Sustainability of Microfinance Outreach: Insights from Assam's MFI Model

This study investigates the sustainability of microfinance outreach in Assam, India, with a specific focus on the Credit Support Programme of RGVN (CSP-RGVN). Drawing on data from 2001 to 2007, the research evaluates three key dimensions: operational performance, financial sustainability, and dependency on subsidies. The findings reveal a substantial expansion in outreach, as evidenced by a compound annual growth rate (CAGR) of 22.68% in the number of active borrowers. While the program consistently maintained operational self-sufficiency, it achieved financial self-sustainability in only two of the six years under review. Although the subsidy dependence ratio demonstrated a declining trend, indicating reduced reliance on external support, full elimination of subsidies was not attained. Importantly, the analysis did not identify a definitive trade-off between outreach growth and sustainability. The results underscore that, despite operational strength, financial sustainability continues to pose a significant challenge. The study concludes that CSP-RGVN has made commendable progress in expanding outreach and reducing subsidy dependence; however, achieving comprehensive financial self-sufficiency remains an ongoing concern. To enhance long-term sustainability, the paper recommends strategic measures such as reducing operational costs, increasing interest income, and exploring equity-based funding options.