Citizens' Issues
Life after Vikram Akula at SKS Microfinance: Some unanswered questions

It seems unlikely that Vikram Akula’s exit will transform SKS Microfinance into a better-governed and -managed microfinance company. Only time can tell if and whether the exit of Vikram Akula would bring better times to SKS micro-finance, its investors and clients

The board of SKS Microfinance is said to be meeting in Mumbai today and it has been widely speculated that Vikram Akula is all said to resign from SKS Microfinance as its executive chairman. While the reasons for this are not exactly known, it has been suggested that the poor performance of the company during the last quarter has brought increased pressure on Mr Akula to resign.

Whether it happens or not is something we will hopefully know in a short while today. That said, if indeed Vikram Akula quits as has been extensively reported in the media, what are the implications for SKS Microfinance as a company?

Three questions are extremely relevant for investors and other stakeholders:

a)    What will happen to SKS in its post Vikram era? Would the corporate governance issues and operating practices change for the better?

b)    What about Vikram Akula’s successor and others at the helm of SKS (if and when he quits)? Will they be able to shepherd SKS Microfinance through its turbulent lines? What is their understanding of microfinance? What is their track record of governance and management?

c)    What about the mutual benefit trusts (MBTs) and the low-income people to whom they belong? Who will control them? Who will safeguard their interests in SKS Microfinance? Who will assume responsibility for the huge (notional) losses caused to the MBTs owned by the low-income people?

A small divergence is necessary here. It is important to note that while many corporate and other investors have divested their shares, the MBTs have continued to hold (a majority of) their (huge) investments despite the steeply falling share price of SKS Microfinance (which stood at Rs112.90 per share today). Please recall that a little after SKS got listed, the shares were selling close to an all time high of Rs1,490.70 per share —this represents a fall of almost 92.43% from this super (share) price indeed.

                                    Ownership Pattern

That said, to set the record clear, it is indeed ironical that Vikram Akula is being pressured to resign by a board that was, at least in part, responsible as much, for many of the happenings at SKS Microfinance as him.

Specifically, it can be said that this board has remained a mute spectator (and thereby, perhaps even endorsed) the serious corporate governance issues and questionable operating practices reported at SKS microfinance in the public domain – (

And the board (with some common members) was undoubtedly a party to the huge growth story of SKS Microfinance during the period 2006 to 2010 as shown in table below:
It must also be noted that much of this growth apparently led to increasing frauds and deficient operating practices at SKS Microfinance as has been reported previously (Increasing frauds, internal lapses at MFIs: Need to strengthen supervisory arrangements to protect the poor,)

And last but not the least, this board, by and large, again remained quiet during the unceremonious removal of Suresh Gurumani, the then CEO (through a hurriedly convened board meeting and especially conducted on a Sunday), after he had led SKS Microfinance through a spectacular initial public offer (IPO) in 2010

Therefore, whether it was the interest-free loan to the founder MD to enable him to buy shares in SKS Microfinance or the unceremonious sacking of the CEO after the successful IPO or the burgeoning growth of SKS Microfinance, it is clear that the SKS board has to bear ultimate responsibility.

That being the case, it seems unlikely that Vikram Akula’s exit will transform SKS Microfinance into a better governed and managed microfinance company. Only time can tell if and whether the exit of Vikram Akula would bring better times to SKS micro-finance, its investors and clients…

(The writer has over two decades of grassroots and institutional experience in rural finance, MSME development, agriculture and rural livelihood systems, rural/urban development and urban poverty alleviation/governance. He has worked extensively in Asia, Africa, North America and Europe with a wide range of stakeholders, from the private sector and academia to governments)




Job Search Sites

5 years ago

Nice. I like this post its very informative thanks for share it. Microfinance is usually understood to entail the provision of financial services to micro-entrepreneurs and small businesses, which lack access to banking and related services due to the high transaction costs associated with serving these client categories. The two main mechanisms for the delivery of financial services to such clients are relationship-based banking for individual entrepreneurs and small businesses; and group-based models, where several entrepreneurs come together to apply for loans and other services as a group.

omprakash yadav

6 years ago

sks microfiance ltd.Vikram akula anounce that he resion sks mfi

Rajan Alexander

6 years ago

Hi Ramesh!

There are two key points:

a. Dr Akula who popularly known as Dracula what ever it was, was a NGO fellow. Now all those on the board represent financial vultures. Their true face

b. The board was to reposition SKS as a rural finance company. This is good. The slur on M/f by SKS posing as a MFI comes to an end. They position makes Akula redundant and could be one reason why they got rid of him but prehaps not they only one

c. Third, if they reposition as a rural finance company what happens to their priority sector loans they now enjoy?

Deepak kumar suman

6 years ago

sksmicrofinance Stock market

Total Shareholder Return, Stock market boom, Share price, Stop price

MD Azharul Islam

6 years ago

SKS Was ALive Or Finish

SAIL sees demand growth for steel halving to 6% this fiscal

The decline in steel demand has been attributed to rising interest rates, according to SAIL commercial director Shuman Mukherjee. However, the company is very optimistic about the demand for steel in the country in the long-term

Mumbai: State-run steel giant SAIL sees the domestic demand growth for steel coming down to 6% this fiscal from 10%-12% last year due to difficult interest rate regime and slowdown in key sectors, reports PTI.

