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    You are at:Home » Challenges in Microfinance Institutions

    Challenges in Microfinance Institutions

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    By InfoDesk on February 26, 2022 Finance

    The real challenge facing the microfinance industry today is scaling up services to reach the estimated three billion people in developing countries who still lack access to formal financial services. Successful microfinance institutions have proven that providing financial services to the poor can be an effective means of poverty reduction and be a profitable business.1 A major bottleneck to the development of sustainable microfinance is limited institutional and managerial capacity at the level of retail microfmance institutions, as reflected in inadequate management information systems, poor strategic planning, and high operating costs.Challenges in Microfinance Institutions

    There is also a marked shortage of organizations that can provide safe savings facilities for the poor and that can sustainably mobilize these domestic savings for onlending. Many of the necessary elements needed to scale up microfmance are already in place. A great deal of the knowledge about the requirements of sustainable microfmance already exists. High-performing microfmance institutions have developed innovative methodologies to extend credit, savings and other services to poor clients. A number of banks and other institutions with nationwide distribution systems are beginning to take active interest in reaching poorer clients. Advances in information technology have the opportunity to lower the cost and risk of providing microfmance to the poor.2 The challenge is to mobilize this knowledge and apply it on a much vaster scale, creating financial systems that work for the poor and boost their contribution to economic growth.


    For citing this article, use:

    • Brintha, P. (2012). Micro financing through self_help groups for rural development_an evaluation_A study with special reference to Madurai District.

    References:

    1. D. Nagayya And D. Koteswara Rao “ Micro Finance and Support Organisations in the Southern States of India” Journal of Rural Development, 2004, pp. 285 -301.
    2. Dr. R.B.Patil, “Gandhian Philosophy of A Self-Reliant Village: Study of Kuthambakkam in Tamilnadu”, International Journal of Rural Studies (IJRS) 2008, pp.3-7
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