SKS: Our Work: How We Do

SKS has identified the barriers to scaling microfinance – what it calls the 3 Cs of Capital, Capacity and Costs – and has taken an innovative approach to overcome these barriers. These three principles, using a profit-oriented model, drawing on best practices from the business world for scaling and using technology have helped us create a new generation of microfinance institution and enabled us to reach numbers that otherwise the microfinance sector has not seen before.

Many believe that microfinance should be a “social business”, meaning investors should get their investment back but no profits. SKS has a different view. If the microfinance industry is going to provide the estimated INR 2,399.35 billion (USD 51.4 billion) of credit needed by the poor, it must tap commercial capital markets – and that means structuring microfinance so that investors can expect a return on their investment. That is why SKS converted from a non-profit NGO to a for-profit Non-Banking Financial Company (NBFC) – regulated by the Reserve Bank of India – in 2005. On November 18, 2013, SKS Microfinance Limited (SKS) became a Non Banking Financial Company – Micro Finance Institution (NBFC-MFI), registered and regulated by the Reserve Bank of India.

With rapid scaling comes the challenge of building organisational capacity. Rather than look at conventional microfinance models, SKS based its business strategy on principles borrowed from fast-scaling consumer businesses. SKS standardised its products and front-line processes and adopted factory-style training models that have helped corporate giants scale up rapidly – thereby boosting our own workforce capabilities and growth.

SKS Microfinance firmly believes that technology is one of the key enablers for scaling microfinance. For SKS, technology is an investment that is adding value to what and how we offer financial solutions to our members. SKS Microfinance is among the first to develop and deploy an industry standard MF technology platform in-house, delivering superior value to our end customers. The systems designed and deployed at SKS have enabled the business to grow rapidly since its simple to use, saves time, is accurate and allows for data highlights to be transferred to head office when needed. SKS is now investing in putting up a robust IT backbone with a world class data backup centre delivering mission critical services and connectivity across our branch offices to manage the next phase of growth. The new agile and scalable technology architecture is capable of handling the challenges specific to the microfinance sector. A web-based Business Intelligence portal using state-of-art technology and a highly flexible and scalable platform has also been deployed to support the business growth and operations.