MFIfailure
From Udaimicrofin
Criticism of Microfinance models
- Bias: The really poor people can do very little with microcredit, owing to the fact that they are mostly ill trained, uneducated and don't have any realistic business opportunities. Providing them with microcredit would simply indebting them even further. This is what has happened in Maharashtra and Andhra Pradesh.
The poorest people need credit in larger amounts and at more flexible terms, to first provide basic sustainance and then help look at an income-generation source (Dichter 2006)
- Repayment: Repayment is an important concern for any MFI. Quoting Rosenborg, "The borrower’s principal motivation to repay the loan is a desire to keep access to the highly valued loan service in the future. When a client sees neighbors failing to pay, her confidence in the lender’s future viability falls, along with her incentive to repay her own loan." (Rosenborg 2003)
