SKS MICROFINANCE

Jency Sebastian

SKS MICROFINANCE
SKS MICROFINANCE case came into light when the CEO Suresh Gurmani was unceremoniously fired by the board of directors. There were no performance or fraud issues. Eight of the ten directors voted in favor of his termination, the other two were absent. It is being said that this was done because the founder chairperson Vikram Aluka had some disagreement with the CEO. Two of its reputed directors are Pramod Bhasin, President and CEO of Genpact and Chandra Shekran, Former Executive Director, SIDBI. This event brought focus to the internal operations of SKS Microfinance

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The organization was formed as part of social entrepreneurship to give rural poor and farmers small value loans. It is said that the organization was charging an astronomical 28% interest and was coercing village women and farmers for recovery. A number of farmer suicide incidents were reported to police holding SKS responsible. Andhra Pradesh government passed a revised law about microfinance lending which in the last three months has severely affected the microfinance industry.

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The board of directors sacked SKS Microfinance MD & CEO Suresh Gurumani after a few months of an IPO of Rs 1650 crores. The reason could be that SKS Microfinance founder and executive chairman MrVikram Akula had interpersonal issues with Suresh Gurumani. Previously, some senior management had left the organization on the same grounds. According to information, the board of directors all voted in favor of termination of Suresh Gurumani. There were no performance or business ethics issues to implicate Suresh Gurumani .

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With repeated actions of the executive chairman and board to terminate senior management on interpersonal issues, there appears marked disrespect for corporate governance