Vikram Akula plans a second innings in microfinance with Vaya Finserv

MUMBAI: Vikram Akula, the poster boy of Indian microfinance, is padding up for a second innings in small-ticket loans by preparing to apply for a licence to run a small bank through Vaya Finserv Pvt Ltd, a finance company in which he has bought a 26% stake.

Vaya Finserv, a business correspondent for banks, will apply to become a small bank to commence lending and deposittaking activities in unbanked villages, said Akula. The company, populated by former SKS Microfinance staff and 65% owned by SKS Trust, may even seek a licence for a payments bank.

"Micro lending is my passion," said Akula, who was ousted from SKS Microfinance, the company he founded, in a boardroom battle. "We understand lending to low-income people. We know what a Rs 25,000 loan means to them.’’
Akula’s SKS became the only microlender to list on the stock exchanges with the backing of private equity firm Sequoia Capital and Infosys Technologies founder NR Narayana Murthy. He had a troubled relationship with SKS Microfinance.

Though he sowed the seeds of growth as a not-for-profit group, it became a forprofit company. When he wanted to return after the company’s valuations turned into billions of dollars, the board pushed him back.

The company also dragged the entire industry into regulatory quagmire with the Andhra Pradesh state coming up with rules after allegations of harassment by SKS staff. Subsequently, RBI came up with rules governing microlending with a cap on interest rates.

"I had a three year non-compete agreement with SKS and that is over," said Akola.

"The biggest learning factor was that hyper growth without commensurate systems" is not the right way to run a company.

Now that the RBI is calling for applications to issue licence for small and payment banks, Akula believes his expertise in microlending could be utilised to achieve financial inclusion. "We are not overconfident, but we are hopeful," says Akula. "This (Vaya) doesn’t have suited-booted people, but those who understand financial inclusion." Akula would be the non-executive chairman of the company.