ANALYZING HOW BORROWERS' CHARACTERISTICS INFLUENCE REPAYMENT PERFORMANCE IN MICRO-FINANCE INSTITUTIONS IN BANGALORE

Abstract

The microfinance sector has experienced rapid growth over recent decades, with Nobel Laureate Mohammad Yunus pioneering modern MFIs through the establishment of Grameen Bank in Bangladesh in 1976. Today, it has evolved into a dynamic industry with various business models. In India, Microfinance Institutions (MFIs) have existed in the form of NGOs (registered as societies or trusts), Section 25 Companies, and Non-Banking Financial Companies (NBFCs). Commercial banks, Regional Rural Banks (RRBs), cooperative societies, and other major lenders have played a significant role in providing refinancing facilities to MFIs. Banks have also utilized the Self-Help Groups (SHGs) channel to extend direct credit to group borrowers. However, at times, individuals borrow from multiple sources, impacting their repayment capacity. This study aims to examine the impact of taking multiple loans on borrowers' default rates.