“Steel demand in the current fiscal is expected to be around 6% as interest rate is too high, impacting demand from key sectors like auto and construction in the recent time,” SAIL commercial director Shuman Mukherjee told an industry conference arranged by Mjunction here on Tuesday.

He said traditionally the second half is a better period for steel demand and hoped that it may pick up in the fourth quarter.

On the back of rising inflation, the Reserve Bank of India (RBI) has raised key policy rates by 13 times in the past 20 months.

This has, in turn, squeezed demand in the economy, especially in the rate sensitive sectors like auto and construction.

Car sales fell 23.8% October, the biggest percentage drop since December 2000 due to rise in cost of borrowing.

The steel major also said the fall in price of key raw materials like coking coal is not giving any cost advantage due to a depreciating rupee.

“Though there is some fall in raw material prices like in case of coking coal, the fall is largely nullified due to the depreciating rupee,” Mr Mukherjee said.

On the pricing front, another top official of SAIL said price will remain stable till March. “Looking at the demand scenario, steel prices will remain stable till March,” executive director for marketing-long products VK Mehta said.

However, the company is very optimistic about the demand for steel in the country in the long-term.


Ideal Road Builders has pocketed nearly Rs1,200 crore from Pune-Mumbai Expressway but what about accident prevention?

Moneylife invoked the RTI Act last fortnight to find out that Ideal Road Builders has collected about Rs1,200 crore until June 2011 since it took up the 15-year contract of security and maintenance in April 2004. But where is its commitment towards a safe journey, considering the constant episodes of fatal accidents?

While I was travelling on the Pune-Mumbai Expressway on Tuesday morning (22 November 2011), I witnessed an accident wherein an allegedly speeding car was sandwiched between two army trucks, in the ghat section. I was also taken aback when a `Swift’ car, probably at 200kmph overtaking us at that very speed from the left, cut in front of us, to get into the fast lane on our right and then swerve back towards the central lane. Both these incidents—accidents and over-speeding—happen with scary regularity every single day on the expressway.

Ideal Road Builders (IRB), the operations and maintenance agency for the Pune-Mumbai Expressway, has a contract of 15 years between 2004 and 2019. As per the 864-page contract agreement procured by this writer in April 2011, under the RTI Act, Chapter 4 (on page 145) clearly places crucial responsibilities of expressway management, on IRB.

As per the agreement, IRB’s responsibilities include upkeep of the road and traffic management. Some of its other crucial duties include patrolling, safety including accident prevention, cleanliness and fencing, ensure ban on cattle and prevent villagers from straying on to the expressway.

However, IRB has completely failed in implementing accident prevention measures and Big Brother MSRDC (Maharashtra State Road Development Corporation) has not bothered to haul up IRB. Its ‘monitoring unit’ Stupp Consultants, to which it pays Rs10 lakh per month is required to ensure that IRB lives to its commitment as per the agreement contract, but looks the other way.

As per the details I collected last fortnight through RTI, the traffic on the Expressway comprises cars as highest in numbers, followed by trucks in vehicular traffic. Whereas in 2007-2008, the number of cars passing through the Expressway were 57 lakh (57,67,023 to be precise), in 2009-2010, that number has increased to 79 lakh (79,72,271 to be precise). As against this, the number of trucks (including ordinary trucks, three axles as well as multi-axles) were 25 lakh (25,55,811) in 2007-2008 whereas in 2009-2010, it increased to 27 lakh (27,328,818).

Thus, earlier there were 2.25 cars for every truck and as of 2010 it was 2.91 cars for every truck. Most of the accidents take place between these two kinds of vehicles.

Other vehicles using the Expressway include light commercial vehicles (LCV)-9 lakh in 2007-2008 (9,53,540 to be precise) and 14 lakh (14,44,297) in 2009-2010. As for buses they were 5.2 lakh (5,28,441) in 2007-2008 and 5.8 lakh (5,83,567) in 2009-2010.
(see box for details of vehicles and toll collection)

In 2010, 443 accidents took place, of which 101 were fatal—103 people were killed.  

Chandmal Parmar, noted road accident prevention activist and chairman of Rail, Road and Traffic Management Committee of Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA) says, “IRB has completely failed in the maintenance and patrolling of the Expressway. It is collecting toll without giving proper services to the people.” The toll collection is nearly Rs1,200 crore (Rs1,117.5551 crores to be precise till June 2011) as per documents provided under RTI last fortnight.

Ban trucks at night to control accidents: MCCIA

Last week, the Rail, Road and Traffic Management Committee of the Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA), Pune, held a press conference to highlight the seriousness of accidents on the Expressway and gave operational solutions for the same. In a survey conducted by the MCCIA, 90% of the accidents take place between the Lonavala entry and the Khalapur food mall, which is the ghat section.

