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![Page 1: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/1.jpg)
SKS Microfinance
“The SKS Acceleration Model”
empowering the poor to become economically self-reliant
Vikram Akula
Founder and CEO
November 2007
![Page 2: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/2.jpg)
SURVEY A VILLAGE RECRUIT MEMBERS
PROVIDE TRAININGDELIVER SERVICES AT DOORSTEP
SKS HAS USED THE GRAMEEN BANK MODEL TO PROVIDE OVER 1.3 MILLION MEMBERS CLOSE TO $400 MILLION WITH A 99% REPAYMENT RATE
![Page 3: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/3.jpg)
29%
31%
27%
7%
6%Agriculture
Animal Husbandry
Trade
Services
Production
BORROWERS UNDERTAKE A RANGE OF ACTIVITIES, EARNING RETURNS FROM 14% TO 245%
![Page 4: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/4.jpg)
THERE IS A HUGE UNMET DEMAND FOR MICROFINANCE IN INDIA
Source: EDA rural report “Maturing of Indian Microfinance”, World Bank.
Assumptions
• Existing market: Rs. 20,000 crores
•Basis: NABARD; EDA Rural Report, “Maturing of Indian Microfinance”
• Poor households: 150 million
•Basis: World Bank poverty statistics, India
• Avg. credit demand / HH: Rs. 20,000
•Basis: EDA Rural Systems
• Adjustment for service difficulties: 20%
•Basis: adjustment made to reflect inaccessible poor in rural areas (~7%) and half of underserved urban poor (0.5 x 26% = 13%)
• covered in part by moneylenders and informal sources, but largely untapped
Current micro-credit by MFIs
Total micro-credit demand, India
Rs. 240,000($55 Billion)
Rs. 20,000($5 Billion)
Projected micro-credit demand, crores
![Page 5: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/5.jpg)
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MOST MFIs ARE NOT ABLE TO SCALE
73% of MFIs Serve <2,500 Clients (2321 Institutions)
16% of MFIs serve 2,500 – 10,000 Clients (515 Institutions)
9% of MFIs serve 10,000 – 100,000 Clients (276 Institutions)
2% of MFIs serve >100,000 Clients (49 Institutions)
Source: Microcredit Summit
Close to 90% of MFIs serve less than 10,000 clients
![Page 6: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/6.jpg)
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THERE ARE 3 CONSTRAINTS TO SCALING MF...
Capital
Capacity
Costs
(2) Scalable processes from the business world
(3) Deploying technology to automate and lower transaction costs
(1) A profit-oriented model to access commercial capital
AND THE SKS SOLUTION
![Page 7: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/7.jpg)
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3 CONSTRAINTS TO SCALING MF...
Capital
Capacity
Costs
AND THE SKS SOLUTION
(2) Scalable processes from the business world
(3) Deploying technology to automate and lower transaction costs
(1) A profit-oriented model to access commercial capital
![Page 8: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/8.jpg)
8
Vinod Khosla
THE PROFIT-ORIENTED APPROACH HAS ATTRACTED $20 MILLION IN EQUITY…. LEVERAGED TO DISBURSE CLOSE TO $400 MILLION IN LOANS
AboveMarket ROE
Equity Investors
First MFI loan in India
LendersROE
First MFI loan in world
KISMETCAPITAL
Ravi & Prathiba Reddy Foundation
![Page 9: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/9.jpg)
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3 CONSTRAINTS TO SCALING MF...
Capital
Capacity
Costs
AND THE SKS SOLUTION
(2) Scalable processes from the business world
(3) Deploying technology to automate and lower transaction costs
(1) A profit-oriented model to access commercial capital
![Page 10: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/10.jpg)
SKS DRAWS FROM SCALEABLE BUSINESS MODELS
SKS trains over 150 new loan officers per month
SKS adds 50 branches and 100,000 customers a monthShared
back office
Field office
Field office
Field office
SKS factory-style recruitment & training draws
SKS decentralized operational model draws on
170% CAGR
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3 CONSTRAINTS TO SCALING MF...
Capital
Capacity
Costs
AND THE SKS SOLUTION
(2) Scalable processes from the business world
(3) Deploying technology to automate and lower transaction costs
(1) A profit-oriented model to access commercial capital
![Page 12: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/12.jpg)
SKS DEPLOYS CUTTING-EDGE TECHNOLOGY TO LOWER COSTS
Industry Leading MIS:
Real-time Data Transfer:
B 3
B 4
Database
Internet
B 1
B 2
B 5
D 3
D 1
D 2
D 4
D 5
Head Office Server
All SKS branches transfer portfolio data through the internet within hours of meetings, enabling management to quickly respond to potential problems
SCALEABLEUSER FRIENDLY ACCOUNTINGREPORTIN
G
![Page 13: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/13.jpg)
SKS HAS SCALED TO 14 STATES WITH OVER 1.3 MILLION MEMBERS
SINCE 1998
• 1.3 million members• 2.6 million life insurance policies• 75,000 health insurance policies• $168M outstanding• $393M disbursed• 99% On-time Repayment Rate • 6,100 staff • 20,000 villages in 557 branches
SKS is one of the fastest growing MFIs in the world, with a CAGR
of 170%
Branch office
![Page 14: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/14.jpg)
0
1,000
2,000
3,000
4,000
5,000
6,000
Mar
-05
Mar
-06
Mar
-07
Mar
-08
Mar
-09
Mar
-10
SKS’s GOAL IS TO SCALE TO 5 MILLION BY 2010
![Page 15: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/15.jpg)
Products
Financial Services
Non- Financial
Fund Based
Fee Based
Enterprise
Consumption
Housing
Education
Remittances
Insurance
Investment
Savings
Perishables (food) Non-Perishables (FMCG)
Electronics
Consumer Packaged Goods (FMCG)
Health (e.g. immunizations)
Commercial
Non-commercial
Disaster Management
SKS HAS ALSO CREATED A DISTRIBUTION CHANNEL TO THE BOP
![Page 16: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/16.jpg)
Upper Poor
(70 million households)
Have some assets
Very Poor
(70 million households)
Have no assets but can work
Ultra Poor
(10 million households)
extreme poverty
SKS HAS LAUNCHED A PROGRAM TO TARGET TO ULTRA POOR THROUGH ITS AFFILIATE—SKS NGO
![Page 17: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/17.jpg)
A sustainable entrepreneurial
activity
An asset, training +
health & social inputs
getsto
beginAn ultra poor
member
ULTRA POOR PROGRAM PROVIDES ECONOMIC, SOCIAL AND HEALTH INPUTS
Potential graduation into microfinance
Ravi & Prathiba Reddy Foundation
with initial support from
![Page 18: SKS Microfinance “The SKS Acceleration Model” empowering the poor to become economically self-reliant Vikram Akula Founder and CEO November 2007.](https://reader030.fdocuments.net/reader030/viewer/2022032517/56649ca75503460f94969194/html5/thumbnails/18.jpg)
SKS Microfinance
www.sksindia.com
EMPOWERING THE POOR TO BECOME ECONOMICALLY
SELF-RELIANT
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Wo
rking D
raft - Last M
odified
8/1
4/200
7 11:5
6:05 P
MP
rinte
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SKS – CREATING MICROFINANCE OF THE FUTURE