Research Paper IJMSRR Impact Factor :3.029 E- ISSN - 2349-6746 ISSN -2349-6738 International Journal of Management and Social Science Research Review, Vol.1, Issue.13, July - 2015. Page 148 FINANCIAL PERFORMANCE OF MFIs IN INDIA – A MULTIPLE REGRESSION ANALYSIS Dr. Mrs. R.Rupa Associate Professor, School of Commerce (PG), C M S College of Science and Commerce, Coimbatore, Tamilnadu. Abstract Microfinance initially has been a form of voluntary help to most deprived population but today it represents a market solution to mitigation of poverty and acts as a development and economic tool in bringing about financial inclusion in India. The institutions that are providing microfinance services such as savings, credit, insurance and remittance services to poor are called Microfinance Institutions (MFIs). The study aims at analyzing the financial performance of MFIs in India by employing multiple regression analysis. The data have been collected from Microfinance Information Exchange from the fiscal year 2007 to 2011. The statistical tools numerical scoring and multiple regression analysis have been used for analyzing the data. It is found that the average loan balance per borrower/GNI per capita, return on asset and yield on gross portfolio(nominal) have been the cause for the decline in the overall performance during the study period. Key words: Financial Performance, Microfinance Institutions, Multiple Regression Analysis. 1.1 INTRODUCTION Finance is an extra ordinary effective tool in spreading economic opportunity and fighting against poverty. Access to finance allows the poor to use their rich talents or open avenues for greater opportunities. Providing sustained credit services is one of the means to increase income and productivity of poor. Starting with the Grameen bank founded by Mohammed Yunus in 1970s microfinance represented a method of lending that is to be tailored specifically to the world’s poorest population. MFI s are commonly known as “Bank for the poor”. MFIs play a significant role in financial sector development, and thereby, overall development. 1.2 STATEMENT OF THE PROBLEM India is a developing economy and poverty is a common problem. It becomes imperative to formulate specific situational poverty alleviation policies and programmes for generation of minimum level of income for rural poor which forms substantial percentage of national population in developing societies. Microfinance is an option to resolve this problem of poor people. The microfinance industry in India started with informal Self Help Group (SHG) to access the much – needed savings and credit services in the early 1980’s and today it has evolved into a vibrant industry exhibiting variety of busine ss model. To provide microfinance and other support services MFIs should be able to sustain for long period. In order to sustain operations, MFIs must generate enough revenues from financial services to cover their financial and operating cost and in many cases, build institutional capital through profit. The present study is an attempt to assess the financial performance of Microfinance Institutions operating in India during fiscal year period 2007 to 2011 (2007-08 to 2011-12). By applying numerical scoring the overall performance of MFIs selected for the study has been arrived at and multiple regression analysis has also been employed to identify the effect of selected parameters on the overall performance score of MFIs in India. 1.3 OBJECTIVES OF THE STUDY The study focuses on the objective: 1. To analyse the financial performance of MFIs in India 2. To identify the effect of selected parameters on the overall performance score of MFIs in India. 1.4 SCOPE OF THE STUDY The study is pertaining to microfinance institutions in India. The comprehensive financial performance indicators model used by Microfinance Information Exchange (MIX) has been chosen for the study. The variables, such as institutional characteristics, financing structure, outreach indicators, overall financial performance indicators, revenue and expenses, efficiency and risk and liquidity have been considered to analyse the financial performance. 1.5 RESEARCH METHODOLOGY 1.5.1 SOURCE OF DATA