra Pradesh accused microfinance companies, including the then market leader SKS, for the suicides of poor, debt-ridden residents of the state that year.[22][23] Two investigations into the incident, the first an independent investigation commissioned by SKS, and the second commissioned by an industry umbrella group, both pointed to SKS involvement in the suicides, and said that SKS employees had engaged in illegal practices like verbal and physical harassment, coercion, and public humiliation, in order to recover debts.[22][23]
Around the same time, Akula's former wife, Malini Byanna, accused Akula in an open letter of pressuring her to do "illegal and unethical things" during her time as the director of the SKS foundation, for example, writing fraudulent immigration letters, covering up shifting of finances and funds between different programs of SKS, and bribing public officials.[24]
Akula addresses the controversy in his book, Micro-Meltdown: The Inside Story of the Rise, Fall, and Resurgence of the World’s Most Valuable Microlender.
Awards and recognition
Akula has received several awards for his work with SKS.
Time magazine's 100 Most Influential People of the Year in 2006.[4]
Social Entrepreneur of the Year in India, 2006.[25]
Ernst & Young Entrepreneur of the Year in India (Start-up, 2006)[26]
Ernst & Young Entrepreneur of the Year in India (Business Transformation, 2010)[27]
India Today, India’s 50 Most Powerful People, 2009.[28]
Forbes India, Person of the Year nominee, 2009.[29]
Godfrey Phillips National Bravery Award, 2010.[30]
World Economic Forum’s Young Global Leader award, 2008.[3]
Echoing Green Poverty Alleviation Economic Development - 1998 Fellow[31]
Karmaveer Puraskaar Noble Laureates, 2006-2007.[32]
Micro-Meltdown: The Inside Story of the Rise, Fall, and Resurgence of the World's Most Valuable Microlender
Publishers Weekly. 265.17 (Apr. 23, 2018): p76.
Copyright: COPYRIGHT 2018 PWxyz, LLC
http://www.publishersweekly.com/
Full Text:
Micro-Meltdown:
The Inside Story of the Rise, Fall, and Resurgence of the World's Most Valuable Microlender
Vikram Akula. BenBella, $26.95 (380p)
ISBN 978-1-946885-10-4
In this impassioned memoir, for-profit microfinance entrepreneur Akula (A Fistful of Rice) defends his legacy while also acknowledging mistakes in the wake of a wave of suicides among his former company's clients. Akula and SKS Microfinance, which he founded to offer small loans to some of the world's poorest people, were riding high after the firm's 2010 IPO. But the euphoria didn't last long. Later that year, news broke that as many as 200 borrowers, some from SKS, had killed themselves after facing relentless pressure from lenders to repay. The backlash against Akula, SKS, and the microfinance industry was swift, and after confrontations with the company's board of directors over how to proceed after the scandal, Akula resigned in 2011. Saddened by the catastrophe, he nonetheless has not altered his stance that helping the destitute and making money are not mutually exclusive. Microfinance watchers will devour this sobering cautionary tale, and other would-be world-changing businesspeople would do well to learn from the missteps catalogued. (June)
Source Citation (MLA 8th Edition)
"Micro-Meltdown: The Inside Story of the Rise, Fall, and Resurgence of the World's Most Valuable Microlender." Publishers Weekly, 23 Apr. 2018, p. 76. General OneFile, http://link.galegroup.com/apps/doc/A536532932/ITOF?u=schlager&sid=ITOF&xid=bb04991f. Accessed 13 Aug. 2018.
Gale Document Number: GALE|A536532932
A Fistful of Rice: My Unexpected Quest to End Poverty Through Profitability
Richard N. Cooper
Foreign Affairs. 90.2 (March-April 2011): p171.
Copyright: COPYRIGHT 2011 Council on Foreign Relations, Inc.
http://www.foreignaffairs.org
Full Text:
A Fistful of Rice: My Unexpected Quest to End Poverty Through Profitability.
By Vikram Akula.
