Over the past few years, a drastic change has occurred in the nature of financial services for the rural poor in India. Microfinance has witnessed an explosion in popularity, with the total number of people served by Microfinance Institutions (MFIs) or members of Self Help Groups (SHGs) growing at more than 50 per cent every year. Andhra Pradesh is one of the leading states in terms of SHG and MFI growth, with the largest number MFIs based in the state. There have been concerns, through, that this rapid growth has caused intense competition amongst MFIs competing for both clients and staff. Clients with multiple-borrowings from various sources are in some cases over-indebted. Many microfinance commercial organisations have entered the Rural Credit Market in search of profit and are competing to lend to the poor. In the process of giving loan to the poor the MFIs started chasing targets and numbers. This paper is an attempt to study the indebtedness situation of rural households in three districts
(Mahabubnagar, Khammam & Warangal) of Andhra Pradesh in India with special reference to the practices of Microfinance Institutions.