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

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Evidence and Implications

Financing of Indian Microfinance

The pattern of funds fl ow during 2006-10 to self-help groups and microfi nance institutions - the two competing institutional arrangements of microfi nance delivery in India - reveals that the commercial banking system had steadily shifted its patronage to large MFIs from the mid-2000s. Increased access to equity capital helped these MFIs improve their capital adequacy, which, in turn, helped them leverage the domestic debt market. They also resorted to newer ways of raising capital through product structuring and introduction of innovative debt instruments. MFIs thus played a signifi cant role in linking the processes of neo-liberal restructuring and fi nancialisation with the daily lives of local communities.

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