Unearthing the Double Bottom Line Commitments of Indian Microfinance Institutions

Abstract

The microfinance industry has emerged from a small domain institution to a broad tool for social development, as many success stories reveal its true potential for serving the society. Nonetheless, like every institution, it has to be sustainable in carrying out its developmental activities. This is where the idea of double bottom line surfaces where a win-win situation is attained for the microfinance institutions along with the clients to whom they are serving. Although there are other unprincipled grounds associated with the concept which obstruct this thought and deviates the MFI activities in accomplishing better and higher revenues. This leads to a trade-off. The paper tries to explore the presence the double bottom line in the MFIs of India. Further, to find if there is a trade-off between financial performance and social performance. A dataset comprising all the Indian MFIs reported in www.mixmarket.org for the period from 2009 to 2013 has been used for the study. The analysis is carried on various indicators that resemble the performance and efficiency of the MFIs. The evidence suggests a moderate trade-off in the operations of the Indian MFIs although largely they adhere to the double bottom line. They are mainly guided by outreach scale in terms of a number of borrowers.