S.k.s Finance - Financial Power

S.K.S. Finance, now known as Bharat Financial Inclusion Limited (BFIL), was a prominent Indian microfinance institution (MFI) that played a significant role in shaping the country’s microfinance landscape. Founded by Vikram Akula in 1997, S.K.S. aimed to provide small loans to impoverished women in rural India, empowering them to start or expand their businesses and improve their livelihoods.

The company’s initial growth was rapid, fueled by a strong focus on operational efficiency, standardized lending practices, and a technology-driven approach. S.K.S. utilized a group lending model, where women formed self-help groups and provided mutual guarantee for each other’s loans. This fostered a sense of community and accountability, contributing to high repayment rates.

S.K.S. Finance went public in 2010, becoming the first Indian MFI to be listed on the stock exchanges. The IPO was a resounding success, attracting significant investor interest and valuing the company at a substantial premium. This landmark event marked a turning point for the microfinance sector in India, demonstrating its potential for commercial viability and attracting further investment.

However, the company’s rapid growth was not without its challenges. In 2010, Andhra Pradesh, a major operational area for S.K.S., experienced a crisis in the microfinance sector. Allegations of coercive recovery practices, multiple lending, and over-indebtedness led the state government to impose stringent regulations on MFIs, effectively halting loan disbursements and recoveries. This crisis had a devastating impact on S.K.S. Finance, leading to significant financial losses, management changes, and a tarnished reputation.

Following the Andhra Pradesh crisis, S.K.S. Finance underwent a period of restructuring and reform. The company focused on strengthening its risk management practices, improving customer relations, and diversifying its geographical footprint. It also shifted its emphasis towards providing a broader range of financial services, including insurance and savings products, in addition to microloans.

In 2017, S.K.S. Finance was acquired by IndusInd Bank, a leading private sector bank in India. The acquisition marked a significant shift in the company’s identity, as it became a wholly-owned subsidiary of the bank and rebranded itself as Bharat Financial Inclusion Limited (BFIL). This move provided BFIL with access to IndusInd Bank’s capital base, technology platform, and wider customer base, enabling it to expand its operations and offer a more comprehensive suite of financial services to its clients.

Despite the controversies and challenges it faced, S.K.S. Finance played a crucial role in popularizing the microfinance model in India and demonstrating its potential to alleviate poverty and empower marginalized communities. While the company’s legacy is complex, its impact on the Indian microfinance sector remains undeniable.