Harvard Business Press, 2010, 224 pp. $26.95.
This is an inspiring autobiographical story of an American of Indian origin who went to India to help the rural poor, first as a volunteer and then as the founder of a for-profit microfinance company, SKS (short for "self-help society" in Sanskrit). It is a personalized account of Akula's motivations, his tribulations in dealing with India's bureaucracies and extortionist gangsters, his gradual but ultimately outstanding success in raising capital to finance rural lending, and the rewards of seeing thousands of poor rural women take initial steps up the economic ladder. Microfinance has come under criticism for profiting from what some view as charitable work. Akula makes a vigorous defense of drawing in capital, largely on the grounds that it permits the much more rapid extension of credit to many more people who need it. He also defends the practice of charging an interest rate (28 percent) high enough to cover the actual costs of reaching remote villages and to provide a competitive return on the risk.
Cooper, Richard N.
Source Citation (MLA 8th Edition)
Cooper, Richard N. "A Fistful of Rice: My Unexpected Quest to End Poverty Through Profitability." Foreign Affairs, Mar.-Apr. 2011, p. 171. General OneFile, http://link.galegroup.com/apps/doc/A254244941/ITOF?u=schlager&sid=ITOF&xid=ab72f4af. Accessed 13 Aug. 2018.
Gale Document Number: GALE|A254244941
Akula, Vikram. A Fistful of Rice: My Unexpected Quest To End Poverty Through Profitability
Lucy Heckman
Library Journal. 135.17 (Oct. 15, 2010): p87.
Copyright: COPYRIGHT 2010 Library Journals, LLC. A wholly owned subsidiary of Media Source, Inc. No redistribution permitted.
http://www.libraryjournal.com/
Full Text:
Akula, Vikram. A Fistful of Rice: My Unexpected Quest To End Poverty Through Profitability. Harvard Business Pr. Nov. 2010. c.224p. ISBN 9781422131176. $26.95. BUS
[ILLUSTRATION OMITTED]
Akula, founder and chair of SKS Microfinance, here relates his personal journey after a life-changing moment in 1995 when working in India in microfinance for the first time ("lending very small amounts of money to very poor people") with the nonprofit Deccan Development Society (DDS). A woman asked him if a lending program could be started in her village, but after being told by the DDS director that funds were not available, Akula informed the woman, who replied: "Am I not poor, too?.... This was a defining moment for me," he says. "We had to find a way to change microfinance--to make it available to any Indian, or any poor person anywhere in the world ... to escape poverty." This event led Akula to organize and create SKS Microfinance, which is now successful. The struggles to develop SKS as well as the innovations that made it successful are recounted. VERDICT Not only for those interested in economics and business, this is for anyone looking to read an inspirational story of a person who works toward helping the poor and succeeds at truly making a difference.--Lucy Heckman, St. John's Univ. Lib., Jamaica, NY
Heckman, Lucy
Source Citation (MLA 8th Edition)
Heckman, Lucy. "Akula, Vikram. A Fistful of Rice: My Unexpected Quest To End Poverty Through Profitability." Library Journal, 15 Oct. 2010, p. 87. General OneFile, http://link.galegroup.com/apps/doc/A240017009/ITOF?u=schlager&sid=ITOF&xid=8551a3b0. Accessed 13 Aug. 2018.
Gale Document Number: GALE|A240017009
Help poor while making a profit?
Michelle Archer
USA Today. (Jan. 10, 2011): Business News: p05B.
Copyright: COPYRIGHT 2011 USA Today
http://www.usatoday.com/
Full Text:
Byline: Michelle Archer
Is making a profit from the poor a form of exploitation? It's a frequently raised question in the world of microfinance, where financial services such as loans are provided to those who have not traditionally had access to banks.
Vikram Akula, the founder of India's SKS Microfinance, argues that not only is it ethical for microfinance institutions (MFIs) such as his to earn high profits, it's more ethical than practicing non-profit microfinance.
