Examining Technical Efficiency of NBFI-MFIs in India: A Non-parametric Approach

Abstract

This study analyses the technical efficiency of Non-BankingFinancial Institution – Micro Finance Institutions (NBFI–MFIs)in India under both variable and constant returns to scale over aperiod of nine years ranging from 2004–05 to 2012–13. The studyused production approach to estimate efficiency scores of firmsby using a non–parametric tool called the Data EnvelopmentAnalysis (DEA). The results indicate that Rashtriya Gramin VikasNidhi Microfinance Limited (RGVN) and Share MACTS are theonly two firms that lay on the efficiency frontier under variablereturns to scale (VRS) approach whereas no firms were there inthe efficiency frontier under constant returns to scale (CRS)approach. The nine-year average Technical Efficiency (TE) scoresunder both approaches remained the same at 0.889. Average PureTechnical Efficiency (PTE) score under input orientation is 0.916,whereas it is 0.921 under output orientation. Average ScaleEfficiency (SE) scores were 0.971 and 0.966 under inputorientation and output orientation, respectively.