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Financial performance of microfinance institutions in India: A study based on outreach and profitability
, M.R. Reddy
Published in Serials Publications
Volume: 15
Issue: 9
Pages: 221 - 231
Microfinance is a deep rooted financial system in India as a mechanism for disbursement and collection small scale funds. Due to inadequate banking channels in rural and remote areas, a large number of informal financial intermediaries particularly Microfinance have been mushroomed which are acting as a proxy to the banks. It emphasizes on rural economy and performs as mode of lifting people from the deprived section into the formal financial system, thereby it reduces the leakage of bogus financial services. Though, the recent microfinance crunch in the state of Andra Predesh, exorbitant rate of interest levied by Microfinance Institutions (MFIs) and movement of banking entities into Microfinance sector, an introspective analysis is necessitated on current outreach of microfinance and its financial performance with respect to profitability of different forms of Microfinance Institutions. Moreover, many of these entities are extending only credit products which lead to huge indebtedness amongst the downtrodden people and deteriorating financial health of small investors. Therefore, this study aims to assess the outreach of microfinance in India based on three parameters such as client penetration, branch penetration and loan portfolio. It also tries to analyse the financial performance of MFIs like Return On Asset (ROA), Return On equity (ROE) etc. To rationalize the objectives of this study, hypothesis testing is applied among assessed variables. The study has been done based on exploratory research method by using five years data collected from various secondary sources. © Serials Publications Pvt Ltd.
About the journal
JournalInternational Journal of Applied Business and Economic Research
PublisherSerials Publications