Study on the Drivers of Over-Indebtedness of Microfinance Borrowers in India: An In-Depth Investigation of Saturated Areas
Despite the rapid growth of microfinance in India in the past few years, incidences of over-indebtedness (OID) have been reported in various parts of the country. This study aims to provide a comprehensive understanding of the problem of over-indebtedness in selected areas, in order to gain a better perception of client OID in the microfinance sector and the extent to which different factors, especially multiple borrowing, can lead to OID. Specifically, the study explores:
- Understanding the level and nature of OID of microfinance institution clients and their households from all sources (formal and informal) in the selected areas;
- Identify the factors responsible for this over-indebtedness and study how they correlate with each other in different thresholds of OID;
- Investigate the linkages, if any, between multiple borrowings and cases of over-indebted clients;
- Map out any struggles faced by the clients in repayment of loans;
- Suggest remedial measures, if necessary, to microfinance institutions and credit bureaus in order to prevent the sector from being hit by another crisis.