One of the major subjects in Microfinancing is the individual organizations and Government/Private Assisted Bodies - Micro Finance Institutions (MFIs) that gives Micro loans to Micro entrepreneurs who do not have access to fund to start up or boost their businesses.
What make these MFIs an important subject in the study of Microfinancing aside the fact that, they give loans is, the systematic processes that are put in place to ensure the loans given to these Micro entrepreneurs go through a flow that permits accurate remittance of the loan at the end of a stipulated loan period while ensuring that, the loan added a considerable impact in the live of the beneficiary, the immediate family and the business itself.
As a field researcher in Micro financing, I found out a whole lot that, the reverse seems to be the case spotting major challenges as - inability to adapt and replicate successful micro finance models, majority of these MFIs lack sound social performance, feeble institutional building, and fixing of high interest rate with short-term loan period. In other words, they charge higher interest rate than should be obtainable and also within a short loan period thus, abusing the true meaning of Micro financing. Read more.
Although, a very few of these MFIs are working within the framework of true Micro financing but it would become more effective if only a very few are working below the framework of true Micro financing.
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