Vikram Akula runs a company that doles out loans of $100 or less to desperately poor villagers so they can buy a water buffalo or a bicycle.
Mr. Akula, the 37-year-old founder of SKS Microfinance Pvt. Ltd., is at the forefront of the latest trend in "microlending," or making tiny loans that help entrepreneurs lift themselves up from the lowest rungs of poverty.
Long the province of charitable institutions, microlending is starting to attract the attention of big business. Intrigued by India's red-hot economy and potential market of more than a billion consumers, financial giants such as Citigroup Inc., ABN and HSBC have already provided millions of dollars for SKS to lend out.
People like Mr. Akula see opportunity in making the system more efficient. After finishing graduate school at Yale University in 1995, Mr. Akula worked with government- and charity-backed microfinance institutions in India. He saw how powerful a little loan could be in the life of a poor villager. He also saw the limits of the standard model.
The programs were run by well-intentioned people, he recalls, but poorly managed. The way that nonprofit organizations "were doing microfinance was incredibly inefficient and hopelessly unscalable," he says.
Mr. Akula decided in 1997 to build his own microfinance company from scratch. His goal: to model a business on McDonald's Corp. or Starbucks Corp., using technology and standardized systems to wring enough efficiency out of each tiny transaction to lower costs.
[Excerpt of an article by Eric Bellman, The Wall Street Journal]
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