Performance Analysis of Banks and Microfinance Institutions in India

Present paper intends to measure the determinants of performance of Indian financial sector. The performance variables of banking sector and microfinance institutions in India are studied over a study period of six years i.e. 2006-07 to 2011-12. The financial sector of India is gaining strength over the years and its contribution to growth is overwhelming. Banks are considered the main component of Indian Financial Sector. Indian banking sector is providing new and improved financial services to economy and masses over the years. The banks have achieved the above objective in some areas but failed to reach to other areas. To fill this gap of access Microfinance Institutions were established in India. The main objective of MFIs is to reach to masses to which banks are not able to provide the services. The main intention of establishing MFIs was to fill the gap of access to financial services by poor people. So, overall the mixed results are obtained from the study. The performance rotates around mainly two variables i.e. size and spread to total assets. All other variables are either negative or insignificant or both to the performance of banks and microfinance. institutions