States Chandmal Parmar, chairman of the Rail, Road and Traffic Management Committee, “Considering the number of accidents, the Expressway appears to have been transformed into a death trap. The data received from Highway Police, during April, May, June and July 2011, states that 74 accidents have been registered out of which 18 were fatal, 31 serious and 48 were minor accidents, resulting in 21 deaths, 51 serious injuries and 47 minor injuries, during this period.  Consequently, the commuters had to undergo sufferings in the form of traffic jam and frustration.”

As an immediate solution, MCCIA has suggested that trucks of all types be banned between 10pm and 6am. They could either take the NH-IV (the old Pune-Mumbai highway) or then wait through the night before embarking on the Expressway journey. States Mr Parmar, “It is agonizing for car drivers to drive through the monstrous trucks and become victims of accidents. We have been advocating a ban on plying of trucks since the last two years.”

In this regard, memorandums and letters were submitted by the MCCIA to the chief minister, deputy. chief minister, guardian minister of Pune district, home minister, minister for public works (private), MLAs of Pune district and MSRDC (Pune and Mumbai).  “No one has taken serious note of our suggestion,” laments Mr Parmar.

Anant Sardeshmukh, executive director general, MCCIA, stated that the state government has recently announced a plan to have a separate bypass on Khandala Ghat section. As per the plan, the NH-IV is proposed to be converted into six lanes and the Expressway to 8 lanes. Also, the common stretch of expressway and NH 4 on the Ghat section is planned to be separated. The bypass will be taken from below the Lonavla lake, is estimated to be completed within 6-7 years and would involve expenditure to the tune of Rs4,000 crore-Rs5,000 crore.

Mr Sardeshmukh states, “It would be necessary to obtain requisite sanctions and approvals from the Union ministry for roads and forests & environments for the purpose.  Further, the work has to pass through the bottleneck of objections and agitations by environmentalists. Therefore, it is not possible to ascertain the exact time frame for completion of this project.” Also he rues that the state government, MSRDC as well as IRB are not coming out with any solutions or measures to minimize the rising number of accidents.

How about action on IRB for its negligence in brazenly taking toll from people and not giving them the safety?
(Tomorrow: Accident Spots)

(Vinita Deshmukh is the consulting editor of Moneylife. She is also an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She can be reached at [email protected]).





RB Shinde

5 years ago

Every lane counter collecting Toll should be provided with additional one person appointed by Traffic regulatory body who can have the authority to send back the vehicle if not provided with the Yellow radium strips on sides & red on rear & white on front. By doing this, the vehicles asked to take U turn will never come back on such roads again as he has already burnt a hole in his pocket by trvelling distance till toll plaza and sent back. This again may create a 24 hrs business to sell the Radium strips at or before such plazas, with the help of men who sells 'Nuts', 'fruits' etc. In fact by doing this at toll plaza will be a major & strategic point for it's implementation as every vehicle touches Mumbai-Pune Expressway at some or other day. But, if such authorities given to IRB, IRB may not send back the vehicle as it will be their revenue loss. Even if IRB is authorised for implementation, IRB may add revenue by selling the radium strips(offcourse if it profits to IRB). Needless to say that IRB will definately sell them at 'Premium Rate'. Traffic Road authorities would cover at least 75% of the vehicles if implemented on almost all toll plazas statewise.


5 years ago

I used to drive on the Pune-Mumbai route extensively, and once the Expressway was complete, analysed it thoroughly. If I may say so, some of the accidents, especially as you rightly identified on the Ghat sections after Khandala towards Pune, are totally preventable.

1) Over-loaded trucks headed uphill are straining every horse they can pull out of their over-loaded engines, and so in first gear, tend to veer into overtaking mode instead of moving single file. If they reduce engine speed, they will simply stall, and not be able to move ahead. Often, this blocks all the lanes as slow-moving trucks go across. Solution:- strict weighbridge checking at both ends, with no compromise, as in Gujarat.

2) Downhill brake testing and escape routes on the side, of the sort seen worldwide, at reasonable intervals, a marked short road peeling off from the downhill stretch, which goes slightly uphill - where a truck can head into if brakes fail. This concept has been used succesfully on the Lahore - Islamabad Expressway, where user conditions are the same.

3) Alcohol testing at the toll booths, based on profiling as well as specially on weekends and holidays, and this needs to include all the so-called VIP vehicles too.

4) The number of cars which appear to be flying red beacons or party flags is about the highest in the country on this road. Delhi Government has shown the way by clamping down hard on this menace, and under the MVA, so can the Maharashtra Government.

These are just a few of the steps that could be taken. For the rest, best of luck!! Thank you for this article.




In Reply to malq 5 years ago

yes perfectly agree with all your points. I saw what you said in no.2 in the USA - v impressive. The IRB is busy collecting toll money and no monitoring is done of its toll collection by MSRDC's toll monitoring unit so we are forced to believe the figures IRB gives of its toll collection and as for safety and accident prevention which it MUST implement under the contract agreement, it hell cares and MSRDC is not raising this issue with it sternly


6 years ago

it will help if statistics are published as to how many acidents have occurred since the date of contract to IRB . Any maintenance contract must have measures to ensure that the contractor is adhering to his deliverables.



In Reply to ramchandran 5 years ago

yes i have asked for this information - should get it soon

We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)