A study on Performance Evaluation of Microfinance Institutions in India An Empirical Analysis

Abstract

Microfinance refers to small scale financial services for both credits and deposits that are provided to people/ firms, who operate at small level and their needs, arc confined to small amount of money. Although India has a vast network of banking organizations for catering financing needs of individuals and firms still the demand for funds has remained unfulfilled over years. Over years micro financial institutes have emerged like an important alternative source of financing other than banks by providing easy funding at convenient terms especially in rural areas. Micro finance operate through two main channels in India that are Banking system through the SHGs under Self Help Group-Bank Linkage Programme (SHG-BLP) and joint liability group- JLG bank lending program and Micro Finance Institutions (MFls) lending through individual and group approach. Recent studies revealed that SHG-BLP which is world largest micro financial programme has covered approx. ten crores of households with 85 SHG with the deposit of Rs. 161 14 crores and annual loan off take of Rs. 38800 crores with outstanding loan amounting Rs 61600 crores (NABARD report 20 I 6- 17) while on the other hand microfinance industry has total loan portfolio at Rs 1 06, 916 Cr. As on March 3 I. 2017 as per MFIN report- Micrometer 2017. So the main objectives of this paper are to study the growth pattern and outreach of Microfinance Institutions in India. Further the study focused upon evaluating the performance of selected Micro Financial Institutions based upon their Gross lending Portfolio and Outstanding Loans using cross tabular studies and one way ANOVA. The technique used to identify if there exist a significant difference in the mean performance of select MFIs. The data collected for the study includes secondary data. The various sources used for collecting secondary data include research papers, journals, Status of Microfinance in India reports published by NABARD, MFIN reports etc.