FORTUNE -- There's a debate brewing in the world of do-gooder banking, pitting the father of microfinance Muhammad Yunus against a few entrepreneurs who have put an unlikely spin on Yunus' model of lending to the poor.
Earlier this week, India's biggest microlender, SKS Microfinance Ltd., made its debut on the Bombay Stock Exchange. Shares surged 18% on their first trading day.
An IPO is a rare and controversial step for a major microfinance company to take, since these lenders typically rely on donations, governments and international organizations such as the World Bank for funding. Only a handful have raised public money on the idea that helping small entrepreneurs like farmers and basket weavers gain access to financing is not only the right thing to do, but also a profitable venture.
But after SKS's strong reception, others will likely follow its lead to the public market. SKS founder Vikram Akula says going public is perhaps the only way to shore up more capital to serve more of India's poor. He wants to prove critics wrong, including Yunus, who argues an IPO would essentially mean profiting off the poor. The Bangladeshi banker and economist has been credited for pioneering microfinance, and in 2006, his founding of Bangladesh's Grameen Bank earned him and the bank a Nobel Peace Prize.
"Microcredit should not be presented as a money-making opportunity," he told The Wall Street Journal in July. "It is an opportunity to make an impact on poor people's lives."The industry faces a sticky dilemma: to pursue morals or profits. But public microlenders argue they can have both. ...