Explorations Into Loans Granted To Microfinance Institutions By Financial Entities: Observations From The Indian Context

Abstract

The research paper seeks to analyze the patterns of loans disbursed to Microfinance Institutions (MFIs) by various financial entities over the past 15 years. To achieve this objective, the study utilizes secondary data from NABARD and establishes a comparative framework for the growth rate and percentage distribution of loans extended to MFIs by different commercial and public banks as well as financial institutions. The study's findings indicate that over the last 15 years, commercial banks have been the predominant contributors, accounting for 50 percent of the loans disbursed to MFIs. Additionally, the growth rate of loans disbursed by commercial banks has been the highest at 26.58 percent. However, the analysis in the study uncovers that the onset of COVID-19 led to a decrease in loan disbursements, followed by a subsequent increase in the post-pandemic period. This shift is attributed to the heightened demand for financial services from businesses and households that experienced economic setbacks during the pandemic