Journal of Microfinance / ESR Review


This paper discusses the growth and transformation of microfinance organizations (MFO) in India. Issues that have triggered transformation include size, diversity, sustainability, focus, and taxation. Transformation experiences in India are few. To move to the mainstream, non-governmental organizations (NGOs) choose from three popular forms of organizations: non-banking finance companies (NBFCs), banks, and cooperatives. It appears that there is no ideal path for spin-off. Regulatory changes are needed to allow MFOs to graduate to other legal forms as they grow organically. NGOs must be permitted to invest in the equity of MFOs, as is the case in Bolivia and Africa. Norms for setting up MFOs under current legal forms should not be eased. Regulations should ensure that they help genuine MFOs and not others masquerading as MFOs.


M.S. Sriram is a faculty member at the Centre for Management in Agriculture at the Indian Institute of Management, Ahmedabad (IIMA).; Rajesh S. Upadhyayula is a doctoral student in the Economics Area at the Indian Institute of Management, Ahmedabad.



Journal Title

Journal of Microfinance

Issue and Volume