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Abstract
Microfinance is becoming a world-wide trend in financing development projects. Due to the fact that the cross-border region of Sandzak has an increasing rate of unemployment on the one hand, but unused resources, especially in the sector of agriculture, on the other hand, we want to develop a micro financial institution for Sandzak, which considers the characteristics of this region. This paper looks at the growth and transformation of microfinance institution in India with different features in providing services. The structure of microfinance institutions has been discussed and in order to penetrate into the poverty and downtrodden segment for their alleviation. The growth with transformation of MFIs studied by SHG-bank linkage programmes. Though there was dependence on the financial institutions, the progress of MFIs was significant. However, it has been found that there is absence of regulatory control in India and interference of political sensitivity in the MFOs. Moreover, it was found that governance within the MFIs was weak. Having examined various options, we conclude that there is no ideal or easy path for MFIs to mainstream in India. This has implications for regulatory framework. There should be regulatory changes that allow smaller MFOs to get into more complex forms as they grow organically. The suggestion has been given that, NGO-MFIs should be allowed to invest in the equity and debt as these are larger enough to maintain adequate leverage ratio and able to raise capital as NBFCs.