Microfinance Repayment Performance and Related Issues in Microfinance Institutions Model: An Empirical Examination in the Brahmaputra Valley of Assam, India

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The success of microfinance in Bangladesh shows how joint liability lending contract helps in mitigating the constraints in the way to finance the un-banked but productive poor and thus making Grameen model a successful replication all over the world. The most common reason for the extensive practice of microfinance around the world is due to reported high repayment rate along with large outreach of the programme. The mechanisms of group lending, such as peer pressure, peer monitoring, screening and group solidarity are hyped as instruments to attain considerable repayment rates. Moreover, some studies indicated the role of other factors related to household and local economic environment characteristics in enhancing repayment rates. However, repayment rates are radically changed from one program to another, signifying an intrinsic instability in the financial technology. The significance of a highly performed lending innovation such as JLL is multifaceted and Zeller and Meyer (2002) termed the core issues as critical triangle of microfinance, where it is based on the assumption of achieving high outreach, financial sustainability and high impact. From institutional perspective, financing poor is a risky affair in the absence of physical and financial contract. Therefore sustainability of the programme emerges as a grave issue in view of high outreach and exerts implication for repayment performance. Besides, efficiency and impact also has an implication in comprehension of sustainability in view of the repayment performance. In view of the growing importance of microfinance as a tool of poverty reduction, the present study intends to shade light on the issues of outreach, sustainability, efficiency, impact and repayment. In this endeavour, the study uses both primary and secondary .
Supervisor: Saundarjya Borbora