ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

An Architectural Plan for a Microfinance Institutional Network

This paper proposes an architectural design for a microfinance service delivery network. It emphasises that savings followed by credit, insurance and money transfer, in descending order of priority, are the most important financial services needed by the poor. Microfinance may be classified as primary and secondary. Whereas the primary microfinance service includes savings, credit, insurance and money transfer, the secondary service includes enterprise credit, pension, equity transaction, leasing, etc. The paper then argues that competition with compassion and right to earn profit under the lens of a rational regulatory and supervisory framework and governmentâ??s active participation in capital formation, both human and physical, are the major forces necessary to fuel the healthy, sustainable and useful growth of microfinance institutions. The paper finally proposes a layout of the MF network, defining the roles of different entities, viz, government, central bank, microfinance authority, banking partner, rating agency, deposit insurance agency, promoter, capital provider, human capital building institution and, finally, MF clients.

M icrofinance (MF) is provision of financial services of small quantity to the poor. In other words, it is opening or improving access of poor people to financial institutions for typical financial services like (i) depositing thrift/ savings, (ii) borrowing, (iii) insurance, (iv) money transfer, (v) equity transaction, etc. In this sense there is not much difference between financial service and microfinance service. There is, however, a vast difference with regard to delivery because of two connotations of the prefix micro: (i) small quantity, and (ii) the poor segment.

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Or

To gain instant access to this article (download).


Pay
INR 59

(Readers in India)


Pay
$ 6

(Readers outside India)

Support Us

Your Support will ensure EPW’s financial viability and sustainability.

The EPW produces independent and public-spirited scholarship and analyses of contemporary affairs every week. EPW is one of the few publications that keep alive the spirit of intellectual inquiry in the Indian media.

Often described as a publication with a “social conscience,” EPW has never shied away from taking strong editorial positions. Our publication is free from political pressure, or commercial interests. Our editorial independence is our pride.

We rely on your support to continue the endeavour of highlighting the challenges faced by the disadvantaged, writings from the margins, and scholarship on the most pertinent issues that concern contemporary Indian society.

Every contribution is valuable for our future.