Challenges for Microfinance Organizations Serving the Poor

The challenge for microfinance organizations is how to provide services to the poor. Evaluate potential income and microfinance to improve living standards. Over the past 15 years, microfinance institutions (MFI) have expanded rapidly. The number of poor families who received small loans increased from 6 million in 1997 to 137.5 million in 2010. Microfinance gains great confidence by creating synergies that lead to rapid poverty alleviation, eradication of poverty and hunger in developing countries, universal primary education, gender equality, and empowerment of women.

Microfinance banks and international organizations have means to implement their views and methods in the country and town. Microfinance decides to let the poor get out of poverty, but how do they do so? Recently I have read articles focusing on Grameen Bank, BRAC and ASA. These three organizations are microfinance lending banks and organizations in various fields and the poor are using various methods to get out of poverty. This article was written by Ananya Roy. Grameen Bank was founded by owners of own funds as lending institutions for small and medium enterprises and families with children receiving higher education. Because Ananya Roy is the center of this article, I do not know what her main point of view is. But I learned from her article that Grameen Bank is a very successful organization with international borders with thousands of customers.

Microfinance institution (MFI) is an organization that provides microfinance services from small non-profit organizations to large commercial banks. Currently, there are 10,000 microfinance institutions around the world. When you join a credit union, cooperative association or other informal agency, there are 100,000 institutions, serving 150 million people worldwide. By expanding access to financial services, microfinance can help people to escape from poverty. Traditional banks often can not afford poor services due to the associated maintenance costs. For banks, microfinance is irrelevant and banks have no motivation to design products for small savings. However, for low-income people struggling in developing countries, a $ 50 loan may be a way to get started and eliminate poverty.

Traditionally, the goal of microfinance means "poorest people" and "poor people". Recently, the focus of microfinance has changed. It is starting to provide services to people who are not in poverty. However, they are generally difficult to gain credit (Torre and Vento, 2006). This is due to socio-economic changes that brought potential new microfinance customers. Thus, modern microfinance is expanding its scope from "poorest" to "victim of financial subsidies". Financial subsidies are defined in the literature as "funds can not be raised in an appropriate manner" (). These financially comprehensive victims involve "vulnerable groups" that can not pay the cost and conditions of the financial products being offered. Women are important in this category. This is because women are more responsible and women are more responsible for loan repayment.