Keywords: Indian Microfinance Institutions, Solvency, Bankruptcy Prediction, Default.


In India, more than 450 million people are outside banking orbit. Many economically deprived communities borrow money from money lenders who charged them to an extent of 115% interest. Microfinance was a strong tool to rescue the poor from Ponzi Schemes. Microfinance industry thrived well in India. It recorded huge growth in South India than North India. The Microfinance crisis broke during the year 2010 in Andhra Pradesh. A bill enacted in Andhra Pradesh made the situation still worse. The repayment rate of the Micro finance clients dropped from 95% (2010) to 1% (2012). This made the survival of the Microfinance Institutions (MFIs) questionable. The paper aims at exploring the solvency and survival positions of the Private & Public NBFC MFIs. Based on the Altman’s Z revised score model (applicable for financial institutions) and Survival analysis, the results reflect that Private NBFC MFIs are solvent and had better survival than Public NBFC MFIs. It aims at understanding the factors discriminating the solvent and insolvent Microfinance Institutions.

JEL Classification Codes: G20, G21, G23, G28, G33.

Author Biographies

S. Sangeetha, KCT

Associate Professor, KCT Business School, Kumaraguru College of Technology, Saravanampatti, Coimbatore, Tamilnadu, India

K. Chitra, SRCASW

Principal, Sri Ramakrishna College of Arts and Science for Women, 395, Sarojini Naidu Road, Siddhapudur, Coimbatore, India


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Regular Research Article/ Short Communication Article