SKS Microfinance: Managing Growth and Continuity of a Social Enterprise


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Case Details:

Case Code : LDEN073
Case Length : 25 Pages
Period : 2009-2010
Pub Date : 2011
Teaching Note : Available
Organization : SKS Microfinance.
Industry : Microfinance
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction cont..

Akula, inspired by Yunus's Grameen Bank, realized that there were three major constraints in India in providing microfinance to the poor. He depicted them in terms of three "C"s - Capital constraints, Capacity constraints, and the high Cost of delivering micro loans. In order to overcome capital constraints, he designed SKS as a for-profit model of business and was thus successful in attracting big Silicon Valley2venture capitalists to fund the institution. In order to overcome the capacity constraints, he took cues from the best practices of global giants such as McDonald's and Starbucks and implemented them in an innovative way to standardize the microfinance operations of SKS and attain rapid scalability.

Akula also promoted the use of modern technology to minimize the cost of operation for the firm.As of 2010, SKS was the largest MFI in India and it was growing at the rate of 200% per annum. It was adding over 50 new branches and 130,000 new customers every month and had a loan default rate of less than 1%3.

Excerpts>>

2] The term 'Silicon Valley' it is now generally used as a metonym for the American high-tech sector
3] Vikram Akula, "God of Small Credit," Business Today, January 13, 2008

 

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