Publication

Abstract : The microfinance industry in India is undergoing radical changes with changes in regulations and competition from the banking sector. With the RBI providing licences for opening up of Small Finance Banks and Payment Banks and commercial banks planning to penetrate into microlending leading to increased competition to microfinance institutions (MFIs), sustainability of MFIs is questioned. The not-for-profit NGO MFIs have largely converted themselves into for-profit entities. Given the current situation in the MFI industry, the paper tries to analyse as to what determines the performance and sustainability of MFIs in India. What are the reasons for not-for-profit MFIs to move out of business and was their performance significantly different from that of the for-profit sector? We examine if there is a significant difference in the financial, social and organizational indicators of for-profit MFIs and not-for-profit MFIs and sustainable and non-sustainable MFIs through the application of statistical procedures, the analysis of variance (ANOVA), a parametric statistical tool for comparing group means, and a limited dependent model, logistic regression.