Micro financing is a critical sector. The profits are very narrow. The target group is usually from the lowest end of the economic spectrum. Thus the chances of defaults are the maximum. But to ensure a uniform growth of economy, it’s important to place resources in the hands of those who need it the most. And that is exactly why Micro financing play an immensely important role in growth of the economy.
When SKS Microfinance Ltd. got an approval from the Securities and Exchange Board of India (SEBI) to proceed with an IPO, a new chapter in the book of corporate history was written. As the company will become the first Indian company to go public in the area of Microfinance, it plans to raise US$ 250 million which will then be handed out as tiny loans to poor families.
Mohammad Yunus, a Nobel Laureate a pioneer of the Microlending, however seemed to disagree. “Microcredit is an opportunity to make an impact on poor people’s lives. An IPO gives a wrong message”, is what he said recently.
Criticisms and accusations kept aside, one thing is certain. The IPO will put more money in the hands of SKS Microfinance Ltd. And as long as it continues to hand out the loans to people who need them the most, it deserves all the good words. The profit may be too small, the purpose is too big though.
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