Companies & Sectors
A letter from the former wife of SKS Microfinance’s Vikram Akula

Yesterday we had reported on how SKS Microfinance had sacked its CEO under a shroud of secrecy. We reproduce a letter below (verbatim) we have received from Malini M Byanna, Vikram Akula’s former wife

Dear Sucheta Dalal,

Thank you for having the courage to write such an article, (Moneylife note -  please see: finally exposing the truth about Dr Vikram Akula et al and the "corporate governance" issues, or more accurately "power and control" issues, that have been long-standing, dating back to our separation and divorce, which was initiated by our then 8-month-old son being abducted in Chicago, Illinois by his father, his father's family, and members of his company in an effort to preclude me from attending a previously scheduled SKS Foundation board meeting during which I was going to call for formal resolutions to be passed such that SKS Foundation and SKS Education would be under my direct management and purview and SKS Microfinance and SKS Technologies under his.

I had called for the same due to stark differences in the legal, ethical, and fiscal management of the international development company that Dr Vikram Akula claims to have founded, which in fact was established in the Fall of 1999 subsequent to our engagement, with me assembling a Board of Directors for Navariti, Inc., later SKS Foundation, at a time when SKS Microfinance was not flourishing and the so-called founder was ready to pack his bags and move back to the United States.

Moreover, (on) the initial seed money that Dr Vikram Akula claims in various media articles that he and his family single-handedly raised from 350+ individual donors... they were in fact guests attending our lavish $80,000 wedding, primarily paid for by my parents, during which we asked for donations to Navariti, Inc., later SKS Foundation, in lieu of wedding gifts.

Our international development company initially operated out of my parents' home in Schaumburg, Illinois where we later resided as husband and wife, with said donors listed in SKS' 2000 Annual Report which can be found on the Web. See also SKS Foundation Annual Report 2001. Further, Dr Vikram Akula continues to take credit for and reap the benefits of the ideas, intellectual property, and sweat equity of countless individuals who helped take him to the "top of the mountain" because he had them convinced that (he) only had noble and altruistic motives, only for him to push them off the cliff if they dared challenged or opposed him or as and when they no longer had any utility or purpose, myself included.

Said ideas, intellectual property, and sweat equity include but are not limited to the following:

(1) Replicating SKS Microfinance in the 100 poorest districts of India by and through a non-banking finance corporation wherein the beneficiaries would be the largest shareholders, which was my inspiration

(2) The Smart Card project and related software and implementation developed by a McKinsey Consultant with a grant by CGAP of the World Bank, which was the inspiration of SKS Microfinance's former Chartered Accountant, and

(3) The SKS Education and Nutrition Program, for which I had secured a $300,000 earmarked grant from I2 Technologies, which was illegally dipped into while I was abroad without the knowledge and consent of the SKS Foundation Board to cover SKS Microfinance expenses because said program had been bankrupted by its so-called founder by and through unnecessary and wasteful expenditures in furtherance of his political aspirations.

Finally, I wanted to correct some factual errors in your report in that Dr Vikram Akula and I divorced in December 2002 after a protracted 14-month custody battle following the return of our son into my custody, care, and control, just 5 days after he was abducted over Columbus Day Weekend 2001 in a plot and a plan that was hauntingly similar to that which was exacted over Columbus Day Weekend 2009, but this time in India where Dr Vikram Akula, family, and company wield tremendous power and influence due to their money, stature, and political connections. Further, custody has never been disturbed and was, in fact, re-affirmed in August 2005 subsequent to a 604(b) best interests of the child evaluation, and the Family Court of Hyderabad's order granting Dr Vikram Akula guardianship of our son is only interim in nature and is currently under direct appeal in the Supreme Court of India. Therefore, Dr Vikram Akula has not by any means won custody of our son, either in India or in the US, as our case is still pending and (is to be) resolved in both countries.

Thank you and God bless,

Malini M Byanna

(The Former Wife)



k a prasanna

7 years ago

Chicago Mom Fights To Bring Son Back From India
By Steven Tanner on March 11, 2010 8:58 AM | No TrackBacks

The case of a Hoffman Estates mother's attempt to regain custody of her 9-year-old son Tejas, discussed by Chicago Daily Herald columnist Burt Constable, goes beyond state and even federal law. Malini Byanna's son is in the custody of her wealthy and politically connected ex-husband Vikram Akula, who is thousands of miles away in India.

Mr. Constable says Illinois family law attorneys are calling this international struggle "one of the most important and complicated custody cases ever."

Ms. Byanna faces monumental hurdles, not least of which is a 62-page decision by a judge in India granting Mr. Akula custody of Tejas. The boy was baptized as a Christian, but Ms. Byanna claims Mr. Akula lied to the court to take advantage of what she calls a legal system that favors Hindus and males in such proceedings.

But Mr. Akula also has the advantage of being one of India's most wealthy and influential entrepreneurs; a friend of Bill Gates who is lauded for his microfinance business that provides capital to mostly poor women in India. One of his US attorneys was quoted as saying Mr. Akula wanted custody after the "umpteenth manic episode" of Ms. Byanna, while she says Mr. Akula is "narcissistic and pathological."

