NRI named TIME 100: The People Who Shape Our World

New York, May 01, 2006
Asha Chopra

NRI, Vikram Akula, (was named in the list of 100 most influential people selected by Time magazine as who shapers of the world. He was selected on the bases of finding Novel Ways to Support India's Poor people. His logic is that poor people need credit to survive. We provide small loans to poor people for income-generating activities. We undercut loan sharks at the doorstep with collateral-free loans.

According to Time magazine, JULIE RAWE reporter Vikram Akula is using advanced technology—smart cards—to make venture capital available to more of the 800 million people in India who live on less than $2 a day. In the hinterland, where there are few landlines, let alone ATMs, the founder of SKS Microfinance is starting to dispense loans, typically $116, on smart cards, which its loan officers had been using to record repayments electronically. The plastic approach intrigued Visa International, which is now pairing SKS with cell phone-based card readers. The cash-free system is more efficient and safer too. As Visa's emerging-markets chief, Debbie Arnold, put it, a cash-laden loan officer "might as well carry a big bull's-eye on his back."

He supports 63 different activities divided into three categories: livestock, trading and agriculture. "Aboutm 40 per cent loans are for livestock, 20 goes to trading and about 15 per cent goes to agriculture in areas where villagers plough their own or leased land.

By SKS Microfinance (SKS)

Akula, 37, has already made SKS one of the fastest-growing microlenders, having dispensed $52 million to 221,000 clients since 1998. SKS keeps its default rate below 2% by using software that provides real-time data. When he spots a red flag, he says, "we're on it like a swat team." Such transparency has attracted Silicon Valley types, with David Schappell of Unitus, a nonprofit venture-capital firm devoted to microfinance, likening SKS to the little coffee shop that became Starbucks. Microccino, anyone?

The poverty in India is disconcerting," says Vikram Bayana Akula. "I just thought I must do something." That's how this story began in the interiors of arid Andhra Pradesh.

Akula, who grew up in Schenectady, upstate New York (where father A.V. Krishna is a surgeon), encountered poverty first hand earlier while visiting relatives in Medhak. "It's a tragedy that we NRIs who can do a lot, are not doing enough. We have the skills to solve the problems," he says. After returning to the US from his stint in Zaheerabad, Akula had joined the prestigious Harvard Divinity School but lasted only a semester. "I could not read ethics," he says. After picking up a master’s degree in agrarian and rural development from Yale, he returned to Medhak on a Fulbright scholarship. In the meantime, he also worked on an India government project to help develop an alternate distribution system. In ’96, he did his PhD at Chicago University where, predictably, his thesis was on local political empowerment. Theory and praxis, Akula has been able to bridge the divide—yet another face of globalisation.

The year that Akula spent in Zaheerabad transformed him forever. For the past decade, he's worked tirelessly to help the impoverished people of this Deccan region. Inspired by Mohammad Yunus' micro-credit Grameen Bank in Bangladesh, he started the Swayam Krishi Sangam (SKS) in 1998 in Medhak district. He raised $52,000 from individual contributors in the US with, not surprisingly, 50 per cent of the money coming from NRI doctors. "The idea is to put private sector initiative into alleviating poverty. I don't want to depend on grants or government money.

Case Study: Raipally Siddamma

Siddamma is among the most entrepreneurial members of SKS Microfinance. She has taken four income-generating loans for a wide range of activities and has secured many assets. In her first year, Siddamma took a loan of Rs. 1,500 (US $32) for rearing a goat. She then took a Rs. 2,000 (US $43) loan for vegetable vending. Still later, Siddamma took a Rs. 6,000 (US $129) loan to purchase a mango tree, the fruit of which she sells each mango season. Finally, Siddamma took a loan to buy fishing nets and to contract three fishermen to catch her daily fish, which her husband then sells in a nearby city. Through this combination of enterprises, Siddamma has netted huge profits. She now earns Rs. 100 (US $2.12) profit per day. This is remarkable considering that, as a former agricultural laborer, she barely earned Rs. 20 (US $ 0.42) each day.

SKS Microfinance (SKS) is one of the leading providers of microfinance in India. Founded in 1997, SKS has delivered over $50 million in microfinance to over 200,000 women clients in one of the poorest parts of Southern India. In the last year alone, SKS grew by nearly 300% and has a current portfolio of $19 million with a 99% on-time repayment rate. At present, SKS has over 80 branches and 850 employees and is expanding rapidly in Andhra Pradesh, Karnataka, Maharashtra, Orissa and Madhya Pradesh. At the current pace, SKS will reach its goal of 700,000 clients by 2007.