How he reached that controversial conclusion makes up the early parts of A Fistful of Rice, which details how the big-thinking social entrepreneur applied the practices of companies such as McDonald's and Google to fuel SKS' explosive growth.
Born in India but raised in the USA, Akula knew from age 12 he wanted to return to his birthplace to help people. He writes of heartbreaking encounters that highlighted the disparity between his comfortable life as a surgeon's son in Upstate New York and the hunger and desperation he saw during visits to India.
Another pivotal moment came after graduation from Tufts University. While working for a non-profit in a remote Indian village, Akula had to turn away a woman from another village because the non-profit lacked resources to expand an agricultural lending program to her area. Her words -- "Am I not poor, too? Do I not deserve a chance to get my family out of poverty?" -- made Akula resolve to find a way to make microfinance available to anyone.
After cobbling together funds from family and friends with a matching grant, Akula started SKS in 1997 to provide small loans to India's rural poor as a tool to help them find their way out of poverty. Though he began the company as a non-profit, Akula says that his goal was always to turn SKS into a for-profit entity. The flaw of non-profit microfinance, he writes, is the limited pool of capital available from donors, social investors or governments: Not everyone who wants a loan can get one.
Akula felt the only way to raise more capital and help as many people as possible would be to run SKS as a highly commercial, for-profit entity to attract a "virtually unlimited pool" of private investors. Akula writes that everybody wants a return on their investments. With more funds, SKS could grow faster and reach more poor villagers.
It's a perfect circle that benefits everyone, Akula writes. Venture-capital firms apparently agree: In 2006, Sequoia Capital led an $11.5 million round of financing for SKS, while another round in 2008 raised $75 million. Akula's dogged pursuit of his goal has yielded SKS more than a million members and 2,000 branches in India, and makes for a colorful story, as well.
In Fistful, Akula details how Michelle Obama helped him shape a grant application in the mid-'90s, how crowbar-carrying thugs locked him inside SKS' first branch, and how he explained "goat economics" to Bill Gates. With such reach into India's underdeveloped, rural markets, Akula says SKS has opened a new world of possible revenue streams, as well as opportunities for their members in the form of deals on goods and services, increased political power and health and education initiatives.
Some people, Akula writes, will never feel comfortable discussing poor people and profit in the same sentence, no matter how much sense it makes.
"The notion that it's somehow unethical to enter into profitable business working with the poor is insulting to the poor," he says in the book. "They are not children who need our protection. Instead, they are working men and women who thrive under a system that lets them take their economic lives into their own hands. Treating them as anything less is unjust," he concludes.
Archer is a freelance writer based in Seattle
A Fistful of Rice: My Unexpected Quest to End Poverty Through Profitability
By Vikram Akula
Harvard Business Review Press, $26.95, 191 pages
CAPTION(S):
PHOTO, B/W; PHOTO, B/W
Michelle Archer
Source Citation (MLA 8th Edition)
Archer, Michelle. "Help poor while making a profit?" USA Today, 10 Jan. 2011, p. 05B. General OneFile, http://link.galegroup.com/apps/doc/A246150325/ITOF?u=schlager&sid=ITOF&xid=8f92a6e5. Accessed 13 Aug. 2018.
Gale Document Number: GALE|A246150325
Vikram Akula’s inside story of SKS Microfinance will remain untold
‘Micro-Meltdown’, written by SKS Microfinance founder Vikram Akula, once the poster boy of Indian microfinance, is a gripping tale of what it takes to build a world-class financial institution and how to destroy it
Last Published: Mon, Jun 18 2018. 12 19 PM IST
Tamal Bandyopadhyay
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Vikram Akula, founder of SKS Microfinance. Rechristened Bharat Financial Inclusion Ltd, SKS is now being merged with IndusInd Bank Ltd. Photo: Pradeep Gaur/Mint
Vikram Akula, founder of SKS Microfinance. Rechristened Bharat Financial Inclusion Ltd, SKS is now being merged with IndusInd Bank Ltd. Photo: Pradeep Gaur/Mint
The untold story of the creation, near-destruction and the resurgence (under a new management) of the world’s second listed microlender, SKS Microfinance Ltd, may not see the light of the day. Micro-Meltdown, written by SKS founder Vikram Akula, once the poster boy of Indian microfinance, is a gripping tale of what it takes to build a world-class financial institution and how to destroy it. However, it is only his side of the story.
