Performance Analysis of Commercial Banks Providing Microfinance in Rural Areas of Maharashtra

Microfinance is an important tool which provides microcredit to the low income People which do not have access to formal financial institutions. In India commercial banks have had a larger share in the providing microfinance right from the inception of microfinance program. In recent times, commercial banks have gone forward to strengthen SHG saving and credit linkages program. In the fiscal year 2014-15, ICICI Bank has planned to reach out to over two million women under self-help groups. SBI is maintaining its position as a leader among Commercial Banks in credit linking of SHGs. The present study is an attempt to analyze the performance of commercial banks providing microfinance operating in rural areas. Different parameters taken for the study includes Operating Self-Sufficiency, Efficiency and productivity. Financial data has been collected from 62 commercial banks that involved in microfinance activity. Data has been analyzed using ratio analysis and t-test. The present study shows that Private sector commercial banks still face high cost per borrower relative to public commercial banks. The paper concludes that Microfinance providers must be able to sustain themselves financially because it is essential that these institutions be run efficiently for poor sections of society.