sks microfinance “the sks acceleration model” empowering the poor to become economically...
TRANSCRIPT
SKS Microfinance
“The SKS Acceleration Model”
empowering the poor to become economically self-reliant
Vikram Akula
Founder and CEO
November 2007
SURVEY A VILLAGE RECRUIT MEMBERS
PROVIDE TRAININGDELIVER SERVICES AT DOORSTEP
SKS HAS USED THE GRAMEEN BANK MODEL TO PROVIDE OVER 1.3 MILLION MEMBERS CLOSE TO $400 MILLION WITH A 99% REPAYMENT RATE
29%
31%
27%
7%
6%Agriculture
Animal Husbandry
Trade
Services
Production
BORROWERS UNDERTAKE A RANGE OF ACTIVITIES, EARNING RETURNS FROM 14% TO 245%
THERE IS A HUGE UNMET DEMAND FOR MICROFINANCE IN INDIA
Source: EDA rural report “Maturing of Indian Microfinance”, World Bank.
Assumptions
• Existing market: Rs. 20,000 crores
•Basis: NABARD; EDA Rural Report, “Maturing of Indian Microfinance”
• Poor households: 150 million
•Basis: World Bank poverty statistics, India
• Avg. credit demand / HH: Rs. 20,000
•Basis: EDA Rural Systems
• Adjustment for service difficulties: 20%
•Basis: adjustment made to reflect inaccessible poor in rural areas (~7%) and half of underserved urban poor (0.5 x 26% = 13%)
• covered in part by moneylenders and informal sources, but largely untapped
Current micro-credit by MFIs
Total micro-credit demand, India
Rs. 240,000($55 Billion)
Rs. 20,000($5 Billion)
Projected micro-credit demand, crores
5
MOST MFIs ARE NOT ABLE TO SCALE
73% of MFIs Serve <2,500 Clients (2321 Institutions)
16% of MFIs serve 2,500 – 10,000 Clients (515 Institutions)
9% of MFIs serve 10,000 – 100,000 Clients (276 Institutions)
2% of MFIs serve >100,000 Clients (49 Institutions)
Source: Microcredit Summit
Close to 90% of MFIs serve less than 10,000 clients
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THERE ARE 3 CONSTRAINTS TO SCALING MF...
Capital
Capacity
Costs
(2) Scalable processes from the business world
(3) Deploying technology to automate and lower transaction costs
(1) A profit-oriented model to access commercial capital
AND THE SKS SOLUTION
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3 CONSTRAINTS TO SCALING MF...
Capital
Capacity
Costs
AND THE SKS SOLUTION
(2) Scalable processes from the business world
(3) Deploying technology to automate and lower transaction costs
(1) A profit-oriented model to access commercial capital
8
Vinod Khosla
THE PROFIT-ORIENTED APPROACH HAS ATTRACTED $20 MILLION IN EQUITY…. LEVERAGED TO DISBURSE CLOSE TO $400 MILLION IN LOANS
AboveMarket ROE
Equity Investors
First MFI loan in India
LendersROE
First MFI loan in world
KISMETCAPITAL
Ravi & Prathiba Reddy Foundation
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3 CONSTRAINTS TO SCALING MF...
Capital
Capacity
Costs
AND THE SKS SOLUTION
(2) Scalable processes from the business world
(3) Deploying technology to automate and lower transaction costs
(1) A profit-oriented model to access commercial capital
SKS DRAWS FROM SCALEABLE BUSINESS MODELS
SKS trains over 150 new loan officers per month
SKS adds 50 branches and 100,000 customers a monthShared
back office
Field office
Field office
Field office
SKS factory-style recruitment & training draws
SKS decentralized operational model draws on
170% CAGR
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3 CONSTRAINTS TO SCALING MF...
Capital
Capacity
Costs
AND THE SKS SOLUTION
(2) Scalable processes from the business world
(3) Deploying technology to automate and lower transaction costs
(1) A profit-oriented model to access commercial capital
SKS DEPLOYS CUTTING-EDGE TECHNOLOGY TO LOWER COSTS
Industry Leading MIS:
Real-time Data Transfer:
B 3
B 4
Database
Internet
B 1
B 2
B 5
D 3
D 1
D 2
D 4
D 5
Head Office Server
All SKS branches transfer portfolio data through the internet within hours of meetings, enabling management to quickly respond to potential problems
SCALEABLEUSER FRIENDLY ACCOUNTINGREPORTIN
G
SKS HAS SCALED TO 14 STATES WITH OVER 1.3 MILLION MEMBERS
SINCE 1998
• 1.3 million members• 2.6 million life insurance policies• 75,000 health insurance policies• $168M outstanding• $393M disbursed• 99% On-time Repayment Rate • 6,100 staff • 20,000 villages in 557 branches
SKS is one of the fastest growing MFIs in the world, with a CAGR
of 170%
Branch office
0
1,000
2,000
3,000
4,000
5,000
6,000
Mar
-05
Mar
-06
Mar
-07
Mar
-08
Mar
-09
Mar
-10
SKS’s GOAL IS TO SCALE TO 5 MILLION BY 2010
Products
Financial Services
Non- Financial
Fund Based
Fee Based
Enterprise
Consumption
Housing
Education
Remittances
Insurance
Investment
Savings
Perishables (food) Non-Perishables (FMCG)
Electronics
Consumer Packaged Goods (FMCG)
Health (e.g. immunizations)
Commercial
Non-commercial
Disaster Management
SKS HAS ALSO CREATED A DISTRIBUTION CHANNEL TO THE BOP
Upper Poor
(70 million households)
Have some assets
Very Poor
(70 million households)
Have no assets but can work
Ultra Poor
(10 million households)
extreme poverty
SKS HAS LAUNCHED A PROGRAM TO TARGET TO ULTRA POOR THROUGH ITS AFFILIATE—SKS NGO
A sustainable entrepreneurial
activity
An asset, training +
health & social inputs
getsto
beginAn ultra poor
member
ULTRA POOR PROGRAM PROVIDES ECONOMIC, SOCIAL AND HEALTH INPUTS
Potential graduation into microfinance
Ravi & Prathiba Reddy Foundation
with initial support from
SKS Microfinance
www.sksindia.com
EMPOWERING THE POOR TO BECOME ECONOMICALLY
SELF-RELIANT
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SKS – CREATING MICROFINANCE OF THE FUTURE