The content of the book allegedly violates the confidentiality and separation agreement signed by Akula at the time of quitting SKS. This agreement does not allow Akula to say what happened at board meetings leading to his ouster. Its publication both in the US and India is, therefore, on hold and legal teams of both sides have been discussing the way forward.
Rechristened Bharat Financial Inclusion Ltd (BFIL), SKS is now being merged with IndusInd Bank Ltd.
While we wait for a sanitized version, the original book, which I have read, is the ultimate insider account—narrating the boardroom battles in graphic details and unmasking the tribe of private equity investors, who, according to Akula, cared only about the returns on investments, and nothing else.
Akula tried to dissect what went wrong in the microfinance industry in general and, SKS in particular, which lead to the suicide of 54 borrowers in Andhra Pradesh. It also talks about the draconian state law of 2010, which choked the industry, killing a few microfinance institutions (MFIs). The share price of SKS crashed, but the money raised through the initial public offering (IPO) saved it from liquidation, which many other MFIs faced.
What exactly went wrong? Well, according to Akula, villain No. 1 was the MFIs, floated by former bankers, who did not know the DNA of borrowers. Their sole objective was to cut costs by compromising on training, the cornerstone of success. These bankers made a beeline to enter the sector, following private equity firm Sequoia Capital’s landmark $11.5 million investment in SKS in 2007.
Villain No. 2 was a motley group of moneylenders, bureaucrats, the mainstream bank-led self-help group or SHG lending model which thrived on bribe, and politicians.
Who was the third villain? Akula is in two minds in accepting the blame. “Why didn’t I step in to stop the deviation of the company from its core values?” Akula has asked himself. “Was I a culprit too?” The answer: “Sometimes I feel like I was. Sometimes I feel like I wasn’t. What I do know is that things went horribly, horribly wrong.”
Three dominant themes run through the book:
#Akula built SKS—an epitome of everything that could go right, lending money to the so-called bottom of the pyramid, changing the lives of millions and, at the same time, making money for the company.
#For its downfall, everybody else is responsible—most of the investors, most independent directors of the board and the top management, particularly SKS’s managing director and chief executive M.R. Rao and chief financial officer Dilli Raj.
#Finally, SKS was on the verge of collapsing because it was not following the ethos that Akula stood for.
How Rao and Raj ganged up to throw Akula out is sensational. According to Akula, they forced him to sacrifice the company’s chief executive Suresh Gurumani after SKS’s blockbuster IPO. Once their mission was accomplished, the duo’s next target was Akula. He also described in detail how Rao isolated Akula from everyone else and forced him to give up the company he had built with his blood, sweat, passion and unique understanding.
His phones were allegedly tapped and every move was tracked. The book reads like a thriller.
It could have been a great lesson for those Indian promoters who run the risk of becoming irrelevant after their enterprises become successful and who see their companies deviating from the core values. That said, this is solely Akula’s version. Somebody needs to write another book on SKS, incorporating the versions of Rao and Raj, and some of the other board members and private equity investors, who have all been painted with the same brush.
The book should have also chronicled Akula’s abortive attempt to come back to SKS as a director and answer questions such as why he left the company at critical junctures (to return later); how it was rebuilt and how it regained its value; how the SKS Trust Advisors Pvt. Ltd, the largest shareholder in SKS, worked and who were the ultimate beneficiaries; why Catamaran Ventures was given a stake in the company at a price lower than what investors who had come in earlier had paid; who owned Tejas Ventures, an investor in SKS; and many more such questions which still remain unanswered.
