Vikram Akula: SKS Microfinance and the Andhra Pradesh Crisis

In August 2010, investors rushed to buy shares in a company. It lent tiny sums to poor women. Three months later, that same company was fighting for survival.

Vikram Akula was born on 7 November 1968. He was born in Ryakal village, Medak district, in present-day Telangana. He grew up in the United States. He studied at Tufts, Yale, and the University of Chicago. He finished a PhD there in 2004. In December 1997, he returned to India. He founded Swayam Krishi Sangam, known as SKS. It began as a non-profit microfinance group. In 2005, SKS became a for-profit company, SKS Microfinance. It gave small loans mainly to poor rural women.

From Non-Profit to IPO

Akula’s SKS grew from a small rural project into a listed company. That rise, and its speed, set up the crisis that followed.

Building SKS

NABARD ran a separate, older model of rural credit. It used non-profit, bank-linked Self-Help Groups, or SHGs. SKS Microfinance was different. It was a private, for-profit NBFC-MFI. See IndEco0192 — NABARD for that separate channel. Under Akula, SKS grew fast. It reached a peak of 7.3 million active borrowers, by 2010-11. Over its history, it lent out more than $5 billion.

The 2010 IPO

In August 2010, SKS Microfinance held India’s first microfinance IPO. It listed on the Bombay Stock Exchange. The IPO raised about $350 million, or roughly ₹1,650 crore. It was oversubscribed nearly 14 times over.

The 2010 Crisis

Just months after its IPO, SKS faced a sector-wide crisis. It centred on Andhra Pradesh, its largest market by far.

What Went Wrong

Soon after the IPO, a crisis hit India’s whole microfinance sector. Andhra Pradesh was the state hit hardest. The state government pointed to widespread borrower distress. It cited reported suicides, as grounds for tighter rules. The state responded with an Ordinance. It took effect on 15 October 2010. Lenders had to register with the state. It capped how many loans one borrower could take. It also penalised coercive loan recovery.

The Fallout

The Ordinance froze lending and recovery, across the whole sector. SKS Microfinance alone could not recover an estimated ₹1,400 crore in loans. Its share price fell sharply, from its September 2010 peak. In November 2011, Akula resigned. He stepped down as SKS Microfinance’s Executive Chairman. This came after the company reported a large quarterly loss. He stayed on as a consultant, until March 2012.

Life After SKS

Akula’s own recognition, and his later return to the field, round out his story. His career also reflects a bigger debate about microfinance itself.

Recognition and Return

In 2006, TIME magazine named Akula one of its 100 Most Influential People in the World. This honoured his work in microfinance. That same year, he won two more awards. He won the Schwab Social Entrepreneur of the Year award. He also won an EY Entrepreneur of the Year award, in India. He wrote a book about SKS’s rise. It is called “A Fistful of Rice.” Harvard Business Press published it in 2010. In 2014, Akula founded Vaya Finserv. It offers financial services to low-income groups, on behalf of partner banks. This marked his return to microfinance.

A Larger Debate

Akula’s career reflects a broader debate in Indian development policy. Can a market-driven, for-profit model serve the poor responsibly? Or does it risk the same predatory pressures as informal moneylending? Akula’s own career is often cited on both sides of that question.

Exam Edge

Two traps come up often around this topic. Both are worth knowing before an exam.