A Study on Financing Structure of MFIs in India

“Microfinance” is often defined as financial services for poor and low-income clients. The institutions offering the financial services and banking opportunities to the unbankable population are called as Microfinance Institutions (MFIs). With the increasing commercialization of microfinance sector in the country, the financing structure is changing. The share of client savings and grants has reduced over the years. Grants are becoming scarcer and savings as source of financing is also decreasing as more and more MFIs transform into regulated structure of NBFC and the central bank does not allow these institutions to raise deposit. The present study is an attempt to assess the financing structure using three variables, namely, Capital Asset ratio, Debt Equity Ratio and Gross loan portfolio to total assets of Microfinance Institutions operating in India. A sample of 46 MFIs have been taken for purpose of the study.