Abstract
The policymakers around the globe have been emphasizing on financial inclusion in line with sustainable development goals 2030 of the United Nations. Developing countries are still behind in ensuring greater financial inclusion especially for women. While banks are the apex financial institutions in any country, microfinance institutions proved to be promising in advancing financial inclusion because of its better reach to women in remote areas. Thus in a country like India, the outreach and sustainability of microfinance institutions is of utmost importance. This paper aims to rank the performance of microfinance institutions listed by Reserve Bank of India on the basis of their outreach, sustainability, quality and efficiency. The ranking is done separately for five years (2014-15 to 2018-19) using Technique for Order of Preference (TOPSIS) method while overall ranking and benchmarking for five years has been done using interval valued TOPSIS (IV-TOPSIS) method. The robustness of the study has been checked through sensitivity analysis. The overall results portray Satin Creditcare Network Limited as the best performing NBFC-MFI while BWDA Finance Limited as the worst performer for the combined period of 5 years
Highlights
Inclusive growth is critical for the overall development of any economy and financial inclusion is a major determinant of an inclusive economic system
Findings and Discussion The present study ranked NBFC-Microfinance institutions (MFIs) registered with Reserve Bank of India (RBI) on the basis of some financial performance criteria for a period of 5 years
For assigning the relative importance of each criterion in determining the performance, criteria Correlation (CRITIC) method have been used and TOPSIS and IVTOPSIS have been applied for determining the ranks of each MFI over the years
Summary
Inclusive growth is critical for the overall development of any economy and financial inclusion is a major determinant of an inclusive economic system. Policymakers around the globe have been emphasizing on a well-developed inclusive financial system for faster economic growth owing to its ability in ensuring better channelization of resources into productive uses from every section of the society. In a developing region like India with a huge population, microfinance has provided promising results in better outreach to the poor in providing formal financial services which was otherwise difficult with mainstream banking structure. The gender gap in financial inclusion in developing economies is consistent at 9 per cent (Demirgüç-Kunt et al, 2013) which obstructs faster and sustainable development. Microfinance institutions (MFIs) are capable of closing this gender gap in financial inclusion as it has better outreach to the poor women helping in their empowerment and poverty alleviation. Financial sustainability is used as a measure to judge the success of an MFI
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