In a recent interview with The Economic Times, Vinod Khosla, one of the early and large backers of SKS Microfinance, remarked that SKS “should present themselves as a business, and not as do-gooders.”

I fundamentally disagree at the notion that those are necessarily (or appear, in his statement) to be mutually exclusive.

For the sake of this article, let’s go ahead and assume that Mr. Khosla’s point is correct, and MFIs should operate solely as a business.  What does this actually mean?

Cutting costs and/or putting through methods to increase revenue growth, for the purpose of driving an increase on profit?  Using smart strategic thinking to read the market better, make the right loans, and make more of them?

Where does the customer perspective fit into this equation?  One of Mr. Kholsa’s citations for SKS’s lack of performance was that “ they should have done more to look after their clients.”  I completely agree with his assertion, but disagree that this means they would be “acting more like a business” at the expense of being “do gooders.”

I would argue that by investing in their customer (the borrowers), MFIs stand a much stronger chance of obtaining the repayments that they fundamentally seek.  Creating an informative environment that helps to educate the segment of borrowers that don’t realize their risk of over-levering themselves will only help the MFI.  Community programs that are scalable across various regions would help to address a portion of the borrowing population that now is claiming that the SKS repayment agents were abusive.

Improved repayment rates aside, this gesture would do wonders for the reputation that SKS now cast upon themselves.  Working FOR and WITH your consumer base does not just make business-sense, it helps to solidify this notion that a good business CAN do good at the same time.

I do not believe that “being a business” and “being a do gooder” have to come at the expense of one another.  Finding ways to engage your consumer in a way that speaks to them creates a sense of trust, but from the “business side”, you’re providing insurance on your investment: the people.

-  Chris