Abstract

This case study is about SKS Microfinance (SKS), the leading Microfinance Institution (MFI) in India. SKS, driven by the mission to eradicate poverty from the face of the country, serves millions of poor people by offering them micro-loans. The case introduces the concept of microfinance and focuses on the various issues and challenges involved in operating a microfinance program. It also highlights the business principles followed by SKS to overcome those hurdles. In the end, the case study facilitates a critical discussion on the apparently conflicting goals of profit vs. altruism in case of social entrepreneurship and how to strike the right balance between them. SKS was established in 1997 as an NGO MFI by Vikram Akula who identified three major constraints as impediments to serving the 150 million poor in India - Capital constraints, Capacity constraints, and high Cost of operations. In 2003, SKS became a Non Banking Financial Company following a for-profit business model and started attracting funds from some top venture capitalists. By 2009, SKS had reached out to more than 5 million customers and was growing at the rate of 200% per annum.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand various issues and challenges in managing the growth and continuity of an entrepreneurial venture, especially a social venture
• Understand the issues and constraints in financing a venture at various stages of its development, especially a social venture
• Understand the environment in which the microfinance institutions (MFIs) operate in India
• Understand the various issues and challenges faced by MFIs operating in India, and how SKS Microfinance overcame these challenges
• Understand the challenges faced by SKS Microfinance going forward and explore ways in which it can overcome the challenges

Keywords

Entrepreneurship, Social Entrepreneurship, Venture Financing, Financing continuum, Managing the growth and continuity, Ethics, Ethics and economic trade-offs, Profit Vs. altruism, Initial Public Offering, Microfinance, Financial inclusion, Inclusive development