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Central and State governments in collaboration with foreign agencies, implemented various
programs for alleviation of poverty in India. These programs did not succeed in the long-run due
to the sustainability of the implementing organization. Microfinance is one such program and is
implemented through the various forms of microfinance institutions. Therefore, the success of the
poverty alleviation programs depends on the sustainability of the implementing agencies.
Present study is designed to analyze the impact of such programs implemented through the
microfinance institutions. The study assessed the respondents from Karnataka, Kerala and
Tamilnadu by applying statistical tools and observed that the respondents are loyal to their
organization in Karnataka but not in Kerala and Tamilnadu. The services of the MFIs did not
satisfy a few clients due to irrational behavior of the microfinance institutions’ in the process of
recovery of credit. Disappointed clients accessing the services from more than one microfinance
institution without discontinuation of membership in existing microfinance institution, is a peril
to the sustainability of the institution and clients as well. The findings and recommendations of
the study provide the factual impact of microfinance and evidences for further regulation of
MFIs in the Indian economy.