Profit-oriented micro-finance institutions in India

Abstract

Micro-finance institutions (MFIs) as financial intermediaries, help poor to come out of extreme poverty through the purposeful lending to those looking to generate income for the livelihood needs. These micro-finance institutions need good governance to ensure improved performance to achieve sustainability and growth. The review of literature has produced mixed results in studies on the influence of governance on the performance of microfinance institutions. There is no enough research undertaken in measuring the impact of governance on the functioning of microfinance institutions, particularly in the context of ‘Profit-Oriented’ MFIs in India exclusively. This research examined the effect of governance on the overall performance of ‘Profit-Oriented’ micro-finance institutions. Using regression technique, evaluation of governance and performance of ‘Profit-Oriented’ MFIs has been undertaken to check the possible impact and it is being found that governance has an impact on the performance. This research emphasized on the impact of governance on the performance of ‘Profit-Oriented’ micro-finance institutions. The governance and performance indicators, identified as independent and dependent variables respectively, from the review of literature using regression technique. As this research can be useful for the microfinance institutions, as several MFIs are transforming from ‘Non-Profit Oriented ’MFIs to ‘Profit-Oriented’ MFIs in providing micro-finance services.