The Landscape of Microfinance Programmes in Northeast India: An Empirical Study with Special Reference to Assam (2012–2022) Commercialisation.

Abstract

This research presents a thorough, empirically informed examination of the microfinance sector across the eight states of Northeast India covering the fiscal years from (2012–2022) 2011–12 to 2021–22, with an emphasis on the structural changes occurring in Assam. By utilizing comprehensive longitudinal secondary data sourced from the National Bank for Agriculture and Rural Development (NABARD), the Microfinance Institutions Network (MFIN), Sa-Dhan, and the Reserve Bank of India (RBI), this study monitors the structural development, geographic distribution, institutional outreach, and quality of portfolios in micro-credit operations. Throughout the decade under review, Northeast India experienced an extraordinary growth in its Gross Loan Portfolio (GLP), largely fueled by a systemic shift from the conventional, savings-oriented Self-Help Group-Bank Linkage Programme (SHG-BLP) to credit-driven, commercialized Joint Liability Group (JLG) frameworks overseen by Non-Banking Financial Company-Microfinance Institutions (NBFC-MF). The empirical study uncovers a significant imbalance within the region: Assam consistently held over 65% of the total microfinance market share, leading to credit over-saturation in certain geographic areas. This swift and aggressive commercial expansion resulted in a localized systemic crisis between 2018 and 2020, marked by widespread multiple-lending, over-indebtedness, and a sharp (2012–2022) increase in Portfolio at Risk (PAR 30+ and PAR 90+) metrics, which were further intensified by the macroeconomic impacts of the COVID-19 pandemic. In reaction to this situation, the state government implemented the groundbreaking Assam Micro Finance Institutions (Regulation of Money Lending) Act, 2020. This paper analyses the aftermath of legislative changes, showing how imposed interest rate caps and borrowing limits have led to a significant decrease in credit availability in various regions, resulting in a "credit vacuum" for at-risk rural borrowers. The study finishes with suggestions for creating balanced regulatory frameworks, incorporating digital public infrastructure (DPI), and focusing on hybrid, community-supported credit systems to promote sustainable financial inclusion while avoiding harm to borrowers.