Awareness of financial efficiency – A flip side of MFIS

In India where a huge part of population, is still financially excluded, efficiency and sustainability of all types of MFIs is an essential building block for inclusive growth. Proper risk management contributes in financial efficiency which arrests the default rate and results in financial sustainability in the long term. The prime objective of this research is to identify the level of awareness of financial efficiency in all types of MFIs in context of micro financing poor people for self employment in Malwa region of India. This paper uses a data of a sample of 54 institutions including commercial banks, rural regional banks, cooperative banks, NBFC, NGO and others to assess the awareness about financial efficiency on various parameters. The results of ANOVA reveal that all the parameters are financial efficiency are explored and understood by MFIs of all types and sizes. Some are aware about profitability while others take care of asset quality. There are few MFIs who are concerned about all parameters of financial efficiency. The main reason identified for lower understanding of financial efficiency parameters are lack of financial training to employees, regulation, supervision and lack of professional management and lack of infrastructure.