ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Institutional Framework of MFIs and Economic Benefit to Clients in Mumbai Slums

The microfinance movement has experienced economic transition over more than four decades across the world. In the 1990s several microfinance institutions were forced to change their institutional structures to face competition from for-profit organisations. Most studies focus on the relations between the institutional structures and the performance of these MFIs. However, there is little focus on the relations between the institutional framework and the benefits to the clients. This article aims at understanding how clients in the slums of Mumbai have fared.

Microcredit for Income Generation: The Role of Rosca

Microcredit institutions have played an important part in income generation activities in developing countries. In India, rotating savings and credit associations (Rosca), a special type of microcredit organisation, largely meets the credit needs of the poor. These organisations also improve the loan repayment habits of the poor borrower. This paper investigates important features of Rosca such as group formation procedures, loan sequencing, peer monitoring, loan repayment, rate of default, etc. It also analyses how Rosca achieves sustainability with low social sanction and policy implications are discussed.
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