Is Microfinance Outreach Sustainable? A Case of Microfinance Institution Model in India

“Second European Research Conference on Microfinance”, June 16-June 18, 2011: University of Groningen, The Netherlands

Posted: 31 May 2014

See all articles by Gopal Kumar Sarma

Gopal Kumar Sarma

BBK College

Saundarjya Borbora

Indian Institute of Technology (IIT), Guwahati

Date Written: June 15, 2011

Abstract

Microfinance sector has witnessed a burgeoning outreach under microfinance institutions model which poses a question on the sustainability of the programme. Even if repayment rate for the major MFIs are greater than 95%, it may neither be an appropriate indicator of institutional sustainability nor on impact. In this paper an exam ination on the outreach and sustainability of microfinance institutions model of microfinance have been carried by taking a MFI of Assam as a case. Although the MFI reaches a large number of clients, analysis indicates that MFI is still financially not self-sufficient which is reflected by a number of calculated indicators such as FSS, SDI and SDR. In addition, the paper discusses on the policy options for sustainability of microfinance institutions which are based on break-even interest rate analysis.

Keywords: MFIs, Repayment, Sustainability, Financial Self Sufficiency, Subsidy Dependence Index, Break-Even Rate

JEL Classification: G29, Y80

Suggested Citation

Sarma, Gopal Kumar and Borbora, Saundarjya, Is Microfinance Outreach Sustainable? A Case of Microfinance Institution Model in India (June 15, 2011). “Second European Research Conference on Microfinance”, June 16-June 18, 2011: University of Groningen, The Netherlands. Available at SSRN: https://ssrn.com/abstract=2443409 or http://dx.doi.org/10.2139/ssrn.2443409

Gopal Kumar Sarma (Contact Author)

BBK College ( email )

Department of Economics
Nagaon
Barpeta, Assam 781311
India
9706366016 (Phone)

HOME PAGE: http://www.bbkcollege.com

Saundarjya Borbora

Indian Institute of Technology (IIT), Guwahati ( email )

Doul Govinda Road
Amingaon

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