Microfinance is the service of providing small loan savings and other basic financial

services to the people in need. As these financial services involve small loans and
small savings the term “microfinance” is used to differentiate it from the formal
bank services. Microfinance model is based upon the Grameen bank model of Mohd.
Yunus. The population who only had access to moneylenders and loan sharks for
financial help are no more to dependent upon them as microfinance provide them
the better financial services with very less formality and documentation.

The MFIs have invented creative methods and technology to reach out to people.
The number of loan accounts serviced by MFIs in India increased from 10 million in
2007 to nearly 27 million in 2010 while loan outstanding increased from $840
million to $4billion (Source: Business line April 8, 2011).

The low income population, like the rest of society, needs financial services to build
assets, stabilize consumption and protect themselves against risks. Microfinance
serves as the last-mile bridge to the low-income population excluded from the
traditional financial services system and seeks to fill this gap and alleviate poverty

SKS Microfinance India’s largest for profit microfinance institution with a social
mission initiated by Mr. Vikram Akula in the year 1997. Vikram Akula, who is a
scholar from the University of Chicago, has been awarded for his work with SKS,
including the Echoing Green Public Service Entrepreneur Fellowship.

Swayam Krishi Sangam, or SKS Society, was founded as a public society in the
state of Andhra Pradesh, and it functioned as a non-governmental organization, or
NGO, that provided microfinance in Andhra Pradesh. After several years of
operation as a NGO, SKS Society and its inherent not for profit business model was
limited in its ability to address the credit needs of the poor throughout India.
Accordingly, SKS Society decided it would transfer its business and operations to a
newly incorporated private limited company in India in 2003.

In recent past, issues have been raised on the management of the five MBTs of SKS.
It was said that the when SKS decided to convert itself into NBFC it took MBT as its
route and then in the name of poor, Vikram Akula raised 410,000 (Rs 2.05 crore)
from philanthropists and friends to meet the Rs 2 crore equity requirement for an
NBFC. (Source: Economic Times Provider: Bennett, Coleman & Co. Ltd dated Jan
31st, 2011).

On October 4th the SKS board of director took an important decision of terminating
Mr. Suresh Gurumani as Managing director of the company; however the company
did not provide any specific reason for the termination and said that it was due to
the interpersonal issues in the top management which led to the termination of Mr.
Gurumani.

Clarifying the fact of termination of Mr. Gurumani, Mr. Akula said that he was
sacked for no other reason but because of interpersonal issue. He also said that
post IPO some interpersonal conflict happened between Mr. Gurumani and the
management team which led to his termination. (Source: Publication: DNA Money
Provider: Diligent Media Corporation dated October 16, 2010). However the
management of SKS could not explain that what they actually meant from the
interpersonal issue.

Mr. Suresh Gurumani a graduate from University of Madras was appointed as

Managing director and and CEO of SKS microfinance in Nov, 2008 had led the
turnover of the company to