As this week has seen a surge of news surrounding the upcoming SKS Microfinance IPO, I began to reflect on my visit to SKS NGO in Hyderabad last week. My field visit started around 6am when Divakar, SKS NGOs VP Programs came to pick me up from Mapple Inn. We had a 165 km drive to cover which typically takes approximately 3 hours. Divakar spoke to me of SKS’s beginnings. Vikram Akula’s (SKS Founder) passion for the region and desire to work to uplift the poor. He spoke of their journey over the years and how the ultra poor program had begun at SKS NGO. India has the highest number of ultra poor people in the world, more than the sub Saharan region. Yet there is a significant flight of foreign donors now as there is significant wealth being created within India. Indians within India should be helping their own…seems to be the simple thought process behind this flight. But there I was being transported from one of India’s technology hubs in Hyderabad where Microsoft, Infosys, ICICI and many other companies have set up mega campuses, where the infrastructure and landscaping quite clearly is in stark contrast to the road I was on.

We reached SKS’s Narayankhed campus. A small, obscure set of buildings set on a 200 acre campus with very very basic infrastructure. There were two buildings that comprised the office, one set of dorms and another training facility. Most of the field staff were in training that day and so a host of two wheelers were parked near the facility. The field staff work with small villages/villagers to identify the ultra poor amongst themselves, thus taking ownership of who amongst them really needs help. Some criteria for the program within Andhra Pradesh include – no male wage earner in the family, landlessness, no productive asset, children not in school and no other Microfinance participation. In Orissa, another area where SKS works predominantly in tribal regions the definition may vary – for example, these tribals do own land but it is mostly unproductive, typically there is a hand to mouth situation and most people are barely eating one meal a day. SKS started its Ultra poor program a couple of years ago and recently graduated families from ultra poor to poor. This intervention takes about 18 months which they are now extending to 2 years. Women are taught to create means of livelihood, provided an initial grant to get started, taught how to manage their finances – gain a basic understanding of their inflow and outflow of cash, taught how to save and a support infrastructure is created. Their kids are put back in school often after having them attend a Rural Bridge Center to get them caught up to some appropriate grade level, as many have never been on school or have dropped out.

I met a few women that were proud graduates of the program. Tukkamma and her daughter Laxmi lived in Banapur. She had moved back to this village after being widowed. Her parent’s home was a short walk away. She had to support herself and 3 kids and the daily seasonal wages were clearly not enough to keep the stove burning. With SKS’s help, she first got two goats – an initial grant to get her livelihood started. They are taught how to raise them, care for them etc. The two goats eventually became 8 in number, she sold them in the regional market, bought two sheep that are now up to 20. In a span of two years she has a savings of about Rs. 10000 with another ultra poor colleague Nagamma. She had opened a postal savings account which they both took ownership of. She recently turned down assistance from Microfinance programs and opted for an SHG (Self Help Group) instead. When I asked her why, she said her cashflows cannot support the repayment requirements of a Microfinance set up which typically has a weekly schedule of repayment. SHGs on the other hand have a monthly repayment schedule which is more doable in her mind. She had the ability to take this financial call…and not get lured in by the numerous MF lenders that come knocking at her door to place loans.

Microfinance lending in India, which is considered to be the world’s largest market for such loans, may surge about 40 percent annually. SKS Microfinance received a non-banking finance company license from the Reserve Bank of India in 2006 and currently has 5.3 million customers making it India’s largest microfinance company by value of loans outstanding, the number of borrowers and number of branches.

SKS provides loans from $22 to $260 each for women raising cows or opening a village tea stall. Over 828 million people live on less than $2 a day, in India thus creating an untapped credit demand of 1.2 trillion rupees, according to Crisil Ratings, the Indian unit of Standard & Poor’s.

What might appear to be incredibly simple to many of us – was so incredibly powerful in that setting. I was sitting in Tukkamma’s “kuccha” home – in conversation with Tukkamma, Laxmi, Nagamma and Tukamma’s father. I got excellent language assistance from the SKS field staff that accompanied me. There in that microcosm of Indian society,  in a small village in rural Andhra Pradesh - I had just interacted with an empowered woman.

Sejal Desai