There is compelling evidence to support the contention that a significant majority of “drop-outs” occur because Microfinance Institutions’ (MFIs) financial services are inadequate or inappropriate to meet the needs of the clients they are trying to serve. The document reviews four such issues facing MFIs worldwide, with evidences drawn primarily from Bangladesh, the cradle of group-based lending:

  • that members leave MFIs usually because they are dissatisfied with the quality of financial services being offered by the organisation;
  • that members might “graduate” to survive without access to financial services;
  • that the single most effective deterrent for defaulters is the prospect of losing access to financial services – follow-on loans and savings facilities;
  • that it is the systems and (in particular) the financial services of the MFI which will determine whether members “self-exclude” or not.

Leave Comments

Written by