SKS Microfinance founder and former executive chairman Vikram Akula is the nominee from SKS Trusts seeking a board seat in SKS Microfinance. SKS Trusts chairperson Biksham Gujja, also mentor to Akula, has vowed that SKS Trusts will pursue all legal channels, including approaching the Company Law Board besides various regulatory authorities, if SKS board rejects the nomination. The Trusts recently became the largest shareholder with 12.6% shareholding and reiterated its long-standing request for suitable representation on the board. In an interaction with BV Mahalakshmi, Akula says if elected to the board, he would bring ethics in the group-lending model in the microfinance industry and help SKS Microfinance regain public confidence. Edited excerpts:

If elected to the board, what will be some of your immediate objectives?

First, I have come to realise that the character of shareholders is important. In particular, in social enterprises, investors have to take a long term view. I am all for creating shareholder value, as long as it is done in a way that ensures borrowers receive high quality, transparent financial services. If you do that, everybody wins ? borrowers as well as shareholders. But if you try to manage for the short term, it can have negative unintended consequences. If I were to join the SKS board, I would strive to ensure that SKS is taking this long term view and that it has shareholders who believe in this approach.

In terms of operations, the group-lending model involves intensive customer interaction and a high degree of transparency with borrowers. There?s a certain ethic to it. In the hyper-growth era of the sector, that ethic was lost. I would like to see SKS take corrective steps to bring that ethic back. This would involve training all field staff and then retraining borrowers to get the system back on track ? as I called for before I left SKS. I think this will help SKS regain public confidence and, in so doing, perhaps help garner popular support to get the Microfinance Bill passed in Parliament.

It was earlier reported that you have started a mobile banking company with a similar vision to that of SKS Microfinance to help the rural people. Any updates on this foray?

I had never intended to start a new mobile banking company. Instead, I worked with SKS Trusts in their partnership with a mobile banking company that was working in Bihar. The SKS Trusts? field staff assisted with business correspondent work such as account opening and assisting with mobile transactions, particularly savings. The SKS Trusts support development targeted to self-help groups of borrowers of SKS Microfinance. Our activities include education, health, and livelihood support and have reached thousands of beneficiaries in AP, Orissa, Karnataka, and Bihar.

So far, the Trusts has deployed funds to establish schools which have served 9,982 low income students in rural AP, provided livelihood support for 2,884 low-income, primarily SC and ST, families in Orissa and AP, facilitated a health programme that provided de-worming tablets to 1,34,000 low-income children in AP, worked with a mobile banking initiative that served 1,108 families in Bihar, served as a Business Correspondent with Yes Bank serving about 450 low-income families in Orissa and Karnataka, and funded medical/surgical camps in different locations of Orissa and AP for poor families.

How do you feel going back to the company, considering that ethics and corporate governance were some of the issues raised by the investor community and other board members?

My nomination has not been accepted yet. If it is accepted, I would be honoured to help SKS Microfinance achieve its mission and to contribute to enhancing long-term shareholder value.

It is learned that you are in talks with PE investors to raise funds. What is the plan?

Yes, over the last six months, I have met existing shareholders of SKS and potential new investors in SKS. Those new investors include both PE funds as well as social investment funds.

SKS Trusts seem to be looking at a legal battle with SKS Micro…

My mentor has said that if the board rejects me as nominee, SKS Trusts will pursue all legal channels, including approaching the Company Law Board. Also, if the company is not ready to engage with us on concerns we have raised over the last several months, we will have no choice but to approach various regulatory authorities.