Shares for the largest microlender in India plunged more than five percent for a second day in a row. Is the open market the place for microfinance?
Just two months after going public, SKS Microfinance, the largest microlender in India, is in trouble with the market. Shares for SKS plunged more than five percent for the second day in a row after a sudden and unexplained departure by CEO Suresh Gurumani.
When the company announced its $347 million IPO it heightened an ongoing debate in the microfinance community about the balance between scaling microlending to reach more people and protecting the mission of poverty alleviation from the potential dangers of public markets and shareholder obligations.
Today's tumble came after SEBI, the Bombay Stock Exchange where SKS shares are traded, has asked for an explanation of the hasty exit of Gurumani. Markets don't like unknowns, so the potential for scandal at the top has investors scared despite impressive growth and profits last quarter. If the stock continues to tumble it could be a set back to the proponents of public offerings.
WATCH: The godfather of microfinance, Grameen Bank Founder, Muhammad Yunus recently debated this issue with Vikram Akula, Founder and Chairman, SKS Microfinance at the Clinton Global Initiative.
READ: The Economic Times has a more detailed analysis of SKS Microfinance leadership and governance.