Financial Sustainability Assessment of Select Indian Microfinance Institutions-An Empirical Study

During the beginning of this year 2014 about 363 million people in India are below the poverty line. The government takes serious steps to upgrade their livelihood. One of such initiatives has been the introduction of Financial Inclusion which means bringing the deprived people under the bankable orbit as well to save people from becoming prey for Ponzi Schemes. Microfinance is taken as strong tool to overcome this issue. Government and Private people joined hands to provide financial services exclusively designed for poor. A new dimension of funding in financial industry was created.

The MFIs has recently undergone turbulent scene. During 2010, India's largest Microfinance Institutions pitched financial crisis and social threat of its clients committing suicide due to over indebtedness. Inspite of Government regulations, efforts are taken privately to improve the situation. This study aspires to study the factors affecting the financial sustainability. The researcher proposes a financial sustainability index for the Microfinance institutions. It also aims at learning the relationship between Operational Self Sufficiency (OSS) & Return on Assets and portfolio at risk with bad loans, operational sustainability and productivity. The study aims at understanding whether the OSS has improved before the Andhra Pradesh Crisis. The results shows the situation is not promising and needs a revamp along with stringent regulatory controlling mechanism.