Tamal Bandyopadhyay, consulting editor at Mint, is adviser to Bandhan Bank. His Twitter handle is @tamalbandyo.
Comments are welcome at bankerstrust@livemint.com.
First Published: Mon, Jun 18 2018. 12 14 PM IST
Vikram Akula makes serious allegations against Bharat Financial’s top officials
By Sugata Ghosh, ET Bureau|May 25, 2018, 09.53 AM IST
Mumbai: Vikram Akula’s acrimonious exit in 2012 from the company he founded was one of the low points of his life. His comeback to regain a toehold in micro-lending, Akula’s passion, has been modest — indeed, he briefly made news when RBI denied a small bank licence to his fledgling firm. Though it has been a while since he left India’s largest micro-lender SKS Microfinance, Akula could never forget the bitter feud or forgive the men he blames for driving him out of the company where he was once ..
After six years, the once poster boy of micro-finance, has spewed a litany of allegations against the CEO and other senior officials of Bharat Financial Inclusion — as SKS is known today— in a tell-all book that hits the stands in June.
According to Akula, during his days in SKS, MR Rao, who is now the CEO & MD of Bharat Financial, was tracking Akula’s phone calls, reading his text messages on the company server, and accessing all his emails. It led Akula to immediately switch to a burner phone, says the book “Micro Meltdown” with the long sub-title “The inside story of the rise, fall, and resurgence of the world’s most valuable microlender”.
Akula also alleges that his driver was spying on him under instruction from Rao who, says Aluka, had put another former CEO under such furtive surveillance. The experience had forced Akula to hire a chauffeur from outside the company.
A Bharat Financial spokesman described the allegations as “wild, unsubstantiated” and “nothing new following his standard practice of similar allegations in the past.” “We are yet to review Akula’s book Micro Meltdown pending its release... The Company will take appropriate action based on the actual contents of the book upon its release,” the Bharat Financial official told ET. He categorically refuted Akula’s another allegation of Rao arm twisting a senior SKS official to go against Akula.
The book narrates an incident where Rao threatened to fire the official concerned — who was in the rank of executive vice-president — and even implicate him in false cases of embezzlement for refusing to sign a statement against Akula. In Akula’s words, Rao physically accosted the official (who resigned a week after Akula left) and shouted obscenities at him in the hallway in the hope that the embarrassment would force him to cave in.
This, the Bharat Financial spokesman said, was unfounded. “The allegations have been investigated and found to be frivolous way back in 2012. The employee in question who made the allegation was repeatedly given several opportunities to produce supporting material, but he failed to do so. He later admitted that he does not have any material to support his allegations.” Akula, he said, seems to be aware of these facts, but for reasons known to him is raising these allegations against the senior management seven years later. According to him, “the preview of the book demonstrates the standard practice of a disgruntled executive raising dated and incorrect allegations.”
Akula, who says he had shared some of his experiences with the former SKS CEO Suresh Gurumani, declined to comment when ET asked him whether he was in a position to substantiate the allegations that could be construed as defamatory by Rao and Bharat Financial.
An email to his publisher, the Dallas-headquartered BenBella Books, went unanswered till the time of going to press.
Akula led SKS till 2004 when he joined the Chicago office of McKinsey & Co as a consultant, and returned to the company in 2005. SKS hit the headlines after the stunning success of its IPO in 2010, and again came under media glare when the then CEO Gurumnai left the company. Less than two years later, Akula quit.
While Bharat Financial did suffer a ‘meltdown’ following the Andhra Pradesh MFI law, the company was rebuilt after Akula’s exit, said a company official. Compared with a portfolio of ?1,810 crore and a loss of ?428 crore in the third quarter of FY12, the company’s fourth quarter numbers in FY18 show a portfolio of ?12,594 crore and after-tax profit of ?211 crore. “The market capitalisation of the company today is in excess of $2 billion — hardly a case of ‘Meltdown’,” he said.