A Niskayuna High School graduate who was once named one of Time Magazine’s most influential people for his work in helping India’s poor through microlending has left the company he founded amid growing controversy of the small-loans industry in India.
Vikram K. Akula, who was Niskayuna High senior class president in 1986, left SKS Microfinance this week. The company did not give a reason for the departure in a news release posted online, but reports by the New York Times, Reuters and The Associated Press cited growing criticism of the microfinance industry in India, specifically its interest rates and loan collection methods.
Akula, who had received much of the acclaim over the years for microlending’s work to help the impoverished, “became a target of much of that ire,” the Times wrote.
The reports say the trouble was brewing for more than a year, with Reuters citing a World Economic Forum India Summit last year where Akula “faced uncomfortable questions from the audience on aggressive loan recovery practices and high interest rates, and was later escorted away from reporters.”
The Associated Press cited an SKS spokesman as saying the resignation was voluntary. The AP, however, also cited one person close to the talks who said Akula clashed with investors over how to revive the company. He wanted to keep the focus on small loans, rather than broadening the focus “into a broad-based rural financial services company,” the AP reported.
Akula was born in India but grew up in Glenville and graduated from Niskayuna High School. His father, Dr. Akula Krishna, is a retired surgeon who practiced at Ellis Hospital in Schenectady.
Akula founded SKS in 1998. By 2006, it had provided more than $52 million in small loans — as little as $100 — to 221,000 women in poor regions of India in a bid to end poverty in the country, according to company literature from that time. Borrowers then used the money to launch a small business such as sewing clothes, raising livestock, farming or running a small store.
Akula received enough acclaim from the endeavor that in 2006, Time Magazine named him one of the year’s 100 most influential people.
His father recalled then a visit to India when his son was a child. The family was attending a wedding, and Krishna said his son — not yet 10 years old — could not understand why the people at the wedding celebration had good food, but those in the streets did not.
Vikram Akula described the scene in a book released last year, “A Fistful of Rice: My Unexpected Quest to End Poverty Through Profitability,” a searchable copy of which is available at Amazon.com. Akula recalled seeing children take unwanted scraps from the dining tent. In Schenectady, he wrote, those children might have been his friends or on his soccer team; in India, they were scavengers.
“That was the moment I knew, beyond doubt, what I would do when I got older,” he wrote. “I wanted to come back to India and help people like those boys get out of poverty.”
Akula’s parents were unavailable Friday, as there was no answer at the family’s Glenville home.
This week’s media coverage carries no allegations of wrongdoing by Akula, but The New York Times wrote that SKS Microfinance had gone through “a stunning fall from grace” in the past year.
The AP wrote that stalwarts in the microfinance industry in India “pointed to SKS as a symbol of an industry that was becoming irresponsibly pro-profit and losing its focus on serving the poor.”
The Times noted the company started as a nonprofit, but turned for-profit and by August 2010 had made a public stock offering.
But, in one Indian state, the company saw 90 percent of its borrowers stop repaying their loans as the state placed harsh restrictions on lending, while politicians accused “SKS and other microlenders of being too aggressive in collecting repayments from impoverished families and driving some borrowers to suicide.”
The Times also noted that the lenders strongly denied the allegations.
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