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
Date Written: June 15, 2011
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: Suggested Citation