Financial Inclusion or Financial Destruction: A Case Study of Microfinance Institutions

Abstract

Microfinance sector, in India has played an significant role in the progress of the Indian rural as well as urban economy. A large number of Micro Finance Institutions (MFIs) in India are serving to the financing needs of rural and semi-urban Indian population. For achieving the target of financial inclusion in India this sector cannot be ignored. Generally daily wage earners, marginal farmers, women working from homes are the clients of MFIs. Such clients work only cash basis. Collection of loan is generally done by MFIs on weekly or fortnightly basis. The objective of the paper is to analyze the short and medium term positive and negative effects of  any government decisions including demonetization on MFIs in India. This study will give more insights about the impact of the demonetization and other government policy framework on MFIs in India.