An Analysis of current Status & Performance of Micro financing Institutions in India

The microfinance is concept of providing finances to the poor section of the society who doesn’t have access to the formal financial system of the Country. This concept is very important for the development of the country through the development of the poors. The NABARD was the first institution in India who thought of including the poor people of the country under the formal financial system of the country and in 1992 a model of SHG-Bank linkage was developed to provide the funds to the poor of the country. It is one of the best and dominating models used for micro-financing in India. But later on a new model came into existence with the help of NBFCs and NGOs who also started providing funds to the unprivileged section of the society. The present paper has made an attempt to study the status of micro-financing in India through the analysis of two Micro-financing models with respect to providing finances and their outreach in India. The data has been collected from the various reports published by NABARD and other publishing agencies and results shows that the two models are doing well but the annual growth rate of loan disbursement through the MFI-Bank Linkage programme is higher than the SHG linkage. Currently the MFIs are operating in 29 states, 4 UTs and 588 districts in India. Most of the MFIs are small in size and are concentrating only in few states. It is expected that due to the emergence of MFI-Bank Linkage model and reliance of Govt. on these institutions to disburse the credit to the poor is going to have very positive results.