Vikram Akula, once the poster boy of the Indian microfinance industry, is back in business.
Akula, the ousted founder chairman of SKS Microfinance Ltd, India’s lone listed microlender, last week joined Vaya Finserv Pvt. Ltd, a business correspondent, as its chairperson.
A business correspondent is an intermediary that collects deposits and gives loans on behalf of banks in rural pockets where banks cannot reach and earns fees.
Last year, Akula had made an abortive attempt to come back to SKS. Most investors in SKS resisted his move and SKS Trust, which was ramping up its stake by buying shares from the market to support Akula’s move, had to give up. Later, it sold the shares and even relinquished its status as a promoter of the firm.
SKS Trust and Ravi Reddy, two of the original promoters of SKS, have set up Vaya. Akula will pick up a 26% stake in Hyderabad-headquartered Vaya and use this as a vehicle to move the Reserve Bank of India (RBI) seeking a licence to float a small finance bank. RBI has recently released the licensing norms for such banks and the window to accept applications for small finance banks will close on 17 January.
Vaya, which opened shop a few months back, has now been working for Yes Bank Ltd but is looking for business from other banks as well. It employs 178 people and for the time being has exclusively been focusing on the Marathwada region of Maharashtra and northern Karnataka, popularly known as the Deccan.
Last year, Akula was keen to come back to the industry but could not. This time around, he will not face any resistance from any quarter. His three-year no-compete agreement with SKS ended in November. Akula, founder-chairman of SKS, was ousted in November 2011 after a bitter boardroom battle. The no-compete agreement did not allow him to enter any field of business where SKS is present.
Now Akula wants to shift from microfinance to commercial banking. His sartorial preference also marks the change. Earlier this week, in a microfinance summit in Delhi, he was seen in a suit and not his trademark kurta-pyjama. He had lost weight and looked lean and hungry for success in his new venture.
Many microfinance companies are expected to seek licences to set up small finance banks. For SKS and a few others, it may not be an easy task as the promoters’ stakes in such companies are far less than what RBI wants. The central bank wants at least 26% promoters’ stake in microfinance companies aspiring to be banks. The combined stake of three promoters in SKS is less than 10%.
A clutch of small banks and payments banks, to be operational in the next 19 months, is expected to change the banking landscape of Asia’s third largest economy where only 35% of the adult population has access to formal banking services. It will be interesting to watch Akula in this space once again.
