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Transcript: Vikram Akula, Founder & CEO of SKS Microfinance

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HYDERABAD, India (CNN) -- Vikram Akula is on an economic mission: to empower India's poor.

His drive to fight poverty led to the birth of the Hyderabad-based SKS in 1998. It is a microfinance company that lends small amounts of money, typically $100, to impoverished women.

The cash is used to buy everything from animals to irons so clients can start their own homegrown ventures. SKS started out as non-profit but later changed its status and is now one of the fastest growing microlenders in the world.

With role models like Mohammad Yunus of Grameen Bank, who recently won the Nobel Peace Prize for his microfinance work, Akula is in good company. CNN's Andrew Stevens asked the former management consultant why he made this career choice:

Akula: In my case, I have grown up in the States but born in India so I used to come back here as a child and just would continue to see the very jarring poverty that we have in our country. And for me it was always trying to figure out a way to eradicate that poverty. And that is how I ended up doing microfinance. I have no particular interest in business, no particular interest in finance per say but I just know that this is the right way to get our country and developing countries across the world out of poverty.

Stevens: What's on your bookshelf? Is it Mahatma Gandhi and the latest management theory?

Akula: Exactly. One of the books of Gandhi's that I like the best is Satyagraha in South Africa and then I have Clayton Christensen's The Innovator's Dilemma and I have my set of Harvard Business Review articles. It is a combination of management books and philosophy.

Stevens: What strikes me and what would strike many people I think is that you actually charge 25% interest rate a year which seems very high. It makes you sound just like a commercial bank.

Akula: Right. In fact I would say 25% is actually what loan sharks typically seem to charge, and so it certainly seems high but what in fact is the situation is that commercial banks simply don't move in this space. They are not able to have the systems to reach out to the poor in villages so it is not that the poor get a lower interest rate from the commercial banks in fact they have no alterative but to turn to money lenders who charge exploitive rates of interest. So what we do is when we charge 25% it is actually the lowest cost financing available to the poor. Now the reason why it is 25% percent is it is a high touch business. We have to go out to rural areas and remote villages every week to meet our borrowers and do banking at their doorstep. Because of that there is a high cost involved and that is why we charge 25%. It is really a cost plus pricing.

Stevens: You were quoted in the Wall Street Journal as saying "this can work driven only by greed, that is the magic of it" -- what do you mean by that?

Akula: Well that quotation was taken a bit out of context but I do believe that this can only be driven by a profit motive in the sense that at the end of the day banks lend to us not simply because of the social motive but because it is profitable for them and so the magic of this is that we have developed a system and we have developed a business that ties into that fundamental drive of business which is profit and made it work for the poor.

Stevens: What's the long term goal here as far as the business is concerned? I read somewhere that the plan was to be like Starbucks and have an outlet on every corner virtually.

Akula: I think what is incredible about Starbucks is how do you roll out thousands of stores across the world in such a short period of time? And I think in microfinance we can learn from that. In our case we have the fastest growth rate of any MFI in the world but we need to push it even farther. We need to look at getting microfinance in every village and every slum in the country. And so yes Starbucks is definitely a model of where we want to go.


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Vikram Akula

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