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Challenges in Microfinance
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TOPIC: Challenges in Microfinance

Challenges in Microfinance 4 years, 11 months ago #829

We have all known how microfinance as a model has evolved. With this evolution, it has presented its own set of challenges. Lets discuss what are the current challenges for microfinance today..

Re: Challenges in Microfinance 4 years, 11 months ago #832

Over-indebtedness and lack of repayment are now among the top concerns in the microfinance sector. There are people who have taken loan from multiple microfinance institutions and it is very difficult for any organization to find the loan history of the person....

Re: Challenges in Microfinance 4 years, 11 months ago #839

  • mansin
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In country like India, many a times local governments seeking political favor subsidize loans at below-market rates and give out credit without checking to see if the borrower can repay the loan.

Re: Challenges in Microfinance 4 years, 11 months ago #841

microfinance in India has become similar to money laundering. Money launder used to charge high interest rates onthe loan ....same is happening with microfinance. There has to be some regulation to control interest rates charged by the microfinance institutions..

Re: Challenges in Microfinance 4 years, 10 months ago #859

  • poojad
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We say that microfinance is boon to poor but on what basis are we saying that microfinance this. Just becuase these institutions are providing loans to them. They are providing loans at much higher rate of interest sometimes upto 40% per annum. How is it beneficial to poor man. Government should step in and define a ceiling for such type of credit. Owing to such many times there is a default and the defaultee then becomes uneligible for further loans...

Re: Challenges in Microfinance 4 years, 10 months ago #862

One of the main challenge for the microfinance is that most of the people who avail the finance are illiterate. Illiteracy is one of the reasons which causes indebtedness

Re: Challenges in Microfinance 4 years, 10 months ago #884

Clients of microfinance are very poor which is a problem because it means these clients have cannot offer any collateral to microfinance providers against loans. As a result, microfinance institutes raise their interest rates which are already high for small loan transactions.
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