MFI’s Loans: Evaluating Adequacy, Utilization and Repayment Pattern among Urban Poor Households
DOI:
https://doi.org/10.5281/zenodo.13771289Keywords:
microfinance, loan utilization, poverty alleviation, repayment trends, income generationAbstract
Microfinance Institutions (MFIs) offer loans to impoverished individuals for small enterprise investments and consumption expenses. Investment-oriented loans can create jobs and income for poor households while ensuring high repayment rates for MFIs. However, studies suggest that microloans are often too small for effective investment, failing to improve living standards significantly in the long term. This study evaluates the sufficiency, utilization patterns, and repayment trends of MFI loans. Using primary data from 104 households in Delhi slums collected in 2016, the descriptive analysis reveals that loans are nearly equally split between consumption and production purposes, sometimes serving multiple uses. Most respondents found the loan amounts insufficient. Repayments are typically punctual, though delays occur in some cases due to inadequate income, loan diversion for household consumption, and giving money to male family members.
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