For a country like India, poverty remains to be one o f the biggest policy concerns. Amongst various measures to eradicate it, Microfinance, o f late, has provided a ray o f hope. The Task Force on Supportive Policy and Regulatory Framework fo r Microfinance constituted by NABARD defined microfinance as “the provision o f thrift, saving, credit, and financial services and products of very small amount to the poor in rural, semi-urban, and urban areas for enabling them to raise their income levels and improve their standard o f living ”. In numerous studies done across the world, it is generally believed that various microfinance initiatives have been able to make a difference in the target population’s lives. However, increasingly, doubts have been raised over the financial sustainability o f microfinance institutions. MFls need to be economically viable and sustainable in the long run but economic implications o f long term sustainability are not being considered. At least in India, there does not seem to be any working model o f analyzing the financial performance and thereby sustainability o f microfinance institutions. This problem is compounded by the absence o f a dedicated legislation on working and management o f microfinance institutions. The lack o f a regulatory mechanism fo r financial disclosures by microfinance institutions also abets the problem.