In other words, this very unusual child custody case has plenty of very ordinary, bitter sniping between the parties.


7 years ago

I deeply sympathise with Ms Malini. Promoters and MD's using Companies for promoting personal gain or for vendetta aginst ex-employees, though not condonable is done everywhere. The PSU's (Central Bank protecting its ex-CMD Mrs Homai Daruwala), quasi PSU's (NSE protecting its MD Ravi Narain who is wrongly charging A Sebastin an ex-employee) and 100's of Pvt companies where employees wrongly suffer at the hands of "owners" are all guilty of this common practice of using their Corproate resources to fight individuals who will ALWAYS have limited means. I challenge people like Ravi Narain and Vikram Akula to create such hell for poeple like Mukesh Ambani or Anil Ambani............poeple with limitless personal wealth; instead of fighting against a Sebastin or a Malini. Hats off to Malini for living thru the hell & trauma created for her by her own husband and for pursuing this matter diligently so that crooks like Vikram Akula do not go scot free.

sunil hemnani

7 years ago

Its always wonderful to see the truth come out .What is always so evident is that the truth comes out in some corner of the media .I hope the guilty is brought to justice and maybe a certain standard could be brought about in the corporate governance area of Microfinance.If things are left as they are we will see a new Avenue for scamsters to take shape.Will this case be the first for the Super regulator??

Ravindra Shetye

7 years ago

Since the charges coupled with the sacking of CEO are of direct interest of the shareholders and in terms of corporate governance of interest to general public as well, can the Supreme Court take Suo Moto cognizance of this matter, so as not to embolden more Public Limited Companies to brazenly act in the same way?

Narendra Doshi

7 years ago

Sucheta : Good followup from you so soon & complete reproduction from the other connected person. Well done & keep it up & going.


7 years ago

Sucheta - There is criminal case filed against him by a woman in Hyderabad for entering her premises and damaging the property. He published few advts during the IPO and lied about that incident. If you check those advts; you will get more details. He looks like megalomaniac and extremely arrongant. Portrays himself as visionary. You have read the interview before the interviews by him and VC invested with SKS.


7 years ago

SKS was touted to be India's grameen bank but these controversies are just casting an unsavoury light on the whole business .. i do hope they manage to clear all the issues and do well


7 years ago

Good to see the letter and clarifications from the ex-wife. There seem to be lot of skeletons of this over-hyped company and it's directors and their working.

Gold finance companies & their revenue models-II

Borrowing against gold is becoming more popular as the yellow metal’s price reaches for the stratosphere and Indians lose their inhibitions over pledging their family heirlooms as collateral. Is it safe to do business with these gold-loan companies? 

In the previous part of this two-part series, we examined how loans against gold gained popularity ( We now examine the revenue models of these gold-loan companies.

The biggest advantages for a gold-loan company are the following:

1) The hefty interest they can charge on these loans. The illiterate farmer has no other place to go and it was an opportunity for these companies.
2) They operate at huge margins - sometimes as high as 20%.
3) They offer very short terms of lending and they can ask the borrower to repay/give more assets or auction the securities (and in auctioning also there are so many fraudulent activities like not giving proper notices to the borrower/imposing very high penalty rates/taking the pledged ornaments in auction through people known to them, the list goes on).
4) No elaborate documentation involved. Just a promissory note and an application form.
5) Safe custody of documents/securities was easier (as they were just bundled in a cloth bag and kept with the name of the borrower tagged to it inside their strong room. And today a share broking company has to keep its shares and clients' shares separately - these gold loan companies have no such norms).
6) Normally, there are huge increases in market rates of assets pledged resulting in heavy gain for lenders due to the high margins while granting a loan.
7) These companies adopted intricate networks for easy reach, coming across as a "saviour" for the local people.

While banks thrived well and succeded in banking as they started other loans like cash credits, term loans by lending to industrial and trading activities, the small NBFCs (non-banking financial companies) and gold financing companies could not do it in the organised sectors. They still continued lending against ornaments to their existing client base and survived. When the liberalisation process started in India, these companies could see a silver lining for survival and waited patiently for the banks to diversify. Along with the banking reforms that were implemented due to the intervention of the Reserve Bank of India (RBI), these companies providing loans against gold started an active campaign for their comeback not in any traditional growth areas, but for the same old "loan against gold ornaments" category. These companies confined their operations to local districts (or maximum to their states) to float in the turbulent market, so that they would be well-poised to reap the benefits of any possible recovery in the market.

And now we see some of the companies trying to reach out to a pan-India audience, with branches at key centres. It can be seen that all these centers will be middle- and lower middle-class dominated areas. They are coming up with massive advertisements to attract customers. These companies are trying to raise money from the public both by way of debt and equity.

Some of them want to come out with initial public offerings (IPOs) to ride the current market highs and some are raising funds through private equity placements. 

Even compared to sectors like real estate, these gold loan companies are finding it easier to attract entities for equity participation or equity lending.

Ultimately these lenders are in it for short-term returns and are not long-term players in this market. Gold loan companies are sure that none of their FDs or bonds will be rated. And same is the case with their deposits. Hence they are taking deposits from the public through the same way they used to collect earlier. As the cost of deposits has fallen down over a period of 20 years today, they are able to garner deposits @ 15% pa (as against the earlier 24%) and are lending at 24% to 30% pa. These costs may not be transparent as they will have appraising charges, processing fees on a quarterly/half-yearly basis, safe custody charges and so on.

These monies are taken for a term of 1 to 5 years and they also borrow from private moneylenders and from some banks against securities. The pooled money is lent against ornaments at exorbitant rates where they have at least 10% gross margin. Their operating cost is very low as they operate from ordinary places; thereby saving on overheads and the staff cost is not at the market level. The people employed are not qualified professionals. Thus they are able to get a huge profit margin and have started approaching the urban/metro sector population, using the latter's greed for retail assets and up-market living style.

Is it safe to deposit money with these companies?

No, for the following reasons:

1) They have no regulator. Though they say that they are regulated by the RBI, the grip on these companies by RBI is too weak. They are under the ambit of NBFCs; depositors should not forget the tough time they had during the days when NBFCs were giving out very huge rates of interest and incentives for mopping up deposits and all of a sudden the bubble burst. Anyone paying more than 200bps (around 10 % now) is to be avoided.
2) These companies have no asset backing. They do not have any fixed assets to floating assets like raw materials and work in process. They have only the money raised from you and from other sources and at any time of downfall there is no asset base cushioning for them.
3) They do not have a long-term plan to diversify into other areas of business and unless there is diversification in related areas in a financial service company, growth cannot come about. Hence they are short-sighted and want to make use of the sunshine now.
4) Their business model is just dependent on a single metal and the vagaries in price of this single asset, gold, will affect them both ways to a larger extent.
5) The deposit guarantee schemes given by the government will not apply to the deposits made with these gold loan companies.
6) Due to cost constraints, they operate from tiny residential areas; keeping a watch on them will be difficult.
7) There is no transparency in their deployment of funds raised as many are not listed companies or fall under the purview of any regulator like SEBI or IRDA.

And what about using them for raising loans?

Invariably, you will be requested to deposit some money or pay a rate of interest based on the amount funded. The usual margin they have is from 25% to 40%. And the amount you get in hand plus the interest you are going to pay will be a huge burden on you. Since these are considered as short-term loans, you need to close them on time or otherwise again pay through your nose to get them rolled over. The EMIs are structured in such a way that the main portion of it goes to interest in the initial period (though they are short-term loans). As a result you will be in a position to lose the ornament and the replacement cost will be higher for you with the cost of the yellow metal going up.

Hence investors are advised to exercise utmost caution while dealing with these companies. It is time that they are screened properly by the regulator and their dealings are made more transparent.

(The author is a management and financial consultant and can be reached at [email protected])




7 years ago

I think half the facts in this article are wrong. For a more reliable view of the inner workings of a Gold Loan NBFC please visit the SEBI website ( and view the DRHP filed by Muthoot Finance (on October 4th 2010). The DRHP is available under the link "offer documents --> Public Issues Draft Offer Documets".


7 years ago

The Regulatory boards can ddo nothing against these gold companies..they dont dare to to anything and the resason is better known to the regulators..They can only regulate the system that is genune...

IIP growth down to 5.6% on contraction in capital goods' output

New Delhi: India's industrial growth slowed down to 5.6% in August from 10.6% in the corresponding period last year, on the back of a 2.6% contraction in the capital goods production, reports PTI.

Among the main industry segments, manufacturing activity declined to 5.9% from 10.6% a year ago. Mining sector growth was at 7% as compared to 11% in August last year.

Electricity generation growth, too, slowed down to one per cent from 10.6% in August last year.

Capital goods sector contracted by 2.6% in August, in comparison to 9.2% growth in the year-ago period, official data released here said.

Also, consumer non-durables, which are mainly fast moving consumer goods (FMCG), recorded a negative growth of 1.2%, in comparison to an expansion of 6.1% in the same month last year.

Consumer durables was the only segment of goods, which saw an output growth over the year-ago period. In August consumer durables expanded by 26.5%, as compared to 24.7% in the year-ago period.

Of the 17 industry groups, as many as 14 have shown positive growth during the month of August. The industrial expansion figure for July was revised upwards to 15.2% from the earlier estimates of 13.8%.

Industrial growth for the first five months of this fiscal stood at 10.6% in comparison to 5.9% growth in the same period a year ago.

Experts had projected that the industry growth might slip to single-digit level because of the high base effect of last year.

Moderate growth in core sectors, which accounts for 26.7% of the total industrial output, was also seen pulling down growth in factory output in August, experts said.

The core sector, which includes crude oil, petroleum refinery products, coal, electricity, cement and finished steel, grew by 3.7% in August. The growth had slowed from 3.9% recorded in July.


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